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An old friend is better than two new ones

EastRussia studies the experience of Indian-Russian projects and reflects on the prospects of strategic partnership between the two countries

Relations between Russia and India have been going on since April 1947 and were established even before the official proclamation of the country's independence. However, despite a wide range of joint strategic projects, extremely positive political experience, joint business initiatives and meetings at various levels, Russian-Indian relations are not being converted into large-scale economic interaction. At the end of the 2016/17 financial year, Russia ranked only 27th among India's foreign trade partners. The share of Russia in India's foreign trade turnover was only 1,13% ($ 7,49 billion). At the end of 2018, the figure reached $ 10,97 billion, which did not change the picture much. The discrepancy between the volume of trade and the level of trust between countries raises questions. How, with a long history of cooperation and strategic projects covering a wide range of areas from weapons to nuclear energy, can trade be left out? Can India's dependence on key economic partners (the United States and China) play against Russia in the future? And to what extent can the internal and external challenges faced by India (high level of poverty, problems with the environment and medicine, territorial conflicts) become constraining factors in the development of Russian-Indian relations? EastRussia was looking for answers to these questions in the Indian open spaces.

An old friend is better than two new ones
Photo: Andranik Agafonov

New era. From Kalashnikov to the peaceful atom

Relations between the two countries are not just strategic. Russian-Indian military-technical cooperation includes not only and not so much the purchase of modern weapons, as their localization in India and the development of new types adapted to the specifics of the region. In recent years, the Indian side has signed contracts for the purchase and modernization of military vessels, for the production of aircraft, helicopters, tanks, air defense systems, including S-400, and other weapons, up to the construction of a factory for the manufacture of Kalashnikov assault rifles.

An eloquent fact is that the naval forces of India are equipped with Russian equipment by 80%, and the air forces - by 70%. Countries regularly conduct joint exercises and are not going to stop on the results achieved.

Of particular interest in the history of Indian-Russian military cooperation is the project to create a BrahMos supersonic missile system developed by OAO NPK NPO Mashinostroyeniya and the Organization for Defense Research and Development of the Indian Ministry of Defense. The joint venture was established in 1998, and the first launch took place in 2001. Today BraMos missiles can be installed on mobile ground systems, ships, submarines and even aircraft. The rocket speed reaches Mach 2,8 (about 1 km / s). Such weapons are almost impossible to detect and intercept.

“None of the countries in the world except Russia and India today have supersonic missiles in service,” said Brahmos Aerospace Pravin Pathack, General Manager of Advertising, Marketing and Export, Director of the Department of Information Technology.

Another hallmark of cooperation between the two countries is Nayara Energy Ltd, which is 49,13% owned by Russian Rosneft. The joint project stands out for Russia's record amount of investment in the Indian economy ($ 12,9 billion) and the potential of the asset, which includes the second largest private refinery in India with a capacity of up to 20 million tons per year, an oil storage facility, a port with infrastructure, and also a fast growing network of more than 5 600 filling stations. It is symbolic that the plant is located in Gujarat - the home state of the current Prime Minister of India Narendra Modi, and the name of the company is translated into Russian as "New Era".

Domestic money came to Indian oil refining in 2017 and provided Russia with access to the fastest growing energy market in the world - according to experts from the International Energy Agency (IEA), by 2040 fuel consumption alone in the Indian automobile industry will grow by more than 300%.

Importantly, the investment did not become one-sided. For example, since 2001, OGC Corporation (ONGC) is the largest Indian investor in Russia - it owns 20% of the shares of the Sakhalin-1 project. And in 2016, the corporation acquired the shares of Vankorneft JSC, which is developing the Vankor oil and gas condensate field. In part, India’s investment in the Russian oil and gas sector is associated with an attempt to reduce the country's dependence on hydrocarbon supplies from Venezuela and the Gulf countries.

“We are working on a strategy to diversify our sources of crude oil supplies in order to reduce dependence on the Middle East,” Indian Oil and Natural Gas Minister Dharmendra Pradhan confirmed the long-term intentions of India in an interview with reporters.

