India is being wooed. And ardently. The year after the beginning of conflict in Ukraine, India’s position of neutrality, seen as strategic autonomy, has paid off. The West has finally come around to India’s viewpoint. But beyond the acknowledgement of India’s power to shape world conversations, the situation has also opened up economic avenues for India.
The sanctions on Russia have opened up a door for trade between the two countries. Especially for small and medium-size Indian companies looking to expand their footprint in new markets. Russia, which used to be the largest movie market in Europe for Hollywood has now blanked out. Russia was one of the biggest markets for Hollywood in 2021. It alone was responsible for $6.9 billion in entertainment. Indian movies are hoping to fill in this gap. 'Pushpa' made 29 million roubles in a week. However, movies are only one tiny spectrum of the possibilities that exist.
“The circumstances have however created a new opportunity for India in terms of economic possibilities because of the sanctions, as well as the possibility of development of the North-South Transport Corridor between India and Russia, which enhances connectivity,’’ said Petr Topychkanov, an Associate Senior Researcher in the SIPRI Weapons of Mass Destruction Programme. “It has also created an opportunity for Central Asia, for India, to expand its influence in these countries and leverage out other players in the region.” With China already having made inroads in this region, utilising this chance to expand in the region economically makes sense for India.
The North-South Corridor is not the only connectivity project that is essential for India to expand its footprint. A new route to push trade—announced when Prime Minister Modi was the guest of honour at the 5th Eastern Economic Forum in Vladivostok in 2019—a route to connect Chennai to Vladivostok was announced. This transport corridor will become operational soon. The route has a 17-day travel time. “This corridor is particularly important for the Russian Far East, Yakutia, and joint Russia–India projects in the region, as well as links India with the Northern Sea Route,’’ noted scholars Lydia Kulnik and Kalinin in their detailed report “Developing Russia–India Economic Ties Under New Circumstances.”
The idea of Free Trade Agreement between India and the Eurasian Economic Union is being talked about. While negotiations have started—and have run into hurdles—there are hopes that there will be progress soon. Trade between the two countries had not picked up despite the special relationship. Today, trade between India and Russia is growing enormously as India has increased importing Russian energy sources, fertilizers, iron, steel, timber products, plant and animal oils to India.
“The Russian trade mission in India (currently part of the Ministry of Industry and Trade) and the Russian export centre support the efforts of Russian companies studying the Indian market. The number of assistance and consultation requests concerning the Indian market received by these agencies has increased several-fold,’’ note Kulnik and Kalinin in their detailed report.
While there has been a spike in trade between the two countries, there are challenges ahead. The trade has to move beyond just being focused on energy. The report lays out the way forward to achieve closer cooperation. It also lists out areas where the two countries need to work. Infrastructure and logistics are some of the areas that both countries need to focus on. Financial infrastructure between both countries also needs to be improved. But the new circumstances may ensure that solutions for these issues will be found sooner.
