India, Russia will be benefitted from trading in national currencies – Indian ambassador to Moscow
© Photo: spbu.ru
Transition to national currencies, rupee and ruble, in trade between India and Russia, speeding up customs clearance, the active use of the “North-South transport corridor by businesses of the two countries and efforts that are being made in these trends will significantly increase bilateral trade.
This was stated by Indian ambassador to Moscow P.S.
Raghavan in an interview with our correspondent Natalya Benyukh in view
of the forthcoming trade and industrial exhibition of India in Moscow.
It will open at Crocus Expo in few days.
Correspondent:
Your Excellency, ambassador, I would like to ask you about
the forthcoming “India Show” exhibition that will be held in Moscow
later this month. It will be interesting for our listeners to hear your
opinion as not only as the Indian ambassador to Moscow but also as a
person who pays great attention to the promotion of Indo-Russian trade
and economic ties. What are the main aspects of the exhibition?
Ambassador: The
aim of “India Show”, which is from September 24 to 26, is to showcase
some of the Indian businesses in major sectors such as pharmaceuticals,
engineering, textile, apparels etc. to the Russian public and to Russian
businesses in order to enable them to form links which will promote
business; in order to bridge what we often call the awareness gap
between businesses of the two countries. Businesses of the two countries
don’t seem to know fully the opportunities that are available in the
other country and the “India Show” is an effort to bridge that gap. It
has a number of elements – it’s not only companies that are coming to
exhibit their products to the Russian businesses; we are also holding
sectoral workshops: we have a workshop on the pharmaceuticals sector for
example, we have a workshop on the leather sector and we have a
workshop on banking and finance. In each one of them, we are trying to
put together the people of the two countries involved in the whole range
of activities surrounding that sector, the legal framework, the
regulatory framework, the nature of the industry in India and in Russia.
To give an example: in pharmaceuticals, India is a major exporter to
Russia, however, many Russian pharmaceutical importers, many Russian
doctors, and many Russian regulators do not know that India’s
manufacturing strength is not only in generics but also in some of the
most advanced formulations. A large number of Indian pharmaceutical
manufacturers have GMP (Good Manufacturing Practices) certification from
WHO. It is not well known here.
Correspondent: At
present, the annual trade volume between Russia and India is estimated
at only $10 billion although our two countries strive for increasing the
volume. What is the reason for such a slow growth?
Ambassador: Well,
the first reason is a certain lack of awareness. There are a few
sectors in which trade is doing well: pharmaceuticals are one which I
have mentioned; in defence, which is in the reverse direction, from
Russia to India, there is vibrant trade. And then of course, we have
trade in commodities, everybody knows about Indian tea, coffee, tobacco
etc. But we have to move from commodities and some specific sectors to a
much wider variety in our trade basket. Until we do that, our trade
will remain limited. That is what we are trying to do. We are trying to
enter the engineering sector; we are trying to show possibilities of
collaboration in joint ventures, collaboration in manufacture. You know
the new initiative that our Prime Minister has recently launched: it is
called “Make in India”. Basically, we are inviting foreign entrepreneurs
and foreign industries to come to India and get their requirements
manufactured in India. So come and make in India, you can get your
product cheaper, you can make your product of good quality and this will
boost exchanges between our two countries.
These
are the new areas we need to see and in India Show we are going to do
that; besides the workshops I mentioned about, we are also going to have
a special programme on “Make in India”, it will show our PM launching
the “Make in India” programme and we will have discussions about the
facilities India can offer to Russian industries which want to make in
India.
Correspondent: Is
there an intention to shift to national currencies of India and Russia
from dollar in bilateral trade? The two countries are the members of the
BRICS group. The issue of using national currencies in making trade and
economic deals is considered by the BRICS countries as a path to
strengthening and promoting mutual ties. Am I right?
