Libmonster ID: IN-1243
Author(s) of the publication: N. V. GALISHCHEVA



Doctor of Economics, MGIMO (U), Ministry of Foreign Affairs of the Russian Federation

Keywords: Indian economy, foreign economic policy of India, Indian-Russian trade and economic cooperation

About 30 joint ventures with Russian investors were registered in India, with accumulated capital investments of about $623.5 million at the beginning of 2013. At the same time, the volume of annual inflows of Russian capital to the Indian economy has recently differed significantly - $ 152.8 million in 2010 and $55 million in 2012 (see Table).


In the ranking of the leading countries that invest in the Indian economy, Russia has been consistently ranked in the third ten over the past few years (although as far back as 2008). it was ranked 10th). At the same time, the Russian Federation is not yet able to meet the needs of the Indian economy in the amount of entrepreneurial capital that is necessary for its accelerated modernization. As Indian Prime Minister Narendra Modi pointed out in December 2014, these needs are estimated at $1 trillion.1

Among the examples of investment cooperation successfully implemented in recent years is the Kamaz-Vectra Motors Ltd. joint venture for the production of heavy-duty KAMAZ trucks. It was established in April 2009 by India's Vectra Group Companies and OJSC KAMAZ (51% stake in the joint venture).2. The joint venture is successfully operating in Hosur (Tamilnadu) and produced 3 thousand trucks in 2012 with a design capacity of 5 thousand per year, and plans to increase it to 7.5 thousand cars per year3.

Since 2006, Ural India Ltd., a joint venture established by Ural Automobile Plant and Motijug Agencies Ltd., has also been successfully operating in the city of Haldia (West Bengal), which assembles Ural trucks for civil and military needs, as well as buses 4. Since 2013, Ural India Ltd. It is working on opening a second plant in Ud Ham Singh Nagar district (Uttarkhand), which, by the way, will create about 2 thousand jobs.5

Zarubezhneft and Stroytransgaz are also implementing joint projects in India6. For example, in 2004 Stroytransgaz, commissioned by the Chennai Municipal Authority (Tamilnadu), together with Gammon India Limited, built a 114 km long water pipeline. Zarubezhneft and the Assam branch of ONGC signed contracts in December 2011 for the supply of chemical reagents and materials, as well as for the provision of services in the development of the Lakva oil and gas field in the state of Assam.

In 2010-2013, Severstal conducted a study of the Indian market, considering the possibility of creating a joint venture with the Indian steel company NMDC Limited in Karnataka; in November 2011, a corresponding protocol was signed in Moscow.

The companies agreed to establish a joint venture on a parity basis by 2017 - a full-cycle metallurgical plant with an annual capacity of 3 million tons of steel per year7However, in June 2013, at the St. Petersburg International Economic Forum, Alexander Mordashov, CEO and main owner of Severstal, said that India remains a promising country for the company, but the conditions for doing business "are not yet ripe". There are "...problems with access to infrastructure, bureaucracy, a lot of risks...". Thus, Severstal refused to implement projects in India 8.

Taking into account the fast-growing Indian synthetic rubber market, in February 2012 Sibur Holding, a Russian petrochemical company, and Reliance Industries Limited, an Indian company, signed an agreement to establish a joint venture in Jamnagar, Gujarat A joint venture for the production of butyl rubber with a capacity of 100 thousand tons per year.

The implementation of the project will allow India to completely abandon the import of butyl rubber (75 thousand tons annually). In general, 3/4 of the Joint Venture's output will be used to meet the following requirements:-


Russian capital in the Indian economy ($ mln)
















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Ending. For the beginning, see: Asia and Africa today. 2015, N 3.

page 10

The rest is planned to be exported to neighboring countries, primarily to China and the Republic of Korea.9

The parties also signed a license agreement on the joint venture's use of butyl rubber production technology owned by Russian partners. The share of the Indian side in the joint venture was 74.9%, and the Russian side -25.1%10This facility will be the fourth largest butyl rubber producer in the world and the only one in India. Construction of the plant began in February 2013, and the start-up is scheduled for 2015. Revenue from sales of JV products in the first year of operation may reach $700 million 11.

In addition to these projects, Russian companies in India are involved in the construction of highways, the construction and reconstruction of metallurgical plants, the exploration of oil and gas fields (Gazprom jointly with the Gas Authority of India Limited)12, the creation of the North-South international transport corridor, etc.

