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Russia-India: Reboot

At the Russian-Indian summit held in New Delhi, there were signed the order of 20 agreements worth several tens of billions of dollars

Russia-India: Reboot

The first annual meeting between Indian Prime Minister Narendra Modi and Russian President Vladimir Putin ended on a positive note - a statement that signals a significant recovery in economic relations between the countries in the next decade after years of relative stagnation.

The first Russian-Indian summit took place against the backdrop of an increasing chill in relations between Russia and the West due to the crisis in Ukraine, and the deals concluded between India and Russia worth tens of billions of dollars predictably caused surprise. In essence, the meeting between Modi and Putin underscored that India and Russia are ready to move away from the clichés of "time-tested", "special" and "privileged" relationships and bring more economic substance and strategic weight to them in the face of rapidly changing geopolitical realities. The success of the revitalization of Russian-Indian relations depends on concrete actions on about 20 agreements concluded between the countries. But already now it is possible to draw 5 key conclusions based on the results of the last summit in New Delhi.

First of all helicopters

Russia will continue to be India's key defense partner, despite the fact that New Delhi is expanding imports of military goods from other countries, including from the side of Russia's main geopolitical adversary, the United States. In a press statement following talks with the Russian president, Mr Modi stressed that "even as India's capabilities have increased, Russia remains our most important defense partner." Mr Modi's assurances about Moscow's central role in providing India with modern weapons should sound like music to the ears of the Russian leader, who is increasingly isolated from the Western world because of his policy towards Ukraine. To date, the share of Russia in the import of military goods to India is 60 percent.

This categorical assurance from New Delhi looks especially significant against the backdrop of the upcoming visit of US President Barack Obama as the main guest at the Republic Day celebrations. One of the main results of the visit of the head of the United States should be the transformation of defense cooperation between India and America. Like Russia, the United States is playing the co-production and co-development card to leverage its influence in India's fast-growing sales market, which has been liberalized by Modi's permission to raise FDI to 49 percent. However, Modi promised the Russian president that it was Russia that would maintain a dominant position in the Indian market, thereby trying to appease part of the diplomatic establishment in Moscow, which is trying to find a hidden meaning in the developing relations between India and the United States. The implementation of a key proposal from Russia - to manufacture light helicopters in India - will not only help Modi's Make in India project, but will also strengthen Russia's position in the Indian military goods market.

High-speed "peaceful atom"

Russia will also remain India's main partner in the field of non-military nuclear energy. In this regard, a separate agreement on nuclear energy looks especially important and offers a roadmap for the sequential construction of nuclear reactors according to Russian projects in India in the next ten years. In addition to two reactors at Kudankulam in Tamil Nadu state and four planned for construction there, India has promised to select an area in which another cluster of six nuclear reactors will be built. This will bring the number of reactors built in accordance with Russian projects to 12. In the long term, it is possible to construct eight more reactors, which guarantees Russia superiority in the Indian nuclear energy market. At the moment, the project is estimated for the Russian nuclear industry and the state monopoly Rosatom at least $ 30-40 billion. Another important aspect of the revised road map is that Russia will receive some of the reactor components from Indian companies.

The speed with which India and Russia plan to implement this project will inevitably cause concern in the American camp because the United States, which played a key role in the global restoration of nuclear power in India, must agree on its own project. In many respects, this situation persists because of fears about the civil liability regime for nuclear energy, which seems to be the most burdensome and repulsive for the largest US nuclear companies. In these circumstances, all views will be chained to the meeting between Modi and Obama in January 2015. It is expected that it will create a concrete realistic program of cooperation between the United States and India in the field of nuclear energy.

Energy splash

There will be a surge in energy in India-Russia relations. The importance of cooperation in the field of hydrocarbons and the zeal with which Russia offers the exploitation of its gas and oil fields to Indian companies are equally great. India has shown its confidence in this area by sending the head of the oil and gas ministry, Dharmendra Pradan, to meet President Putin at the airport. The parties signed an ambitious cooperation program within the framework of the Intergovernmental Agreement on Expanding Cooperation in the Oil and Gas Sector in 2015-16, which consists of a variety of projects, including joint exploration and production of hydrocarbons, long-term supplies of liquefied natural gas and joint study of the pipeline system connecting Russia with India. The agreement between TATA Power and the Russian Direct Investment Fund, securing investment opportunities in exploration, also points to an increased emphasis on energy interaction in Indian-Russian relations.

Restart economic ties

Economic relations between India and Russia could be set in motion if procedural barriers are removed and the agreements made during Putin's visit are promptly implemented. The parties raised the bar and set an ambitious goal of achieving mutual trade turnover of $ 30 billion by 2025. Ten years will be enough not only to achieve this goal, but also to overfulfill it. Compared to other countries, $ 30 billion is a modest goal. By 2025, the trade turnover between India and China could reach $ 150-200 billion. The United States has set a goal to quadruple trade with India to $ 500 billion.

The current trade volume between India and Russia is $ 10 billion. In this context, the formation of special investment funds can be a factor that will change the situation. The creation of an investment fund worth $ 1 billion of pooled venture capital through a partnership agreement between IDFC (Infrastructure Development Finance Corporation) and the Russian Direct Investment Fund, as well as a $ 2 billion private equity fund in high-tech projects (capital of Rusnano and Indian investors) means that both the parties are interested in serious cooperation. Prospects for direct diamond trading, the billion-dollar deal between VTB and ESSAR Group, and an agreement between ACRON and NMDC to buy some of the potash mines in Russia are among the important factors that will revitalize economic ties. Promoting Russian investments in major infrastructure projects such as DMIC (Delhi Mumbai Industrial Corridor), as well as in other major sectors of the economy - telecommunications, energy and road construction, fits perfectly into Modi's Make in India project. Russia, in turn, agreed to encourage India's participation in sectors such as pharmaceuticals, fertilizers, coal mining and energy in general.

In addition, the beginning of negotiations between India and the Eurasian Economic Commission on the achievement of full-fledged economic cooperation can become a factor in increasing the effectiveness of economic interaction.

Work globally

One of the important but less discussed consequences of the Russian-Indian summit was the reaffirmed intention of the parties "to work together to achieve a multipolar and democratic world order based on the common interests of all countries." This may sound clichéd, but if you think about the subtext, it becomes clear that, despite all the talk about India drifting into the American camp, the country will retain its strategic autonomy and will closely interact on a number of regional and global issues, including global terrorism, Afghanistan and nuclear proliferation. It is also important that President Putin repeated his words about Russia's support for the admission of India to the UN Security Council as a permanent member, about India's participation in multilateral organizations of countries exporting nuclear energy, including the Nuclear Suppliers Group. Thus, Moscow will remain critically important for many of India's long-pursued strategic goals.

The way is ahead

In the long term, the Putin-Modi summit created a detailed model for the transformation of Russian-Indian relations, which slowly moved towards stagnation and fell into the trap of predictable diplomatic clichés. The agreements signed during the summit, especially the economic and energy ones, have great potential if they are implemented on time. However, the ultimate success of the restart of Russian-Indian relations will generally depend on trust in strategic issues.

Recent events - the signing of a military agreement between Russia and Pakistan and the expanding economic and military interaction between Russia and China - have not aroused enthusiasm in India. In addition, the Russian establishment still tends to see India as a future US ally. In diplomacy, perception plays a role. Having laid an ambitious doctrine and an updated model of the Friendship-Dosti concept at the foundation of the relationship, it is very important to revive and maintain trust, which will cement the new building of Russian-Indian relations.
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