Trade between India and the CIS (Commonwealth of Independent States) region - includes 12 countries, namely, Kazakhstan, Turkmenistan, Uzbekistan, Kyrgyzstan, Tajikistan, Russia, Georgia, Azerbaijan, Armenia, Ukraine, Belarus and Moldova - has increased by about 45 percent in the last five years. Russia and Ukraine are India’s major trading partners in this region, accounting for approximately 81 percent of India’s total bilateral trade with the CIS region.
The CIS region offers enormous market potential given its strong GDP, high per capita incomes and economic growth rates, the size of the region’s population, and the abundance of natural resources such as petroleum, coal, natural gas, potash, fertilizers, metals and minerals. The CIS region has a strong complementarity with India’s manufacturing sector. Invigorating trade and investment ties with Russia is a focus area of the government. India’s trade with Russia (USD 6 billion in 2013-14), a member of the WTO since 2012 and a BRICS partner, remains surprisingly small.
There are several complementarities between the two sides and scope to increase cooperation in areas such as hydrocarbons, nuclear energy, pharmaceuticals, fertilizers, diamonds, coking coal, agro products, textiles and leather, engineering, information technology services and infrastructure development.
Some of the impediments faced by exporters in trading with Russia include underdeveloped trade infrastructure, onerous regulatory requirements, complex and time-consuming customs procedures, the requirement for the exporter to bear the cost of obtaining import licences, product-specific approvals and even for pre-shipment inspection, frequent changes in laws, decrees and regulations, complicated rules for certification of products and banking and finance issues. In addition, Indian exporters face various non-tariff barriers in their trade with Russia such as stringent sanitary and phytosanitary standards on bovine meat, egg products, oilseeds, and non-basmati rice. The Indian pharmaceutical industry also faces similar barriers in exporting to Russia.
The Joint Statement issued on the occasion of the visit of the President of the Russian Federation to India in December 2014 recognizes the enormous untapped potential for bilateral trade between the two countries and commits the two governments to identifying measures to facilitate the full realization of this potential such as encouraging payments in national currencies. It also sets a target of USD 30 billion for bilateral trade in goods and services to be achieved by 2025. Diamond trading is an important constituent of trade relations with Russia. During the Summit in December 2014, ALROSA, the largest diamond supplying company of Russia signed agreements for direct sale of rough diamonds with twelve Indian companies. Under these agreements, over the next three years, USD 2.1 billion worth of rough diamonds will be supplied to India at the rate of USD 700 million per year.
