Viktor A. Burlakov
Far Eastern Federal University, Vladivostok,
Far Eastern Law Institute of the Ministry of Internal Affairs of the Russian Federation (Vladivostok branch), Vladivostok
Abstract: The article analyzes the main transport routes through which the Russian-Indian trade cooperation is carried out. The successful development of trade relations between countries directly depends on the solution of logistical problems.
Keywords: Russia, India, trade relations, transport corridors, «North-South», «Vladivostok-Chennai»
The development of trade relations between Russia and India in the current international political conditions is not so much a need as an urgent need. The curtailment of trade relations with the countries of the West is fraught for Russia with the formation of such a system of relations that can be characterized in terms of an economic blockade. India, in this regard, can become another country, besides China, capable of compensating for inevitable economic losses.
The purpose of this work is to consider the prospects for the formation of new transport corridors between Russia and India, which can stimulate the further development of trade relations between the countries.
It is important to understand that the successful development of Russian-Indian trade relations directly depends on the solution of logistical problems. Countries do not have a land border. Moreover, between India and Russia there is a kind of “belt of instability” that covers a number of regional conflicts: the permanent conflict in Afghanistan, territorial disputes between Uzbekistan, Tajikistan and Kyrgyzstan, the Armenian-Azerbaijani conflict. The picture is complemented by Pakistan hostile to India and Iran under international sanctions. This seriously complicates the delivery of goods and makes trade between countries extremely sensitive to the global political situation.
The potential of Russian-Indian trade relations has not yet been fully realized to date. According to the results for 2021, the trade turnover between the countries amounted to 13.556 billion US dollars, which is 46.45% more compared to the pandemic year of 2020. In part, this growth is explained by a 17% drop in trade turnover in 2020 (compared to 2019). However, this is the highest figure since 2010.
Экспорт России в Индию составил 9,13 млрд долл. США, увеличившись на 57,43% по сравнению с 2020 годом. Импорт России из Индии составил 4,43 млрд долл. США, увеличившись на 28,03% .
However, despite such indicators, India’s share in Russia’s foreign trade turnover amounted to only 1.73% (in 2020 – 1.63%). In terms of the share in Russian trade turnover in 2021, India took 14th place (in 2020 – 16th place). Russia’s share in India’s foreign trade turnover was 1.4%. In terms of share in Indian trade turnover in 2021, Russia ranked 25th.
Since April 2022, the Federal Customs Service of Russia has stopped publishing data on the import and export of our country. However, even indirect estimates inspire a certain optimism. According to the Indian Ministry of Commerce and Industry, for the period from April to August 2022, India’s trade with Russia amounted to $18.2 billion. This makes Russia the seventh largest trading partner. Naturally, the share of India in the foreign trade turnover of Russia is also rising. At the same time, it is clarified that India’s imports from Russia amounted to 17.2 billion US dollars, and exports – 992.7 million US dollars .
The increase in trade turnover occurred primarily due to the increase in Russian oil supplies to India. Thus, “in March 2022, daily oil supplies to the country increased by 4 times compared to the same indicator in 2021. And in June 2022, the volume of imports from Russia increased 50 times compared to April figures and amounted to about 950 thousand barrels of oil per day. From February to June 2022, India bought 34 million barrels of Russian oil” [8. P. 94].
It should be said that mineral resources already in 2021 prevailed in Russian exports to India, amounting to 31.87%. Other significant positions of Russian exports were: machinery, equipment and vehicles – 19.88%; precious metals and gems – 18.44%; products of the chemical industry – 16.08%; metals and products from them – 5.50%; food products and agricultural raw materials – 4.27%; wood and pulp and paper products – 3.35%.
Goods were actively imported in the following positions: products of the chemical industry (primarily pharmaceutical products) – 31.70%; machines, equipment and vehicles – 29.94%; food products and agricultural raw materials – 16.34%; metals and products from them – 7.69%; textiles and footwear – 7.31%; precious metals and stones – 1.88% .
The main current route serving Russian-Indian trade is Mumbai – Hamburg / Bremerhaven – St. Petersburg. Its length is 8675 nautical miles, and the transit time is from 30 to 45 days. The cost of transportation along this route is 955-1400 US dollars for a 20-foot container, 1500-1900 US dollars for a 40-foot container. The main line operators are Maersk Line, MSC Line, CMA CGM Line, СSAV Line [3. P. 3].
Figure 1 – The current sea corridor Mumbai – Hamburg / Bremerhaven – St. Petersburg
The obvious advantages of this route are the development of logistics links, the universal range of transportation and the use of a developed port network. The designated operators have been providing transportation on this route for a long time. The customs control system has been clearly worked out. The multifunctionality of the ports allows for the transportation of containerized, liquid and bulk cargoes. This is especially important considering that the main Russian export to India is oil and oil products.
The shortcomings of the route are obvious, first of all, to the Russian side. The main carriers operating on the route are refusing to serve Russian foreign trade for political reasons. Insurance premiums for goods going to and from Russia also increased. In addition, it is often necessary to use European ports for transshipment of Russian cargo, which creates additional difficulties with customs clearance.
Russia does not have a sufficient number of merchant ships capable of fully replacing foreign carriers. The Russian ports in the Baltic (the Big Port of St. Petersburg, the commercial seaport of Primorsk and the seaport of Ust-Luga) noticeably lose in terms of cargo turnover to the nearest European ports. This makes it inevitable that foreign ports in the Baltic will become involved in the logistics of Russian-Indian trade.
Under these conditions, the logistics of goods from Russia to India and vice versa, carried out along the route Mumbai – Hamburg / Bremerhaven – St. Petersburg, becomes extremely sensitive to the European political and economic situation, and, in fact, makes Russian-Indian trade relations dependent on Western European and American partners.
The logical solution to this problem is the search for new trade routes between Russia and India. One of the earliest ideas for a North-South land transport corridor (International North–South Transport Corridor (INSTC)) began to be discussed in the late 1990s. On September 12, 2000, during the Second International Eurasian Conference on Transport (St. Petersburg), Russia, Iran and India signed an international agreement on International North–South Transport Corridor. In May 2003, the ministers of transport of the countries signed a protocol on the official opening of the corridor in St. Petersburg. In 2002, the ministers of the countries participating in the project also approved the Charter of the Coordinating Council (CC) of the INSTC, which became the governing body of the ITC. Azerbaijan joined the agreement in 2005, and subsequently Armenia, Belarus, Kazakhstan, Oman and Syria. Turkmenistan did not join the agreement, but showed readiness for cooperation [3. P. 20].
The INSTC architecture was presented as follows (see Fig. 2). The extreme points of the project were to be St. Petersburg (the point of dispersion of goods to Europe) and the largest Iranian port of Bandar Abbas (the point of dispersion of goods to Asia). Communication with India was supposed to be along the Bandar-Abbas – Mumbai sea line. Although the North-South ITC assumed a combination of rail, road, sea and air routes, it was the railway that was to become its basis.
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