~This is a landmark event in the history of India-Russia commercial relations. India and Russia have a time-tested relationship, which is marked by close political understanding, strategic convergences, defence cooperation and cultural affinities. There has also always been a strong economic dimension to our relationship, but its content has largely been determined by government facilitated trade and investments by our State-owned enterprises.

Today, it is a pleasure to see that nearly 100 senior Indian businesspersons have travelled to Moscow for my visit, and have received such an enthusiastic response from Russian business and industry. It signals the encouraging prospect of a new vigour in India-Russia trade and investment relations, which would be driven by the private business and industry of the two countries.

The wider macro-economic picture is very encouraging. Both India and Russia are dynamic economies with tremendous potential for growth. India is a large and growing market, with a large pool of excellent human resources and a favourable demographic profile. Russia has enormous natural resources as well as acknowledged scientific and technological excellence. Both have made impressive progress with structural reforms in recent years, blessed with a broad policy consensus and inspired by the desire to occupy their rightful places in the global economy.

The facts speak for themselves. During a period of major economic slow down around most of the globe, India and Russia have continued to grow. In fact, by the yardstick of average GDP growth during the last four years, both countries are among the top ten performers in the world. Equally importantly, the growth in both our countries has been broad-based, covering both the domestic and external fronts. Both countries are today in the forefront of developing and introducing cutting edge technologies. Our advances in the knowledge-based industries have transformed our economic landscapes and developed new capabilities and synergies. We have both achieved expertise and even dominance in certain areas of technology.

The new dynamism in India’s economy is receiving more and more attention around the world. In the last ten years, GDP doubled; and we hope to redouble it in less than a decade. India is today the fourth largest economy in the world on purchasing power parity. Our external reserves are over US$ 90 billion and are increasing by a billion dollars every two weeks. We are rapidly reducing our external debts, even by repaying them before they are due. This year alone we have already pre-paid over 3 billion dollars. Inflation is low and interest rates are on a declining curve. There is a strong increase in business confidence in recent months. Foreign trade is growing at double digit rates.

The world is also beginning to recognise the quiet revolution in the integration of the Indian economy into the global mainstream. Indian enterprises are achieving global scales in quality and output. India has become a production base and export hub for a range of products, from agricultural goods to automobile components to high-end services. Indian firms are now part of global production chains – importing sub-assemblies, adding value to them and re-exporting them. Corporations from all over the world are establishing themselves in India for manufacturing and services. Taking advantage of its pool of high-quality scientific talent, they have also established large R&D centres in India.

India is one of only three countries to have indigenously built super computers and one of six countries in the world that build and launch satellites. A few months ago, we launched a satellite into geo-stationary orbit. We plan to send a spacecraft to the moon in the next five years.

In many areas of this Indian success story, there is a strong Russian connection. Particularly in the early decades of our independence, we received the most valuable assistance from the Soviet Union in the establishment of our infrastructure and heavy industries. Both in our space programme and in the peaceful applications of nuclear energy, India owes a strong debt of gratitude to Russian scientific and technological assistance. Our close collaboration in scientific and technological research and development has extended to diverse disciplines. You would be amazed at how many Indian scientists and engineers in India, specially of the older generation, can speak or understand Russian!

This longstanding, robust and multifaceted bilateral engagement is the firm base on which we seek to build a more modern economic edifice. We need a concerted joint effort to invigorate the traditional economic relationship and to integrate it with market determined forces.

Our bilateral trade has been largely conducted under the framework of a rupee-rouble agreement from Soviet times, and a subsequent credit repayment agreement. While this has been a steady relationship, it has also been limited in its flexibility. Our existing annual trade level of under $ 1.5 billion does not correspond to the transformations in our economies.

Our two Governments are acutely conscious of this anomaly. When President Putin visited India last year, we signed a Joint Declaration, which spells out our shared vision for a new dynamism in the India-Russia economic partnership. We recognized that there is huge untapped potential, not only for an exponential growth of bilateral trade and investment, but also for jointly exploring other markets through pooling of resources. With our vast resource base and intellectual capital, Russia and India should jointly explore avenues for generating and meeting demand on a regional and global basis.

