India, Russia plan alternative to S&P, Moody’s

Cooperation in aviation sector and free trade with Eurasian block mooted

St. Petersburg, June 1: India and Russia on Thursday vowed to develop a credit rating industry that is “independent from political conjecture” — a move that follows apprehensions about global agencies being biased towards large economies like the United States and China.

In a joint declaration, Prime Minister Narendra Modi and Russian President Vladimir Putin also said they would also explore harmonisation of the respective laws in the two countries regarding credit ratings.

The move assumes significance in the wake of several commentators and policy makers in India raising concerns that the global rating agencies have not been upgrading India’s sovereign credit rating despite its improving economic and political fundamentals, even as China was viewed favourably by the same agencies.

Globally, there are a handful of rating agencies and most of them are headquartered in the US. Most of the agencies including Fitch, S&P and Moody’s have given India the lowest investment grade rating — just a notch above the junk grade.

With Russia developing its own civilian aircraft and India planning to connect unserved cities through UDAAN scheme, the aviation sector has got a special focus of both the countries.

“The Regional Connectivity Scheme of the government of India provides an opportunity for strengthening cooperation in joint production and setting up of joint ventures in India in the field of aviation manufacturing to serve the demand created,” the declaration said.

Russian aircraft provides a low-cost alternative to established players like Boeing and Airbus.

Both the countries have also pledged for early commencement of negotiations for a free trade agreement between India and the fivenation Eurasian Economic Union (EAEU).

A joint feasibility report on the proposed agreement was completed last year. It has concluded that the proposed pact is feasible and mutually beneficial with substantial potential welfare gains and augmentation in trade in goods, he said.

“We will jointly encourage our business communities to use the existing workable schemes and mechanisms for settlements in national currencies elaborated by the Reserve Bank of India and Bank of Russia,” the declaration said.

India has implemented such agreements with several countries including Japan, South Korea and Singapore. EAEU holds huge potential to increase trade. It has a population size of over 180 million.

Speaking at a CEO conclave of both the countries, Mr Modi invited Russian companies to partner Indian firms in setting up manufacturing facilities to make high-tech defence equipment in India.

“India is sixth biggest manufacturer in the world and we want to raise the share of manufacturing in GDP to 25 per cent,” he said.