00:00So joining me today is Mr. Jayant Krishna. He is a senior fellow at the Center for Strategic
00:18and International Studies and he's joining me to have a discussion on the economic cooperation
00:24between India and Russia. For Jayant Krishna, first of all, we all know that the relationship
00:29both the countries share. It's rock solid. We have seen it's very reliable, it's very steady amid all
00:36sorts of global situations, all sorts of pressure from Western side. But when we talk about the
00:42economic ties between both the countries, we see that there is a huge amount of trade deficit
00:48and it is skewed in Russia's favour. If we want to work towards improving that, what all areas can
00:55Russia scout for and India can look to export in the Russian markets?
01:00Yeah, absolutely. So if you look at, you know, both these countries and their GDP rank by purchasing
01:07power parity, right? You know, we are already the third largest economy by purchasing power parity,
01:12otherwise we are the fourth largest, right? And Russia is fourth largest by purchasing power parity,
01:17right? So these are two great economies, big sized economies. And, you know, and Russia's geography,
01:26geographical expansion is so huge, right? You know, but the fact is that, you know, on the export
01:32front, I mean, the export of Indian products to Russia on that front, we have, we have had a miserable
01:36performance since last several years. It's not a new development at all. I mean, just to tell you that,
01:43you know, the trade deficit in favour of Russia and against India, which used to be about 3.4 billion
01:50dollar in the year 2020, has galloped to as much as 63 billion dollar last year, that full year that
01:57we have the data of 2024, you know. So I think this is something we need to look at more deeper. If you,
02:05we all know India imports lots of products from Russia, you know, beyond the military equipment
02:15and so on and so forth, we are, you know, one of the largest importers of crude oil from Russia,
02:23right? I mean, of course, they have been, there's been sanctions on those two companies by the US.
02:29So I think, you know, in these discussions, we would know whether the crude oil import from Russia that
02:34India does, will remain at the old level or will it go down? I think that's something which needs to
02:39be looked at. Other than that, I think India imports fertilisers, edible oils, you know,
02:45these kind of things from Russia, you know. Whereas, if you look at what we export,
02:51India exports to Russia, I mean, there's not a single product category which has a critical mass,
02:56right? It's a very, very small stuff, right? And, you know, what I understand, you know,
03:02bulk of the issues which are open, which are not tariff issues. Yeah. Unlike the US,
03:09you know, where India is facing, you know, 50% tariff on most of the products, except,
03:14except, except the exempted ones, you know. But with Russia, the tariff barriers are not
03:20significant, not very huge. But non-tariff barriers in terms of, you know, allowing some of the Indian
03:27products to be exported to Russia. I mean, their standards, stipulations and many other regulations,
03:33I think that need to be ironed out. And India has to throw open, you know, it's, I mean, Russia has to
03:41throw open and have given greater market access, you know, for products from India to be exported to
03:48Russia. You know, categories since you talked about, in my mind, the categories which are very,
03:53very important, you know, our textile and garments, you know, if India is exporting to the rest of the
03:58world, why not to Russia as well, you know. Other category, you know, India has emerged as a significant
04:05exporter of farm products, right? You know, and, and Russia has, you know, you know, its, its population
04:13is about 14 crore, you know, I think that's another, there are lots of mouths to be fed there as well. And,
04:20and I think that's one area where, you know, we need to get market access. Shrimps and other marine
04:28products in the fishery category, I think that's another area where India can start exporting,
04:33because Russia is a huge shrimp consuming country, you know. Pharmaceuticals, you know,
04:40even US could, did, kept pharmaceutical outside the 50% tariff barrier, you know, because it is very,
04:47very, very critical for US to export pharmaceuticals from India. And, and there is no reason why India
04:52shouldn't export pharmaceuticals to Russia as well, you know. So, I think these four categories are
04:57very important to my mind. And, and slightly moving away from trade, I think, one area which is very,
05:06very important is Russia is a, is a, is an aging economy, right? I mean, the, the, the median age of
05:12Indian workforce is about 29 years. And in Russia, it is very, very significantly higher than that,
05:18you know, kind of a thing. And, and also Russia faces huge amount of skill deficit. The data that
05:23I have been hearing in the last couple of days, since President Putin's visit, you know, took shape,
05:30you know, Russia has needs almost half a million, which is, you know, which is a, which is a huge set
05:40set of number of people, almost five lakh people, they want to, to, to go and work there. So, I think,
05:46you know, in this discussion that Prime Minister Narayan Modi and Russian President Putin will have,
05:50I think they should talk about, you know, immigration issues, you know, and, and so on,
05:56so forth, it will help both the countries. You mentioned that the trade deficit, which is there
06:01between both the countries, it is not related to tariffs. So, what are regulatory restrictions
06:08are these countries facing? Is it because of the sanctions? Or is it something which is post 2022?
06:15Or has it always remained like this? I think the single biggest contributor has been, you know,
06:22the sanctions which were imposed by the US and some other European countries, when Russia invaded
06:30Ukraine in the year 2022, right, you know, so we have to operate within the framework of those
06:36sanctions and look at, you know, do they hurt us while when it comes to exporting Indian products to
06:42their country, to Russia or not. And also, Russia has some category restrictions also, from what I
06:49understand, you know, I mean, like certain product categories can't be exported, or they have to go
06:54through a lot of due diligence and standards have to be met and so on, so forth. So, I think, you know,
06:59these kind of barriers need to be looked at. And, you know, if India could export many of such
07:05products to the rest of the world, you know, why not to Russia itself, but India will have to face
07:09competition because China over the years has flooded Russian market with lots of its products,
07:15right. So, India will have to, I mean, it's not just a market access issue. We need to be competitive
07:20also with Chinese products which are already available in Russia in abundance, you know.
