India, Russia to address trade deficit, market access issues

India and Russia on Tuesday (18) agreed to address trade deficit and market access issues, the Indian foreign ministry said, as New Delhi seeks to narrow trade imbalance after a more than four-fold rise in imports from Russia since the war in Ukraine.

The two nations are discussing a free trade agreement, the Russian trade minister said in New Delhi on Monday (17), a move that marks a step up in commercial ties between India and its dominant weapons supplier.

India has not explicitly condemned Russia's February 2022 invasion of Ukraine - which Moscow calls a "special military operation" - and has called for a peaceful resolution of the conflict through dialogue.

India imported goods, mainly oil, from Russia worth $51.3 billion from February 24-April 5, compared with 10.6 billion in the same period in the previous fiscal year, according to a person familiar with the matter.

Russian trade and industry minister Denis Manturov met India's foreign and finance ministers on Tuesday, the second day of his two-day visit to the country that came a little over a week after Ukrainian deputy foreign minister's visit.

In the meeting with the Indian foreign minister, the two sides "discussed cooperation in the areas of trade, finance, industry, energy sector, including nuclear power, agriculture, transport, healthcare, education and culture," the Russian embassy wrote on Twitter.

"We pay special attention to the issues of mutual access of production to the markets of our countries," Russian deputy prime minister Denis Manturov, who is also the trade minister, told an event in New Delhi.

"Together with the Eurasian Economic Commission, we are looking forward to intensifying negotiations on a free trade agreement with India."

India’s foreign minister, S Jaishankar, said the Covid pandemic had disrupted discussions on an FTA between India and the Russian-led Eurasian Economic Union, and that he hoped "our colleagues will pick up on this ... because we do believe it will make a real difference to our trade relationship".

Manturov said road construction material and equipment and chemicals and pharmaceutical products were in demand in Russia and "I am sure that this will create opportunities for Indian companies to increase their supplies to Russia".

The announcement came at a time when New Delhi is also engaged in FTA discussions with Britain, the European Union and the Gulf Cooperation Council.

Russia, traditionally India's top source of military hardware, displaced Iraq last month to become India's top supplier of crude oil. Before the war that began in February last year, India bought very little oil from Russia.

Manturov also said Russia would consider widening the use of "national currencies and currencies of friendly countries". India has been keen on increasing the use of its rupee currency for trade with Russia.

Reuters reported in November that Russia was potentially seeking to import more than 500 products from India for key sectors including cars, aircraft and trains, given that Western sanctions have undermined its ability to keep core industries operating. India said in December that it shared a list of Indian products with Moscow for access to Russian markets.

Russia's efforts to improve trade with India form part of its strategy to help evade the impact of Western sanctions by boosting commerce with Asian giants including China.

Moscow is also trying to increase or maintain cooperation with other South Asian countries, most recently agreeing to settle payments in yuan for building a nuclear power plant in Bangladesh and discussing discounted oil exports to Pakistan.

Jaishankar said Indian business could benefit from Russian technology and that New Delhi was working to iron out payments, certification and logistics issues.

(Reuters)