Prime Minister of India - Dr. Manmohan Singh

PM's speech at Indo-Russian business meet

"It gives me great pleasure to be in your midst this afternoon. I am glad this opportunity has been created for senior representatives of Indian trade and industry to meet their Russian counterparts. I hope your discussions will provide a much-needed impetus to our economic and commercial engagement.

India and Russia have a time tested relationship marked by close political understanding and convergence of views on all major issues. The economic dimension of our relationship has been historically marked by government facilitated trade and industry. There has been little direct interaction between the leaders of private enterprise of the two countries since in the past, government and state-owned enterprises had a higher profile.

The global and bilateral environment has now changed. The economies of Russia and India have registered GDP growth rates of about 7% in recent years. New potential areas of growth have emerged in both economies and new areas of bilateral cooperation have opened up. Structural reforms in both economies and advances in science and technology have given our respective economies new strengths and capabilities which we should seek to exploit for mutual benefit.

Indian firms are attaining global levels 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 and IT enabled services. Indian firms are now part of global production chains--importing, sub-assembling, adding value and re-exporting. Corporations from all over the world are establishing themselves in India to take advantage of the pool of high quality scientific talent and work force, in the manufacturing and services sectors.

I would like to place on record the fact that in many areas of India's success story, there is a strong Russian connection. Particularly in the early years of our independence we received valuable assistance from the Soviet Union in the establishment of our infrastructure and heavy industries. We acknowledge with gratitude Russian scientific and technological assistance for progress in several critical areas including in the peaceful uses of space.

This long standing, time tested and multifaceted bilateral engagement is the firm base on which can be built the edifice of a deeper and more diversified economic cooperation of the future. We need to make concerted efforts to reinvigorate our economic cooperation and integrate it with market forces. While the political responsibility for expanding ties with other countries is the primary task of governments, business to business relations have become a critical element in the overall architecture of interaction between countries in this age of increasingly de-regulated economies, private sector dynamism and globalization.

Our bilateral trade has so far largely been conducted within the framework of rupee-ruble arrangements but it is moving towards and it will soon be a fully market determined phenomenon. We are currently working on an agreement to permit the utilization of the remaining rupee debt for Russian investments in India. I am hopeful this matter will be finalized shortly. This will put the ball in the court of Indian and Russian businessmen to identify and seize the opportunities for expanding trade and economic cooperation. While the governments will act as facilitators the business community will have to occupy the center stage. Our bilateral trade level of $ 1.9 billion, according to our figures, does not correspond with the potential of the economies of the two countries and our strategic partnership in other key areas.

Both governments are acutely conscious of this anomaly. There is need to not only stem the decline in trade in traditional items like tea, tobacco, textiles and leather but to also expand the trade basket to include value added items in areas of applied technologies, information technology, telecommunications, automobile components, gems and jewellery and energy. With our vast resource base and intellectual capital, India and Russia should jointly explore avenues for generating and meeting demands on a regional and global basis.

Banking and financial sectors can provide the necessary framework for growth in bilateral trade. It will also provide the necessary element of confidence to the business communities. The opening of branches and representative offices of banks in each other's country is a positive development. The increase in exposure limits and extension of Lines of Credit also provides the necessary instruments for boosting trade. Joint financing of Indo-Russian projects and development of correspondent relations between financial institutions are the directions for future growth.

Indian and Russian economies have natural areas of synergy. India is ready to share its experience and expertise in setting up Information Technology parks. Besides Russia can import IT products directly from India rather than via Europe. President Putin's visit to Bangalore in November 2004 put into sharp focus the possibilities of cooperation in the IT sector. Now it is upto the business communities to seize the initiative.

The energy sector is a key area of interest. While production has begun in Sakhalin-I, we are keen to diversify our engagement in this sector. Russia's position as the world's second largest producer of energy and India's growing demand for energy resources spells out a natural complementarity between us in this sector. The dialogue between ONGC, GAIL, Rosneft and Gazprom is gradually gaining momentum and we hope to see concrete results soon. The oil and gas companies of India and Russia should consider expanding their joint operations to third countries.

Our government is placing special emphasis on infrastructure development-both urban and rural infrastructure. We have launched ambitious projects for building and upgradation of highways, ports and airport facilities and building of new metros. More Russian firms, with expertise in the relevant areas, must participate in projects in India.

At the 11th session of the Indo-Russian Inter-Governmental Commission on Trade and Economic Cooperation held recently in Moscow, both sides noted that the dynamic growth of the Indian and Russian economies opened up a wide range of opportunities for bilateral trade and economic cooperation. They took cognizance of the need to step up the modest volume of bilateral trade. Specific sectors were identified, including telecommunications, information technology, electronics, space, biotechnology, nanotechnology, machinery and equipment, aviation, ship building, tourism, metallurgy, oil and gas, hydro and thermal power, coal, civil nuclear energy and other infrastructure and high tech sectors. Cooperation in these areas can be stepped up through joint efforts. The group also called for early finalization and signing of a liberalized visa regime. Early conclusion of such an agreement will help develop commercial contacts between the two countries. Nevertheless, it is essential that Russian and Indian businessmen maintain a regular dialogue to seize emerging opportunities and identify projects for expanding their operations.

India-Russia economic cooperation has extended to the multilateral fora. Both countries support strengthening of rule based, non-discriminatory multilateral institutions and in that context India supports accession of Russia to the WTO.

India and Russia have developed unique bonds of friendship and cooperation over many decades. Our shared political perspectives, convergence of strategic interests and our cultural affinities have been the foundation stones of our strategic partnership. A multifaceted economic partnership will underpin more securely our traditionally close relationship. The role of the business community to build a stable and strong economic partnership is very important.

I wish your deliberations every success".