Introduction

Prime Minister Narendra Modi has just concluded his two day visit to
Moscow to attend the 16th India-Russia Annual Summit from 23 24
December 2015.
The previous Summit, which was held in India, was attended by the
Russian President Vladimir Putin on 11-12 December 2014. These annual
talks have been taking place alternately in Moscow and New Delhi since
2000.
The major issues that were on the agenda during this meet included,
signing of big defence deals, expanding economic ties and talks on
terrorism.
Perspective on Indo-Russia Relationship
The relationship between India and erstwhile Soviet Union (USSR) during
the era of cold war was highly cordial and enjoyed a strong strategic,
military, economic and diplomatic relationship. After the disintegration of the
USSR, Russia inherited the close ties being shared with India.
Traditionally, the Indo-Russian strategic partnership covered the areas of
cooperation in defence, civil nuclear energy, anti-terrorism and Space. The
latest dimension that has been added now is economic cooperation.
India and Russia signed a Declaration on India-Russia Strategic
Partnership in October 2000. The same was elevated to Special and
privileged Strategic Partnership in December 2010.
The main body that conducts affairs at the governmental level between
both countries is called Indo-Russian Inter-Governmental Commission
(IRIGC). It is the largest and most comprehensive governmental
mechanisms that India has had with any country internationally.

Russia currently is one of the only two countries in the world, besides
Japan, that has a mechanism for annual ministerial-level defence reviews
with India.
Considering Indias growing need for energy security, it is essential that we
align towards Russia, which has abundance of oil and natural gas reserves
and can share resources and technology for civil nuclear energy to meet
our energy demands.
India had earlier backed what it describes as legitimate Russian interests
in Ukraine after Russian accession of Crimea that resulted in Western
sanctions against the country.
Furthermore, to maintain the cordiality of relationship, India had abstained
from voting on the UN General Assembly Resolution condemning Crimeas
annexation and has also opposed the imposition of Western sanctions.
Reasons for Russia to Improve Ties with India and other Asian
Countries
Russian economy has been crippled because of US-EU sanctions post the
Ukraine crisis, falling price of oil, which is Russias major source of income,
and the impact of fast depreciating Russian currency, leading to flow of
investments out of the country (capital flight).
Russia is said to be losing $40 billion a year due to sanctions, around $100
billion on account of falling oil prices, and some $130 billion in capital flight.
The same has resulted in inflation to rise to double digits.
European Union is already exploiting alternate sources of gas for its
domestic requirements to punish Russia on account of its military
intervention in Ukraine. Consequently, Russia had to shelve its $50 billion
South Stream gas pipeline project, which was to run across the Black Sea
to Southern and Central Europe.
The above said compulsions are drawing Russia towards fresh markets for
its energy and bilateral trading partners in Asia. China is Russias largest

single trading partner, with bilateral trade flows of $90 billion and India, in
comparison is just $10 billion.
In May 2014 and November 2014, Russia signed contracts with China to
supply 38 and 30 billion cubic metres of natural gas annually from 2018, for
a period of 30 years scalable at a later date to 100 billion cubic metres per
year along an eastern route and western route through Altai republic,
respectively from the Siberian gas fields.
The potential Russian gas supplies to China through the above mechanism
may exceed the current levels of export to Europe. Taking advantage of
Russias current unfavourable state, China is leveraging its position to
negotiate long-term contracts for Russian gas at cheap rates.
Russia is also making a serious endeavour to bolster relations with
Pakistan. Russian Defence Minister visited Pakistan (first visit since 1969),
and signed their first military cooperation agreement on 20 Nov 2014,
which included joint naval exercises, military officer exchanges, arms sales,
counter-narcotics and counter-terrorism cooperation.
Pakistans Chief of Army Staff General Raheel Sharif had visited Russia in
June 2015 and Russia has signed a deal with Pakistan at Rawalpindi to
supply Mi-35 attack helicopters, Hind to Pakistan on 20 August 2015.
As a retaliatory step to EU sanctions, Russia has imposed trade restrictions
by banning import of meat, fish, dairy, fruit and vegetables from the US, the
EU, Canada, Australia and Norway.
Hence, Russia is now looking for partners, like India to bridge this supply
gap. Last year, Russia has allowed import of buffalo meat from four Indian
companies to the territory of the Customs Union (of Russia, Belarus and
Kazakhstan).
There are also plans to certify other Indian agricultural producers to supply
poultry, powdered eggs and dairy products.

Till recent times, Russia contributed 75% of military hardware procured by

India from abroad, in contrast to USA, which is just 5%. Russia feels
insecure that it will lose its advantage as the dominant arms supplier to
India, since India in the recent times has been aligning more towards USA.
Take Home from PM Modis Russia Visit
The two countries signed 16 pacts to expand cooperation in various
sectors, including nuclear and defence. The significant agreements
included the following areas of cooperation:
Geo-Political Cooperation
Both countries are members of many international bodies where they jointly
collaborate closely on matters of shared national interest, e.g. the United
Nations, BRICS, G-20 and Shanghai Cooperation Organisation (SCO).
Similarly, Russia has expressed interest in joining SAARC with an observer
status.
During this visit PM Modi and President Putin discussed a host of global
geo-political issues, including the situation in Syria and looked at ways to
tackle global terrorism.
Economic Cooperation
The level of mutual investments between the countries at present is highly
inadequate, i.e. Indian investment in Russia is about 5 billion dollars,
mainly in the energy sector, whereas Russian investment in India is not
more than 3 billion dollars.
On the conclusion of a joint address of the CEOs of leading Russian and
Indian companies by Putin and Modi, a number of important agreements in
diverse fields of bilateral cooperation, including several commercial
agreements between Russian and Indian companies, were signed during
the visit.

