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Mainstream, VOL LIII No 1, December 27, 2014 - Annual Number

Fifteenth India-Russia Economic Summit: Advantage Russia

Saturday 27 December 2014

by R.G. Gidadhubli

The 15th India-Russia summit meeting held in New Delhi on December 11, 2014 has reiterated close and cordial strategic ties built and sustained by both the countries during the last few decades. Twenty agreements have been signed at the summit covering various sectors such as defence, energy, trade and industry, infrastructure, R&D etc.

So far as the defence ties are concerned, India has already entered into joint projects including BrahMos supersonic missile project, fifth generation fighter aircraft etc. According to the latest agreement, Russia will extend technology and equipment to manufacture in India 400 Kamov 226T light utility helicopters with Indian partners including Hindustan Aeronautics Ltd. As per reports, this is one of the most advanced technology helicopters that will benefit Indian defence and civilian needs. In fact India has overtaken China in Russia’s defence exports during the last few years with imports of a wide range of defence equipments. Hence exports of these defence equipments to India will further increase Russia’s defence exports to India and will immensely boost the expansion of Russia’s defence industrial enterprises. Equally important is the fact that Russia will get much needed hard currency to contain the falling value of ruble that has declined by about 42 per cent in less than one year (with the present rate of 57 rubles per US dollar). Hence this project costing about $ 3 billion will immensely benefit the revival of the Russian economy suffering due to economic sanctions from the Western countries accusing Russia for the Ukrainian crisis. So far as India is concerned, it will promote Prime Minister’s policy of ‘Make in India’ and will give an opportunity to export the products to third countries apart from meeting domestic needs. Hence Narendra Modi has rightly emphasised that Russia will retain its unique position as the important defence partner of India.

Secondly, Russia will provide the third and fourth reactors to the Kudankulam nuclear power plant that is already operating and producing electricity and partly meeting the energy needs of the South Indian States including Tamil Nadu. As per the latest agreement, Russia will supply 10-12 more nuclear reactors to India with manufacturing of equipments and components to be done in India. Russia’s Rosatom and the Nuclear Power Corporation Ltd of India (NPCIL) will be participating in the construction of nuclear power plants. While these proposals are under consideration since the last few years, there are expectations that they should materialise now under the new regime of NDA which will have to take into account public safety and issues of potential accidents to avoid social protests for nuclear plants as it happened in the case of Kudankulam. Russia is keen to export nuclear machinery and equipments as the country claims to be leading the world possessing the newest nuclear technology through innovations in the country. Russian scientist Andrey Baklitsky has claimed that his country is interested in taking forward S&T cooperation in the peaceful use of nuclear energy.

Thirdly, as per one agreement, a consortium of Indian companies NMDC and ACRON of Russia will acquire stake of $ 2 billion in the Russian potash mining project. This will certainly help Russia to increase the total production of potash to meet both domestic consumption and export demands including that of India.

Fourthly, as per another agreement, 12 Indian diamond companies can import diamonds directly (rather than from third countries such as Belgium and Dubai) from the Russian diamond mining giant, Alrosa, which controls about 27 per cent of the global diamond trade. India has emerged as the world’s largest country with highly skilled workers for cutting and polishing rough diamonds that are exported to major jewel markets of Europe, the USA etc. Putin has assured that there will be some direct export of diamonds from Russia to India. Of course, it is unlikely that vested interests in Russia as also in the third countries will give up their stakes completely. At any rate the visit of Vladimir Putin was well planned coinciding with the World Diamond Conference held in New Delhi which has immensely benefited both India and Russia.

Fifthly, so far as the energy sector is concerned, it was a booster dose for Russia by signing a raft of pacts worth $ 10 billion (Rs 60,000 crores) that allow India’s Essar group to import crude oil and petroleum products from Russia’s major oil giant Rosneft for over a decade. Apart from that, an agreement has been signed between Tata Power and Russia’s Direct Investment Fund for exploring investment opportunities in Russia’s energy sector. There are already a few agreements between Indian and Russian companies in the energy sector. India’s ONGC OVL has invested about $ 2.7 billion in Sakhalin-3 for importing 50 million tonnes of oil. Russia’s Lukoil and India’s IOC have entered into an agreement for annual supplies of 15 million tonnes of oil and petroleum products to India. Even with all these agreements, India does not compare with China in Russia’s energy sector.

To meet the growing demand for energy, India needed to take the initiative to expedite implementation of two proposals. Firstly, Prime Minister Narendra Modi should have persuaded Russian President Vladimir Putin to expedite the long pending decision with regard to the North-South Energy Corridor project linking the Caspian Sea in the north with Bandar Abbas in the south that connects all six Caspian Sea states—Russia, Kazakhstan, Turkmenistan, Azerbaijan and Iran. With growing improve-ment in the US relations with Iran, objections to this corridor from the West has reduced. More importantly, Putin could play an assertive role promoting India-Russia energy cooperation helping India to meet energy security for all the Caspian Sea states with which New Delhi has close and cordial political relations. Secondly, India could have persuaded Russia to supply oil and natural gas under a swap deal arrangement via Iran, that is, Russia will supply oil to the northern port of Iran and in turn an equivalent quantity of oil could be supplied by Iran to India through its southern port. Such swap deals have become common as they are very beneficial and economical for both exporting and importing countries.

