Indo-Russian relations: the strategic partnership Paper presented in the 2016 ISA Annual Meeting in Atlanta, march 17.

First draft. Please do not quote without authors permission

Indo-Russian Relations: a historical overview Hindustan-Russia bhai bhai. For decades, the old Hindu expression used for

describing an embarrassing dependence relation between a big brother and his/her

younger sibling was used in the political realm as an anecdote to deal with bilateral

relations between a protectress Soviet Union and the infant Indian state. However, if

one pays attention more carefully to the history of such relationship, since India

independence, in 1947, it is possible to note that other features could be found there

that go beyond a simple asymmetrical dependence relation. In fact, the expression bhai

bhai could be much more appropriately replaced by the idea of resilience. It is rare to

find within the international environment, especially after the 20th century, states

bilateral relations that denote the pragmatism and the adapting capacity Indo-Russian

relationship has presented along its sixty-eight years of uninterrupted and meaningful

diplomatic relations.

We can identify nowadays some dimensions within which these relations call for

a closer analysis – Defense, Trade, and Energy Cooperation. As pointed before,

though, examples abound historically along another transversal dimension – the state

to state relations. It must be stressed that the Union of Socialist Soviet Republics

(USSR), under Joseph Stalin leadership, was one of the first countries to recognize

Indian independence from Great Britain. Stalin desire to get closer was so significant

that the recognition happened on August 8th, 1947 – a week before the Indian

Independent Act made India creation official (TSAR, 2012). Despite Soviet approaching

actions, Indian Prime Minister Jawaharlal Nehru was bothered by a suspicion that the

Kremlin was directly financing and planning India Communist Party activities (SEN,

2011).

When Nikita Khrushchev takes the position as USSR Communist Party General

Secretary, in 1953, a more amicable environment was fostered between both

countries. In 1955, the first summit meetings were initiated between the Soviet Union

and India – a heritage from which, from 2000 on, such encounters became annually. In

1955, Khrushchev visited India and made the remarkable Srinagar speech, in which

there were the express recognition of Indian claims to Jammu and Kashmir, as well the

declaration of soviet support to it. On the other hand, Nehru government was not

pleased by the Soviet rapprochement with Mao Zedong, in China. According to Sen

(2011), Khrushchev even compromised with Mao not to intervene in case of Chinese

military actions against India.

This increasing alignment process found more challenges from 1964 on, when

there were changes both in the Indian and in the Soviet government. Nehru death

leaves a power vacuum in India during a troubled period of short interim governments

until Indira Gandhi became Prime Minister in 1966 (STEIN, 2010).1 After facing the

1962 Missile Crisis and a country in a serious economic deprivation, Khrushchev lost

its influence capacity inside the Politburo and was replaced, also in 1964, by Leonid

Brezhnev (SUNY, 2015). The new Soviet leader refuses to include Srinagar discourse

in an official set of Indo-Soviet documents, and this generates frictions with Indira

Gandhi. Nevertheless, in 1971, these controversies were contained with the Indo-

Soviet Treaty of Peace, Friendship, and Co-operation2 signature. This agreement

brought about a comprehensive cooperation agenda between them.

Brezhnev official visit to India, in 1973, launched an auspicious period of Indo-

Soviet relations that would last fifteen years (TSAN, 2012).3 Within this context,

bilateral relations were deepened in many fields. In 1985, after the brief Andropov and

Chernenko governments, Mikhail Gorbachev came to power in the Soviet Union, at the

same time Rajiv Gandhi rule in India had just started. In 1986, both leaders signed, in

New Dehli, the Declaration on the Principles of a Nuclear Weapon-Free and Non-

Violent World (SEN, 2011). Based on a letter of intent from 1972 for cooperation in

Science & Technology, the Integrated Long-Term Program for Cooperation in Science

and Technology (ILLTP) was put in motion from 1987 on, and it is still working. It has

counted on more than three hundred executed projects.4 It is estimated that, during the

Soviet period, more than 100.000 Indians graduated from Indo-Russian Science &

Technology cooperation programs (SHAUMYAN, 2010).