No less significant is the cooperation between Russia and India in the field of nuclear energy, dating back to the time of Gorbachev: under an intergovernmental agreement of 1988, Russia is building the Kudankulam NPP in India. The first phase of the project, including the creation of two blocks, has already been put into operation, the second is in the active phase of construction, and the third is planned for the pouring of the "first concrete".

Growth points

The frequency and level of contacts between countries have long outgrown the format of ordinary business interaction. If Russia is actively sharing with India technologies and developments within the military-industrial complex and is taking unprecedented steps to localize the production of military equipment and weapons, then relations in other areas could be no less open.

According to the statistics of the Directorate General of Trade Statistics of India for 2018, the country's exports are formed by the jewelry (15,8%), petrochemical (11,7%), textile (8,9%) and pharmaceutical industries (8,9%). At the same time, imports come from oil and oil products (26,8%), precious and semiprecious stones and metals (14%), electronics (10%), machinery and equipment (8,4%).

A possible breakthrough point for growth could be cooperation in the production of jewelry. India, practically without its own precious and semiprecious stones, is the world leader in their cutting. So, 14 out of 15 diamonds used in jewelry were processed in India. Russia, in turn, is one of the world's largest producers of natural diamonds. The richest resources of one side and the accumulated competencies of the other can be converted into mutually beneficial cooperation.

There are successful cases in both India and Russia. According to data provided by the Gem and Jewelery Export Promotion Council of India (GJEPC), last year India purchased about $ 3,5 million worth of raw materials from Russia. In addition, in 2017, the Indian company KGK DV Launched a diamond cutting company in Vladivostok, investing 500 million rubles in the creation of production capacities. Later, company representatives announced plans to further develop polished production and increase the total investment to 2,8 billion rubles. One more significant investment project - the opening in Vladivostok of a structural unit of the diamond company M. Suresh, one of the world leaders in diamond processing and trade transactions with them.

Another strategic area of ​​cooperation is the production of medicines and other pharmaceutical products. According to the Pharmaceutical Export Promotion Council of India, exports from April 2018 to March 2019 amounted to $ 19,13 billion. Among the countries importing Indian medicines for 2018-2019, Russia ranks fourth, with a total value of imported goods of $ 485,6 million. According to experts, there are real opportunities in the industry, both to increase supplies and to create localized and joint industries in Russia, including conducting research and training specialists.

Success Story

The successes India has achieved over the past decades in the field of social, scientific and economic development can be envied: according to the World Bank, the country's GDP in 2018 reached $ 2,601 trillion (sixth position in the world ranking); the poverty level (incomes less than $ 1,9 per person) decreased from 61,6% of the population in 1977 to 21,2% of the population in 2011; the unemployment rate over the past 30 years ranges from 2,3% to 3,2%.

Listing the numbers and noting the dynamics, it is worth mentioning that by the time of independence (a little more than 70 years ago), the country's population was only twice the population of the Soviet Union (179 million people against 357 million) and grew by more than one billion people in a short period of time .

The Soviet Union supported India in the provision of cash loans, in the establishment of industrial enterprises and in the production of electricity from the 1950s. Soviet and then Russian specialists largely ensured the formation of modern Indian industry and the army. According to the assessment of Doctor of Historical Sciences, professor of the Department of Oriental Studies of MGIMO, Sergey Lunev, in the early 1970s, enterprises built with the help of the USSR accounted for 30% of steel smelting, 60% of oil production and 30% of oil refining, 20% of electricity production, 60 % of the production of electrical equipment and 85% of the production of metallurgical equipment.

Back in 1971, an agreement on peace, friendship and cooperation was concluded between the USSR and India, in 1993 a similar document was drawn up on behalf of the Russian Federation. In 2000, as part of Vladimir Putin’s visit to India, a strategic partnership declaration was signed, and in December 2010, relations acquired the status of a “particularly privileged strategic partnership”. Today, after another ten years, relations between the countries again receive a serious impetus for development, so far at the level of mutual sympathy of the two leaders. However, the voluminous historical “baggage” explains the proximity of Russia and India and opens up fundamentally new horizons for countries.

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