Business and industry should take this up in their own commercial interest. A number of core sectors can be easily identified for focused cooperation. They include machinery and equipment, IT and telecom, automobile components, gems and jewellery, food processing, tourism, pharmaceuticals and energy.

Information Technology is a glaring example of unutilized bilateral opportunity. India is today one of the world leaders in IT and IT enabled services. Our annual exports in this sector are nearly US $ 10 billion – most of it to Europe and America. Russia has a large and sophisticated IT market, and yet India’s IT exports to Russia are negligible. Quite often, Russia has been importing these products from Europe, which have been sourced from India at much lower cost. The middleman benefits, the consumer loses.

India is today undergoing a qualitative transformation in its infrastructure. We have launched an ambitious project which involves building or upgrading about 15,000 km of highways, which would link our major metropolitan centres and provide improved connectivity to our rural areas. We are upgrading our ports facilities; modernizing our airports and building new metros. We are improving the efficiency of our power generation, transmission and distribution. In the last few months, India has been adding nearly 2 million mobile telephone connections every month.

Russian companies, which have both the expertise and the spare capacity in these industries, have not yet fully grasped the opportunities for contracts in various infrastructure projects in India.

Energy cooperation is another key area of interest. Russia has emerged as one of the leading suppliers of energy and India is one of the largest and fastest growing markets for energy. Indian companies are keen to invest in energy projects covering upstream, midstream and downstream areas. India’s investment of about US $ 1.5 billion in the Sakhalin Oilfield illustrates this. Our companies have also significant investments in the oil and gas sector in Sudan and Vietnam. There is an India-Russia synergy for projects within our countries and in third countries. Our business communities should take the initiative for an Energy Forum between India and Russia.

Connectivity and transport linkages are crucial inputs to trade and economic collaboration. The new multi-mode North South transport corridor, which links India to Russia through Iran and Central Asia, provides an important cargo route between the two countries. Goods are already moving from India to Russia on this route. Russian exporters should also explore this route, so that it becomes more economically viable. It will also provide the incentive for upgrading infrastructural facilities on this route.

A sector of great potential in India-Russia collaboration, and one which has been somewhat neglected, is small and medium enterprises. In India, this sector which has contributed significantly to employment, development and exports. Small enterprises in India extend from relatively low-tech, labour intensive industries to high-tech areas, including Information Technology. Today, India’s pharmaceuticals industry has achieved national self-reliance with high quality medicines at affordable prices. This achievement was mainly due to our small pharmaceuticals enterprises.

We know that Russia is now devoting attention to the development of small and medium enterprises. I was happy to learn that the Russian Public Organization of Small and Medium Size Enterprises has just concluded an MOU with our Federation of Indian Chambers of Commerce and Industry to explore synergies in this vital sector. Our cooperation can span a wide spectrum, such as training, exchange of experts, management, supply of machinery and equipment and even turnkey execution of projects.

Mutual investment flows is an important pillar of a vibrant economic partnership. Both our countries are attracting increasing flows of foreign investment. Our firms are also looking for investments abroad. It is time that Indian and Russian firms availed of more opportunities in each other’s country. Our major bilateral investments –the Sakhalin Oilfield in Russia and the Kudankulam Nuclear Power Plant in India - illustrate the benefits of mutual collaboration. We need to broad-base investment flows. This also needs closer links between our banks and financial institutions. The establishment of commercial branches of banks in each other’s countries should be a priority goal.

India-Russia economic cooperation has extended to multilateral forums. Both our countries support the strengthening of multilateral institutions to sustain a balanced and equitable global economic order responsive to the needs of our countries. We have actively supported Russia’s accession to the WTO, not only in the spirit of our strategic partnership but also in the firm belief that Russia’s membership would bring balance and strength to the WTO. India and Russia can play an important role, in concert with other major emerging markets, in encouraging the WTO to operate for the common benefit of all its member countries.

India and Russia have developed strong bonds of friendship and cooperation over many decades. Our shared political perspectives, convergences of strategic interest and our cultural affinities have been the foundation stones of our strategic partnership. A dynamic and multifaceted economic partnership provides a secure underpinning to the other elements of this relationship. It is in the hands of the business community to strengthen this under-pinning. There are objective factors propelling you towards this objective.~