The Russian Federation and the Republic of India traditionally maintain friendly relations and collaborate on joint projects in strategic sectors. Russia is a key partner for India in developing new military technology and implementing space programs. Since the early 21st century, a new stage of business cooperation between the two countries has emerged against the backdrop of the reformatting of the global market for resources and energy. Over the past one and a half years, Russia and India have significantly increased trade volumes and transitioned to settlements in national currencies. Business councils and investment funds play a key role in the development of business relations.
Business Council for Cooperation with India
As part of the joint efforts of Russian entrepreneurs to create conditions for the development of business relations between Russia and India, the Business Council for Cooperation with India was established in 2014. The organization is chaired by Sergei Cheremin, a minister of the Moscow government.
The Business Council has clearly outlined its tasks:
- Assisting council members in establishing and developing business ties with representatives of the authorities in Russia and India.
- Involving council members in the business communities of both countries.
- Promoting goods and services for council members.
- Advocating the business interests of council members.
- Providing information support on legal and economic issues.
- Attracting investments.
The Business Council offers potential members assistance in choosing the organizational and legal form of commercial enterprises, business registration, and consultation on other issues.
Indian Business Council
After the stabilization of the global healthcare situation in 2021, representatives of India decided to start a new stage of business relations development with Russia. For this purpose, the Indian Business Council was created. According to the founders, it should serve as a bridge between Indian and Russian enterprises. The Indian Business Council includes entrepreneurs, managers of different levels, and specialists in various business areas. The main task of the business council is to create a positive image of India in Russia. To achieve this goal, participants plan to implement the following tasks:
- Developing business relations on partnership principles.
- Ensuring long-term prospects for the development of economic relations between the countries.
- Establishing connections between state structures and business.
- Patronizing startups.
- Assisting state structures in analyzing the needs of business.
- Providing support to entrepreneurs in new niches.
The priority areas for entrepreneurship and investments are pharmaceuticals, information technology, textiles, biotechnology, food products, engineering, construction, retail, and metallurgy. The main activity of the Indian Business Council focuses on participating in public events and building relationships with representatives of the authorities and businesses in India and Russia.
Joint Projects
India has been a long-standing strategic partner of Russia. The countries not only encourage trade in light and food industry products but also develop joint projects in energy, space technology, defense, and healthcare. The basis for economic relations between the countries was the Agreement on Trade and Economic Cooperation signed in 1992.
Trade and Investments
In the early ’90s, the intensity of trade between Russia and India decreased to minimal values (1.8-3% of annual turnover). This trend persisted over the following decades. For example, in 2012, the trade turnover between the countries was $11 billion, with $8 billion accounting for Russian exports. In subsequent years, trade turnover remained approximately at the same level. The main Russian goods exported to India in 2018 were:
- mineral fuels, oil
- pearls and semi-precious stones
- nuclear reactors and boilers
- electrical machinery
- potassium and phosphorus fertilizers
During the same period, Russia actively imported from India:
- pharmaceuticals
- electrical machinery and equipment
- organic chemicals
- railway and tramway vehicles
The trade balance of Russia remained positive during this time. The situation changed after the EU and the U.S. imposed sanctions on Russia. India became one of the main buyers of Russian oil, increasing purchases to 20 million barrels per month. In the ranking of Indian black gold suppliers, Russia took second place after Iraq. Prior to this, Saudi Arabia was the second-largest seller of oil to India. The share of Russian black gold in the Indian market reached 13% in 2022 (the previous year’s figure did not exceed 2%). At the same time, coal shipments began to increase at record rates in the Indian market. According to the Indian government, the indicator increased sixfold, and fertilizer shipments also increased by 371% compared to the same period in 2021. Simultaneously, there was a growing demand in the Indian market for agricultural products from Russia. The main items of export were sunflower and soybean oil. According to preliminary estimates, from February to May 2022, India purchased Russian goods worth over $5 billion, almost five times more than the same period a year earlier. In 2023, the trend of increasing shipments of goods from Russia continues. According to Reuters, coal exports to India almost tripled compared to 2022 (to 7.3 million tons). At the end of 2022, the trade turnover between Russia and India reached $38 billion.