1 After Jawaharlal Nehru death, who ruled from 1947 until 1964, Gulzarilal Nanda, also a Congress Party member, assumed interim government for less than a month. The Congress Party elected Bahadur Shastri on June 1964. He ruled until his death in 1966, during a period marked by Indian victory in the war with Pakistan, in 1965, which rendered him a significant popularity. When he passed away, Gulzarilal Nanda came back to power for thirteen days, until Indira Gandhi – Nehru daughter, was elected. She was Prime Minister from 1966 until 1977, and then, for a second term, from 1980 until 1984. See STEIN, B. (2010) A History of India. Oxford: Wiley-Blackwell. 2 A version of the of the Treaty of Peace, Friendship and Co-operation (1971) can be found in an interesting discussion about the topic made by Mary Senterla (1991:295) in her PhD thesis. See SENTERLA, M. Indo-Soviet Relations 1971-1980: a study of the impact of the Treaty of Peace, Friendship and Co-operation on bi-lateral relations. PhD Thesis. Kottayam: Mahatma Gandhi University, 1991. Available in http://www.mgutheses.in/page/?q=T%20491&search=&page=&rad=#311. Accessed on August 28th, 2015. 3 The harmony of these relations was threatened by the absence of Soviet support to Indira Gandhi reelection, in 1980. Brezhnev government did not expected this reelection, and was surprised in an embarrassing situation in front of Indira new term (SEN, 2011). 4 The Integrated Long-Term Program for Cooperation in Science and Technology (ILLTP) is the most comprehensive program that India possesses with any country in this field. It deals with high technology, biotechnology, medicine, meteorology, and oceanography. For further official information, see EMBASSY OF INDIA. Indo-Russian S&T Cooperation. Available in http://www.indianembassy.ru/index.php/science-technology/indo-russian-s-t-cooperation. Accessed on April 25th, 2015.

The Union of Socialist Soviet Republics dissolution, in 1991, meant a significant

blow for these resilient relations. The August 1991 coup that greatly pushed for Soviet

republics independence was not clearly condemned by the Indian government, and

that was quite badly seen by the new Russia. In this context, the Kremlin shifted its

attention to Pakistan, since it was worried with the Afghan issue. Therefore, relations

with India were turned into secondary.5 In 1992, the foreign affairs doctrine published

by Russian Foreign Affairs Ministry6 indicated a position that should not be directly pro-

India, but it instead should be a more flexible approach when it came to these bilateral

relations (BAKSHI, 1998).

Economic liberalization in Russia under Boris Yeltsin had a parallel with reforms

made by Indian Prime Minister by then – Narasimha Rao, who deconstructed Rajiv

Gandhi social state in the 1990. This double pro-liberal movement made India and

Russia closer to Western nations, and further away each other. In this context, two

schools of thought rose in both countries concerning the fate of Indo-Russian relations.

For some, this partnership belonged to the Soviet past, a moment from which both

present India and Russia wanted to detach themselves. This view was predominant, for

instance, among Russian executive power, especially within the Foreign Affairs

Ministry led by Andrei Kozyrev. On the other hand, the Russian Duma and Indian

diplomacy comprehended this relationship as based upon a legacy of mutual trust that

shall continue and grow (NAIK, 1995).

In 1993, with changes in Russian domestic politics in favor of a less westernizer

stance, Indo-Russian resilient relations seemed to acquire new strength. With Yeltsin

official visit to India in 1993, a new agreement on friendship and cooperation was

signed, and should last for twenty years.7 Contrary to the previous treaty from 1971, the

new compromise did not grant a strategic dimension to peace, but it was important for

