Indo-Russian Cooperation in Industrial Modernisation

Mutual cooperation between Russia and India in the business sector and the participation of Russia in India’s modernisation programme will help benefit Indian business to enter the prospective Customs Union market. The market possesses high potential for industry (more than US $ 65 billion), energy (over 100 billion barrels of oil and about 450 billion cubic metres of gas) and agriculture (the volume of agricultural production being to the tune of US $ 12 billion) thus ensuring high purchasing power. In case New Delhi lifts the existing barriers and creates favourable conditions for economic cooperation with Moscow, it would enable India to occupy the still vacant niches of the CU market while also protecting the Indian economy from the global crisis.

Russia and India are conventional partners whose trade and economic ties have been progressively growing since the establishment of diplomatic ties between the two states. The two countries have a long history of positive cooperation in the sphere of construction of new projects and re-equipment of previously built facilities [for example, expansion of the capacity of metallurgical plants in Bhilai (Madhya Pradesh) and Bokaro (Bihar) from 2.5 billion to 4 billion tonnes of steel per annum, Metro construction in Calcutta (West Bengal), participation of Russian companies in the reconstruction of hydroelectric power stations on Indian territory]. These provide the backdrop for the vast involvement of Russian firms in similar ventures.

The Soviet Union and Russia took part in setting up a considerable number of enterprises in India that now need reconstruction. The wide experience of operation of similar facilities in the Russian Federation and the existing design as well as technological capacity of the Russian research institutes guarantee fast realisation of projects and assistance in cutting re-equipment costs (compared to those proposed by potential competitors). These would also go a long way towards facilitating adaptation of local specia-lists to the new techniques.

However, on some occasions the Government of India has declined to invite Russia’s special exporters (like Tyazhpromexport, Technopro-mexport etc.) to tender for modernisation of national industries thereby violating the bilateral agreement on mutual participation in such programmes. Such a step, taken in the case of modernisation of thermal power stations, has cast a shadow on bilateral cooperation in the entire thermal power complex of Russia and India.

In fact energising mutual cooperation in the area of industrial modernisation would improve bilateral ties in general while promoting innovation and giving a fillip to the technological and investment dialogue between the two countries. This will create the necessary climate and environment for realising joint projects in various branches of industry, notably metal-lurgy, pharmaceuticals and building of civilian aircraft.