NEW DELHI: India has offered to help build a satellite city, including ports, roads and energy infrastructure, near Vladivostok in Russia’s Far East as part of Prime Minister Narendra Modi’s Act Far East Policy. This was discussed during the working visit by Aleksey Chekunkov, Russia’s minister for the Far East and Arctic, during his recent India visit.
“Discussed furthering IN-RU ties in the maritime sector including cargo transportation along Northern Sea Route, container shipment between ports of Russian Far East & India, operationalising Chennai-Vladivostok corridor and training of Indian seafarers in Arctic waters,” Ports Minister Sarbananda Sonowal tweeted after his meeting with Chekunkov.
The next round of maritime cooperation talks will be held in Moscow later in April. Reports suggest India will continue to build its relationship with Russia defying U.S. sanctions on the country for its invasion of Ukraine. Other similar announcements are expected at the 26th St Petersburg International Economic Forum in June, and subsequently the 8th Eastern Economic Forum in September at the Far Eastern Federal University campus in Vladivostok.
To encourage international investment in the remote region which has massive reserves of hydrocarbon, timber, gold, diamonds and other mineral resources, President Vladimir Putin instituted the EEF in 2015 as part of his ‘Asian Pivot’, which also aims to expand international cooperation in the Asia-Pacific region.
In 2019, Modi became the first Indian prime minister to visit Vladivostok for the 20th annual bilateral summit with President Putin. He then addressed the plenary session of the 5th Eastern Economic Forum (EEF), where he was the chief guest, and unveiled the ‘Act Far East’ policy for Russia. Announcing that India would extend a $1 billion line of credit towards developing the Russian Far East, he said the EEF was a “historic opportunity” for Indian companies to invest in oil and gas, mining, agriculture and tourism.
The Chennai-Vladivostok Sea route, which would allow India access to Russia’s Far East in 24 days, compared to 40 days taken by the current route via Europe and the Suez Canal, was also discussed during Modi’s visit, along with the possibility of building a pipeline to transport Russian oil to India’s east coast.
ONGC Videsh, Tata Power, and the Adani Group have already invested in the region. China, Japan, South Korea, Australia, New Zealand and Vietnam also have significant investments there. A footprint in the region would also give India, a member of the Arctic Council, access to the Arctic Ocean and the Northern Sea Route that runs along Russia’s northern coastline, making it the shortest shipping route between East Asia and Europe. The thick ice that covers the route in winter has started melting due to global warming and Moscow plans to begin shipping by end of this year.
But apart from the commercial benefits, the region’s location between China and Japan gives India—and Russia—an opportunity to balance China’s growing influence in the region.
Describing Modi’s Act Far East policy as “the most significant Indian geostrategic initiative of the decade,” a senior Indian official who has served in Russia said it was “a very extensive and geopolitical vision. It involved business, politics, energy, connectivity, but it was essentially geopolitical, to expand India’s footprint and take the fight right into China’s backyard.”
But today “that vision is under stress and the Eastern Economic Forum is a lost opportunity,” he said. “After the Ukraine war started, the only area where India has reached out is cheap, concessional Russian oil. That is temporary and it will dry up. There is a lot of opportunity but do we have the courage and stamina to exploit it? The Adanis run a small port there but who is going after the big opportunity? We are ready to buy, that is trading. But are we willing to invest and go big?”
“All major Indian businesses have their money in banks abroad and business exposure in the U.S. and they are all scared of American sanctions. The profit margins in Russia are higher because the risks are higher. It’s a risky business. But how many of our chaps are willing to take that risk? But the Chinese are making money, the Turks are making money, the Koreans are making money,” he said. “Have you ever asked private businesses whether they are only for profit or do they also have some national objective in mind?”
Besides, no country in the world has opened its doors to us the way the Russians have, he said. “That is because, first, they don’t have any friends left. Second, we are not threatening compared to the Americans and the Chinese. But what the Russians are not convinced about is our staying power, particularly our private sector.”
According to him, “these sanctions should not deter our government or private industry. And our private industry should learn to change with the times, invest in R&D, learn to scale up quickly and seize opportunities when they come. Like this one we have with the Russians.”
That sentiment was echoed at the two-day ‘Russia-India Business Forum: Strategic Partnership for Development and Growth’ held at the Oberoi Hotel in New Delhi last month where the large Russian delegation including ministers and senior officials as well as large private companies only seemed to underline the glaring lack of Indian business representatives, although there were several delegates and panelists from the central and state governments.
The annual forum organised by the Roscongress Foundation (which also organises the EEF) is to forge high-technology alliances across a number of sectors including IT, cybersecurity, manufacturing and production, smart cities, transport and logistics, and healthcare.
“What we have here is a short-term opportunity to get long term partners,” said Delhi-born entrepreneur Ravi Sachdeva, who has spent almost three decades in Russia and is the CEO and co-founder of Advanced Digital Technologies, one of Russia’s top technology firms.
“The Russians are offering cutting-edge tech which would make India sovereign in terms of its reliance on semiconductors. The opportunities are immense. They were reluctant to take this out of their safe but are compelled to do so owing to the geopolitical realities. And they are offering us open architecture, which no multinational will ever offer us,” he said.
“We were led to believe that the Indian government’s decision to defy American sanctions to buy oil from us meant Indian businesses would also want to take advantage of this huge opportunity but we were wrong,” said Igor, who represented a company which produces high-end electronics and semiconductors.
After describing the few companies—mostly American and Chinese—that monopolise the high-tech market as purveyors of digital colonialism, the panelists at the first session agreed that it was time to challenge the trade rules written by the west.
“We have to rewrite such rules. We can talk of Digital Rouble, Digital Rupee and have collaborations on our terms,” said Aleksandr Babakov, deputy chairman of the Duma (Russian parliament). “Now Russia, India and China will rewrite the financial system,” he said.
Perhaps echoing Russian frustration over India Inc.’s lack of interest, Tigran Sargsyan, deputy chairman of the Board of Eurasian Development Bank, pointed out that progress of the International North-South Corridor, which aims to connect Russia with the Indian Ocean via Central Asia and the Iranian port of Chabahar, was far from satisfactory.
“We started parallel trade discussions with China and India. With China, we have an agreement. With India, the process began 20 years ago but there is no agreement and the question is still being discussed,” he said.
When quizzed about the lack of private business at the event, a representative of one of the main Indian business associations quickly turned his identity badge around before shrugging and saying, “Sometimes the spirit is willing but the flesh is weak.”
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