Skip to main content

Prime Minister Modi's Upcoming Visit to Russia: A Trade Perspective

Introduction

On July 8, 2024, Indian Prime Minister Narendra Modi is set to embark on a three-day visit to Russia. This visit holds significance as it marks his first bilateral engagement since taking office for a rare third consecutive term as India's prime minister. Traditionally, Modi has chosen neighboring countries for his initial foreign visits, emphasizing India's neighborhood as a foreign policy priority. However, this time, the choice of Russia and Austria may seem unconventional. Let's delve into the reasons behind this decision and explore the trade implications of Modi's visit to Russia.

Background: India-Russia Relations

India and Russia share a longstanding relationship that dates back to the Indo-Soviet Treaty of Peace, Friendship, and Cooperation signed in 1971. Despite the collapse of the Soviet Union in 1991, their ties have endured, with annual India-Russia summits playing a crucial role in anchoring this partnership. Defense and energy cooperation have been key elements, but recent years have seen a decline in summit meetings due to geopolitical shifts and India's growing reliance on the West for technology and investments.

Trade Dynamics and Strategic Considerations

1. Energy Cooperation

One of the critical aspects of India-Russia trade is energy cooperation. Despite Western objections during the Ukraine conflict, India has continued to receive Russian oil at discounted prices. This strategic move allows India to secure energy resources while navigating global tensions. Modi's visit provides an opportunity to strengthen energy ties and explore avenues for further collaboration.

2. Payment Mechanisms Amid Sanctions

Western sanctions have strained Russia's economic relations, making it essential for both countries to find alternative payment mechanisms. During the visit, discussions are likely to focus on smoothening payment issues arising from these sanctions. The use of national currencies for bilateral trade, which now accounts for 60% of the total trade, will be a key topic of conversation.

3. Maritime Connectivity: Chennai-Vladivostok Route

Modi's visit may also address the Chennai-Vladivostok maritime route, which aims to enhance connectivity between India and Russia. By improving sea links, both countries can boost trade and facilitate smoother movement of goods across the Indo-Pacific region.

4. Defense Exchanges and RELOS Agreement

The Reciprocal Exchange of Logistics Agreement (RELOS) is expected to be concluded during Modi's visit. This agreement will pave the way for more defense exchanges, reinforcing India-Russia defense ties. Given Russia's limited credible friends on the global stage, Modi's engagement becomes crucial for both nations.

Conclusion

Prime Minister Modi's upcoming visit to Russia holds immense significance for bilateral trade and strategic cooperation. As the world faces intense global flux, India's multi-alignment approach seeks to maximize advantages by engaging with different partners. By strengthening energy ties, addressing payment challenges, and promoting maritime connectivity, Modi's visit underscores the importance of India-Russia relations in an ever-changing world.

Please note that this article provides an overview, and further research and analysis would be needed to delve deeper into specific trade agreements and implications. If you have any additional requests or need further details, feel free to ask!

Labels:

Comments

Post a Comment

Popular posts from this blog

Practical issues in RoDTEP Scheme

I hope, by now, everybody is aware of what is the RoDTEP Scheme. Assuming that let me highlight some practical questions regarding this scheme. On 28th October 2020 under the chair of Mr. G. K. Pillai, the RoDTEP Committee was formed. The main objective of this committee is to determine the ceiling rates of items covered under the scheme. However, the data of chapter 86, 88, and 89 are still pending from the industry's side. It is predicted that the Remission of Duties and Taxes on Exported Products briefly known as the RoDTEP Scheme is likely to be launched under the new Foreign Trade Policy. The scheme seeks to refund currently un-refunded duties/taxes/levies at the local, state, and central level have borne on the exported products. In view of the above, I have jotted down some key questions which need to be answered, 1.  How to segregate the VAT and Excise Duty leviable on petrol & diesel on export and domestic selling products? 2.  How to segregate the electricity dut...
1 comment
Read more

Drafting Transfer Pricing Legislation: Taxes Covered

Depending on the design of a country’s tax system, application of the arm’s-length principle may be relevant in determining the taxable objects for one or more direct taxes (income tax, corporate tax, profits tax, etc.). Generally, most countries’ transfer pricing legislation has broad application across direct taxes. One notable exception being Ireland, where the transfer pricing legislation introduced in 2010 applies only to certain classes of income for direct tax purposes.  Countries with other specific types of direct taxes governing specific sectors or transactions types (such as a mining income tax) may need to consider application of transfer pricing legislation to them. Typically, this would be achieved through separate provisions being inserted in the relevant taxing acts. However, where a consolidated tax code has been adopted, a single set of legislation may be possible. Transfer pricing provisions may also be necessary for other types of taxes such as a resources royal...
Post a Comment
Read more