Russia and India: partners in growth

Respected Ambassador, on August 15 India is celebrating Independence Day. What modern meaning does this event have?
I would like to begin by expressing my thanks to your newspaper for your interest in this major event in our political and cultural calendar. I also convey my greetings and good wishes to the people of Russia, who have been the bedrock of our friendship for the last six decades. As to the Independence Day itself, I would say that for India, this day was particularly important because after a very long time, India took charge of its own destiny. When India won its freedom, the writing was on the wall: other countries that were under colonial rule would sooner or later get their independence too. So in that sense, August 15 was important not only in India's history but in the contemporary history of the world. Another distinguishing feature of our independence was that it was achieved through a long political struggle based on Mahatma Gandhi's ideal of non-violence. The remarkable thing about India's independence was that while India was conquered through force, it was liberated through peaceful means.
In terms of a more modern meaning and significance of our Independence day celebrations this year in 2008, I believe we are among the success stories of globalization. The last 15 years or so have seen the flowering of the Indian genius in practically every sphere of human endeavour: this covers most importantly the political sphere where India, the world's largest democracy, has also changed as one of its largest economies. Our electoral process is hi-tech, and efficient. Our Election Commission is a model for other countries. Economically, the gains have been unprecedented, with a GDP of well over a trillion dollars. Rapid strides have been made in the knowledge-based sector. Growth in IT-enabled services (ITES) and Knowledge Processing Outsourcing (KPO) which includes Information and Communication technology (ICT) has been spectacular in the last ten years in particular. India is emerging as a global KPO hub. This industry is valued at around US $ 50 billion per year, and is growing at a rate of 30% per annum. Indian private companies have also emerged in recent years as major investors abroad. This includes not just sectors like mobile telephony (where we are strong) but also areas like steel, automobiles and others. In the cultural sphere, there is a much greater appeal today internationally for Indian films, music, fashion, cuisine, art and literature than was the case just ten years ago! While on the social front we do have a lot more to do, the Government has been successful in meaningfully addressing issues such as poverty, illiteracy, and health care to make a real difference in the peoples lives. So on balance we in India do have a lot to celebrate on Independence day.

2008 is Year of Russia in India. Are there any preliminary results of this event? Which activities have been most interesting for the Indian people?
India and Russia have traditionally enjoyed a close friendship. The people of India and Russia know each other well and closely relate to each other's cultures. Nevertheless, over the last decade, and especially in the new century, both India and Russia have seen major positive changes in a host of fields like trade and economy, scientific and technological research and education, which in many ways also reflect how the two countries have responded to the challenges of globalization. The Year of Russia in India in 2008 and the Year of India in Russia in 2009 are planned to showcase our respective countries in their multifaceted forms, their modern achievements, their cultural heritage, their youth and their aspirations.
The Year of Russia in India was jointly inaugurated by Russian Prime Minister Mr. Victor Zubkov and Indian Prime Minister Dr. Manmohan Singh on 12 February, 2008 at a colorful ceremony held at the historic Purana Quila (Old Fort) in New Delhi. Many cultural troupes from Russia, including the Aquarium Rock Band, the Academic Chamber Orchestra Musica Viva and the Igor Moiseev Ballet Group have visited India so far this year and performed in different cities. Indian audiences have enjoyed these performances and now we eagerly await the programmes scheduled for the later part of this year, including Slava Polunin's Snow Show and the Youth Circus of Russia, to name a few.

2009 will be Year of India in Russia. Is there any preliminary program for that now? What will Russians see next year?
We are preparing to display the full spectrum of India in all its cultural richness to the people of Russia. We will present our dances, music, theatrical performances, craft demonstrations, cuisine etc. We would like to place a strong emphasis on reaching out to Russia's youth and bring in our pop groups, fashion shows and movies. After all, India is the largest movie producer in the world with its strong and vibrant Bollywood, and its regional film industry. We also plan to hold a large number of trade exhibitions, tourism promotion, business and academic conferences and scientific and technological seminars. These Years of Russia and India in each other's countries would once again underline our historical ties, and the great potential for future cooperation in different fields.

