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Context
- PM Modi recently attended the Eastern Economic Forum, being held in the Russian city of Vladivostok. It was also attended by Russian President Vladimir Putin.
- PM Modi recalled his participation at the forum summit physically in 2019, saying India had announced its “Act Far-East” policy at that time.
- India iterated its keenness to strengthen its partnership with Russia on Arctic subjects and there is immense scope for cooperation in newer areas, particularly in the field of energy.
Russia’s Far East and India
- At the fifth summit of the Eastern Economic Forum (EEF) in 2019 at Vladivostok, PM Modi pledged a $1 billion Line of Credit for development of the Russian Far East.
- This pledge has now become a key pillar of the ‘Special and Privileged Strategic Partnership’ between India and Russia.
Russian Far-East Region: The geography
- The Russian Far East is the easternmost part of Russia and the Asian continent; and is administered as part of the Far Eastern Federal District.
- It is located between Lake Baikal in eastern Siberia and the Pacific Ocean.
- The region’s largest city is Khabarovsk, followed by Vladivostok.
- The region shares land borders with the countries of Mongolia, China, and North Korea to its south, as well as maritime boundaries with Japan to its southeast, and with the United States along the Bering Strait to its northeast.
Why is the region under India’s consideration?
- Although it is rich in natural resources including minerals, hydrocarbons, timber and fish, it is an economically underdeveloped region.
- The region faces several challenges, including a:
- Harsh climate
- Sparse population
- Increasing outmigration
- Poor infrastructure and
- Lacking connectivity
Why focus on the Far East?
- While the region is labor-scarce, it is resource rich.
- The Russian Far East needs capital, technology and markets.
- Meanwhile, India is a country with a labor-surplus and a resource-deficit, in need of energy, mineral resources and farming land.
- Russia is in a position to meet Indian requirements and vice-versa.
Economic significance of Far-East Region
- Natural resources: The region occupying 40 per cent of Russia’s total territory is rich in natural resources, particularly diamonds, gold, oil, natural gas, coal, timber, silver, platinum, tin, lead, and zinc. It also has rich fishing grounds.
- Agriculture: Indian interest has been focussed mainly on its need to tap into the region’s natural resources, including arable land. A recent Indian study identifies oil and natural gas, iron ore, copper, diamonds and gold, fresh water, timber and fish stocks as the resources of the region that would find an Indian market.
- Blue Economy: It is in this context that the Chennai-Vladivostok sea route development has been proposed. This link would facilitate cargo transfers between the two eastern ports of the two countries in 24 days compared to 40 days that it now takes for ships that sail via Europe.
- Employment opportunities: A lack of manpower is one of the main problems faced by the Far East and Indian professionals like doctors, engineers and teachers can help in the region’s development. Presence of Indian manpower will also help in balancing Russian concerns over Chinese migration into the region.
- Energy Security: The area is rich hydrocarbon reserves in the region throw up immense opportunities for Indian companies. ONGC Videsh has already invested in the Sakhalin-1 project and its terminal is acknowledged as the best in Russia. India is set to get gas from Gazprom that will probably be liquefied at a plant near Vladivostok.
- Scope for Small scale industries: For India, there is immense potential for mid-sized and small businesses who should be assisted to overcome language and cultural barriers so that they successfully adopt local business practices. The large diamond reserves in the region should be a magnet for the Indian diamond cutting and polishing industry, which is already facing tough competition in Africa from the Chinese.
- Export destination for key sectors: Infrastructure, pharmaceuticals, and agriculture development are also areas of opportunity for Indian business and labour. Tele-medicine and long distance education are other areas where Indian companies can make a mark. It would also help in increasing India’s exports.
Strategic importance
- Opening to Indo-Pacific: The Russian Far East is at the forefront of geopolitics centred on the Indo-Pacific and is key in pivot to Asia.
- Direct gateway to Japan: India’s ties with the Russian Far East could help cement Indo-Russian relations as well as bolster its ties with Central Asia and East Asia. It would connect India to East Asia especially Japan.
- Confidence building with Russia: In the wake of the Ukraine crisis, the US-EU campaign to isolate Russia has gathered momentum. India’s simply cannot risk missing this opportunity to show its affinity for Russia. Although Russia needs Chinese investment it is uneasy with Chinese projects as they often use only Chinese workers.
Countering China:
- China’s emergence as a major economic power in Asia, as a source of investment, a market for exports and, above all, the source of mass labour migration have altered both the ground situation.
- At present, China is the leading investor in the region. Chinese investments account for nearly two-thirds of the total Foreign Direct Investment of $33 billion that has come to Russia’s Far East (RFE) in the last four years.
- A larger footprint in the Russian Far East enhances India’s presence and influence in China’s immediate neighborhood.
Various steps taken by India
- While 2019 is the first time that India has participated in the EEF, it is not new to the Russian Far East.
- India opened a consulate in Vladivostok in 1992, the first country in the world to do so.
- In the decades since, its interest in the Far East region, especially its oil and gas reserves, has grown.
- Indeed, back in 2001 India’s ONGC acquired a 20 percent stake in the Sakhalin reserves and over the last couple of years Indian companies have started announcing investments in the Russian Far East.
- In December 2017, for instance, Tata Power announced that it had secured a $4.7-million mining license for a thermal coal mine in the Kamchatka peninsula.
Note: Indian leadership was visionary even before the NDA-II regime!
Way forward
- A necessary pre-condition for increased trade and investment relations between India and the Russian Far East would be the development of necessary infrastructure aimed at improved connectivity between the two regions.
- India and Russia should put in place a free trade agreement, easier visa norms and improved travel facilities. Connectivity is key to development in the modern world.
- While land connectivity is impaired by several geopolitical and security constraints, developing sea connectivity is possible.
- To maintain the momentum of this engagement, both governments must ensure that their respective private sector firms participate, going beyond oil and gas into manufacturing and agriculture.
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