systematize cooperation in other fields, as official Russian backing for Indians in case 5 In 1991, Russia unprecedentedly voted in the United Nations Security Council in favor of a Pakistani proposal to create a nuclear-free zone in the South of Asia, which was directly against Indian intents in the region. Moreover, in 1991, Russian vice-president Alexander Rutskoi officially visited Pakistan, before any Russian official visit to India. In the same period, two official visits of Boris Yeltsin to India were cancel in order to prioritize Western trips agenda. Another sign of this brief diplomatic change was in 1992, when Moscow hosted an international conference on relations between Pakistan and the Community of Independent States (CIS) (BAKSHI, 1998). 6 For full document, see RUSSIA FEDERATION. (1993) Концепция внешней политики Российской Федерации. Available in http://www.gumer.info/bibliotek_Buks/History/nov_history_evropa_usa/29.php. Acessed on August 28th, 2015. 7 An important point of this agreement was the deconstruction of the rupee-ruble exchange system that had functioned during the Soviet period. This compromised enabled Russia to have cheaper credit to invest in India, which until nowadays fund joint projects. See TSAN, K. F. (2012) Re-energizing the Indian-Russian Relationship: opportunities and challenges for the 21st century. Jindal Journal of International Affairs, vol. 2, n. 1.

of their candidacy to a permanent United Nations Security Council membership

(BAKSHI, 1998).

Despite this controversy, Russians and Indians increasingly found more space

for their bilateral relations in the following years. Even in 1994, the countries

collaborated for stabilizing civil war in Tajikistan. Furthermore, a series of official visits

happened, and promoted sectorial cooperation agreements. Prime Minister Rao visited

Moscow, and, by then, further rapprochement in Science & Technology and defense,

bank cooperation, and a Novorossisk port modernization joint project were promoted.

Rao also declared support for Russian foreign policy sensitive points, as the

Community of the Independent States (CIS), and the protection of Russian minorities

living in third states. As an example of a common international view that was rising

between these two states, Russia and India signed the Moscow Declaration on the

Protection of the Interests of Pluralistic States (BAKSHI, 1998).

During an official visit to Russia, Indian Minister of Interior, Chavan, signed

partnerships for fighting terrorism, narcotrafic, and international crime. Yet in 1994,

Russian Prime Minister, Chernomyrdin, went to India for promoting economic and

military-technical cooperation. In 1995, Indian congressmen visiting Moscow declared

Chechnya as a Russian domestic problem – another instance of Indian political support

for Kremlin foreign behavior. This cooperative environment is further enhanced when

Primakov takes the Russian Ministry of Foreign Affairs, in 1995. He defended the

importance of a strategic alliance between Russia, China and India, and had as its

main purpose seek to correct the previous unbalance in favor of the West contained

within Russian foreign policy (BAKSHI, 1998).

Within Defense Relations, from its beginning, Stalin strategy to immediately

recognize Indian independence demonstrated his fears concerning the continued

Britain influence on the country after its independence. The main Stalinist concern was

Britain influence over Indian military sector given the continued participation of United

Kingdom soldiers leading it (SEN, 2011). It can be speculated that this has been one of

the opened doors found to initiate a deeper Indo-Russian defense cooperation, a key

feature of this bilateral relationship. Furthermore, its strategic position and its

continental dimensions made India a new key state for Soviet alignment within South

Asia region.

Later on, despite international sanctions on arms selling to India due to the war

with Pakistan in the 1960, the Soviet Union had kept its intense commercial flow with

the country for defense exports. In 1962, the first Soviet arms were delivered to the

Indian market. Between 1965 and 1969, 80% of Indian arms market was dominated by

the Soviets (MEA, 2002). Even if these numbers had decreased during the following

years,8 the USSR maintained its position as the main Indian arms supplier until its

dissolution (SHAUMYAN, 2010). In 1971, the Indo-Soviet Treaty of Peace, Friendship,

and Co-operation above mentioned brought about a comprehensive cooperation

agenda between them, with special attention paid to defense. The clauses on defense

cooperation and mutual help in case of aggressions were a sign of deepened political

relations and of the fact that erstwhile divergences were largely overcome

(SENTERLA, 1991).

The 1993 agreement on friendship and cooperation held a compromise made

by Russia not to give military-technical assistance to Pakistan, and reinforced Russian

support for India within Jammu and Kashmir claims (BAKSHI, 1998). During the same

year, a new and largely comprehensive agreement on armaments was signed.

