According to the supposition put forward by Jacques Sapir, a well-known French economist, in the autumn of 2012 the Russian government came to conclusion that Europe exported to Russia slow economic growth and the threat of stagnation. He believes that it pushed Moscow to adopt a more balanced policy towards the West and the East. Actually, there is nothing new here – it’s just a return to the traditional centuries-old diplomacy. Summing it up, the French economist notes that the sanctions introduced against Russia by the West have made this policy shift more tangible even for those who have little to do with politics. President Putin has just wound up his visit to India that the Indian media called «productive». The trip further diversified the Russia’s foreign policy priorities. The event confirmed the India’s role as a «time-tested and reliable friend». The both countries always stood with each other no matter how hard the times were.
India unambiguously reiterated its negative attitude towards the anti-Russian sanctions. It’s an important contribution into creating a better economic climate. It’s only natural for New Delhi to adopt this approach as India itself has often fallen prey to Washington’s whims. On his part, President Putin assured the Indian partners that there would be no glitches in supply of defence systems and equipment by Russia. He also promised to expedite the transfer of sensitive technologies to India. Russia is interested in restoring its role as the chief military hardware supplier being actively involved in the ‘Make in India» policy – the backbone of India’s industrial growth. One of takeaways from President Putin’s visit was the announced decision to locate a manufacturing facility in India to produce as well as export up to 400 Mi-17 medium lift and Kamov Ka-226 light utility helicopters every year. The world crisis prompts the creation of a new pattern of international division of labor which meets the interests of the both partners. India has a large internal market and huge skilled manpower resources while Russia can offer innovative ideas and technology needed to produce weapons of the future and duel-purpose systems. All in all, it makes transferring some elements of production to India a logical step to generate profits.
Observers pointed out the fact that the Republic of Crimea had its representatives among the members of Russian delegation. Indian business circles are interested in establishing cooperation with the region.
To my knowledge, the plans go beyond agriculture to encompass hotel construction (especially as Turkish investors are getting actively involved in this business) and, probably, other areas.
Indian Prime Minister Narendra Modi has the reputation of being a real pragmatic. He reasonably believes that the lasting Russia-India ties stabilize the situation in Eurasia and positively influence the India’s relationship with other great powers, like the United States and China, for instance. The logic of what the journalist call the loose geometry of international relations drives the process.
The economic diplomacy is an important element of India’s foreign strategy. Besides helicopters, Indian manufacturers will produce spare parts for Russia-made weapons systems currently in service with Indian armed forces. This policy will curtail the role of bureaucracy in the process of military cooperation. Russia plans to locate the already operational Sukhoi Superjet 100 and perspective MS-21 modern airliners production facilities in India as the process presupposes the availability of high value-added intellectual capital.
Russia is taking advantage of local cheaper but trained manpower. This is one of the reasons for production transfer to India. There is another, no less substantial, reason. Russia strives to gain its share of Indian large-scale civil airliner market prone to extension and innovation (according to the most moderate estimates, the India’s and Russia’s markets have by and large the same capacity of at least 1600-1800 aircraft yearly for each country). It’s worth to note that the visit did not bring any announcement on co-development programs, such as the fifth generation fighter aircraft project or the medium transport aircraft initiative. It is believed that the progress in implementation of these projects will open the way for new joint initiatives.
Continuing negotiations on hydrocarbons reflect the old time interest of India in developing oil and gas fields in Eastern Siberia as a transportation revolution is looming in Eurasia. These issues have been on the experts’ agenda for around 20 years. The progress is possible here in case other countries of Asia and Europe join the three giants (India, Russia and China) in the effort.
The production of some key components for Indian nuclear power plants is to provide impetus to further progress in the field of bilateral economic cooperation. The foreign order portfolio of Russian state nuclear corporation Rosatom is already around $100 billion.
Indian foodstuffs export to Russia (including tropical fruits and vegetables) is an important issue on the agenda. The experienced experts of Russian Rospotrebnadzor are frequent visitors to India.
There are other promising areas of cooperation, for instance, jewelry industry. Becoming an Italy’s successful competitive rival in jewelry manufacturing, India left behind the established world leaders in the 1990s.
Nowadays the relationship at the level of «region to region» is no less important than the «state-to state» and «company to company» economic ties. It would be a mistake to make the central state agencies responsible for everything. An effective pattern of economic interaction requires the availability of capacious data banks with information about the capabilities and economic potentials of partners. The regional branches of Russian Academy of Sciences and local universities are ready to tackle this issue.
The Russian-Indian relationship is too important to let it slide. The India’s full-fledged membership in the Shanghai Organization of Cooperation makes the economic ties with Russia the number one strategic priority.