India, Russia Discuss Free Trade Agreement Despite Western Pressure

(MENAFN) India and Russia are in talks to establish a free trade agreement (FTA), according to the Russian trade minister. The announcement comes at a time when the two countries' bilateral commercial ties have flourished since the outbreak of war in Ukraine, despite calls from Western countries for India to distance itself from its primary weapons supplier, Russia. The FTA negotiations are a significant step-up in economic relations between the two countries, with India's imports from Russia more than quadrupling to USD46.33 billion in the last fiscal year, mainly through oil.

The Russian Deputy Prime Minister, Denis Manturov, who also serves as the trade minister, stated that the two countries "pay special attention to the issues of mutual access of production to the markets of our countries." Manturov added that the Eurasian Economic Commission is looking forward to intensifying negotiations on the free trade agreement with India. Indian Foreign Minister S. Jaishankar also expressed hope for the FTA, stating that it would make a real difference to their trade relationship.

Manturov also noted that road construction material and equipment, chemicals, and pharmaceutical products were in demand in Russia, creating opportunities for Indian companies to increase their supplies to Russia. These FTA talks come at a time when New Delhi is also engaged in similar discussions with Britain, the European Union, and the Gulf Cooperation Council.

According to Reuters, Russia was potentially seeking to import over 500 products from India for key sectors, including cars, aircraft, and trains. This move comes as Western sanctions imposed over Russia's military action in Ukraine have undermined its ability to keep core industries operating. Manturov also revealed that Russia would consider widening the use of "national currencies and currencies of friendly countries," adding that India has been keen on increasing the use of its rupee currency for trade with Russia.

While the war in Ukraine has led to calls for India to distance itself from Russia, New Delhi has not explicitly criticized the Russian invasion and has instead called for a peaceful resolution of the conflict through dialogue. Russian-Indian bilateral trade has jumped as the war has progressed, with Russia displacing Iraq last month to become India's top supplier of crude oil.

Russia's efforts to improve trade with India form part of its strategy to evade the impact of Western sanctions by boosting commerce with Asian giants, including China. Moscow is also trying to increase or maintain cooperation with other South Asian countries, most recently agreeing to settle payments in yuan for building a nuclear power plant in Bangladesh and discussing discounted oil exports to Pakistan.

Jaishankar also highlighted the potential benefits of Russian technology for Indian businesses and stated that New Delhi was working to iron out payments, certification, and logistics issues.

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