However, there were some divergences concerning this topic among Russians and

Indians. On one hand, India was unsecure about Russian capacity to honor exports

given its severe economic problems from the post-Soviet dissolution. On the other,

Boris Yeltsin yielded to Western pressures and started, especially from 1994 on, to

adopt a more westernized vision on the Nuclear Non-Proliferation International

Regime. As a consequence, Russia accepted the Missile Technology Control Regime,

and the Kremlin found itself unable then to honor its compromise to sell cryogenic

material to India (CHENOY, 2010). Nevertheless, it can be perceived that, from 1994

on, the Indo-Russian partnership on defense definitely replaced a client-supplier

relationship.

Trade relations were also intensified during the 1980. In this period, India and

Soviet Union were each other biggest trade partners (TSAN, 2011). As mentioned

before, arms trade composed significant part of this relation. In this field, it could be

noted a gradual change from a client-supplier relation between Soviets and Indians,

respectively, to the construction of a partnership that could involve technology transfer

and joint investment projects.

Energy cooperation and the nuclear field are an example. As a Nuclear Non-

Proliferation Treaty non-signatory, India was casted out this international regime, and

this made it difficult for Indians to make their nuclear program come true due to the

limits imposed for buying necessary materials within international market. In 1988,

however, the USSR and India signed an agreement for acquiring two soviet 1000 MW

8 According to Shaumyan (2010), Soviet arms exports to India fell from 80% to 70%, between 1970 and 1974, and to 57%, between 1975 and 1979. For official records, see INDIAN MINISTRY OF FOREIGN AFFARIS (MEA). (2002) Bilateral Relations between India and the Russian Federation. Available in http://mea.gov.in/Portal/ForeignRelation/India-Russia_Relations.pdf. Accessed on August 28th, 2015.

nuclear reactors for Kudankulam plant, in Tamil Nadu, India. In the same decade, after

a controversial French withdrawal, the Soviet Union agreed to sell to India cryogenic

material (CHENOY, 2010).

A brief historical overview about India and Russia relations signs that the

bilateral dialogue between these actors arrives at the new millennium far beyond a bhai

bhai asymmetrical dependence relationship. In spite of punctual disagreements

between 1947 and 2000, as for instance concerning the Nuclear Non-Proliferation

International Regime, a chronology of cooperation increasingly expanded and

intensified can be observed in state to state, defense, and trade relations, and the

countries seemed to resiliently react to unfavorable conjunctures in order to keep their

pragmatic partnership, as it happened during the Soviet disintegration.

It is possible to note that, in the 21st century, a common international vision

between these two states emerges and solidifies. As India projects itself internationally

as a regional power through a consolidated democratic regime and a thriving economy;

post-2000 Russia seeks to pragmatically balance its Western and Eastern orientations

and retake part of the international power it previously had. For both, the solution to

satisfy these intents rests upon the defense of a multilateral world order that is opened

to South, and they have taken practical steps towards this direction, as the BRICS

creation testifies. Following that, this article will consider Indo-Russian relations in the

new millennium based upon analytical categories of cooperation that were historically

consolidated between these two countries – state to state, defense, and trade relations.

ANALYTICAL DIMENSIONS

As we pointed out in the last section, India and Russia enjoys a long-stand time-

tested relationship. It is possible to see cooperation in a variety of issues and themes,

but two of them are well more developed and enhanced than others: the defense and

energy industry. In the first case, the Indo-Russian relations went through some

significant changes throughout the years arriving in a joint design type of relationship,

where India and Russia join efforts to develop new technology in this area; whereas in

the second, Russia is helping India to build nuclear reactors and ease India’s dramatic

foreign dependence for energy sources.

Other issues and themes related to India-Russia cooperation, however, remain

unfulfilled, despite many attempts made by government officials and great potential that

they have. Areas such as business-to-business relations that engage the private sector

in a meaningful way are among the top challenges that both countries must face in

order to enhance its partnership.