During a visit to India in June 2014, Deputy Prime Minister Dmitry Rogozin suggested that Russia plans to extend the gas pipeline from Russia to China to India, thereby connecting three of the five BRICS member countries.13

Cooperation in the field of ferrous metallurgy is developing mainly within the framework of modernization and reconstruction of metallurgical facilities in the cities of Bhilai, Rourkela, Durgapur, Bokaro and Visakhapatnam with the participation of the State Enterprise "VO Tyazhpromexport" 14.


One of the most important areas of bilateral cooperation is the implementation of fuel and energy projects in India. Cooperation in this area has its roots in the 1950s. Back in 1954, several dozen Soviet specialists came to India to study local oil and gas fields. Energy cooperation with India continued in the following decades.

In the 2000s, Russian companies upgraded the Bhakra hydroelectric power station and the Korba and Singrauli thermal power plants. In May 2008, Power Machines completed its participation in the construction of the first stage of the Teri hydroelectric power Station in the foothills of the Himalayas, one of the largest in India and designed to provide electricity, drinking water and improve irrigation in the north-east of the country15.

Given the Indian government's plans to increase the share of electricity produced at nuclear power plants in the country (from 4.8 GW in 2011 to 14.6 GW by 2020), nuclear energy cooperation is particularly promising. 16

Currently, Russian companies are building several power plants in India. The construction of the Kudankulam nuclear power plant in Tamilnadu is being carried out by Atomstoyexport CJSC, and the Indian Atomic Energy Corporation is the customer and operator of the future plant. At the end of 2011, it was planned to launch the first power unit and sign an agreement on the construction of additional units.

However, after the earthquake in Japan in March 2011 and the Fukushima-1 nuclear power plant accident, these plans caused a negative reaction in Indian society and mass protests in the state of Tamilnadu17As a result, the launch was initially postponed to the end of 2012 and took place only in July 2013. The first unit - the most powerful in India-was connected to the country's grid in 2013. Construction of the second unit is in its final stages, and it should start operating in the summer of 2015.18

During the visit of Russian President Vladimir Putin to India in December 2014, an agreement was reached on the construction of the second stage of the Kudankulam NPP (the third and fourth power units). In total, no less than 12 power units will be built within 20 years, fully meeting the safety requirements that were significantly tightened after the Fukushima accident.19 As Vladimir Putin noted, " this area, we have moved to a different level of cooperation. It's not just about trading services or goods or even technology, it's about creating an entire industry for India. " 20

Among the promising areas of Russian capital's participation in investment projects in India are metallurgy; exploration, production and transportation of energy resources; mechanical engineering; pharmaceuticals; aviation and space industries; information technology (IT), telecommunications and biotechnologies, as well as infrastructure projects, including the construction and reconstruction of highways. The latter direction is very promising, as the country is implementing a long-term program for the construction of roads with a total length of over 36.5 thousand km.

In addition, India and Russia maintain active cooperation in the development of railway transport. Currently, in Chennai, JSC "Moscow Metrostroy", together with Gammon India Limited, is constructing the first stage of the metro with a length of 18 km (19 surface stations) and building 7 more underground stations and a tunnel with a length of 6.4 km. The total cost of all these facilities is $430 million 21.


The words of J. R. R. Tolkien are well remembered in India. Nehru: "Science alone can solve the problems of hunger and poverty... The future belongs to science and those who are friends with it."

Cooperation between India and the USSR in the scientific sphere began after the signing of the corresponding agreement in 1972, and was supplemented in 1987 by the signing of a Comprehensive Long-term Program of Scientific and Technical Cooperation, updated in 2000 and extended in 2010. for another 10 years. This program covers 70 institutes of the Russian Academy of Sciences and 50 institutes in India; to date, more than 500 joint projects have been implemented.22 The program includes fundamental and applied research and provides for the possibility of financial support on a parity basis for the most significant projects.

The two countries have a permanent working group on science and technology-

page 11

In the framework of which 6 specialized groups were created: biotechnologies; medical sciences; oceanology; meteorology; standardization, metrology and certification; commercialization and technology transfer 23. The parties intend to expand cooperation in the space industry, as well as in the field of IT and nanotechnology.

