Why it’s Time for India to Embrace Eurasia
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.