A transportation corridor and greater trade and investment have been discussed and agreed so often that they no longer excite the business community.
Two years ago, when Prime Minister Narendra Modi met Russian President Vladimir Putin for the first time, he said, “Even a child in India, if asked to say who is India’s best friend, will reply it is Russia, because Russia has been with India in times of crisis.” When the two leaders meet in Goa this week for their annual summit, they will find that a lot of water has flown down the Don, the Potomac and Yamuna since then.
Today, India has moved much closer to the United States. As the recent Rafale jet deal shows, New Delhi is seriously diversifying its arms imports. India is also concerned about Russia’s growing military ties with Pakistan. New Delhi has made it clear that Russia’s military cooperation with a country that supports terrorism as a state policy is the wrong approach and may create problems for India-Russia ties in the future.
Both economies have moved away from each other in a very significant way. The Soviet Union used to be India’s major trading partner, but today, Russia does not figure even in the list of top 30 trading partners of India.
Due to the slump in oil prices, economic sanctions and tensions with the US and Europe, Russia’s political dominance within the BRICS grouping – whose seventh summit takes place in Goa this week – has also somewhat weakened. Similarly, due to the BRICS Development Bank, the Asia Infrastructure Investment Bank and the One Belt One Road project, the Chinese position within the group has strengthened. Even if the joint declaration may not reflect any of this, the actual outcome of the summit will be a product of changing realities.
In the 16 summits that have been held since 2000 – when their ‘strategic partnership’ was sealed – New Delhi and Moscow have signed over 150 agreements and memoranda of understanding in the areas of military and technical cooperation, space, nuclear energy, hydrocarbons, trade and economics, terrorism, education and culture, a few of which have worked well.
Overall, the main pillars of the Indo-Russian relationship have been strategic congruence, defence ties, nuclear power and hydrocarbons.
According to the SIPRI arms transfer database, Russia has been India’s top exporter for arms. Between 1992 and 2015 (at 1990 constant prices), India imported $36 billion worth of arms from Russia, which were more than 70% of the total Indian imports. Since 2007, India has surpassed China and has become the largest market for Russian military hardware.
Reports indicate that an agreement for the purchase of the S-400 long-range surface-to-air missile system may be signed soon. The estimated cost of five S-400 units is between $4.5-$6 billion. There are also reports of possible deals concerning Kamov-28 helicopters, submarines and an upgradation of the Sukhoi 30-MKIs.
If these major defence deals were under discussion with India, then the Russia-Pakistan joint exercises were obviously ill timed. Hence, the end result of the Goa summit will also indicate the direction that India-Russia ties will take.
Apart from defence, Russia has a clear comparative advantage in hydrocarbons and nuclear energy, and India has provided it good business in both these areas. ONGC Videsh has made major investments in Sakhalin-1, Imperial Energy and Venkor. Other Indian majors are also looking for further investments.
In terms of nuclear energy, the first unit at Kudankulam is operational and the second is nearing completion. Initial work on the third and fourth reactors has begun and the framework agreements on the fifth and sixth are also likely in the near future. The roadmap that was signed at earlier summits had plans for up to 18 Russian nuclear plants in India.
In the past, the Soviet Union, and then Russia, always backed India on the Kashmir issue. On its part, India has pursued a ‘balanced’ position on Ukraine. While emphasising its respect for the sovereignty and territorial integrity of other countries, India also supported Russia’s ‘legitimate interest’ in the region. As India never supported unilateral embargoes against any country, it did not support western sanctions against Russia. It also abstained from voting on the Ukraine resolution in the United Nations General Assembly.
Across Eurasia, Russia has been, and perhaps will continue to be an important factor for India. Russia’s attempts of integrating the region under its influence are for the most part viewed positively by New Delhi. India, however, worries that the space vacated by Russia’s geopolitical retreat would likely be filled by China – or worse by radical forces. Moreover, for India, it is easier to work with Russia in this region than any other regional or extra-regional power.
For many years, bilateral commercial ties have languished. Despite the setting of several ambitious target by various summits, annual bilateral trade remains below expectations. Last year, both governments set a trade target of $25 billion by the year 2025. However, according to Indian commerce ministry data, bilateral trade has been just above $6 billion in the last few years, with Indian exports accounting for just about $2 billion.
In an echo of the old Indo-Soviet relationship, there has been talk of reviving trade in local currencies. The possibility of creating a linkage with the Eurasian Economic Union are also being explored. To ease transport issues, a renewed focus is also on the International North-South Transport Corridor.
Indian investments in Chabahar and the direct rail link from Iran through Azerbaijan could solve some of the transport problems. But these matters have been discussed and agreed so often that they no longer excite the business community. For small and medium-sized businesses, visa issues and information gaps are still highly crucial.
After years of continuous drift, India-Russia ties are at a crossroads. A few major defence deals concluded at the summit will reassure Russians of the continuity it craves and Moscow may soon forget about Pakistan. Otherwise, the impact of this drift will be felt in regional geopolitics in the years to come.
Gulshan Sachdeva is a professor at the School of International Studies, Jawaharlal Nehru University, New Delhi. He is the author of India in a Reconnecting Eurasia: Foreign Economic & Security Interests (Washington DC: CSIS and Rowman & Littlefield, 2016).