One of the promising areas of bilateral scientific and technical cooperation was the creation of 9 joint research centers. The Indian-Russian Gas Hydrate Research Center is located in Chennai, which studies the properties of gas hydrates and develops technologies for their extraction, transportation and processing.

In Moscow, there is a Center for Ayurvedic Research, as well as a Center for Advanced Computer Technologies based on the Moscow Institute of Design Automation of the Russian Academy of Sciences. Under the auspices of this Center, a branch of the International Institute of Information Technology operates in Pune (Maharashtra). In New Delhi, Allahabad, Bulandshahr, Hyderabad, Jamshedpur and Trivandrum, joint research centers have been opened, respectively: earthquake research; biotechnology; polyvaccine production; advanced research in powder metallurgy and new materials; non-ferrous metallurgy; biomedical research24As a result of Indian-Russian cooperation, industrial production of polio vaccine was mastered using the technology developed at the Russian Institute of Polio and Viral Encephalitis of the Russian Academy of Medical Sciences. 25

Communications in the field of microelectronics are developing. In particular, an agreement was signed between the Krasnoyarsk Mining and Chemical Combine and the Indian company Central Electronic Ltd. about joint production of semiconductor silicon for the needs of solar power and microelectronics.

In November 2014, India hosted a regular meeting of the Russian-Indian Intergovernmental Commission on Trade, Economic, Scientific, Technical and Cultural Cooperation, which discussed the possibility of joint production of modules for receiving the signal of the ERA-GLONASS satellite system and Sukhoi Superjet-100 short-haul passenger aircraft. The issue of cooperation in the field of manned cosmonautics was also considered 26. In addition, as Dmitry Rogozin noted, India has shown interest in joint production of MS-21 medium-haul passenger aircraft, which meet the requirements of the Indian market both in terms of the number of passenger seats - 180, and in terms of the possible flight range-up to 5 thousand km. the first flight of such an aircraft will take place in 2016, and mass production will begin in 2017.27


Bilateral cooperation between India and Russia is expected in the production of Ka-226 helicopters, both for civilian and military needs, as well as Mango shells for T-90 tanks.

Sukhoi and Hindustan Aeronautics Limited (HAL) are working together to modernize the advanced front-line aviation complex (T-50) and transform it into a fifth-generation military aircraft. In particular, HAL develops an on-board computer, a navigation system, a display for the cockpit, an aircraft self-defense system, etc. The volume of investment of each of the parties in the project is about $30 billion. It is planned to produce about 400 aircraft, 144 of which are for India. It is expected that the first aircraft will pass test tests of the Indian Air Force by 2016, and production will begin in 2021. 28

Military-technical cooperation (MTC) is an important component of Indian-Russian relations, which began in the 1960s. Currently, about 60 % of the military equipment used by the Indian armed forces is produced in Russia or at Indian enterprises under Russian licenses.

India is one of the few countries that supplies almost the entire range of Russian weapons, from small arms to warships.29 The basis of the military-technical cooperation remains the maintenance and supply of spare parts for Russian (Soviet) vehicles previously delivered to India. As noted in the document adopted following Vladimir Putin's visit to India in December 2014. According to the Joint Russian-Indian Statement, the military-technical cooperation between the two countries is developing on the basis of deep mutual trust and contributes to the deepening of peace and security.30

In the 2000s, relations between the two countries in this area gradually transformed, moving from the "buyer-seller" phase to the joint production of military equipment with the prospect of its entry into the markets of third countries. In December 2014, Indian Prime Minister Narendra Modi called the assembly and further export of military products to other countries a new stage of cooperation, noting: "We are grateful to Vladimir Putin for his willingness to continue supporting our' Made in India '.31

The first result of such cooperation was the Russian-Indian BrahMos supersonic anti-ship cruise missile, which was successfully tested in July 2014. It is produced at the Russian-Indian joint venture BrahMos Aerospace, named after the rivers of India and Russia-Brahmaputra and Moscow. BrahMos Aerospace was created by the Russian military Industrial Complex NPO Mashinostroyeniya and the Indian Defense Research and Development Organization of India . In July 2013, the government ordered several versions of the BrahMos supersonic cruise missile worth $4.2 billion.33

The Russian side provides India with modern technologies, for example, by leasing the Nerpa 34 nuclear submarine for 10 years and assisting in the construction of an Indian-made nuclear submarine.

