Russian Far East- India’s Act East Initiative

PM Modi’s visit to the Russian Far East, the first ever by an Indian PM, aims at economic inroads into this resource rich area in direct competition with China and other countries. 

Background

Russia’s Far Eastern Federal District (twice the size of India) is the largest but the least populated of the eight federal districts of Russia, with a population of roughly 6.3 million. 

The Russian Far East region has a wealth of natural resources, including land, timber, minerals, and other resources, such as tin, gold, diamonds, and oil and natural gas. The Russian government has announced several initiatives to attract investments into the region, including an agricultural SEZ, the Vladivostok Free Port Project, and also invites participation in the timber industry, mining of mineral resources (coal and diamonds), and precious metal deposits (gold, platinum, tin, and tungsten). Opportunities for collaboration for Indian companies include such sectors as agriculture, mining, port development and infrastructure, diamond processing, and agro-processing.

The Eastern economic forum was set up  by Russia to attract investments to the East Siberian and Arctic pole regions of Russia. There is an emphasis on energy from this region as now due to global warming, exploration and trade routes have become accessible. At present, India relies heavily on the Middle East for its energy requirement and is looking for alternatives. 

On the by-lines of the 20thIndia- Russia Annual Summit and the 5thEastern Economic Forum (EEF), Indian PM Modi extended $1 billion line of credit for the less developed but resource rich Russian Far East Region. 

Analysis

In accordance with India’s ‘Look East Act East’ policy, India, like China, is looking to expand its presence in Russia’s Far East.  It wants to harness natural resources there, among them oil and gas supplies as well as diamonds. Both sides plan to build Indo-Russian bilateral trade up to US $ 30 billion by 2025.

In recognition of the economic value of the Russian Far East, India established a Resident Consulate in Vladivostok in 1992, the first country to do so. In September 2017, the then Indian Foreign Minister Sushma Swaraj attended the Eastern Economic Forum and initiated the process of Indian involvement in the development of resources of the Russian Far East. Preliminary talks on an alternate shipping route between Chennai and Vladivostok also took place.

During this summit, India and Russia agreed on a full-fledged maritime route between Chennai and Vladivostok. Commenting on this, Mr. Modi said “When ships will start plying between Vladivostok and Chennai with the opening of the maritime routes between the two cities, the Russian port city will become the springboard of northeast Asia market in India”. He added that the partnership between India and Russia in the development of the Far East will make it a "confluence of open, free and inclusive Indo-Pacific". Mr. Modi’s comment has to be viewed in light of the fact that China has been aggressively pushing to expand its military presence in the Indo-Pacific region. 

India’s current engagement with the region is limited to isolated pockets, such as the Irkut Corporation in Irkutsk where the MIG and Sukhoi aircraft are built, over US$6 billion worth of investments by ONGC Videsh Limited in the Sakhalin 1 project, and recently – the Eurasian Diamond Center with the Indian Group KGK, a global leader in gems and jewellery. KGK have been granted a certificate of residence for the Vladivostok Free Trade Zone, giving them tax and customs preferences, and lower shipping costs.

Despite US sanctions on Russia, India maintains defence ties with Moscow, which has been the corner stone of the relation. Between 2008-2012, India bought 79 per cent of its weapons, measured by value, from Russia. Presently it provides for 60% of India’s defence imports. 

On October 5, 2018, India and Russia formally signed a multi-billion-dollar defence deal: $5.2 billion for five regiments of the S-400 air-defence shield, $2.2-billion to procure four new warships for the Navy, and $1.1-billion for new medium-lift helicopters to be used by both the defence and home ministries.

India went ahead with defence procurement deals in spite of warnings from the Trump administration that such purchases from Russia would be considered a “significant transaction” and could result in tough US sanctions.

Assessment 

  • At a time when Moscow and Beijing are fostering closer ties to counter the West, India has taken advantage of Moscow’s call to build strategic reliance through the Eastern Economic Forum, thus limiting reliance on China.
  • Now that Russia has extended support at the UNSC, especially on the issue of Kashmir, India recognises the criticality of the relationship and the need to strengthen it with meaningful actions, rather than mere platitudes. 
  • Russia has also recognised India’s involvement in Afghanistan and support for the present government which is necessary for its long term stability.
  • The Vladivostok-Chennai sea link, apart from being a viable trade route which will help in the upscaling trade relations between the two nations, will increase India’s presence in the Indo-Pacific, and especially the South China Sea, a deeply contested patch of the ocean that Beijing considers its own back yard.
  • It will also reduce travel time to 24 days from the existing time frame of over 40 days taken to transport goods from India to Far East Russia via Europe, which will boost trade.
  • The Vladivostok-Chennai sea link can also be viewed as a counter to China’s  Maritime Silk Route (MSR) plan as part of One Belt One Road project. China's ambitious MSR plan is about establishing and hence directly controlling the Asia-Africa sea route.
  • While the increase in Indian maritime traffic in the Indo Pacific will justify Indian Naval presence in international waters there, the greater ability of Chinese Navy to interdict this sea route must be taken into account by security planners once there is an an increase in the number of Indian merchant ships/ India bound ships plying this route.
  • Russia is keen to develop ties with India which offers a huge consumer market for Russian goods, while the Russians have long enjoyed Indian teas, spices, and fabrics. The move to open up alternative sea routes makes economic and strategic sense for both, and indicates that China is not the only player when it comes to Silk Road developments.

Image Courtesy: en.kremlin.ru

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