Indo-Russian Trade Relations

India and Russia have established a new milestone in bilateral trade and economic relations, with India giving its consent to Russia’s accession to the World Trade Organization (WTO) and both sides setting up a Joint Study Group (JSG) to finalise a roadmap for increasing the bilateral trade turnover to US $ 10 billion by 2010.

India and Russia have established a new milestone in bilateral trade and economic relations, with India giving its consent to Russia’s accession to the World Trade Organization (WTO) and both sides setting up a Joint Study Group (JSG) to finalise a roadmap for increasing the bilateral trade turnover to US $ 10 billion by 2010. The Protocol on Completion of Bilateral Negotiations on the Accession of Russia to the WTO and the Memorandum of Understanding (MOU) on Cooperation between the Ministry of Commerce & Industry of India and the Ministry of Economic Development and Trade of the Russian Federation were signed here this evening by Shri Kamal Nath, Minister of Commerce and Industry on behalf of the Government of India and by Mr. German Gref, Minister for Economic Development and Trade, on behalf of the Government of Russian Federation respectively. [br]

Shri Kamal Nath said that India was looking forward to Russia’s early accession to the WTO for further cooperation in the multilateral trade forum on the basis of mutual benefit. The finalisation of the Protocol marks the completion of bilateral negotiations with the Russian Federation in connection with their accession to the WTO. (As per the WTO accession procedures, the member seeking accession is required to negotiate bilaterally with each member country of the WTO).

The MOU provides for the setting up of a Joint Study Group (JSG) with a view to examining the feasibility of signing a Comprehensive Economic Cooperation Agreement (CECA) between India and Russia, besides envisaging increase in bilateral trade turnover to US $ 10 billion by 2010. The JSG is expected to prepare by the end of 2006 a roadmap for achieving a significant increase in mutual trade turnover by diversifying and strengthening bilateral relations in a wide range of areas, particularly trade in goods and services, investment and economic cooperation.

The JSG, to be co-chaired by the Commerce Secretary from the Indian side and his counterpart from the Russian side, is expected to specifically suggest measures to arrest the decline in India’s exports to Russia. Even though bilateral trade is increasing – with growth of 11% in two-way trade in 2004-05 –India’s exports to Russia had been declining over the last few years. (Indo-Russian bilateral trade in 2004-05 was of the order of Rs.8369.85 crore i.e., US $ 1862.81 million (US $ 1.8 billion). Of this, India’s exports to Russia amounted to Rs.2684.33 crore i.e., US $ 597.43 million and India’s imports from Russia valued at Rs.5685.52 crore i.e., US $ 1265.38 million.[br]

Earlier, Shri Kamal Nath had a bilateral meeting with Mr. Gref during which trade issues were discussed. Shri Kamal Nath requested for early finalisation and signing of the draft inter-governmental agreement regarding higher offtake of Indian tobacco by Russia through the purchase of cigarettes / tobacco or procuring of cigarettes from a joint venture proposed to be set up in Russia by any Indian company which would procure tobacco from India. He also requested Mr. Gref to accord protection to “Darjeeling tea” as a geographical indication and to recognize “Assam”, “Nilgiri” and “Indian tea logo” as labels/well known original brands and requested facilitating setting up of joint ventures between Indian tea companies and Russian business houses in order to augment the export of quality tea from India.

Cooperation in diamond trade between Russia and India also figured in the discussions given the fact that India is the largest processing centre of rough diamonds and Russia is one of the world’s largest producers of rough diamonds and, therefore, cooperation in this sector though direct trade would be mutual advantage to both countries. The Protocol for cooperation in diamonds was signed during the visit of President Putin to India in October 2004. In this context, Shri Kamal Nath urged the Russian Minister to expedite the decision agreed by both sides for inclusion of MMTC in the list of regular participants for auction and tenders for selling of rough diamonds by Alrosa (Russian diamond mining company) as also to explore the action taken by the Russian side for setting up a joint venture by Alrosa with MMTC for manufacturing jewellery in India. The Indian side requested Russia to expedite the release of payment due to the Indian exporters and delink this issue from the overall settlement of state credit. The issue of early conclusion of simplified visa procedure agreement to enhance trade and economic cooperation also figured in the deliberations.

Source: PIB Press Releases.