India and Russia aim to enhance bilateral trade through several strategic measures, as outlined in a recent report by the Global Trade Research Initiative (GTRI). Despite challenges posed by the Ukraine conflict and US sanctions on Russia, both nations are pursuing avenues to strengthen economic ties. Here’s a summary of the key points from the report:
BulletsIn
- Strategic Steps: Increasing exports, facilitating local currency trading, and negotiating a Free Trade Agreement (FTA) with the Eurasian Economic Union are pivotal for boosting India-Russia trade.
- Trade Imbalance: Post-Ukraine war, India witnessed a significant rise in imports from Russia, leading to a substantial trade deficit.
- Import Surge: Imports surged by 8,300%, primarily driven by India’s strategic procurement of crude oil under favorable terms amidst Western sanctions.
- Trade Deficit: The trade deficit rose from USD 2.8 billion to USD 57.2 billion, despite a 59% increase in exports during FY 2020-21 to 2023-24.
- Bilateral Trade Target: During PM Modi’s visit, India and Russia set a target of achieving USD 100 billion in bilateral trade by 2030, with current trade standing at USD 65.7 billion.
- Product Diversity: India exports smartphones, shrimp, medicines, and more to Russia, with a competitive advantage in these sectors.
- Local Currency Trade: Proposed as a solution to payment challenges, India aims to establish a transparent currency exchange to facilitate trade settlement in rupees and other local currencies.
- INSTC Initiative: Enhancing the International North-South Transport Corridor (INSTC) could significantly reduce transit time and freight costs between India and Russia.
- Challenges with INSTC: Despite advantages, logistical challenges and underinvestment in infrastructure hinder the corridor’s full potential.
- FTA Negotiations: India is in early stages of negotiating an FTA with the Eurasian Economic Union, which includes Russia, Kazakhstan, Kyrgyzstan, Armenia, and Belarus.