Are there any events within the Year of India in Russia that are aimed at strengthening business cooperation and bilateral trade between our countries?
The Year of India in Russia in 2009 has programmed for a series of activities in the commercial sphere that are aimed towards enhancing business cooperation between the two countries. These include the third meeting of the Indo-Russian Forum on Trade and Investment which has, over the last couple of years, gradually acquired the status of an effective business platform enabling interaction between corporate leaders of the two countries. Under the rubric of product-specific exhibitions, participation by Indian companies both at the business council level and at the company level at important Russian Trade Exhibitions is being programmed, including in the areas of textiles, gems and jewellery, tea and coffee, food commodities, tourism, IT services pharmaceuticals and engineering products. A specific `Made in India' exhibition is also proposed to be held in St. Petersburg in which the industrial and commercial diversity of India is planned to be showcased. So there is a significant business component.

If one looks at figures of business cooperation between India and Russia, it is evident that they are far from being perfect so far. The trade turnover between our countries amounted to only $5.2 billion in 2007, it increased only by 30-35%. For comparison: the trade turnover with China was $48 billion (44.3% growth). What do you think is the reason of this lagging behind in the business cooperation, its inconsistency with the sizes of our economies?
It is true that our bilateral trade is much below its true potential. However, the growth in our bilateral business and trade has been encouraging. As you say, trade figures have increased by over 35 percent over the last year, and this has been the rate of growth for the last few years. While our two countries are dramatically increasing their trade with all other countries in the world, direct India-Russia trade has been sluggish. This is a challenge to both our governments and entrepreneurs, and is being addressed. Towards this end, a number of efforts have been initiated and put in place at the institutional level by the two governments. A joint study group has recommended various business enhancing measures which are being configured by a Joint Task Force that will channel the different solutions into an effective package that could result in the establishment of Comprehensive Economic Cooperation Agreement (CECA). A CEO's Council has also been set up which is headed by Mr.Vladimir P. Yevtushenkov from the Russian side and Mr. Mukesh Ambani from the India side. There is also an attempt at the government level to strengthen the financial linkages between the two countries through effective banking cooperation. This will further facilitate trade through availability of credit and effective finances. The Indian financial system is extremely advanced, and so is our stock market. The National Stock Exchange is the third largest exchange in the world in terms of the number of transactions. And, as you can imagine, the world's largest investment banks are active in India, as Indian banks are active overseas. Perhaps it is time for greater financial sector interaction between our countries.

India and Russia are planning to double the trade turnover by 2010 - up to $10 billion. Do you consider this task to be the priority one for your activities in Russia? In your opinion, what are the first measures that should be undertaken to complete the task and double the trade turnover?
Efforts at doubling the current trade turnover to achieve the figure of US$ 10 billion by 2010 have been, and will continue to be, my top priority. Towards this end, a number of institutional measures have been established. As I have mentioned, there is a bilateral task force that will examine ways to increase our trade and recommend a possible establishment of a comprehensive economic and commercial Agreement between the two countries. The CEO's Council is being established to facilitate corporate traders to identify potential areas for investment and growth. The Indo-Russian Trade and Investment Forum, which is now a regular yearly affair, provides an excellent platform for business councils and their members to identify important sectors for commercial activities. Closer level of financial cooperation between the two countries through establishment of banking channels will finance the growth in trade, and other forms of cooperation. At the inter-governmental level, the Indo-Russian Inter-Governmental Commission (IRIGC) has a number of working groups and mechanisms to address the bottlenecks and to remove the impediments to growth in trade.

What aspects of cooperation of our countries are the most promising ones, from your point of view?
Politically, India and Russia have a shared understanding on various issues of interest to both of us both bilaterally and on the multi-lateral side. We value this very much, and are doing our best to ensure that this remains at the same level, and as intensive as it has been in the last decade in particular. Regular high-level political contacts have made this possible, and the various visits at the highest levels planned between now and the next summer will provide the necessary stimuli for enhancing our close cooperation.
I have referred to important aspects of our political, business and cultural cooperation. Our economic and commercial cooperation, and efforts to double our trade turn over by 2010 particularly with cooperation in the areas of energy security, also looks promising from the economic point of view. I believe that our trade in hydrocarbons can easily be raised, and will add significantly to our trade turnover. We need to work more actively and positively here, as also in other forms of energy. Russia is already executing a nuclear power project in India, and I hope we shall find a way to develop our ties in this sector also.