In November 2013, the contract for the modernization of the Vikramaditya aircraft carrier, a former heavy aircraft carrier, was completed for the Indian Navy

page 12

The Admiral Gorshkov cruiser. Initially, it was planned that the ship would be re-equipped, upgraded and become a combat ship of the Indian Navy by August 2008, but for a number of reasons, this deadline was postponed several times. The modernization of this ship, according to experts, is called the most ambitious project of modern Russian shipbuilding, as a result of which a grandiose work was carried out to transform a heavy aircraft carrier into a full-fledged aircraft carrier 35Russia also trained the Indian crew of the aircraft carrier, which is about 1.5 thousand people.36

Due to disruptions in the supply of military equipment, former Indian Ambassador to Russia K. Sibal noted:: "Our Russian partners should take into account one important circumstance. Until now, Russian-Indian military contracts were not the result of a tender, but of direct intergovernmental agreements. But now international tenders are becoming the norm for military purchases. " 37

Unfortunately, Russian exporters also contribute to the negative image of our products on the Indian market. First of all, this applies to frequent delays in the fulfillment of contractual obligations and unsatisfactory after-sales service. Overcoming these negative trends is an absolute imperative for further positive Russian-Indian military-technical cooperation.38

Thus, in the implementation of military-technical cooperation between India and Russia, aspects of the competitiveness of Russian weapons, their reliability and durability are increasingly coming to the fore. In some aspects, the products of Russian companies, unfortunately, are inferior to the products of their American, European and Israeli competitors. However, despite the fact that in recent years, the United States for the first time surpassed Russia in terms of the volume of weapons sold to India, as Indian Prime Minister Narendra Modi emphasized,"...Russia remains India's most important defense and security partner. " 39


Over the past decade, India-Russia cooperation in the financial sector has become noticeably more active. In particular, since 2001 Ingosstrakh has stepped up cooperation in the field of insurance and reinsurance with the General Insurance Corporation of India( GIC), ties with which were established back in 1966, when the Ingosstrakh-GIC Joint Bureau was established on the basis of a decree of the Council of Ministers of the USSR 40.

In 2005, the Russian Insurance People's Society (ROSNO) entered the Indian insurance market. In recent years, a number of agreements have been signed between the Association of Regional Banks of the Russian Federation and the Association of Indian Banks, Vnesheconombank of the Russian Federation and the Indian Industrial Credit and Investment Corporation (ICICI Group) , between the Russian Union of Industrialists and Entrepreneurs and the Confederation of Indian Industry on the establishment of the Russian-Indian Trade, Investment and Technology Promotion Council, as well as- import Bank of India.

Currently, VTB Bank and Sberbank of Russia, represented in the form of branches in New Delhi, carry out commercial activities in the Indian banking market. They provide a wide range of services to legal entities engaged in foreign trade operations between Russia and India 41Vnesheconombank, Promsvyazbank and Gazprombank also have representative offices in this country (without the right to conduct commercial activities) .42 India's ICICI Bank Eurasia (a 100% subsidiary of ICICI Bank Ltd.) and the Commercial Bank of India, a joint venture created by State Bank of India (60% of shares) and Canara Bank (40%), operate in Moscow.43

Interregional cooperation is carried out on the basis of the Agreement on Principles of Cooperation between the executive authorities of the constituent Entities of the Russian Federation and the Governments of the States and Union Territories of the Republic of India dated October 3, 2000. Partnerships have been established between Moscow and New Delhi, St. Petersburg and Mumbai, Volgograd and Chennai, Kazan and Hyderabad, Novosibirsk and Bangalore, Vladivostok and Calcutta, Krasnodar and Panaji, the Republic of Bashkortostan and the State of Haryana, the Republic of Tatarstan and the State of Andhra Pradesh, the Astrakhan Region and the State of Gujarat, the Samara Region and the State of Karnataka 44Cultural ties between the two countries are also developing.


Summing up the analysis of the Indian-Russian economic cooperation, it should be noted that, despite the growth of mutual trade and investment in recent years, its dynamics and nature are still lower than potentially possible. Although the main obstacles usually include insufficient awareness of mutual opportunities, bureaucratic delays, territorial remoteness, and even the peculiarities of the mentality and language barrier, the main ones still often remain "behind the scenes".

