India and Russia Collaborate on Joint Development Funds, Technical Innovation Projects
March 24, 2017
India and Russia have both pledged to set up a Joint Development Fund, with an initial US$1 billion being set aside for the purpose.
The fund is being supported by the Russian Direct Investment Fund (RDIF), who will work with India’s National Investment and Infrastructure Fund (NIIF). They will each invest US$500 million, replicating partnerships the Russian entity has with countries such as China.
The RDIF has a history of supporting ventures, profiting, then exiting, but it has also worked in India before, partnering with Indian infrastructure investor IDFC to invest US$1 billion in power projects. The RDIF-NIIF partnership will address around 20 investment proposals and seek to strike its first deals this year, according to public comments made by RDIF CEO Kirill Dmitriev.
The main aim is to provide equity capital to joint India-Russia projects, mainly in India, such as small-scale hydro projects that are based on Russian technology.
The scheme fits in with the overall Eurasian development that is taking place along the old Silk Road countries. Although not a “One Belt One Road” project, the joint India-Russia initiative is a clear sign that mutual Eurasian development is very much part of Delhi and Moscow’s plans.
India has recently joined the Shanghai Co-Operation Organisation (SCO), which gives it, among other strategic benefits, a platform to discuss infrastructure development with other SCO members. These now include China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. Pakistan was admitted at the same time as India, and Iran will shortly be taking up membership. India and Russia are also members of the BRICS group of nations.
Other related India-Russia initiatives are also taking place. The Russian Venture Company, Indian Association of Technology Parks and Business Incubators, and the Global Venture Alliance have signed an agreement to jointly develop technological ventures for mutual benefit. The organizations plan to work together to promote and facilitate the commercialization of technologies, exchange of experiences, and practices of support programs for small and medium-sized businesses, and develop a plan to implement joint programs.
These include unmanned vehicle (UAV) technologies, smart energy, smart cities, biotechnology, food processing technology, as well as new materials and chemical components, especially for the aerospace sector.
Denis Manturov, Russia’s Industry and Trade Minister, recently stated that Russia would welcome Indian partners in joint collaboration on the Ilyushin Il-114 medium-haul turbo-prop airliner, which is designed for local routes and can carry up to 64 passengers. The aircraft is about to recommence production in Moscow following the relocation of the assembly facility from Tashkent in Uzbekistan. The aircraft could be sold on both Russian and Indian markets, Manturov stated.
Such co-operation fits with Russia’s move east following the US and EU trade sanctions placed upon it in 2014, and with India’s plans to engage more with Russia. India has close links with central Asia, which itself maintains strong political influence over many of the Central Asian nations. With China also massively involved in Eurasian development, the new Silk Road powers appear to have shifted to Moscow, Delhi, and Beijing.
India is also negotiating with Moscow over a Free Trade Agreement with the Eurasian Economic Union, which, if agreed, would see the free movement of products between India and Russia as well as Armenia, Belarus, Kazakhstan, and Kyrgyzstan.
India and Russia may not appear the most likely of bedfellows, but ties run deep. It was to the Soviet Union that India went looking for structural advice following its independence from the UK. Russia, which is also a large nation of tea drinkers, boasts Indian teas in its supermarkets and numerous Indian restaurants in its cities.
Although bilateral trade is relatively small, the potential for Indian products to be sold in Russia is huge. The India-Russia trade corridor is opening: Indian and Russian entrepreneurs should be positioning themselves to take advantage.