What Russian companies `stand out from the crowd' on the Indian market? Can you provide an example of effective direct investments of the Russian business in the Indian economy?
Given the diversity of Russia's industrial input into India's economy, it would be difficult to single out any one company. Russian companies have been associated with India's economic development in various areas such as infrastructure, heavy engineering, steel production, extractive industries and defence. Russian business is increasingly appreciating the potential for growth in the Indian economy and, therefore, venturing into promising sectors like telecommunications, real estate and infrastructure upgradation, including roads and ports. As an example, I wish to mention the successes of the Russian company Sistema. Russian banks are also beginning to get active in India, and this is also welcome. We have welcomed Russian involvement in our energy sector including in down stream projects and our gas pipeline distribution systems. Russian companies are also involved in the upgradation of existing power plants and construction of new ones. We also foresee a lot of Russian investment in our civilian nuclear energy sector, as I have already mentioned.

The same question, but from India's side. What Indian companies `stand out from the crowd' on the Russian market? Can you provide an example of effective direct investments of the Indian business in the Russian economy?
Indian businessmen are also increasingly looking outwards and investing abroad to diversify both their market and their product sources. The Indian oil major ONGC has invested US$ 1.7 billion in the hydrocarbon sector in Russia. We are anticipating further opportunities for investment in the hydrocarbon sector in Russia. Two major Indian banks are also present here with significant investments. Indian pharmaceutical companies are active in the Russian market and provide high quality medicines and medical equipment at competitive costs for the Russian health industry. The Indian automotive industry, including components and ancillaries, is recognizing the growth potential of the Russian automobile market which is emerging as the biggest in the European market having overtaken Germany, and is looking at ways and means of expansion in Russia to participate in this growth. The Indian IT industry and its various business processing solutions will provide the growing Russian corporations the potential to outsource their business processing requirements. As the importance of corporate governance and compliance with international accounting standards gain prominence in the Russian corporate world, the Indian IT and BPO industry will be able to provide tailor-made solutions for these requirements. I have reason to believe that these will be replicated in Russia after the success Indian IT companies have achieved in the American and European markets.

Since the Soviet times, we all remember the successful cooperation of India and Russia in military and technical sector, in energy, and in peaceful use of atomic energy. Are these traditions living today? Could you give any examples of successful bilateral projects in these sectors?
As you state, the cooperation between India and Russia in the military-technical sphere dates back to Soviet times, and has had a long history. India continues to be one of the major beneficiaries of the Soviet/Russian origin defence equipment. It is today the largest importer of Russian armaments. The Indian armed forces have successfully utilized Russian weapon systems like the Mig-21, 23, 25, 27 and 29 and the Sukhoi fighter aircraft; An-12 and 32 and Il-76 transport aircraft; Mi-8, 17, 24 and 26 helicopters; PT-76, T-55, T-72 and T-90 tanks; and various categories of missile boats, frigates and destroyers for the Navy; besides a number of missiles, artillery and other weapon systems. The Declaration of Strategic Partnership between India and the Russian Federation signed in October 2000 in New Delhi has elevated this cooperation to a qualitatively higher level.
Russia is one of the few countries with which India has an institutionalized defence cooperation mechanism at the Ministerial level. We have had interactions at various levels. Recent high level visits to Russia by the Defence Minister, the Defence Secretary, and the Chiefs of our Army, Navy and Air Force reflect the intensity of our bilateral dialogue at both the Government and Industry levels.
An important innovation in the bilateral defence cooperation is that both countries are no longer only `buyers and sellers'. We have moved to joint development, production, and marketing cooperation. In the field of defence, we have been engaged in a number of projects covering all three forces - Army, Navy and Air Force. One striking example of our joint engagement is the BrahMos which is a universal supersonic cruise missile that can be launched from submarines, ships, aircraft and land-based Mobile Autonomous Launchers (MAL). Both our countries have been making efforts to identify third country markets for this jointly developed product.
In terms of energy cooperation, though India is not a rich source of hydrocarbons, it has been making all-round efforts to manage with the available resources of energy domestically, and by importing energy resources from abroad. However, we have emerged as a major exporter of petroleum products, and exported US $ 40 billion worth of refined products last year. In the recent past, with India's rapid economic growth, the demand for energy has grown significantly. In order to sustain 8 to 10 percent economic growth rates, it is essential for India to cooperate internationally in the energy sector.
India and Russia have been traditional partners in the energy sector and the cooperation in the field of hydro-carbons is vital for our long term economic and commercial interaction with Russia. India's largest oil and gas company ONGC-OVL had invested over US $ 1.7 billion in the Sakhalin-I project- ONGC's largest investment outside India, and we have already started reaping dividends from this. ONGC and Rosneft are in touch for exploring possibilities to enhance their cooperation in Sakhalin-III projects and to identify possible joint venture projects in upstream, midstream and downstream sectors in India, Russia and in third countries. Several Russian companies are also making their presence in the Indian market though this is only the beginning. For example, the Russian company `Power Machines' has been involved in the upgradation of a number of hydro power projects in India where the Soviet/Russian technologies were in use.
Civil nuclear energy is another vital element in our cooperation with Russia in the energy sector. We very highly appreciate Russia's assistance in this sphere, including the supply of nuclear fuel to our Tarapur Reactor and Russia's over all support to us in this vital sector for the Indian economy. Currently, India and Russia are engaged in the construction of two nuclear reactors of 1000 MW each at Kudankulam in the southern state of Tamilnadu in India. This project is expected to be completed and commissioned in the near future. We are also cooperating successfully in the IAEA and count on Russia's support in bodies like the Nuclear Suppliers Group (NSG), so as to promote more active international cooperation with India.

