The Aakhya Weekly #104 | PM Modi in Moscow: Fortifying Ties Amid Global Dynamics
In Focus: Revitalizing India-Russia Relations
by Devyani Wadera
Prime Minister Narendra Modi is set to visit Russia from July 8 to 9, marking his first international trip in his third term. This visit will focus on strategic, economic, and military cooperation, underscoring the continuity of an enduring friendship between the two nations. Notably, it will be PM Modi’s first visit to Moscow since 2019 and his first visit to Russia since the outbreak of the Russia-Ukraine war in 2022.Â
Breaking from precedent, Prime Minister Narendra Modi has chosen Russia as his first international destination in his new term, bypassing neighbouring nations like Bhutan, Maldives, and Sri Lanka which he had visited earlier in his previous terms. This decision places Russia as a close ally and at par with India’s closest neighbours. By opting for Moscow amid global tensions and pressures, Modi's visit sends a resolute message: India values its longstanding alliance with Russia and maintains diplomatic independence amidst international dynamics. It also enhances Putin’s international stature stating that Russia and Putin have not been isolated and rather have the support of its key allies.Â
India’s Concerns over Russia-China Alliance
India's decision to prioritise its visit to Russia also serves as a strategic counterbalance to the growing alliance between China and Russia. President Putin's recent visit to China in May highlighted a strengthening partnership between the two nations, which has raised concerns in India. Since the border clashes in 2020, India's relations with China have been strained, prompting New Delhi to view the deepening China-Russia ties as a potential threat to its national interests and the historical friendship with Russia. The expansive nature of the China-Russia partnership, characterized by "no limits" and "no forbidden areas," along with significant energy exports to China and increasing use of the Chinese yuan in Russian transactions, has exacerbated these concerns. Reports of potential Russian military exports to China have also heightened anxieties in India, given its heavy reliance on Russian military equipment. The historical advantage India enjoyed in terms of exclusive access to advanced Russian technology may now be challenged. These dynamics underscore India's strategic calculations and the complexities it faces in maintaining its geopolitical interests amid shifting alliances in the region.
Modi's upcoming visit aims to address concerns about the current state of India-Russia relations amidst a shifting global landscape and perceived distancing influenced by China. The trip is intended to reaffirm the enduring strength of their bilateral ties and address critical issues that may affect their partnership. Here are some key areas that can be on the agenda:
RELOS Agreement: A Geostrategic Masterstroke
Progress is anticipated on the long-awaited India-Russia Reciprocal Exchange Logistics Agreement (RELOS), which would facilitate mutual logistical support between the two country’s militaries during joint operations and long-distance missions. This agreement would enable Indian warships and aircraft to utilize Russia's logistics network and ports for fuel replenishment, repairs, and maintenance, significantly bolstering India’s operational capabilities, while reducing costs. The most important benefit of this agreement would be India’s foray into the Arctic Ocean region, which is abundant in natural resources and has new shipping routes coming in, making it a critical geopolitical arena.Â
China has shown keen interest in the Arctic, even going as far as declaring itself a ‘near-Arctic state’, despite the geographic challenges that contradict such claims. Nevertheless, China continues its efforts to secure access to mineral resources, prioritize shipping routes, and exert influence in the region. In this context, India emerges as a significant player due to the potential of the RELOS agreement, which would grant it access to Russian logistics in the Arctic. This strategic access would enable India to advance swiftly in the region. This arrangement promises to be mutually beneficial, as India will be supporting Russian activities in the Indian Ocean in exchange—a region crucial to India's strategic interests. The long-delayed agreement has been approved by Russia and awaits signature by both parties to take effect. Once concluded, the agreement will be valid for five years and will renew automatically unless either party notifies the other of its intent to terminate it.
Trade Dynamics and Investment
Trade will indeed be a significant agenda item during Modi's visit. In 2023, bilateral trade between India and Russia reached $65 billion, primarily driven by Russia's oil exports. However, India's exports to Russia were comparatively modest at around $4 billion, resulting in a considerable trade imbalance that India seeks to rectify. Most of India's payments to Russia are made in rupees, leading to an accumulation of unused rupees on Russia's side due to the trade deficit. Both countries are exploring effective ways to utilize these rupee payments, whether through increased imports from India or strategic investments in key Indian sectors like infrastructure, equity markets, and government securities.
There is a focus on fostering joint ventures where Russia can invest in India, such as the successful collaboration on the Vande Bharat trains, where Russia and India jointly operated and maintained 120 trains. These partnerships aim to increase Russian investments in India and effectively utilize the accumulated rupee payments. The use of the rupee payment system for trade transactions was implemented to navigate banking and economic sanctions imposed on Russia by Western countries due to the Russia-Ukraine war. This mechanism has facilitated continued economic interactions between India and Russia despite external pressures.
Chennai-Vladivostok Sea Route: Enhancing Connectivity
The Chennai-Vladivostok sea route will be a key topic of discussion during Modi's visit. This trade route offers a significant reduction in travel time from 40 days to 24 days, marking a promising opportunity for India and Russia to diversify their trade beyond oil into sectors such as agriculture, pharmaceuticals, and energy. This initiative seeks to achieve several strategic objectives, including reducing freight costs, speeding up transit times, and establishing efficient trade routes directly linking India and Russia. Additionally, improved connectivity through this corridor promises mutual benefits by facilitating quicker and more cost-effective access to other global markets. For India, the corridor serves as a viable alternative route for trade with Europe, reducing dependence on the Suez Canal and mitigating potential geopolitical risks. Discussions during the bilateral talks are likely to focus on increasing investments in the Chennai-Vladivostok sea route, highlighting its critical role in advancing the economic interests of both countries.
On a side note, Modi's visit will offer him a firsthand assessment of the developments in Russia's conflict in Ukraine. Discussions are expected to encompass sensitive issues like India's opposition to the recruitment of Indians as Russian military "helpers." Additionally, efforts to expedite the supply of defence hardware and spare parts, delayed by the ongoing conflict, are likely to feature prominently in bilateral talks. These discussions are critical for addressing mutual concerns and advancing cooperation amidst challenging global dynamics.Â
The upcoming state visit is poised to showcase the enduring and robust friendship between India and Russia, demonstrating their steadfast bilateral relations amidst global challenges. The diplomatic engagement will prioritize advancing mutually beneficial areas of cooperation and resolving any outstanding issues between the two nations, showcasing a united front on the global stage.Â
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For exciting insights into the world of artificial intelligence, covering key trends and interesting updates from India and around the world, explore AI4India's "The AI4India Weekly"