Bilateral trade between India and Russia remains the weak link despite agreements and policy declarations made from time to time. In contrast to the Soviet era when India’s trade with the USSR used to be 12-14 per cent of India’s total foreign trade, Russia is no more a major trading partner of India and accounts for about three per cent of this country’s total trade turnover. India has an adverse balance of trade with Russia and India’s major traditional items of exports—such as tea, coffee, spices, tobacco, textiles—have lost their significance in the Russian market. The trade turnover between India and Russia is just about $ 10 billion and it is far too short of the expectations between the two countries. Both the countries had earlier set the target of $ 20 billion for 2015 in this regard but this will remain a dream. Hence unlike in the past no target of trade turnover has been fixed at the present summit.

 In fact pharmaceutical exports from India to Russia are very important and are competitive in price and meet international standards. Even as Russia badly needs medicines for its aging population and meeting healthcare facilities, there are various problems before Indian pharma companies to increase exports to Russia as they face several constraints such as long period for registration of products etc. which, if overcome, will immensely benefit both India and Russia. There is also a European lobby which might be supporting costly pharma imports from Europe rather than from India. Hence during Putin’s visit the Government of India should have addressed these issues. This was all the more important as the Eurasian Economic Union is going to be inaugurated in January 2015. This Union will comprise Russia, Kazakhstan and Belarus with a huge market that would include pharma products.

In lieu of conclusion it may be stated that the 15th summit has become quite advantageous for Russia even as it will bring economic benefits to both India and Russia apart from strengthening the political ties between the two countries. 

Dr R.G. Gidadhubli is a Professor and former Director, Centre for Central Eurasian Studies, University of Mumbai.


Hong Kong Movement looks like a College Kids’ Game. But It’s Real Serious

T.J.S. George

The protest movement in Hong Kong is a modern-day political wonder. Reason one: To demand Western-style democracy in a part of China is plain mad; for lesser audacity vast numbers of people in Tibet and the Muslim area of Uighur have paid dearly. Reason two: Authorities in Beijing have avoided a Tiananmen-model crackdown, apparently because a violent interdiction would have undermined business, Hong Kong’s lifeblood, and rattled world opinion at a time when Beijing is working towards a world leadership role.

China won’t yield an inch to the protestors. But that does not mean that the so-called Occupy movement, also called democracy movement, is a non-event. That it has lasted two months is an achievement in itself. More importantly, it

has energised the youth and attracted large segments of the general public, holding up the message that Hong Kong has changed. For a century-and-a-half it had remained a happily docile colony of Britain, firm in its belief that the freedom to make money was the only freedom that mattered. Democracy never bothered either the ruler or the ruled.

China actually injected a tiny dose of democracy into this system. Earlier Britain merely nominated a Governor and he ruled as the colony’s lord and master. For the election of the next Chief Executive (as the Governor is now called) in 2017, China offered universal franchise for all citizens in Hong Kong, a first-ever “reform”. The catch was that the voters’ choice was limited to a panel of two or three names nominated by a China-controlled 1200-member committee. In other words, the right to vote was given to all, but the right to stand as candidate was given to none. It was against this little trick that the students took to the streets.

They did so in a unique manner. Despite a skirmish or two, overall it was a disciplined and stylish movement. They did not look like agitators in the first place. They were dressed in city casuals reflecting—this being Hong Kong—uptodate international fashion. They were polite with the public. They were meticulous about cleaning the streets they occupied, collecting their garbage in big plastic bags for disposal. They called their protest a civil disobedience movement but emphasised that civil disobedience was not defiance of the rule of law but acceptance of it. Some of the leaders were no older than 17 and 18. Many talked of parents pressurising them to get back to classes. One bright young man with a nattily shaped hair-style told this writer that he was returning to his research at Hong Kong University but that didn’t mean he was with-drawing from the movement. The University campus was leafy, peaceful and busy as always.

The question is: Why has this new generation of Hong Kong citizens taken on China’s mighty power structure when their elders were content to be apolitical until just two decades ago? Basically there are two issues, political and cultural. Politically Hongkongers fear that China is becoming more rigid under President Xi Jinping. He has been neutralising powerful leaders one by one using corruption charges as his weapon. At this rate, would he one day crush the freedoms that Hongkong people have come to take for granted? This antipathy to Xi’s China is intensified by the behaviour of visitors from the mainland. Hong Kong’s people are for long used to the niceties and adjustments of

international living. The mainlanders, as visitors from China are called locally, are crude by comparison, talking loudly in public spaces and behaving without any civic sense. The story of a mainlander mother letting her child do No. 1 in a crowded Metro train is the most discussed folk tale in Hong Kong these days.

The cultural divide goes really deep. Hong Kong’s filmmakers say that mainland audiences are difficult and different. Hong Kong’s universities, people say, are rated higher than China’s thanks to a tradition of intellectual freedom. The new generation in Hong Kong feels that its precious cultural edge would be lost if China takes full control of Hong Kong. They are not alone. The new generation in Taiwan is also embittered by an apparently hardening China. Within the mainland itself the young often revolt but are firmly suppressed. The Chinese-language Apple Daily of Hong Kong, founded in 1995, has been anti-China to the extent of once calling on people to rise in revolt against Beijing. Last week an academic survey revealed that only 8.9 per cent of Hongkongers call themselves Chinese. This is a historical shift: not just Tibetans and Uighurs, but Chinese turning against communist China.