In this section we will bring about some considerations based on data gathered

about the dimensions of India-Russia relations. It will be possible to grasp the aspect

that this bilateral relation has nowadays as well as to see its limits and possibilities.

Political relations

Since the beginning of the 2000s, the two countries have met diplomatically for

over 20 times in meetings and have signed almost 100 agreements. The most

comprehensive of them was, as we showed in the last section, signed in 2000. Overall,

this agreement meant to strengthens cooperation in the political, economic, defense

and culture real.

The idea was to “deepen and diversify cooperation in sectors such as

metallurgy, fuel and energy, information technology, communications and transport,

including shipping and civil aviation” and gets a "further development of cooperation in

the banking and financial sector, and improving credit and insurance facilities.” There

were only a few mentions on simplifying the rules and procedures for travel

entrepreneurs and businessmen of both countries, mostly seen on discourses and

statements. Moscow and New Delhi also agreed to work together to enhance its

cooperation with regional arrangements in each other’s region. Summits have been

taken in an annual basis. (Sachdeva, 2011)

The biggest problem that experts point is related to type of commitment made.

The majority of deals are related to State-to-State interactions and since in Russia

today about 70% of the economy is the private sector, it becomes clear that there is an

enormous potential to be yet achieved. (Sachdeva, 2011)

This doesn’t mean that the deals are useless altogether. One of the major areas

of advancement was definitely in the space research area materialized in the

GLONASS satellite Project.

In the political realm, Russia could be of vital importance for India by using its

influence over the Central Asian republics to persuade them to look favorably on India’s

project for the International North–South Transport Corridor, a multi-modal network that

would connect India to Central Asia through Iran. This route is of utmost importance for

India as it will not be able to compete with China for access to Central Asia’s resources

and for trade in goods and services more generally. (Lee, 2015)

Additionally, both countries have similar standings relating prospects and

positions for a rearranged world order. Moscow and New Delhi also cooperate in

Central Asia in order to contain the “spread of fundamentalist Islamic terrorism and

instability from the region, as well as shared suspicions of China, whose rise will

inevitably impinge upon their respective spheres of influence in Central and South

Asia.” (Lee, 2015)

Within global institutions, especially the United Nations Security Council

(UNSC), some interesting points can be made. India, in general, is more supportive to

Soviet Union/Russia than USA, but on few occasions this pattern shifted, as we shall

see. As the graph below shows, during its mandates in the UNSC India in general was

more inclined to support USSR than USA:

GRAPH 1 - ALIGNMENT BY INDIAN MANDATES

Source: made by the authors with data from UNSC

Throughout its seven mandates, only in two occasions India supported the US

more than it supported the Soviet Union/Russia. In both occasions it is important to

understand India’s domestic situation contrasted with its global aspirations to become a

global power.

The 1977/1978 and 2011/2012 reversal

During India’s United Nations Security Council mandate between 1977 and

1978 the patter of supporting USSR reversed and Indian behavior was more supportive

to USA then any other time in history. This patter can be better understood by taking

into account some developments that happened internationally and domestically.

Internationally, the world was witnessing the 1978 South Lebanon conflict and during

that time the UNSC produced 4 resolutions dealing with it (S/RES/434 (1978),

S/RES/431 (1978, )S/RES/427 (1978), S/RES/426 (1978) and S/RES/425 (1978). In all

7

2

11

3

7

01

7

0

2

8

4

0

3

0

2

4

6

8

10

12

1950-1951 1967-1968 1972-1973 1977-1978 1984-1985 1991-1992 2011-2012

Russia USA

of them, India supported the United States in negotiating the adoption of the resolution.

During these years, the USSR-USA balance in terms of India support was as the

following graph show:

GRAPH 2 - INDIAN ALIGNMENT AT UNSC (1977-1978)

Source: made by the authors with data from UNSC

Despite agreeing in the majority of cases (73%), when India had to decide

between the two supper powers, it chose USA in a ratio of most 2 to 1 in issues relating

to Lebanon and other Middle East (S/RES/438 (1978) regarding the renewal of the

mandate of UNEF in Israel) and Africa issues.

