Abhijit Bhattacharyya | After US, UK, EU; it’s time for India FTA with Russia
Despite this, however, at the height of the Cold War, the United States, in a bid to drive a wedge between its main rival, the then Soviet Union, and its principal allies, forgot this adage and did exactly that -- of putting “all eggs in one basket” -- and perhaps unwittingly created a monopoly manufacturing base in China
It is a truism in economics that anyone -- whether it be an individual or a country -- must not “put all eggs in one basket”. Despite this, however, at the height of the Cold War, the United States, in a bid to drive a wedge between its main rival, the then Soviet Union, and its principal allies, forgot this adage and did exactly that -- of putting “all eggs in one basket” -- and perhaps unwittingly created a monopoly manufacturing base in China. This led to America itself becoming the primary market and target for China-made consumer goods, electronics and high- tech gear.
Subsequently, India too followed the beaten path -- to buying Beijing’s products. Though not in the same mega league of the US and China, the Sino-Indian bilateral trade was bad enough to inflict long-term damage to Indian indigenous industry and one-way adverse balance of payments.
America’s realisation dawned late after it got mauled in both the industrial and technological fields by the Dragon for four decades. In India’s case, the bilateral trade deficit has become an unbridgeable yawning gap.
Today, fresh troubles are brewing with US President Donald Trump’s inexhaustible insensitive semantics and thoughtless acts. Consequently, the “system” of world multilateralism is in a state of shock and confusion. The pendulum of state under Mr Trump has inexorably swung to the other extreme to sting all. Once the land of competition and quality, the US has suffered as it ignored its own winning formula -- all that had made the US the economic, financial and commercial pole star of the globe. The US, once the champion of competition in open market economics, inexplicably turned hostile against the very global institutions which America had helped set up, supported and relied on for decades.
The 166-member 1995-established World Trade Organisation (WTO), the primary multilateral institution which regulates international trade, is gasping as it has incurred Mr Trump’s wrath. The 1948-established World Health Organisation (WHO), based in Geneva, which provides leadership on global health matters, most recently in the Covid-19 pandemic, is choking because POTUS has shut off the cash flow. It could now be the turn of the World Intellectual Property Organisation to call it a day.
There were enough indications signalling that the days of globalisation, liberalisation and inter-linked multilateralism were numbered. But now they are shredded into pieces.
The growing friction between Europe and Russia undoubtedly constitutes the defining moment of the twenty-first century. It started with the West asserting its economic clout to take on the military machine of Moscow, which further escalated over the developments in Crimea a few years back and escalated after the Russian invasion of Ukraine three years ago. But the economic consequences for Europe and the West were even greater.
From the United States to European Union, from the UK to Australia, everyone is exploring free trade agreements (FTAs) for the sale of their industrial goods as the open market for world trade has been disrupted. And all of them are in search of an FTA with India, given its readymade market of at least 550 million consumers. It also opens up new opportunities for New Delhi. While negotiations are in various stages for India’s FTA with the US, UK and Europe, it may be time to break new ground. What about an FTA between New Delhi and Moscow, between the world’s most populous country and the one with the largest land mass? Hasn’t Russia (and the former Soviet Union) been one of India’s steadiest friends and partners for over seven decades, repeatedly come to India’s rescue in the UN Security Council with its veto on issues like J&K during conflict times? Hasn’t it consistently been on India’s side in military and other issues at times when the West took a different stand?
Let’s take a look at India-Russia bilateral trade figures, based on information on the website of India’s embassy in Moscow. For obvious reasons, Russia had a $55.18 billion surplus in 2023-2024. The total of $4.26 billion Indian exports consisted of agricultural commodities (rice, tobacco, shrimp, tea, coffee, grapes), chemical and pharmaceutical products, clothing, leather goods, knitwear, ceramics, iron and steel, surgical tools, electrical machinery. Russia’s $61.44 billion surplus, on the other hand, was earned through exporting oil, petroleum products, fertilizers, bituminous substance, mineral fuel, machinery, precious stones, wood, paper metal, vegetable oil. What, however, isn’t reflected here are Russian arms exports to India, which have been going on since the mid-1950s.
While there is nothing spectacular about the inventory of India-Russia bilateral trade at present, what is important is the long-term stability of the relationship and their mutual trust and confidence in each other. In an era of global turbulence and geo-economic uncertainties, a dependable and long-term FTA will serve both the nations well, away from sanctions and other threats. One must examine what Russia alone has, and what the rest of Europe does not. It would be a mistake to eye Russia only through the prism of arms and military technology, as well as MiGs, Sukhoi, Antonov and Tupolev aircraft. The country’s vast continent-sized expanse is an untapped, unexplored and unexcavated geological wonder. With populations exploding across the underdeveloped Third World and the growth of a few unscrupulous oligarchs in the developed West and Asia, a race for resources will intensify in the twenty-first century, creating unforeseen crises, leading to Gaza, Syria, Iraq, Afghanistan and similar hotspots. Endless wars and bloodshed are good for business, as peace holds little benefits for the oligarchs and mega military merchants. The ongoing Russia-Ukraine war, for example, creates economic opportunities for both oligarchs and the merchants of mayhem.
It is important to remember that while Russia has been a pariah to much of the West, it has been an enduring friend to India for over 60 years. Just look back at the 1971 Indo-Soviet Treaty of Friendship, and what it meant to this country at a time of crisis. With its large base of industry, agriculture, fisheries and being a major producer of cereal, meats, vegetables, wheat, sugar and non-food items like copper, lead, nickel, aluminium, precious metals, silver, platinum, rubber, oil, gas and coal, there is a solid case to be made for an India-Russia FTA. Russia’s importance will only grow. Let New Delhi and Moscow think out of the box to invest in the future with a 25-year FTA just like it did with the 1971 treaty. It is time for the two to tango, and not focus on the Elephant-Dragon dance, as the Beijing overlord would like a naïve India to do.
The writer has served as chief commissioner of customs in Hyderabad and Delhi
