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To Touch Indo-Russian Bilateral Trade Target of $10 bn by 2010...		Putin's Visit To Push CECA By Dev Varam

The countdown for Russian President Vladimir Putin's visit to India in January 2007 has begun. With just two months to go for Putin's arrival in New Delhi, top officials from India and Russia are furiously hammering out a comprehensive economic cooperation agreement (CECA) that can mark yet another milestone in relations between the traditional allies. The agreement is expected to cover a vast range of goods, services and two-way investment in key sectors.

The joint study group (JSG) on trade and investment, currently studying the feasibility of a bilateral CECA, is expected to come up with its recommendations shortly. These recommendations will be given a formal shape later by the two leaders. Both the governments believe that a bilateral trade and investment agreement will be a win-win for both the countries.
Currently, Russia is flush with oil funds and is a potential investor, especially from India's point of view. Also, Indian exporters stand to gain from the huge Russian market for goods. Russia's scientific advancement is proven and a pact on science and technology can give a boost to India's research and development (R&D) efforts. And Russia can gain from India's experience in Information Technology and IT software, in which areas, the latter is an acknowledged global leader at present.
A CECA between India and Russia would certainly give a much-needed fillip to bilateral trade which had fallen significantly in the past few years. Indo-Russian trade in 2004-05 stood at $1.8 billion, of which India's exports to Russia amounted to $597 million, while India's imports from Russia were worth $1265 million. The quantum of the current bilateral trade between the two countries is very low considering the potential that needs to be tapped. Both countries are aware of this fact and that is why they have set an ambitious target of reaching $10 billion by 2010, which deadline is just four years away. This means the two countries need to push bilateral trade up vigourously, and hence the need for a wide-ranging CECA.
Concerned over the dip in exports to Russia, the Indian government wants to expand the country's trade. It has already held one round of discussions with Russian officials in Moscow Another round of bilateral talks will take place in November or early December.
In the years before the disintegration of the former Soviet Union in 1991, India's exports to that region and Russia were dictated by India's strategic interests and were intended to service debt repayments for the import of defence equipment and spares. Trade between the two declined for a while after break up of the Soviet Union and trade statistics show an erratic pattern.
According to the Federation of Indian Export Organizations (FIEO), Indian exports to Russia have declined in the last decade. The export growth of around 17 per cent in 1997-98 over 1996-97, was reversed the following year (1998-99) with a negative decline (26 percent). In 1999-2000, Indian exports to Russia again swung upwards by around 34 per cent and then fell to 6 percent in 2000-01, -10 percent in 2001-02 and -11 per cent in 2002-03. Then, once again in 2003-04 negative growth was arrested and Indian exports showed positive growth of around 1.5 percent, followed by 2005 showing a negative growth of over -15 percent. Indian exports to Russia vis-à-vis India's global exports has declined from 2.7 percent during 1997-98 to 0.7 per cent in 2004-05.
In recent months, India and Russia have attempted to mend their derailed trade ties. The two have now set up a joint study group to draw a blueprint to take bilateral trade to $10 billion by 2010.In comparison, India's bilateral trade with China reached $18 billion 2005.
To supplement the government's efforts, FIEO has taken the initiative to organise multi-product exhibitions in Moscow and St. Petersburg in 2006 to promote the "brand India" consciousness for Indian goods and services in the Russian market. FIEO has welcomed India's approval of Russia's accession to the World Trade Organisation (WTO) and the joint commitment of both countries to increase their bilateral trade to $10 billion by 2010.
With Russia becoming a member of the WTO, India has begun preparations to explore the possibility of increasing economic cooperation with the country, leading to a free trade agreement (FTA).
The government has been concerned over the dip in Indian exports to Russia and is now planning to take steps to help expand the trade basket. Indian officials have already held one round of discussions with their Russian counterparts in Moscow. Another round of talks, led by Commerce Secretary G K Pillai will take place shortly.
To add more value to existing 10-12 export items, market research and promotion are expected to be done. The government is also trying to find out reasons for low penetration of Indian services in sectors like IT and health in the Russian markets.
The government has also decided to give more focus to gems and jewellery, food-processing, auto-components, nanotechnology and biotechnology. It is making efforts to promote the North-South corridor, which passes through the Iranian port of Bander Abbas. Currently, not many exporters are using this faster route. Officials said an increase in trade with Russia through this route would help the Indian products to make inroads into Central Asian, Western European and Chinese markets.
In 2005-06, Indo-Russian trade had showed a 41 percent growth to touch $2.75 billion. Of this, imports from Russia were at $2 billion (minus defence imports) while exports to Russia accounted for just $733 million. Fertilisers, steel and iron constituted the majority of India's imports, whereas spices and pharmaceuticals formed most of the exports.
CII's international trade policy head TS Vishwanath said, “Last year, there was a negative export growth to Russia. Many Indian exporters have the issue of lack of transparency regarding barriers in terms of customs.”