BOFIT Viikkokatsaus / BOFIT Weekly 2019/37

Russian president Putin hosted the leaders of India, Japan, Mongolia and Malaysia at the Eastern Economic Forum on September 4−6 in Vladivostok on Russia’s Pacific coast.  The bilateral discussions of Russian host Vladimir Putin and Indian Prime Minister Narendra Modi focused on increased economic cooperation. A number of bilateral agreements were signed.

The countries already cooperate on a few strategic and technical fronts. There are a few Russian nuclear reactors in India, and more may be built. For years, Russia has been supplying arms and other military equipment to India, but recently Russian companies have made efforts to start producing them in India as well. India is a partner in the Sakhalin-1 project to exploit oil and gas fields in the Sakhalin Island. The American Exxon holds a 30 % stake in the venture, the Japanese Sodeco 30 %, the Russian Rosneft 20 % and India’s state-owned oil company ONGC Videsh 20 %. Rosneft CEO Igor Sechin announced at the economic forum in Vladivostok that the venture partners had agreed on construction of a gas liquefaction plant at Russia’s De-Kastri seaport on the coast of the Sea of Japan. Oil and gas are already flowing through pipelines from Sakhalin Island to the mainland.

Despite these ventures, Russia-India trade is fairly modest. Russian customs values last year’s Russian goods exports to India at around 7 billion dollars, while goods imports from India were worth about 3 billion dollars. India accounts for just 1.7 % of Russian goods exports and 1.4 % of goods imports. Russian exports to India include oil, fertilizers, paper, diamonds, machinery and sea vessels. The Stockholm International Peace Research Institute (SIPRI) reports that Russia last year exported at least $1 billion in military equipment to India. Russia imports pharmaceuticals, tea, electrical equipment and clothing from India. The statements released in the context of Putin-Modi meeting envision a manifold increase in Russia-India trade in coming years. However, there is no free-trade agreement between the Eurasian Economic Union and India at the moment.