Modi, Putin talk multi-nation trade corridor being built by India via Iran

Prime Minister Narendra Modi speaks as Russian President Vladimir Putin looks on during their visit to Sirius Education Centre, in Sochi, Russia, on Monday | Photo: PTI
Prime Minister Narendra Modi’s ‘informal summit’ with Russian President Vladimir Putin was heavy on defence and geopolitical discussions, at a time when US sanctions on Russia’s military have been picking up pace and Washington DC has turned up the heat on a trade war with India.

On Monday, Modi reached Sochi as part of his one-day tour of Russia and Putin saw him off in the early hours of Tuesday. The trip has been officially characterised as ‘agendaless’ by the government which has meant that the Prime Ministers’ topic of discussions have not been announced, while there also has not been a joint statement by both leaders after the conclusion of the trip.

So, what has instead surfaced is images of both leaders soaking up the culture of the Black Sea resort town and holding a meeting on a yacht. But reports from Russia now confirm that international geopolitical issues and that bedrock of India’s ties with Russia - defence - received maximum time from both leaders during talks.

Defence and geopolitics dominate talks

Modia and Putin have met multiple times on the sidelines of numerous international summits and are known to share a personal rapport. In his last year in office, before the general elections of 2019, the Prime Minister pushed for a visit to Russia because of his desire to cement ties with Moscow, said foreign policy watchers. This comes at a time when India has had to increasingly maintain a tightrope act, balancing its ties with an increasingly unpredictable administration in the United States and a Russia threatened by economic sanctions by the former.

The Countering America’s Adversaries Through Sanctions Act (CAATSA), signed by US president Donald Trump back in August last year, ‘seeks to counter Russian influence in Europe and curb Iran’s ballistic missile programme and targets the rogue regime in North Korea, according to the US Congress.

“Significantly, for India, it has provisions to impose economic and financial sanctions on against countries that engage in significant transactions with Russia’s defence and intelligence sectors,” a senior Russian diplomat said.

Putin reportedly said India was not going to allow its defence engagement with Russia to be dictated by any other country. “Our defence ministries maintain very close contacts and cooperation. It speaks about a very high strategic level of our partnership,” Putin said.

India’s defence deals with Russia have been rocky over the past couple of months. The proposal for India and Russia to jointly develop an advanced fighter — the eponymous Fifth Generation Fighter Aircraft (FGFA) — has been formally buried back in February. However, New Delhi is also mulling the acquisition of a S-400 Triumf missile-based air defence system that may come with a price tag of an estimated ~390 billion, according to a national daily.

According to reports in the Russian media, the talks also focused on the sanctions on Iran and the crisis in Syria as a result of the civil war. Both leaders also talked about the multilateral groupings such as BRICS and the Shanghai Cooperation Organization and what may be the way ahead on crucial issues such as development financing and the prohibition of chemical weapons, the reports added.

Multi-nation trade corridor also discussed?

India’s bilateral trade with Russia rose to $9.53 billion in the first 11 months of 2017-18, from the $7.48 bilion of 2016-17. While trade has grown for the past two years, it has been heavily in favour of Russia. Of the $7.63 billion worth of imports from Russia, diamonds - processed or otherwise - and refined petroleum oil make up for the lion’s share.

A multi-nation trade route being developed by India to cut shipment time for container cargo travelling to Russia, Central Asia, and Afghanistan may have been among the issues discussed. The International North South Transport Corridor (INSTC) focuses on the Chabahar port in southern Iran and incorporates thousands of kilometres of all-weather highways across the Iranian desert to transport goods to the northern border with Azerbaijan. Here, logistics hubs have been set up for transporting the goods to the Russian port of Astrakhan and onwards to Russia’s European markets.

“However, now with the US decision to reinstate sanctions against the Islamic regime in Iran, apart from the prospects of a bloated oil import bill as global crude prices soar and loss of export markets in Iran, the INSTC has hit another roadblock. We had suggested the issue be raised by the Prime Minister with President Putin,” a senior commerce ministry official said. Data from the Directorate General of Foreign Trade (DGFT) showed almost all of India’s container trade with Russia was still passing through the Suez Canal, moving around the European continent and through St Petersburg.

The Federation of Freight Forwarders Association of India, which had conducted the first dry run through Azerbaijan back in 2014, had initially pegged six months as the time required to popularise the new route after it opened. But difficulties over the lack of loan facilities from banks on this route, inadequate insurance coverage for bill of lading, non-vessel operating common carrier as well as irregular shipping services to Iran remain.

Modi also invited Putin for the 19th Annual Summit in India later in the year. The last bilateral summit in St Petersburg, back in June 2017, had seen Modi pitching for more Russian investments into India.

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