India Could Become the Fabric for Russian Market: Economist

India and Russia will have to find "new ways" in order to address the issue of bilateral trade imbalance, as he noted that the problem wasn't entirely new and had been ongoing since the Soviet era, eminent Russian economist Professor Alexander Dynkin told Sputnik India at the Raisina Dialogue, organised by the Ministry of External Affairs (MEA) and Observer Research Foundation (ORF).

"There are no very simple answers to this question. I guess we have to find some new ways. For example, establishing new value-added chains between Russian enterprise, Indian enterprise, and maybe enterprises in some third countries. Because today, I guess, India has the capacity to become a sort of a fabric for the Russian domestic market," Dynkin explained.

He said that such a proposition would be helpful for both economies as it would increase the production and employment in India.

"It would increase the taxation of the Indian budget and at the same time the huge Russian market is open for Indian goods. I guess this is one of the strategic ways of dealing with the problem," Dynkin stated.

Trade between India and Russia reached a record $66 billion last fiscal, a surge of over 500% since 2022, driven primarily by Russian crude exports to India. However, the trade deficit has grown, with Russian exports totaling over $61 billion, while Indian exports amounted to just over $4 billion, according to official data. Notably, over 90% of the bilateral trade is conducted in local currencies.

Commenting on the resilience of the Russian economy, which defied all expectations to grow by 4.1% last year, Dynkin stated that the Russian economy has indeed demonstrated rather strong resistance to an "unbelievable quantity of sanctions" imposed by the Western powers.

"I think no economy in the world, not even the Chinese economy, could have sustained such a huge amount of sanctions, including the freezing of Russian stolen assets abroad, physical attack on infrastructure, and so on. Today, we are more or less stable on the supply-side of the economy. So, we have a stable integration of the economy, as President Putin specified in his address to our government," Dynkin pointed out.

He, however, flagged certain challenges which Russia would have to overcome in order to sustain the same economic growth in coming years, as it competes with other economies of scale.

"The problem is that almost all resources have already been used in production because we have unemployment rate of 2.3% which means close to zero unemployment. We have loads of capacity of enterprise more than 80%. So, major steps would be budget consolidation, tightening of the monetary policy and increasing the labor productivity. These are the targets and tasks for the current year for us," the Russian thinktank chief said.

Meanwhile, sharing his thoughts on US President Donald Trump's tariff threats against BRICS nations, he said that these nations were on "alert" and waiting for some concrete measures from the US.

"It would be impossible [for the US] to launch a tariff war with the whole globe," Dynkin reckoned.

Commenting on the China "decoupling" strategy being pursued by various powers including India, Dynkin stated that the Chinese market would be important for Indian exports in coming years, mainly because of its sheer size.

"So, as India grows, it has to be somehow connected with the Chinese economy," he stated.

Dynkin also referenced recent remarks by Prime Minister Narendra Modi during a podcast with Lex Fridman, where the Indian leader highlighted that tensions between the two Asian giants had eased since the disengagement pact on 21 October.

"I guess this is a step in the right direction because, despite all the historical heritage, China and India are the biggest economies in Eurasia, and they have to have some sort of communication," the economist stated.

Speaking about Russia's 'Pivot to Asia' strategy, Dynkin emphasised that Russia not only had excellent ties with India, but also with its neighbours such as Bangladesh, where Rosatom is involved in developing the Rooppur Nuclear Power Plant (NPP), the largest foreign investment project.

"We have good relations with India, and I guess in this sense, of course, we could be a security provider in the region. We supply a lot of military equipment to India, and I do not foresee those ties would be stopped, despite all other military equipment producers, such as France and the United States, dreaming of penetrating India now," he said.

While Dynkin said that western sanctions had somewhat hindered the further development of economic ties between Russia and Southeast Asia, he added that easing of sanctions in the future would create "very good prospects for cooperation between Russia and Southeast Asia".

Defenсe News

Russia Keen to Expand Technological Cooperation Under 'Make In India'

10 March, 20:13