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India likes to do business with Putin

January 25, 2007 03:22 IST

"You must look at Russia with fresh eyes. Russia is going to become the third largest economy in the world this year. Its $300 billion foreign exchange reserves are robust thanks to the hike in the oil price. Russian leadership has given it a new direction," urged Kanwar Sibal, India's ambassador to Russia, to Indian investors in his speech at the Confederation of Indian Industry on the eve of President Vladimir Putin's visit to India.

Prime Minister Manmohan Singh, while welcoming Putin's visit, told the Russian media, "This is the first time that a Russian leader has been invited to be the chief guest at the Republic Day function, and we are delighted that President Putin will be with us on this occasion."

"In him we have a very sincere friend of our country," Dr Singh added. 

Much before he became president, Putin has been well-versed with India in his previous avatar as a KGB officer. Putin completes his term in March 2008 and therefore, this will probably be his last visit to India as president. The Indian establishment in New Delhi is giving his visit due importance.

While highlighting the importance of Putin's arrival, former diplomat M K Bhadrakumar, who served in the Indian Embassy in Moscow twice in the 1970s and '80s during the Soviet era, told, "Russia's re-emergence was never in doubt. Russia was awaiting its leader. Vladimir Putin is a man of history. His extraordinary success in marshalling the vast intellectual and material resources of the Russian people has made possible that nation's journey back as a great power on the world scene. The saga has few parallels."

Putin is coming with an impressive delegation. Sergei Ivanov, deputy prime minister, who is also Russia's defence minister is already in India and his announcements have already added warmth to the Indo-Russia relationship.

Before Putin's two-day visit begins, a look at the latest wide-ranging announcements show that the success of Putin's visit is already ensured.

Indian foreign ministry briefed the media on Monday that India and Russia are set to jointly produce a fifth generation stealth fighter and a multi-role transport aircraft, and the Russians have also said so in Moscow.

Accordingly, on Wednesday, both countries have reached a deal to jointly develop a MTA. A Russian news agency has reported that Russia will not be opposing the possible export of the BrahMos supersonic cruise missile, which is a Indo-Russian joint venture. India as a co-developer would like to sell some missiles in the commercial market.

Russians are not behind in their plans to make big bucks, too. They have already queued up to sell the latest MiG-35 fighter jet to the Indian Air Force. Since long, the Russians are quite comfortable with India in offering various kinds of joint production ventures.

In Banglore, Ivanov made an offer to India to use Russia's Global Navigation Satellite System, and has also shown interest in Indian investment in Sakhalin-3, an oil and gas project in Russia. (However, Putin was non-committal about India's involvement in Sakhalin-3 in his interview with PTI.)

And, quite an interesting announcement has been made regarding the production of titanium, which can be helpful in certain weapons.

Foreign Secretary Shiv Shankar Menon, told mediapersons, "Actually, there are no "issues" between the two countries!"

"We have a strong and abiding relation based on continuity. There is a strategic component to our relation," he added.

And, unlike the much-debated US-India relation, the no-nonsense deals are inked behind doors and announcements are normally made in a drab manner in the case of Indo-Russian matters.

Importantly, Dr Singh, while talking to Russian journalists, has said, "Russian nuclear power technology is internationally competitive. Since we have major plans to increase the share of nuclear power in our energy mix, there are concrete opportunities for cooperation in this area. We would also like this cooperation to expand in years to come." Meaning, the Indo-US nuclear agreement will actually end up boosting Indo-Russia nuclear ties.
Similarly, Putin said in an interview to PTI, "We intend to help India directly in the construction of atomic energy facilities for peaceful use. On top of that, some of our companies are very much interested in acquiring large contracts for construction of new facilities."

"On various occasions we provided India with nuclear fuel. And we will help India settle her problems in international affairs with the proviso that Russia will abide by international obligations," Putin said.

Bhadrakumar thinks this has been made possible because, "Indo-Russian partnership eschews dogmas, is invested with pragmatism and makes allowance for upholding national interests, but at the same time, it draws inspiration from a critical mass of shared concerns and principles. It is possible to say that the partnership has adapted to globalisation."
Certainly, India likes to do business with Putin.

Last year, The Economist had debated the post-retirement plan of Putin, who is merely 55 years old and shows attractive physical fitness.

One of the options debated in the article was that he will take Gazprom (It is the largest Russian company, which controls more than 13% gas reserves in world) to new heights by getting associated with it.

Putin knows the global business of energy and India knows that Putin will remain an important Russian player after retirement also.

Former diplomat G Parthasarathi, who started his career abroad in Moscow, and is one of the last three persons alive who were present during the final stages of the discussions in Moscow of the famous Indo-Soviet Treaty of August 1971 told, "President Putin has reasserted Russian influence in its neighbourhood, rolled back or contained NATO influence in his neighbouring countries and made it clear that Russia would act decisively if its vital interests were threatened."

He said Putin has made sure that on the world stage now, Russia can't be ignored.

"In the UN and elsewhere Russia is slowly but surely making it clear that whether it is in the Middle East, Iran or North Korea, its role cannot be ignored. He (Putin) has shown a particular interest in deepening the strategic partnership with India and has resolutely backed India's position on developments in its neighbourhood. Russian co-operation with India in strategic areas like defence and space is assuming new dimensions. He is a welcome visitor on our Republic Day," Parthasarathi said.
In New Delhi, besides Republic Day celebrations, Putin and Dr Singh are partnering the seventh India-Russia summit too.

In order to enhance the economic content of the strategic partnership, South Block and Kremlin have set up a Joint Study Group to remove bottlenecks.

Both countries have also agreed to set up a Trade and Investment Forum headed by the Russian economic development and trade minister and India's commerce and industry minister.

The first meeting of this forum is expected to take place in February 2007.

On the eve of Putin's visit, the latest CII analysis shows a reversal of roles between the two sides since 2002-03, when India became a net importer of goods from Russia.

Unfortunately, due to political upheaval, Indian exports to Russia in 2005-06 ($ 0.74 billion) were less than 1994-95 ($0.85 billion).

Imports from Russia into India for 2005-06 stood at $2.02 billion compared to $0.52 billion in 1994-95.

India's exports to Russia are characterised by low value-added products. The export basket has not diversified over the years and is concentrated on traditional commodities.

CII's 'product analysis' shows that the main items of India's export do not demonstrate a uniform growth rate over the years, implying Russia uses alternative sources of import.

India's imports from Russia consist mainly of primary commodities and over the last decade and a half; the main items of import from Russia have remained the same. India 's percentage share in Russia's total imports has declined from 1.21% in 1997 to 0.83% in 2004. India 's top five exports are 1) pharmaceuticals; 2) coffee, tea, spices; 3) edible preparations; 4) tobacco; 5) preparations of vegetables and plants.

Russia exports mainly iron and steel, fertilizers, natural or culture pearls and precious and semi-precious stones, nickel and paperboard or paper pulp. One of the biggest stumbling blocks is Russia's almost weird rules and the authoritarian control over the visa regime.

India's serious expectations are to boost ties in the energy sector. Russia is one of the largest suppliers of gas and oil, and India is one of the biggest buyers in world market.
K Raghunath, former foreign secretary and former ambassador to Russia, told, "We have complementarity of interest in the energy sector."

"For the gas and oil producers, buyers are important also. In this partnership 'strategic' is the word that matters. While looking for markets for its products, it will look for mutual interest," Raghunath added.

While explaining what clicks between India and Russia, Raghunath, an acknowledged Russian expert said, "Russia understands India's national interest very well."

Sheela Bhatt in New Delhi