Consequent to India increasing FDI up to 49 per cent in the Defence production, its depth of economic relations with Russia, are expected to see a dramatic change with Prime Minister Mr Narendra Modi's forthcoming visit to the CIS countries giving an extra push to the strategic ties with the region, an ASSOCHAM study has said.
The recent hike in FDI limit to 49 per cent is expected to bring more investments, particularly from Russia into the defence sector. Earlier FDI limit of 26 per cent was the main hurdle holding back global OEMs (original equipment manufacturers) from investing in the Indian defence production, ASSOCHAM Paper on India's ties with Russia has noted.
Looking forward a successful visit of the Prime Minister to Russia, ASSOCHAM Secretary General Mr D S Rawat said, Russia has been a trusted and an old friend of India . However, due to geo-political reasons, the country has been isolated by the western world. India, should stand by this friend and extend the fullest economic cooperation to it when Russia needs it most. Our Prime Minister should make it loud and clear that India remains a trusted friend of Russia.
It said to make India increasing self-reliant, the Ministry of Defence has placed high priority on procuring equipment from Indian companies. Any country that makes indigenization of India's defense imports the core of its India strategy would be able to establish long-term, mutually beneficial relationship, the paper said.
India-Russia bilateral trade of about USD seven billion has not only remained much below the potential, it has also remained highly skewed for a few items besides the Defence in which investment has also taken place. The bilateral investment has also remained at subdued level of USD eight billion.
Indo-Russian cooperation in the military technical cooperation sphere has evolved from a simple buyer-seller framework to the one which involved joint research and development, joint production and marketing of advanced defence technologies and systems.
The BrahMos missile system is an example of this type of cooperation. Joint development of the Fifth Generation of Fighter Aircraft and the Multi Transport Aircraft, as well as the licensed production in India of SU-30 aircraft and T-90 tanks, are other examples of flagship cooperation programmes presently underway, the paper highlighted.
It suggested that with liberalisation of policies for FDI in the defence production, India should collaborate with Russia to set up a Special Economic Zone for defence capabilities and aerospace. "Russian companies and their Indian suppliers can set up manufacturing and research facilities for domestic use and export".
According to the ASSOCHAM paper, Russia has also been a long standing partner of India in nuclear energy. It recognises India as a country with advanced nuclear technology and an impeccable non-proliferation record.