Long-term India-Russia cooperation programs in science and technologies have existed for more than 20 years. What trends in science and technologies cooperation do you consider to be the most promising ones? In your opinion, in respect of new technologies, what can India give to Russia, and Russia - to India?
20 years of active scientific collaboration between the scientific communities of India and Russia under the Integrated Long term programme (ILTP) has resulted in development of stable scientific contacts. These have, over time, provided a rare opportunity for both countries to collaborate. Several bilateral thematic centres have been established. These centres are promoting bilateral scientific research, and are also liaising with industry in their research areas.
Several hi-tech products have been jointly developed. Examples of these are design aspects of the Indus-1 and Indus-2 synchrotron, a light transport aircraft (Saras), seismic instrumentation, accelerators and lasers for different applications, polio vaccine manufacture in India, development of thin films, industrial catalysts, a streak camera with a 10 pico-second pulse recording capacity, application of low intensity lasers in medical sciences (burns, tuberculosis) etc. So we do have a robust cooperation in the S&T sphere!
Technical-industrial interaction has also started with several workshops being organised with the participation of both scientists and entrepreneurs. A Technology Summit was organized in New Delhi in November 2005 with Russia as the main partner country. Around 50 Russian entrepreneurs and scientists and 400 Indian scientists and industry representatives participated at this event.
In terms of our approach to the future, we wish to cooperate in both Basic & Applied Sciences. We need to further develop cooperation in the new and emerging areas of science which are vital to both countries and economies. These include nanotechnology, bio-technology, information and communication technologies, food and agriculture, seismology, as well as basic sciences mathematics etc. To my mind, this cooperation is mutually beneficial.
To ensure continuity in these collaborations, we will encourage the further development of inter-institutional linkages. Bearing in mind that the future of our S&T cooperation will be in the hands of the youth, we will continue to encourage young scientists to work in each others' laboratories. We have already announced fellowships at the post-doctoral level for Russian scientists to work in India on projects of a duration of four months and more. There are currently over 50 fellowships which cover the international fare, furnished accommodation and a monthly fellowship.
An important area is the creation of mechanisms for the commercialization of scientific accomplishments so that scientists on both sides remain motivated. In this connection, our Ministries of Science and Technolgy are negotiating the establishment of an Indo-Russian Technology Centre. The Protocol of Intent for this Centre has already been concluded, and a more detailed Joint Work Document is currently being negotiated. So, as in other areas of our bilateral cooperation, progress in our Science and Technology cooperation is also proceeding apace, and I must say to our mutual satisfaction.

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