Russian Manufacturers, Investors & Exporters Should Begin Preparations To Access An Indian Middle Class Consumer Market Of 350 Million People
Российские производители, инвесторы и экспортёры должны начать подготовку к выходу на потребительский рынок среднего класса Индии, насчитывающий 350 миллионов человек.
Op/Ed by Chris Devonshire-Ellis
- EAEU-India Free Trade looks increasingly likely
- Russia-India trade will boom and triple in next four years
- Bilateral trade growth an additional US$5 billion per annum
- Russian trade opportunities in pharmaceuticals and medical devices, minerals, steel, chemicals, including petrochemicals, ceramics, agro-industry, timber, high technology and scientific research.
The Indian Foreign Secretary Harsh Vardhan Shringla has been visiting Moscow and said that India and Russia should diversify their trade basket and economic exchanges by going beyond the traditional sectors and cooperating in new areas like railways, transport and logistics, pharmaceuticals, minerals and steel that will add momentum to the bilateral ties. He was speaking at a meeting hosted by the Russian Ministry of Foreign Affairs in Moscow on Wednesday.
Shringla said that Russia-India trade, which amounted to US$10.11 billion in 2019-2020, is far below potential. “Last year there was a slump, but we are finding ways of reviving it. Both countries have set the bilateral trade target at USD30 billion by 2025.” he said.
One of the steps taken to enhance trade is the commencement of negotiations in August 2020 for the India – Eurasian Economic Union (EAEU) Free Trade Agreement.
Such an FTA would open markets in India to Russian businesses, investors and exporters. The Indian middle class consumer market is about 350 million people from a total population of about 1.3 billion. That compares to the EAEU with a total population of about half that. We discussed the opportunities of the India market to Russian businesses in the article What Can Russian Businesses Sell To India? A medium-longer term route to better manage trade, source Indian goods and look for buyers is to establish a Liaison Office in India. We discussed this inexpensive option of establishing your Russian business in India in this article here.
The operationalization of a Russia-India “Green Corridor” and a Bilateral Investment Protection Arrangement are also likely to encourage bilateral trade and investment.
Indian Minister Shringla pointed out that the oil and gas sector has been a flagship sector of commercial cooperation and said the two countries have been looking out for ways to diversify economic exchanges going beyond the traditional areas. India is looking at investment in new areas such as coking coal, timber, and LNG.
“We have already started a shipping line between Vladivostok and Chennai. We are looking at a significant trade route which was never there, a new route between our two countries.”
To date, Indian oil and gas companies have acquired stakes in five Russian companies/projects at a value of about US$15 billion. Rosneft was the leader of a consortium of investors that, in 2017, acquired a 98 per cent stake in India’s Essar Oil at a cost of US$12.9 billion. Shringla said that India is privatizing its major oil companies, and some are having discussions with their Russian counterparts to see if some of these stakes can be acquired by Russian investors.
“We are looking at long-term arrangements for the supply of coking coal from Russia for Indian steel plants. An India Energy Centre will be opened in Moscow next month,” he said.
Underlining the importance of diversifying and expanding India-Russia trade he said, there is interest in taking forward cooperation in railways, transport and logistics, civilian ship building and repair, inland waterways, pharmaceuticals and medical devices, minerals, steel, chemicals, including petrochemicals, ceramics, agro-industry, timber, high technology, and scientific research. Indian companies are actively exploring investments in Russia in energy, minerals, infrastructure, and healthcare, he said.
Acknowledging that the COVID-19 pandemic revealed several chokepoints and vulnerabilities in global supply chains, he said this has allowed India and Russia to analyze where they can stand together to overcome over-dependence and over-reliance on certain economies.
He said India and Russia have prioritized the International North-South Transport Corridor and the Eastern Maritime (Chennai-Vladivostok) Corridor as alternatives to previously limited and expensive traditional routes.
This article was written by Dezan Shira & Associates. The firm assists Russian businesses enter and establish operations into Asia and has offices throughout India, China and the ASEAN nations. For further assistance please contact Maria Kotova at firstname.lastname@example.org or visit us at www.dezshira.com. Please see the link below for our complimentary ‘Doing Business In India 2021’ Guide.