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Russia India Trade
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- 2. History • Afansy Nikitinvisit to Vijaynagara empire-16th century • Cooperation in various fields-ideology, defence,space,energy, diplomatic,strategic but never in trade • India is the second largest market for the Russian defence industry
- 3. Current Scenario • Indo-RussiaTrade $10bn in 2013-$7bn imports • Russia is ranked 18th largest trade partner for India,India is 20th for Russia • Indo china-$60bn,Sino-Russia $100bn • RCA India Russia Textiles Metal & Metal products Leather Products Fuels Gems and jewelry Fertilizers Agro based Wood,pulp,paper
- 4. Exports Product 2008 2013 Fish& crustacean, mollusc & other 28667.360 40318.727 Rubber and articles thereof. 24684.310 44100.031 Articles of iron or steel. 36004.948 50802.286 Tobacco and manufactured tobacco pds 53887.558 113893.143 Coffee, tea, matï and spices. 116235.921 131715.552 Art of apparel & clothing access, n 51348.773 135709.406 Iron and steel. 65336.681 149134.818 Nuclear reactors, boilers, mchy & m 117199.229 159296.805 Electrical mchy equip parts thereof 116973.349 382350.772 Pharmaceutical products. 532631.941 818875.459
- 5. Imports Product 2008 2013 Rubberand articles thereof. 30873.935 55530.565 Printed books, newspapers, pictures 110086.347 75693.109 Articles of iron or steel. 133708.800 114083.529 Inorgn chem; compds of prec mtl, r 31597.046 121337.819 Paper & paperboard; art of paper pu 125689.319 125702.362 Iron and steel. 549979.377 137532.872 Mineral fuels, oils & product of th 71989.467 189513.313 Fertilisers. 1135448.788 278333.154 Electrical mchy equip parts thereof 519976.283 545466.387 Nuclear reactors, boilers, mchy & m 800306.227 750436.034 Natural/cultured pearls, prec stone 91260.480 870854.922
- 6. Barriers • Geographical distance •Language and Information barriers • Low people-people contact, Cultural exchange- compare it with US • Trust of business partners, business interactions • People movement-visa restrictions-recently resolved • Financial Services
- 7. Barriers • Stringent Certification& phytosanitary norms • Transportation and logistics problem in Russia ▫ long queues, winter freezing,expensive warehousing ▫ Encouraged trade via other countries-Netherlands • Shrinking economy, Fall in oil prices • Volatility of Rupee and Rouble • No Trade agreements, High tariffs in select sectors
- 8. Sector wise outlook • Pharmaceuticals- Mutual Recognition Agreements for conformity assessment,6% share • Tea-Branding, promotion of Indian Tea,tariffs- bulk tea(0%) vs packaged tea (20%) • Bovine meat & Egg powder- Recent ban of Euro exports, high standards • Ready Made Garments- Knowledge of Russian market, transportation cost, consumer preferences
- 9. Sector wise outlook •Automobile- potential, high tariff(20%) • Diamond trade- 14/15 rule, but 67% of diamond exports to other nations by Russia. Have long term contracts between Russian and Indian Companies • Diary products & Fruits-Diary export increased 50 times in 5 yrs. India is replacing EU in Fruit market • Tobacco- India’s share is declines from 30 % in 1980s to 8% now • Leather: high tariff(10-20%), substitutes from japan,competition
- 10. Services • Slight balancein favour of India • IT services-cooperation low –fear of competition • Tourism- Russian tourists growing at 8-10% per year. Goa,Kerala are the destinations • Potential in Health services- ayurveda, naturopathy & modern medicine • Entertainment-lot of potential by dubbing, popular before West penetrated
- 11. Services • Transport, Engineering-Russiacan provide expertise, help in modernization of our ports, roads, aviation • Education-mutual recognition of degree, advertising • Urgent Need to strengthen Transport & Financial Service trade-have multiplier effect for industries ,tourism & IT
- 12. Suggestive Measures • Speedingup North South International Corridor • Finalizing Free trade agreement with Eurasia • Framework to trade in rupees and roubles • More cultural contact, business interaction, trade fairs, seminars-convert positive opinion to trust • Transform G-G to G-B and B-B economic deals
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Editor's Notes
- #3 Afansy Nikitin visited Vijayanagara and praised its richness, but said trade cannot happen as what Indian needs is not what russia exports and vice versa. It remained as such for long time
- #4 Mention pakistan, economic compulsions made energy deal between Russia and Pak
- #7 India eased visa restrictions on Russian travelers. Under the new rules there are provisions for e-visa and visa on arrival. Russia has also opened new Russian visa application centres in the four metropolises of India to expedite visa applications of Indian citizens. The first item on agenda was lifting visa requirements, chiefly for business people. Those traveling on diplomatic and official passports no longer need visas to travel from Russia to India and vice versa. We discussed the possibility of lifting visa requirements for tourists. I believe that we should be moving in this direction. Lifting visa requirements for tourists and business people should be out next step. This matter is a subject of our ongoing discussions. What's more, I don't think that it will be long before this issue is resolved. Poor information exchange between Indian and Russian businessmen has affected bilateral trade. Exhibitions and conferences have been arranged by FICCI, CII and the Indo-CIS Chamber of Commerce in association with the Government agencies and Chambers of Commerce in Russia. To promote more active involvement of private business representatives in the trade fairs held in India and Russia, steps should be taken to increase the number of such events by including a greater number of major Russian and Indian cities and cover all potential areas for the development of intensive trade between Russia and India Indian businessmen and consumers do not have adequate information about the current situation in Russian economy. Russia is still considered a shaky economy with high criminal activities as it was in the early 1990s , Russians often consider India as a poor and underdeveloped country, and, therefore, do not view it as an interesting market for their products or investments. There is a lack of information about Indian suppliers and Indian products in Russia and false prejudices prevail against Indian products on account of poor information Indian businessmen in Russia are treated as non-reliable partners. It was noted that the two central banks have facilitated the process of acceptance of guarantees of Russian banks and a list of top 10 Russian banks has been circulated to Indian banks. RBI has also proposed to Indian Banks Association, letters of credit not accepted mutually