Energy Sector
In 2014, the Indian corporation DAE and the Russian Rosatom began collaborating in the development of peaceful nuclear energy. With Russia’s participation, Blocks 1 and 2 of the Kudankulam Nuclear Power Plant in Kudankulam were constructed and put into operation. Simultaneously, work is underway on Blocks 3, 4, 5, and 6 of the nuclear power station. An agreement has also been reached on mutual understanding in implementing the joint project of building the Rooppur Nuclear Power Plant in Bangladesh.
Space Program
Russia and India have several joint projects in the field of space exploration. Specialists from both countries are involved in developing launch vehicles, satellite navigation systems, and applied technologies. A new phase of cooperation began in 2022 when an agreement on joint space research was signed in Moscow. This initiative aims to restrict access to space technologies. To achieve this goal, Moscow and New Delhi have prepared a special plan for security measures. In March 2023, RUSSOFT signed a memorandum of understanding with the Russo-Indian association RISING. The parties committed to enhancing cooperation in the development of high technologies. In the same year, another document on collaboration in the field of artificial intelligence was signed.
Defense Industry Complex
Russia is the primary supplier of weapons to the Indian market, providing around 50% of military goods in the country. In addition to trade relations in the arms sector, India and Russia are united by several projects. In 2016, the countries agreed on the production of Su-30MKI fighters and T-90 tanks at the joint venture “BrahMos.” Besides military equipment, Russian specialists have also established the production of anti-ship missiles. Simultaneously, an agreement was reached on the joint production of frigates and Ka-226T helicopters. The construction of new ships for the Indian fleet began in 2019 at Goa Shipyard Ltd. The deal’s value was 2.2 billion rubles. In the same year, the production of 200 Ka-226T helicopters was agreed upon. In 2020, Russia participated in the repair of the Indian aircraft carrier “Vikramaditya” and agreed to produce 600,000 AK-203 rifles at the joint venture IRRPL.
Healthcare Sector
In 2020, Russia and India signed an agreement on the testing and production of a coronavirus vaccine. The Russian Direct Investment Fund and the Indian company Hetero signed an agreement on the joint production of 100 million doses per year of the “Gam-COVID-Vac” vaccine.
Russian-Indian Investment Fund
In 2017, Vnesheconombank and the Indian company SREI signed an agreement to open an investment fund with a target capital of $200 million. The funds were planned to be used to finance various enterprises operating in the field of industrial technologies. According to VEB Chairman Sergey Gorkov, cooperation with Indian companies will help the Russian IT sector enter the markets of the Asia-Pacific region.
Free Trade Zone between India and the EAEU
Some Russian banks are already present in the Indian market, providing services to private and corporate clients. In 2023, negotiations on the creation of a free trade zone between India and the Eurasian Economic Union intensified. In case of successful entry of Indian companies into the EAEU, Russia will have the opportunity to buy goods and services in rupees, thus balancing the national currencies in settlements. It’s worth noting that from January to April 2023, trade turnover between the countries increased by 3.8 times compared to the same period in 2022, reaching $21.8 billion. Excess volumes of Indian money appeared due to the rapid growth of Russian oil exports to the Indian market and the abandonment of both countries from dollar settlements.
Conclusion
Russia and India have maintained business relations since the early 1990s. Active cooperation is taking place in the fields of trade, space, defense, and healthcare. In recent years, there has been accelerated growth in trade turnover and intensified business ties, allowing Russia and India to reach a new level of cooperation. Collaboration in strategic sectors will ensure the preservation of strong business ties in the coming decades.
Разрабатываем Стратегии для собственников бизнеса в целях оптимизации группы компаний, решения нестандартных задач и продажи активов. Оказываем услуги по сопровождению сделок M&A, управлению непрофильными активами и проектами в целом.