The two sides expressed commitment to realize the target of $30 billion in
the next 10 years set during the 2014 Annual Summit, up from the present
$10 billion. The two countries are also moving forward on the India and
Russia-led Eurasian Economic Union Free Trade Agreement.
The two countries signed memorandums of understanding (MOU) on
technical cooperation in the railway sector, building solar energy plants in
India, investment cooperation in Russias Far East.
Enhancement of bilateral trade through the International North South
Corridor Project (INSTC) by freight forwarders and exporters to facilitate
trade, especially in Agriculture and Food Processing was also discussed.
The priority areas of cooperation between two countries include,
hydrocarbons, coking coal, fertilizers, mining, civil aviation, infrastructure
and trade in rough diamonds.
Both countries have been discussing to have a free-trade zone with the
Customs Union consisting of Russia, Belarus, and Kazakhstan. Also the
creation of a comprehensive economic cooperation agreement with the
Eurasian Economic Union is in the final stages of discussion.
Cooperation in Energy Sector
Cooperation in energy sector is one of the key issues that have brought
both countries together to further harmonise relationships.
The proposed establishment of additional nuclear power plant units in Tamil
Nadu, laying down of gas pipelines from Russia to India, and joint
exploration of energy resources is a vivid demonstration of decisive
bonding in this sphere between the two countries.
ONGC Videsh Limited has $ 5billion investments in Sakhlin and Imperial
Energy Limited in Tomsk and India is bidding for 20%stake in Sakhlin-I, at a
cost of $1.7 Bn. Further, $2.1 Bn is being invested to acquire Imperial
Energy by ONGC Videsh.

Russias gas export monopoly Gazprom made five large-scale shipments

of liquefied natural gas to India this year. Further, a deal has been signed
between Gazprom and GAIL for the supply of 2.5 million tonnes of gas per
year with effect from 2018.
Russian oil producer Rosneft signed a deal to supply India with 10 million
tonnes of oil per year starting from 2015.
Indian Oil Corporation Limited and Oil India Limited have signed a
memorandum with Rosneft, which paves the way for acquisition of 10%
stakes in Taas-Yuriakh oil assets in East Siberia at a cost of $700-800
millions.
Installation of two new units at Kudankulam will commence forthwith, which
will be over and above the two already in a near functional state at the
Kudankulam Nuclear Power Plant. Besides this, Russia and India agreed to
build at least 12 new nuclear power units within the next 20 years.
The Programme of Action for localization between RosAtom of Russia and
the Department of Atomic Energy of India has also been finalised.
Defence Cooperation
Indo-Russia defence agreements are also getting rebooted. Joint defence
ventures like fifth-generation fighter jet and a multi-role transport aircraft,
and development of new modifications of the BrahMos missile.
INS Vikramaditya (formerly The Admiral Gorshkov) was upgraded at the
Sevmash shipyard. It was handed over to India in November 2013, and its
warranty period expired on 16 November 2014.
As a goodwill gesture, Russia has assigned 23 specialists, who will be
present in India on a permanent basis to address day-to-day issues and
conduct annual overhaul together with a maintenance group from Russia.

The two countries on 24 December 2015 signed a pact on cooperation in

the field of helicopter engineering for joint work on a multi-role fighter jet
and a transport aircraft.
It was agreed that Russia and India will jointly manufacture Kamov-226T
helicopters, in what is seen as a first big step for PM Modi's "Make in India"
push in the defence sector.
India has approved the purchase of five S-400 air defence systems from
Russia at an estimated cost of Rs. 40,000 crore.
India is also looking at the possibility of leasing a second nuclear
submarine from Russia.
In the defence cooperation sector, there are many ongoing flagship
commitments, like joint annual military exercises, licensed production of
Russian Sukoi-30 aircrafts and T-90 tanks in India, etc.
Cooperation in Diamond Industry
India is the global hub for cutting and polishing the gemstones, and Russia
controls almost one fourth of global diamond reserves. Russian mines sell
most of the rough produce to the diamond hubs of Antwerp and Dubai from
where it comes to India for final finishing.
Decision to directly supply rough diamonds to India was favourably
discussed during the previous Annual Summit and it was proposed to build
a diamond hub in Mumbai, which will increase bilateral trade turnover by 45 billion dollars.
Putin gave a formal approval for the Russias state-controlled
diamond company Alrosa, which produces 27 per cent of all diamonds in
the world, to team up with India, which makes 65 per cent of the worlds cut
diamonds.
Facilitating Visa Processing

In order to simplify visa processing, specialised Russian Visa Application

Centres have been recently opened in Delhi, Mumbai, Chennai and Kolkata
and the modalities of issuing e-visas was discussed during the Annual
Summit. The same is aimed at promoting tourism and improving the quality
of service provided to Indian citizens looking to visit Russia.
Conclusion
India is walking a tight rope while it indulges in meaningful economic
cooperation with Russia and at the same time extends its committed
friendship to USA.
While defence preparedness and energy security are Indias undisputed
imperatives, having the backing of USA in a scenario of Chinese expansion
and growing regional jihadist fundamentalism is also extremely essential.
Finally, on conclusion of his visit to Russia, Prime Minister Modi headed for
the Afghan capital, Kabul to inaugurate the new building of the Afghan
Parliament constructed by India at a cost of about USD 90 million.
He further made a surprise stop over at Pakistan for a few hours and
visited PM Nawaz Sharifs residence and exchanged pleasantries. This
gesture is being seen as a very positive initiative towards trust building in
Indo-Pak relationship.