- #8 3.53 After 1991, India’s trade with Russia had been taking place through Novorossiisk and St. Petersburg. Throughout the 1990s, Novorossiisk registered long queues and excessive demand on limited facilities – . St. Petersburg became the preferred port of entry – however, it was extremely expensive and Customs’ procedures were difficult to deal with. Although ice-cutters and convoys ensure that both ports were accessible all year round, the problem of winter freezing added a further complication to commerce. The heavy costs of demurrage at Russian ports and expensive and unreliable warehousing has been a problem that has encouraged trade through third countries. As a result, goods bound for Russia pass through alternative routes – undermining bilateral trade. Such routes also include agents in Dubai and Hamburg – who act as importers who re-export the goods to Russia as part of a general trade in goods with a number of countries India expressed its view that the Russian Authorities may recognize and technically collaborate with the official export inspection agency of India or any other certifying agency in India for issuing the health and safety certificates for Indian exports to Russia. It was also noted that India and Russia should make available relevant information and documents on laws, rules and regulations affecting trade, in particular, including for registration. Indian side suggests that the possibility of India and Russia entering into MRA on Conformity Assessment(CA) and Equivalence on health and safety standards relating to various categories of products like Pharmaceuticals, Meat and poultry products, dairy products, other products of Animal origin and other relevant food and other products needs to be explored. Russians say volatile rupee quotes our 2012 experience, Indians say rouble volatilit happening now
- #9 Slav people testing The Indian side expressed that at present, every batch of medicines exported to Russia from India is certified by a certifying laboratory, which takes more than a month. Pending grant of certificate by Russian authorities, the companies have to pay demurrage charges, thereby increasing the cost of medical supplies Certify in India itself
- #10 India’s strengths include the image of Indian goods as low cost, good quality and reliable. However, the major obstacle to increase in trade volume is transportation cost. The latter provides great advantages to Turkish, Chinese and European textile and clothing manufacture. However, as the Russian demand is expanding for good quality clothing and apparel, there are good opportunities for Indian RMG exports due to wide range and pallete of Indian production in textiles and clothing, limited local availability of textiles in Russia, the limited colour range offered by competitors and the Indian design expertise. While diamonds and precious stones contribute not more than 1.3 per cent of Russia’s GDP and gems & jewellery sector of India contributes 6% to 7% of country’s GDP, the diamond industry employs thousands of people. In case of India, it runs into hundreds of thousands. India is one of the world’s largest pharmaceutical manufacturers, and yet over the past 10 years, the country’s share in the Russian pharmaceutical products market has decreased from eight to five percen “As a diamond manufacturer we employ 25 000 people. We need a stable supply of rough to ensure stability of the production cycle”, Bharat Kakadia, director, Sheetal Manufacturing Company, told RIR. “It is only possible with getting rough directly from Alrosa because the diamond market functions in such a way that middlemen trading diamonds via Antwerp, Dubai and other hubs speculate in diamond trade by either withholding rough stock and creating supply deficit or flowing it out in the market and crushing the prices”. “I made three proposals to president Putin. First, I would like Alrosa to have direct long-term contracts with more Indian companies. I am pleased to know that they are moving in this direction,” Mr Modi said. “Second, I want Alrosa and others to trade directly on our diamond bourse. We have decided to create a Special Notified Zone where mining companies can trade diamonds on consignment basis and re-export unsold ones. Third, I asked to reform regulation so that Russia can send rough diamonds to India and reimport polished diamonds without extra duties”.
- #12 Russia can help in modernization of existing induastries, participate in road transport, provide expertize Large number of Indian students are going abroad for further studies. The following subjects are most popular among Indian students going to study in Russia: medicine; engineering (construction, automation of management, electronics, aviation, etc Russian higher education establishments need to advertise more actively its education opportunities to Indian students through organization of seminars, workshops, education fairs, etc like UK However, the issue of mutual recognition of Russian and Indian degrees still exists.
- #13 Rupee rouble trade on lines of Bric goal,Us sanctions