07:25So, I think that's fair because export market is all competition driven and, you know, and I'm sure
07:33India will find its own space, its own areas of advantage, you know, where, you know, I think these
07:41exports to Russia should be feasible to my mind, you know. There's also a gap between a difference
07:47between the foreign direct investment between both the countries. We see a lot of Indian companies
07:53investing in Russia, but it's not happening the other way. What can we do to increase that?
07:59So, I think, for some reason, Russian businesses have not looked at India as a major source of,
08:07as a major country where FDI can come in, right. You know, one reason could have been one of the
08:13Russian companies, you know, when their 2G license was cancelled in India, you know, after they had made
08:18some investments and so on and so forth. So, I think they may have some bitterness, but that's a long,
08:23old story, right, kind of a thing. I think Russia has to look at India's ease of doing business,
08:29has improved our rank, which used to be 120th, had jumped to 63. And now, last couple of years,
08:35this ranking has not happened. I'm sure it would have jumped further. I think this is very important.
08:40Another thing, you know, where India as a country needs to look at, and not just with Russia, whether
08:46US, European Union and so on and so forth as well, that, you know, we have to ensure that there's a
08:54regulatory certainty, right. You know, you can't have a certain set of policies and regulations in
09:02place when somebody decides to make an investment and change it mid-course, you know. I, you know,
09:08I think that, that hurts the sentiments of overseas investors quite a lot. And, you know, when these
09:13things are there and, and, you know, you know, I think there are lots of areas where Russian businesses
09:20could invest in India. And I see this, I think last, more, the problem is our ties, since, you know,
09:31historic times, you know, have largely been focused on defense, right. I think, and last few years,
09:37since Russia agreed to supply crude oil to India at a rate, at a price much lower than the other countries,
09:44all exporting countries, I think that area has gone to that as well, right. So it has, I think,
09:50India has never really explored and showed that hunger to get Russian investments, which I'm sure
09:56would start now. And, and even, even some of the, you know, defense products, you know, like
10:04S-400 upgrades, which are S-500, you know, you know, not just importing them, but co-producing,
10:10co-manufacturing them with Russia in India. I think that's important. Even Sukhoi fifth-generation
10:17aircraft, you know, those could be manufactured in India. You know, I think, you know, small and
10:22modular nuclear reactors, I think a nuclear submarine, you know, there are lots of areas
10:26where India could explore that, you know, rather than just importing from there, you know, could,
10:31could there, could, could FDI come here and we co-manufacture that in the country itself,
10:37you know, under Make in India initiative and even otherwise, you know, I think that's, that's very
10:41important. Sir, you mentioned oil. We, we have already seen that there has been a significant dip
10:47and we might see another dip happening in the month of December. Long term, how do you see this
10:52trajectory going? Will we see some sort of uptick in this or will it continue to decline? I think
10:59it's anybody's guess, you know, if you look at with the sanctions imposed by the US against the two
11:04Russian oil companies from which we used to, you know, import crude oil. I think initially the
11:13public sector companies, oil companies in India, you know, they, they went slow on, on importing. But,
11:20but if you look at the November data, you know, November data was, you know, we imported more crude
11:25oil from Russia than what was there a month ago. But some dip is expected down the line, unless,
11:32you know, when the Prime Minister Modi and President Putin discussed, they figure out
11:37modalities and some arrangements through which, you know, is there any way to circumvent these
11:42sanctions and oil, you know, import it at any other price? Because let me tell you, it makes a lot of
11:48business sense for India to import oil from Russia, given the rates that we get, you know, and it,
11:54it, it, it helps India in, you know, not only in the balance of payment matters, but also in
12:01making available a cheaper oil to, you know, to, to Indian, you know, individuals as well as
12:09businesses, you know, I think. So I think it's anybody's guess what happens. I'm sure during
12:14these one and a half days talks in Delhi, you know, there'll be discussions on, on how to keep importing,
12:22uh, you know, uh, uh, you know, uh, you know, uh, you know, without major violations, uh, you know,
12:28taking cognizance, cognizance of these sanctions, but yet some workarounds could be, could be found to
12:33keep importing. Because as I said, uh, the, the, the prices we get from Russia for crude oil are much
12:39lower than, uh, you know, other oil, uh, exporting countries, you know. We know that a lot of deals, uh,
12:45a lot of transactions are also done in rupee ruble. Uh, how, uh, reliable this mechanism
12:51can be because I read reports where a lot of multinational banks of Indian origins, they
12:56refuse Russian payment because of the sanctions, uh, potential sanctions they could face in other
13:01countries. Um, 90% of the deals right now are happening in rupee and ruble payments. Uh, what do
13:08you think will be the future of this? We have already seen discussions happening that BRICS can
13:14be an alternative. Uh, do you see anything immediate happening though? Putin has already ruled out that
13:20we cannot see anything immediately happening, but, uh, what are your thoughts?
13:25See, this is a contentious issue. I mean, if you look at the BRICS, uh, at, at the BRICS forum,
13:30there have been discussions on de-dollarization and so on and so forth, you know, and how do we create a,
13:35uh, uh, so I think it's not that easy, uh, kind of a thing, uh, yes, there are issues, uh, uh, uh,
13:40about stability of, uh, uh, the Russian currency and so on and so forth. Uh, you know, one Indian
13:46business would like that all these, uh, things shift to dollar, you know, and, uh, we, we do dollar
13:50trade between the, uh, two countries, right? Uh, but, but, uh, you know, it, it remains to be seen,
13:56you know, how, how these discussions go and, uh, uh, uh, in, in near future, I don't see any major
14:02changes in the, in the way, uh, you know, currencies operate, uh, you know, uh, in, in, in, in trade
14:08between these two countries, but, uh, you know, a more stable arrangement would be to, to do it in
14:13dollars to my mind.
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