Acknowledging that huge imbalance in trade heavily towards Russia is an issue in Rupee-Ruble trade, visiting Russian Deputy Prime Minister and Minister for Industry and Trade Denis Valentinovich Manturov said on Monday (April 17) that they are keen to import manufacturing equipment including machinery from India to replace the West. His comments come in the backdrop of Western sanctions on Moscow due to the war in Ukraine and payments emerging as a major issue in India-Russia relations.
He is here to co-chair the 24th Russia-India Inter-Governmental Commission (IGC) meeting on Tuesday with External Affairs Minister S. Jaishankar, which is expected to review defence cooperation between the two countries which has seen issues related to deliveries and payments due to the war in Ukraine. The visiting team includes leading names from the state owned companies like Alexander Mikheev, Director General of Rosoboronexport, Russia’s top defence company and Sergey Gorkov of Rosgeo, Russia’s top geological exploration company. The IGC is also expected to discuss India’s plans for Russia’s far eastern region which is part of Russia’s strategy in the Indo-Pacific region that Kremlin refers to as “Asia-Pacific”.
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“Payments is one of the issues. Lack of imports from India, it’s not enough to use the rupees. We need to increase Indian imports so we have balance. For example, with China we have $200bn trade but it’s balanced 50:50,” Mr. Manturov said speaking to journalists on the sidelines of the ‘India-Russia Business Dialogue’ organised by Federation of Indian Chambers of Commerce and Industry where, accompanied by a high-power delegation, he met with Mr. Jaishankar and Indian industry representatives at a closed door meeting on Monday.
Elaborating, he said the bilateral trade effort is to identify new industrial points which will give additional impetus for trade as the balance is currently in favour of Russia. “We sell more than we purchase. So to purchase more from India, not just raw material or traditional agriculture products. We are more interested in cooperation in machinery. And India today is a country with sophisticated machinery production. We are interested in this cooperation… With our knowledge and India’s manufacturing facilities…,” Mr. Manturov stated.
Addressing the event, Mr. Jaishankar too said payments, logistics and certifications are real concerns. “The payments issue clearly needs to be worked through,” he said while noting the efforts payments through Rupee-Ruble trade for which Vostro accounts were created.
The Russian Deputy PM further said that they cannot gain 100% autonomy and that is “impossible.” “We need to have specific areas to be independent, issues of national security and military,” he stated pointing it as an opportunity for Indian companies.
“We pay special attention to the issues of mutual access of production to the markets of our countries. Together with Eurasian Economic Commission, we are looking forward to intensifying negotiations on Free Trade Agreement with India,” said Mr Manturov in his remarks at the event and also announced the upcoming “Russia-India Bilateral Agreement for the Promotion and Protection of Investments”.
Mr Manturov’s delegation includes Pavel Mikhailovich Fradkov, First Deputy Manager of affairs of the President of Russia and Vladimir Viktorovich Chistukhin, First Deputy Chairman of the Bank of Russia. Mr Fradkov and Mr Chistukhin are powerful figures in the Russian establishment. Mr Fradkov is the son of Mikhail Fradkov, one of the former heads of Russia’s Foreign Intelligence Service. The presence of Mr Fradkov in the delegation indicates that the two teams are likely to discuss a possible visit by President Putin later this year to India. India is on track to host the G20 summit in September and President Vladimir Putin is expected to be here for the event.
Mr Chistukhin’s presence is indicative of important discussion that the two sides may carry out on the financial front. Russia and India are in talks for resorting to the Rupee-Ruble mechanism to safeguard bilateral trade from the impact of western sanctions. Russia-India trade has attracted western criticism over the past one year because of India’s purchase of unprecedented quantity of Russian hydrocarbon. This sector too is likely to receive significant attention as the Russian side has flown in Pavel Sorokin who was earlier this year described by the Wall Street Journal as “Putin’s Secret Weapon on Energy”. Mr Sorokin is a former Morgan Stanley banker and has been noted for playing a crucial role in negotiating energy deals between Russia and the developing world. The visiting team has high level representation from VTB Bank (PJSC), the second largest bank of Russia.
The Russian team also includes Aleksei Vladimirovich Gruzdev, Deputy Minister of Industry and Trade and Dmitry Stanislavovich Zverev, Secretary of State and in charge of transport. Mr Zverev has been active in developing overland transport capacity of Russia in across Iran, Azerbaijan and Central Asia. Mr Manturov also dealt with the issue of connectivity in his speech, saying, “India could become one of the key partners within the framework of development of International North-South Transport Corridor”
The high power delegation from Russia drew special attention as it arrived just days after Ukraine sent its First Deputy Foreign Minister Emine Dzhaparova who urged India to follow a “balanced” policy on Ukraine. Mr Jaishankar was in Africa during the visit of Ms Dzhaparova who spoke at the Indian Council of World Affairs (ICWA) here and argued that her country will keep fighting Russia.
“The sides plan to discuss the widest range of issues of bilateral trade, economic and humanitarian cooperation. Mr Manturov will also hold a number of bilateral meetings during his stay,” a statement from the Russian Embassy said. The IGC led by Mr Manturov and Mr Jaishankar will hold a “plenary meeting” on Tuesday. The two delegations are expected to sign a “final protocol” after Tuesday’s plenary meeting.
