Russia, India at Crossroads

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Russia, India at Crossroads

A summit between India and Russia is a reminder of the potential of bilateral ties. India could learn from China.

On December 16, Indian Prime Minister Manmohan Singh will head to Moscow for the latest India-Russia summit – the 12th such high-level meeting since 2000.

For the Russian side, the summit will likely offer a welcome respite from some pressing domestic concerns – an economic slowdown, depopulation and tumbling support for Prime Minister Vladimir Putin and his United Russia Party, as highlighted by the December 4 parliamentary elections. But while there will be much official talk between Singh, Putin and President Dmitry Medvedev of a further warming of the bilateral relationship, the meeting is likely to be yet another in the established tradition of regular, yet often inconclusive, India-Russia summits.

Putin has enjoyed steady visibility and popularity in India, and is credited here with reviving ties that had flagged in the 1990s. In geopolitical terms, the two countries are strategic allies whose wider goals – the pursuit of a multipolar world, especially in Eurasia, stability in Afghanistan – align (or at least don’t clash) with one another. Russia supports India’s securing full membership in the Shanghai Cooperation Organization, while India has displayed none of the suspicion of Western countries at Putin’s recent proposal regarding the formation of a “Eurasian Union.” The relationship’s progress has recently been marked by two events: Russia’s completion of two nuclear reactors at the Kudankulam plant in Tamil Nadu amidst protests from the local population, and the reciprocal easing of the visa regime for Indian and Russian businessmen to address their woefully underperforming bilateral trade and investment regime.

Advance press reports indicate that this summit will feature agreements in the traditional areas of pharmaceuticals, energy, and the relationship’s weakest link, namely banking. The two countries have also taken similar stances on the Middle East uprisings, and are expected to make a statement on this and the Afghan situation at the summit.

But will all this be enough to lift the Indo-Russia relationship from the benign neglect of the past? An unprecedented 30 Memoranda of Understandings (MOUs) were signed between the two countries at the last summit, in 2010. But many, such as the MOU “envisag[ing] joint production of modern oncological medicine in the Russian Federation and/or purchase of raw materials” have been too vague to lead to tangible results. Meanwhile, the government-to-government exchanges that worked so well in years past are lately proving counterproductive or downright obstructionist, resulting in significant misunderstandings. For instance, even stalwart Indo-Russian defense cooperation suffered a hiccup in the past year when India declined Russia’s MiG-35s as part of a possible $11 billion to $12 billion defense procurement deal. Some have suggested Moscow cancelled a planned military exercise with India over the issue.

Soon after Putin’s September announcement of his renewed presidential ambitions, a response in the Russia & India Report, a supplement of the official Russian government newspaper Rossiyskaya gazeta, claimed that Russia had a diversification plan of its own: “…the power balance in the Russia-India-China equation may shift, especially in light of the recent Vladimir Putin’s [sic] visit to China and resulting agreements on broadening of Russian-Chinese economic cooperation from traditional industries to high technology industries and signing $7 billion deals.”

This is more than an idle threat: China’s bilateral trade with Russia far exceeds India’s at $42.4 billion, and saw 25 percent growth in 2009-10. That makes China Russia’s biggest trade partner – and it imports a large amount of Russian defense material. At Putin’s aforementioned visit to China in October, the two neighbors signed a range of agreements on energy and hydropower, and also created a mutual investment fund dependent on contributions from private donors. Immediate results came in the form of 16 economic and trade cooperation deals across a broad swathe of sectors including new machinery, electronics, and agriculture.

Directly responsible for the positive results were the delegations of leading businessmen from China and Russia, who were brought to the state meeting and given the opportunity to interact with each other. Meanwhile, because of the lack of effective introductory mechanisms, Indo-Russian private cooperation is limited to small-scale trade and investment fora, none of them tied to state visits. India clearly needs to learn from the vigor and urgency present in the Russia-China relationship and, above all, from its focus on private sector engagement.

This month’s summit can take a step in that direction. Modernization of its own economy is at the top of the Russian leadership’s agenda, and will extend to its bilateral ties as well. This is the time for India to really push for sophisticated, high-technology cooperation with its old friend and strategic partner. The best opportunities in the bilateral relationship that promise immediate results are those that incubate Russian science and hi-tech concepts by using India’s technological eco-system and infrastructure for joint projects. Information technology in particular is an area where India should capitalize on the plethora of educated and talented Russian professionals, while Russia can benefit from the size and expertise of the Indian labor pool. For India, the size and scope of the teams and trials involved will not only promote innovation, but also provide employment and encourage market growth in new technologies.

There are already some joint hi-tech projects in the pipeline. One is a venture with the Skolkovo Innovation Center, a planned hi-tech business area just outside of Moscow and a symbol of the Russian government’s focus on innovation. An MOU between Tata Sons and Skolkovo Foundation involving joint research and development in communication and IT was signed in 2010. Yet its realization, as that of the Skolkovo Center which has been under construction since 2009 and is yet incomplete, remains distant. Nanotechnology, as well as another pioneering science, biotechnology, has also been on the agenda since the last summit, given that the costs of commercializing and piloting nano and bio-solutions are higher in Russia than in India.

Clearly, a few MOUs isn’t enough – what’s needed is a more wide-ranging and systematic plan under which the government can provide initial support and later allow the private sector to take over. 

This summit has enormous potential to put relations between the two countries on a new path. It can be used to launch initiatives such as government-funded study trips for representatives of innovative IT businesses to visit their counterparts in India or Russia. Even more crucially, it could be used to create the first-ever Indo-Russian IT forum. Private initiatives, for example those co-sponsored by organizations like NASSCOM, can add to the existing joint IT center by encouraging the formation of joint ventures between IT organizations and scientists. This can create venture funds for collaborative Russian-Indian projects, which would benefit from Indian relationships in the outsourcing industry and Russian relationships in higher-end computer science research in third countries.

With the ongoing global economic slowdown, it’s time for the two countries to use their history of cooperation and political goodwill to address their respective economic needs and market gaps by boosting joint innovation. Only then will India’s most important, yet disconcertingly dormant, geopolitical partnership receive a much-needed lift.

Dr. Katherine Foshko is the Russia Studies Fellow at Gateway House: Indian Council on Global Relations, Mumbai where this article originally appeared.