Putin’s India visit to focus on rebooting relations, diamond trade

Russian President Vladmir Putin’s visit to India next week is going to be far more important than most people in the two countries and elsewhere would have thought of. India and Russia are going to sign eight to ten agreements during Putin’s visit, the most significant of which will be a vision document giving roadmap of rebooting Indo-Russian bilateral relations over the next one decade. The dates of Putin’s India trip have not been announced yet by either side but it is learnt that he will be arriving on 10 December late evening and will depart for home on 12 December. The main functional day of Putin’s India visit will be 11 December when he will hold the 15th India-Russia Annual Summit with Prime Minister Narendra Modi, the first time that Modi is getting this honour and privilege. [caption id=“attachment_1832449” align=“alignleft” width=“380”]  Narendra Modi and Vladimir Putin. AFP[/caption] Putin is also expected to address a joint session of parliament, an honour that is reserved for only a few foreign dignitaries. This may happen on 12 December. Another high watermark of the upcoming 15th India-Russia Annual Summit in New Delhi is going to be a sharp focus on boosting bilateral trade by involving private sectors of the two sides and the big ticket announcement in this respect will pertain to their cooperation in rough diamonds trade. This is going to be a major B2B exercise coming up primarily at the Russian initiative. If Indo-Russian bilateral trade has not picked steam, has actually regressed and the two sides are not going to meet their target of doubling the bilateral trade to $20 billion by 2015, it is largely because the two countries’ private sectors have failed to forge closer business links despite encouragement from their respective governments. It was in 2010 when India and Russia had decided to double their bilateral trade to $20 billion by 2015, but unfortunately things stand today where they were then. India-Russia trade remains static at around $10 billion. The two sides are going to come up with a revised target of boosting bilateral trade and the ten-year-roadmap will detail ways of doing this. Cooperation in rough diamond trade is going to be one of these ways to boost Indo-Russian bilateral trade and involve private sectors of the two sides. In April this year, India (the world’s largest diamond processor) and Russia (the world’s largest rough diamond producer) had signed a memorandum of understanding to share diamond trade data. The MoU was signed in Russia by India’s Gem and Jewellery Export Promotion Council and Russia’s state-owned diamond mining firm Alrosa which accounts for close to 25 percent of the world output. The sharing of diamond trade data has proven to be extremely useful and is going to lead to a major agreement during Putin’s visit. The two sides are going to announce making Mumbai a world class diamond trading hub with relaxed taxation and simplified procedures which may lead to establishing a special zone with tax benefits for diamond traders. This will be a win-win situation and can prove to be an effective game changer in boosting Indo-Russian trade. India accounts for about 60 percent of global polished diamond output in value terms, having imported rough diamonds worth $16.34 billion and exported polished diamonds worth $20.23 billion in 2013. India and Russia stand to benefit mutually by increasing cooperation in diamond trade considering the fact that India exported gems and jewellery worth $36.04 billion last year. Diamond trade was one of the high points discussed by Russian deputy prime minister Dmitry Rogozin with External Affairs Minister Sushma Swaraj when the two leaders co-chaired the 20th meeting of the India-Russia Inter-Governmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation (IRIGC-TEC) in New Delhi on 8 November 2014. The two sides decided to enhance trade ties across various sectors, even as it resolved to “maintain the momentum of cooperation” already achieved in some priority areas including trade in rough diamonds. Significantly, Gems and Jewellery Export Promotion Council (GJEPC) and the World Diamond Mark Foundation (WDMF) along with the Indian Government are organizing the World Diamond Conference in Delhi on 11-12 December to coincide with Putin’s visit. Other important highlight during Putin’s India visit would be smart cities. Russian company Sistema is keen on developing a smart city in India. Modi and Putin are going to discuss this new aspect of Indo-Russian bilateral relations but no agreement is likely to be signed this time. Energy, particularly nuclear energy, space, infrastructure and defence are going to be other major areas of bilateral cooperation which will come up for intense discussion during the Modi-Putin talks. Many agreements are expected to be signed in these areas. Watch this space for more information on these areas! The writer is Firstpost Consulting Editor and a strategic analyst who tweets @Kishkindha.