This patter can be better understood by analyzing Indian domestic politics of the

time. Prime Minister (PM) Moraji Desai was just elected on march 27 in 1977 to form

the first coalition cabinet in Indian history so far. Member of the Janata Party (latter

becoming Prime Minister’s Modi BJP), Desai had different ideas from its predecessors,

especially Indira Ghandi. Self-proclaimed as a pragmatist, the new Prime Minister

intended to diminish India’s dependence over the USSR by enhancing its relations with

USA.

Additionally to Desai’s thought, Indian was witnessing an interesting movement

in its political institutions: the move from a personalistic approach to politics and policy

to a more institutionalized one, where institutions were given power their never had. It

impacted greatly in the Indian Ministry of Foreign Affairs (MRE) as it emerged as a

forefront place to design foreign policy. As Kapur (2013) points, three were the main

motives for this shift: the little interest by the PM in foreign issues, the political

73%

0% 7%

20%

27%

Both None Russia USA

atmosphere and the new coalition charter of the government. Within the MRE itself, the

Foreign Minister Atal Vajpayee and the Foreign Secretary Jagat Mehta had similar

ideas regarding a new approach to USA and the election of Jimmy Carter as the US

President boosted relations as President Carter was an enthusiastic of Indian history

and its democratic institutions. As a result, Desai appointed a “highly visible” (Kapur,

2013) Ambassador for the Indian Embassy in the USA: Nani Ardeshir Palikhavala, a

lawyer with a history of supporting human rights and strongly opposed to Indira

Gandhi’s government (Kapur, 2013)

Both countries held high level meetings for each chief of state and government

in the year of 1978. Carter visited India in January and Desai visited Washington in

June, and signed general declarations regarding strengthening relations. In the June

joint communiqué the US recognized India’s importance in the global realm as the

country was called a global power that should be treated in an equal basis.

In general then the 1977-1978 Indian mandate in the UNSC was marked by the

interrelation of domestic and international factors that made India prone to support USA

instead of Soviet Union.

In 2010, president Obama announced that the United States would support

India’s bid to join the UNSC as a permanent member. Besides producing the effect to

make India support more the US than Russia – as we shall see in the next section in

the arms trade relation between India and Soviet Union/Russia – this might also be one

way to think about the reversal of support in 2010.

Economic relations

An important point of the Indo-Soviet friendship was a bilateral trade and special

economic relationship. While this arrangement had many of the usual shortcomings

such as corruption, clientelism and low quality products, it helped many small private

Indian companies to become exporters. After the collapse of the Soviet Union, relation

between the two countries were severely damaged as the new Russia turned inwards

to deal with domestic problems of the economic and political transition. At the same

time that Russia was undergoing structural changes, India was also going through

similar changes, moving from a somewhat planned economy to a market economy in

1991 after the balance of payments crisis of the same year. These changes have

altered the nature and scope of foreign economic and political relations in both

countries. Despite a good record of trusted economic and trade relations in the past,

most Russian and Indian companies are still trying to adjust to each other's markets.

(Sachdeva, 2011)

Since the first trade agreement was established between them, in 1953, seven

long-term contracts were signed between USSR and India until the collapse of the

Soviet Union. Bilateral trade was conducted through a specific trade and payment

system designed to conduct trade in countries’ own currencies, called the Rupee

Trading System, which was based on annual plans. (Sachdeva, 2011)

After the collapse of the Soviet Union, both governments had to renegotiate the

this trading scheme. One agreement singed in 1993 concluded the Trading System

and determined that all bilateral trade transactions would be carried out now on in a

strong currency basis. However, with this agreement, the payment of civil and military

loans taken by India also came up, but after several negotiations, the ruble credit was

denominated in rupees and a repayment schedule was drawn up. (Sachdeva, 2011)

Today, economic relations reflect the trend we pointed in this section outline,

where defense and energy materials represent Russia’s top exports to India whereas

India’s exports to Russia are dominated by pharmaceuticals products as shown in

charts 1 and 2 below.

