Why it’s Time for In­dia to Em­brace Eura­sia

The Economic Times - - The Edit Page - Dipanjan Roy Chaud­hury

The cri­sis in Ukraine has cre­ated the pos­si­bil­ity of an al­ter­na­tive eco­nomic zone rich in nat­u­ral re­sources and wide-rang­ing mar­ket op­por­tu­ni­ties. Be­tween May 22 and 24, St Peters­burg will host an In­ter­na­tional Eco­nomic Fo­rum (SPIEF). Most par­tic­i­pants will be the head hon­chos of large Rus­sian, Baltic and Euro­pean na­tions. But the heads of Gold­man Sachs and other US in­vest­ment banks are also ex­pected to at­tend. Held in the back­drop of the Ukrainian cri­sis, this is an at­tempt to show­case the po­ten­tial of an eco­nomic zone in the heart of Europe and Asia: Greater Asia — and In­dia can also ben­e­fit from this group­ing. Elec­tions at home have cur­tailed In­dia’s par­tic­i­pa­tion to a hand­ful of chiefs of sta­te­owned banks. But fu­ture edi­tions of the SPIEF could see our in­ter­est, and par­tic­i­pa­tion, grow. Notwith­stand­ing its close strate­gic part­ner­ship and po­lit­i­cal ca­ma­raderie, In­dia-Rus­sia bi­lat­eral trade has not evolved much be­yond de­fence and en­ergy pur­chases. Many at­tempts and ne­go­ti­a­tions over the years have not boosted trade and in­vest­ments, with bi­lat­eral trade at a mea­gre $6.52 bil­lion in 2012-13. But over the last few years, the grow­ing en­ergy part­ner­ship has shown a lot of prom­ise. And emerg­ing mar­kets in Eura­sia, led by Rus­sia, open up an op­por­tu­nity for Delhi as a pos­si­ble al­ter­na­tive to the EU. This re­gion is en­dowed with an abun­dance of nat­u­ral re­sources: huge re­serves of oil and nat­u­ral gas, as well as metals and other min­er­als. Last year, In­dia and Rus­sia de­cided to co­op­er­ate in sec­tors such as oil and gas, phar­ma­ceu­ti­cals, in­fra­struc­ture, min­ing, au­to­mo­biles, fer­tilis­ers and avi­a­tion. Both will col­lab­o­rate to mod­ernise age­ing fac­to­ries. Europe has not re­cov­ered from its eco­nomic cri­sis. Some Euro­pean lead­ers sup­port Moscow’s po­si­tion on the Ukraine is­sue ahead of EU Par­lia­ment polls. So, Moscow has po­si­tioned it­self as a cen­tre of eco­nomic power, with in­flu­ence across the for­mer Soviet republics. The US is ag­gres­sively against Putin’s Ukraine pol­icy, but Moscow has said that it will not block out na­tions that are not par­tic­i­pat­ing in the SPIEF. “We will not close the door to the Rus­sian econ­omy and mar­ket on those com­pa­nies that will not be com­ing. We can as­sure these com­pa­nies that this will have no ef­fect on our re­la­tion­ship with them,” said Sergey Belyakov, deputy min­is­ter of eco­nomic de­vel­op­ment of the Rus­sian Fed­er­a­tion.

The SPIEF, a brain­child of Vladimir Putin, at­tracts around 5,000 po­lit­i­cal and busi­ness lead­ers, sci­en­tists and me­dia from all over the world. De­spite the con­flict in the Ukraine, In­dia has backed its Rus­sian ally. Na­tional se­cu­rity ad­viser Shiv Shankar Menon sup­ported Rus­sia’s in­ter­ests in Crimea.

In­dia would like to join a Rus­si­aBe­larus-Kaza­khstan cus­toms union. Last year, when Prime Min­is­ter Man­mo­han Singh vis­ited Moscow, In­dia started push­ing for mem­ber­ship of this cus­toms union, es­sen­tially a free­trade zone be­tween its part­ners. Started a few years ago, the union pro­vides free move­ment of goods, ser­vices and people in the re­gion.

The de­lay in con­clud­ing an In­dia-EU free trade agree­ment (FTA) has pre­vented an ex­pan­sion of trade, de­spite the fact that the EU as a bloc is In­dia’s largest trad­ing part­ner. Any FTA can now be signed by the new govern­ment that comes to power in Delhi.

Among the po­ten­tial hur­dles to the In­dia-EU pact are hard­ened po­si­tions on some topics: In­dia wants EU to pro­vide greater mar­ket ac­cess in ser­vices and phar­ma­ceu­ti­cal sec­tors, data se­cu­rity for its IT sec­tor and lib­er­alised visa norms for its pro­fes­sion­als. The EU, in turn, is press­ing In­dia hard for re­forms in bank­ing and in­sur­ance, wines and spir­its, in­tel­lec­tual property regime, au­to­mo­bile and pub­lic pro­cure­ment.

While the EU pact sim­mers, In­dia should seize the op­por­tu­nity in Eura­sia. It should be­come a big eco­nomic player in the re­gion where Europe and Asia over­lap. Over time, this can also be­come its gate­way to western Europe as well.

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