According to a number of experts, an important obstacle to expanding cooperation is the decline in India's interest in Russia, primarily caused by a significant reduction in Russia's scientific and technical potential. The Russian side is no longer able to meet the requirements of the fast-growing Indian economy in advanced industries, including mechanical engineering. The failure in the supply of equipment is regarded by the Indian side, including as the inability of our country to overcome the lack of scientific and technical personnel and the necessary modern infrastructure. Russia is not yet able to overcome the gap in fundamental research in a number of key technical areas, which India is currently showing particular interest in.

The curtailment of multi-faceted cooperation with Russia goes back to the very beginning of the 1990s, when the Indian government realized that in the context of the economic crisis and

page 13

the destruction of economic ties between Russia and the new states that were formerly part of the USSR, the orientation of Russia in its economic relations to an increasing extent towards European states, the United States, etc. it will not be possible to maintain the same level of interaction.

The financial and economic crisis in India in 1991/92 and the launch of liberal reforms in the economy actually pushed the Indian political and economic establishment to search for alternative options for cooperation and expand it towards the EU, Japan, Southeast Asian countries (SE), the United States, China, etc.

However, recently both India and Russia have taken measures aimed at intensifying and deepening bilateral cooperation. As Indian Prime Minister Narendra Modi pointed out to Russian Prime Minister Dmitry Medvedev at the East Asia Summit in Myanmar's capital Naypyidaw in November 2014, Russia is India's closest friend, and in this regard, India hopes to raise India-Russia relations to a qualitatively new level.45 Earlier, in a conversation with President Vladimir Putin on the sidelines of the BRICS summit in Fortaleza (Brazil) in July 2014, Modi said that he supports expanding the strategic partnership between India and Russia, especially in the military-industrial complex, as well as in the nuclear and energy spheres. 46

Many Indian experts point out that India is currently re-evaluating its external relations in a peculiar way and seems ready to abandon those that do not work and deepen those that promise real prospects. Meanwhile, the recent revival and further strengthening of bilateral ties with India are considered by Russia as one of the most important achievements of its foreign economic policy. It is noteworthy that the main foundation of this success was laid in the era of the so-called "Indian-American technical rapprochement".

During Vladimir Putin's visit to India in December 2014, prospects for the development of strategic partnership between the two countries for the next decade were outlined. The joint Russian-Indian statement stressed that "... the time has come for a significant multi-faceted expansion of bilateral cooperation and bringing the friendship between the two countries to a qualitatively new level. " 47 The parties identified several areas of cooperation, including: energy; technology and innovation; trade and investment; regional cooperation, etc.

There is reason to believe that economic relations between India and Russia will reach a new level in the next decade, and this will contribute to the further development and modernization of the two countries ' economies.


2 The joint venture builds dump trucks with a gross weight of over 25 tons (KAMAZ-6540) and mainline tractors (KAMAZ-5460) with a semi-trailer from machine kits supplied from Russia with the installation of a number of parts manufactured in India -

3 increase_kamaz_truck_productioninindia 25059.html

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13 rging-energy-alliance/article613 7686.ece

14 Since 2009 JSC "VO Tyazhpromexport" is a part of JSC "RT-stroitelnye tekhnologii" and the corporation GC Rostekhnologii -; company/about/

15 Customer-State corporation Tehri Hydro Development Corporation Ltd. Power Machines OJSC installed 4 power units with a capacity of 250 MW each, which were launched in 2006-2007. The structure is designed with maximum seismicity (9 points on the Richter scale) -; 2211ud/index. shtml;

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23 Ibid.

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25 It is assumed that the Indian side will have commercial access to technologies for the production of vaccines against rabies, measles, hepatitis C, therapeutic and preventive drugs and food additives created in Russia.



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35 Aircraft carrier displacement - about 50 thousand tons In the Indian Navy "Vikramaditya" replaced Viraat (formerly the British light aircraft carrier Hermes, built in 1959). In the course of modernization at the Northern Machine-Building Enterprise, the ship received new power and radio-electronic equipment, and

page 14

also a springboard take-off deck - in the configuration "Short Take-off-restricted landing" (Short Take-off but Arrested Recovery) to turn it into a classic aircraft carrier; news.asp?id = 270749; content&task-view&id=188&Itemid=97; 04905605005712405005105505 0052.html

36 http://russian.rt.eom/article/18370#ixzz3GlqMtJcV;

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