A Critical Appraisal of Indo Russian Trade Dynamics Since Liberalization

Abstract

India and Russia have shared strong and warm bilateral relations over the last many decades. The dissolution of the Soviet Union in 1991 was the primary reason for a slowdown in trade and relations between India and Russia. However, as the Russian economy has stabilized, relations with India too have accelerated. After the collapse of the Soviet Union, India and Russia renegotiated the entire trade regime. An agreement signed in 1993 terminated the rupee trade arrangement and mandated all bilateral trade transactions to be conducted on hard currency basis. The issue of repayment of civilian and military loans taken by India also came up. After prolonged negotiations, the rouble credit was denominated in rupees and repayment schedule was drawn up. It was agreed that India will pay about Rs.3, 000 crores annually to Russia for 12 years from 1994, and that Russia would use the rupees to buy Indian goods. Later, it was also agreed that this amount could be put to auction to Russian and third party enterprises at discount to make Indian goods more economically viable. newlineNeed of the study newlineThe economic relationship between India and Russia is not a new phenomenon; trade between these two countries is old. The present research has been attempted to further add impetus on the need of building strong relations between India and Russia. newlineThe challenge is to enhance the political economic commitment further, so as to ensure the trade conditions are better then ever before. The ultimate aim of the commitment is that the quality of the product and makes them price competitive. newlineHowever, the following problems can be observed in this regard. newlineand#61623; Unfavorable balance of trade of India with Russia due to inelastic demands of imports from Russia. newline No availability of produced material of international standard in India due to the use of traditional techniques of production. newline