Ambassador: Yes,
I would like to mention actually three specific ways in which we are
looking to see a significant increase in trade exchanges between our two
countries. The first is what you mentioned, trade in national
currencies. It is obviously advantageous, because trade between Russia
and India is now through the currency of a third country which means
that business people have to hedge against two different currencies –
between rupee and dollar and then dollar to ruble and vice versa. So if
you cut out one currency, obviously transaction costs are lower and
trade becomes more competitive. We have already a joint working group
between our Reserve Bank of India and Central Bank of Russia, which is
considering the modalities for putting this in motion. We hope that it
will soon recommend to the two Governments on how to go about it. This
we believe will be a major boost to trade.
The second is the discussions between the Customs authorities of our
two countries for a smoother flow of information by which Customs
clearance of goods on either side can be speeded up. This again will
reduce the transaction costs. This is called a “Green Corridor” for
goods moving between the two countries and that can reduce the
transaction costs.
The
third is something which is a little bit further down the line, but
which the two countries are exploring very strongly, which is to have a
corridor for trade, which is called a North South Corridor – from ports
in India to ports in Iran, up by the overland route and then into
Russia, either across the Caspian Sea or through Azerbaijan. Now, if you
look at a map, this actually reduces the total length traversed by
goods between India and Russia by half. If a container takes 45 days to
go from a western Indian port to St Petersburg, it will take only 20 to
25 days through this route. It would also mean half the cost of freight.
If this can be activated, this can be another huge boost to trade
activity. We had recently an Indian company commissioned by our Ministry
of Commerce and Industry, which recently did a dry run of this route
with an empty container, physically taking it through customs of various
countries on the route. It discovered that this link is very much
viable. What we have to do now is to create the procedures for it
between India, Iran, Azerbaijan and Russia. Then it can start. Of course
we need to publicize it among the business communities of our
countries.
If these three elements are put in place, they can have a huge impact on trade between the two countries.
Correspondent:
What is your opinion? Are the Indian companies ready to and interested
in occupying the niches that will be opened for business due to
sanctions imposed by the West against Russia?
Ambassador: I
have been asked this question many times and my answer has always been
that when you look at India-Russia economic opportunities, you do not
have to look through the prism of other external relationships. We have
enough opportunities, we have lots of prospects; we should focus on
them. Indian businesses are happy to find new business opportunities in
Russia; Indian businesses are very happy to invite Russian business to
come to India.
Correspondent: What are the most interesting areas for India in the Russian economy?
Ambassador: They
are so wide, that I can keep on talking about it. Let me mention a few
of them. Hydrocarbons are definitely one area of great interest for
India. There is interest in Russia’s resources in coal; there are
already ongoing discussions about the possibility of Indian companies
investing in coal mining in Russia. As you know, Russia is the world’s
biggest exporter of rough diamonds, and India is the world’s biggest
importer of rough diamonds, and yet direct trade between Russia and
India in this commodity is very limited; much of it comes through third
countries. We are looking to see whether we can reorient this trade to
make it direct. India is a huge fertilizer consumer; Russia is a huge
fertilizer producer. Again, we are looking at long term arrangements,
not only for buying fertilizers from Russia but also looking to see
whether we can invest in fertilizer production in Russia. There is an
entire range of materials, where we would like to benefit from Russian
technologies, where we would like to invite Russian companies to either
invest in India or enter into joint ventures for production in India. A
whole range of engineering products, which I mentioned to you, that we
can jointly produce either in India or in Russia. India is very strong
in automotive components; actually we manufacture automobile components
for major cars around the world. It is an area in which we can
collaborate with Russia. Even in the defence industry, there is a lot of
procurement that India does from Russia; we could manufacture some
assemblies and sub-assemblies in India for some of the platforms and
equipment that we get from Russia. The same in nuclear energy, our
nuclear energy agreement provides for increasing indigenization of
equipment for nuclear power plants being set up with Russian assistance.
The opportunities are so great that I can keep on talking about them.
Correspondent: Coming back to western sanctions against Russia. What is the opinion of India?
Ambassador: We
are not party to the sanctions, which is why we are continuing to look
at both trade and investment opportunities for us in Russia and for
Russia in India.
Correspondent: Your
Excellency, the ambassador, thank you very much for the interview. We
wish you success in your work in Moscow for the benefit of the two
countries.
Read more: http://indian.ruvr.ru/2014_09_22/India-Russia-benefitted-trading-in-national-currencies/