Chart 1 – Top 10 commodities of Exports from Russia to India in Jan.- Sept. 2014 - in US$ million

Product Jan- Sept.

2013

Jan.- Sept.

2014

% increase/

decrease

Nuclear reactors,

boilers, machinery and

mechanical appliances;

parts thereof

425.4 469.7 10.4

Electrical machinery

and equipment, parts

thereof; audio recording

equipment, TV etc.

317.3 299.6 -5.6 %

Optical, photographic,

measuring, checking

instruments, Parts and

accessories thereof.

178.7 227.1 21.3%

Fertilizers 187.3 181.7 87.7

Mineral Fuel, Mineral

oils and products of

their distillations.

96.8 172.4 7.4 %

Iron and steel 114.6 131.8 15.0 %

Paper and paperboard,

articles of paper pulp

etc

102.7 13.1 %

Salt; Sulphur, plastering

materials, lime and

cement

59.1 87.2 47.5%

Rubber and articles

thereof 37.2 39.4 5.9 %

Animal or vegetable

fats and oils and their

cleavage products;

prepared edible fats;

animal or vegetable

waxes

- 35.5 100%

Source: Federal Customs Service, 2015

Chart 2 – Top 10 Commodities of Export from India to Russia in 2012 - in US$

million

Product Jan- Sept. 2013 Jan.- Sept.

2014

% increase/

decrease

Pharmaceuticals

products 604.2 351.1 - 41.9 %

Articles of apparel

and clothing

accessories not

knitted or

crocheted.

113.6 224.5 112.3 %

Nuclear reactors,

boilers, machinery

and mechanical

appliances; parts

thereof

105.7 132.8 16.9 %

Electrical

machinery and

equipment, parts

thereof; audio

recording

equipment, TV etc.

298.4 126.8 - 57.6 %

Articles of apparel

and clothing

accessories knitted

or crocheted.

75.0 103.1 37.4 %

Coffee, tea and

spices 98.853 94.7 - 15. 6 %

Iron and steel. 112.1 94.4 - 4.5 %

Vehicles other than

railway or tramway

rolling-stock, and

parts and

accessories

thereof.

86.5 88.3 4.9 %

Tobacco and its

industrial

substitutes

84.195 85.8 - 0.9 %

Organic chemicals. 52.6 72.5 37.8 %

Source: Federal Customs Service, 2015

Trade has been growing since India’s liberalization and Soviet Union’s collapse.

The 2000s marked beginning of this trend where bilateral commerce begun to

increase. This growth have impact only in absolute terms and for the indication of a

possible trend as in comparative terms Russian exports account for a small fraction of

India’s total imports and the other way around. As have been argued for a long time,

both by analysts and government officials, the procedure for acquiring business type

visas is very difficult. Another interesting point is to notice that the 2000s also marked

the moment where India begun to buy more then it sell to Russia.

Indian exports to Russia and Indian imports from Russia - in millions of 2015 US$

Source: UNCOMTRADE, 2015

In the real of foreign direct investment, relations are also weak as Russia is only

India’s twenty-first most important source of foreign direct investment with figures

nearing US$500 million in 2011, while Indian investments in Russia are estimated to

total US$6.5 billion, mostly because indians purchase of energy assets. (Lee, 2015)

As Lee puts it, Russian economic engagement of India outside the field of

energy and defense has been slow to take off for four reasons.

First, India’s economic growth is consumption-driven rather than export-led, and private-sector firms have much less risky opportunities to invest in the domestic economy than they do in tackling entry into a Russian market that is unfamiliar and often viewed as a “hostile investment environment. Second, the withering of people-to-people contacts and civil society engagement through education since the end of the Cold War has had a direct impact on the numbers of Indian businesspeople who have a direct cultural experience of Russian life, as well as requisite language skills. Third, on a practical level, Russia and India lack a direct and cost-competitive land route for trade in goods and services. Finally, Russia and India have yet to agree on a preferential trade agreement that could standardize trade relations. (Lee, 2015, p.)

There is a hope that Russia’s entry into the World Trade Organization (WTO) in

2012 should further boost economic relations between the two countries. (Lee, 2015)

The defense sector

$0,00$500,00

$1.000,00$1.500,00$2.000,00$2.500,00$3.000,00$3.500,00$4.000,00$4.500,00$5.000,00

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Exportações Importações

In the defense sector, we can see some interesting developments. Right after

its independence, India adopted a pan-Asia approach to its foreign policy and did not

fear any neighbor. This changed after its first war against China in 1962, where India

suffered a humiliating defeat and started to see the world in terms of realpolitik, seeking

to increase its material capabilities specially its military. It then begun to engage in

arms purchases and the Soviet Union emerged as a great partner as Sino-Soviet

relations deteriorated in the same time.

This event can easily be seen in the Graph 1, which shows the 1960s as the

turning point in the top destination for Soviet arms and defense material moving from

China to India.

Graph 1 – USSR arm exports destinations – in US$ million at 1990 prices

Source: SIPRI, 2015

After its collapse, in the beginning of the 1990s, Russian defense industry was

in a dramatic situation. Its home government wasn’t able to purchase the amount it did

in the past, and since exports accounted for a small fraction of its revenues in

comparison to Soviet purchases, the industry faced tough times, and almost went to

bankruptcy. The companies felt the extreme need to push the government to engage in

the foreign realm to assure new contracts to save the industry that employs a

considerable number of Russians. India emerged as a preferential partner in the

aftermath of USSRs collapse.

In the security and defense sector, there are estimates that there are about 800

Russian facilities for production of defense equipment that are kept in operation by

Indian contractors. Although China figured as the biggest buyer of Russian defense

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EastGermany(GDR) Egypt Iraq

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equipments,, India took this post in 2007 as shown in the graph below. There are also

projects for the joint production of armaments and defense equipment. (Sachdeva,

2011)

Graph 2 – Russian top 3 arm imports destinations – in US$ million at 1990 prices

Source: SIPRI, 2015

The initiatives of joint production has enabled India to start producing significant

portion of its weapons domestically, including the BrahMos missile, T72M1 tanks,

radars, anti-ship and anti-tank missiles. In addition to that, most tanks and aircrafts are

now also being mounted in India. Under this program India-Russia relations are moving

from a buyer-seller relationship to a much more comprehensive design, development

and production together type of relationship. India also has a long tradition of

collaboration in space with the USSR / Russia. (Sachdeva, 2011)

Now however, Russia and India are developing its relations with new partners

which have made both countries concerned as Moscow is now dealing with Pakistan

and China – even though India still appears as a bigger partner than both countries

mentioned – and India is increasing its relations with the United States and France –

with the purchase of the 36 Raffale aircrafts - as Graph 3 shows.

India arm trade from 1950 to 2014 – in millions of 1990 US$

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Source: SIPRI, 2015

This sharp fall in Russia’s export to India is accompanied by a rise in US

exports to India from 2010 onwards. Interestingly to notice is that 2010 was the

moment Barack Obama said the US was to support India’s bid for a permanent seat in

the United Nations Security Council9.

Preliminary assessments

As we showed in this section, Indo-Russian relations are developing for more

almost 70 years as independent countries now. Despite some set backs during the

way, both countries have proved to each other that they can be considered trusted

partners. This does not imply that Moscow and New Delhi have already explored the

full potential of their relationship.

Commerce remains an area that can be more developed and that both

countries can benefit from. This will necessarily go through an easing in visa

accreditation from the Indian government and also the increase of private sector

exchange and agreements. These agreements can be enhanced with the help of

governments.

In diplomatic relations, Russia can help India to gain leverage in its bid for an

UNSC permanent seat as well as a full membership status in the Shanghai

Cooperation Organization and India can help Russia to get bigger access to South Asia

institutions and consequently emerging markets.

9 For more information about this process, check: http://www.bbc.com/news/world-south-asia-11711007

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URSS/Russia ReinoUnido EstadosUnidos Outros

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