Economy of India

India, Russia ink deal for new nuclear power generation units, 12.26.2023.

The two governments have signed an agreement for additional units for the Kudankulam Nuclear Power Plant.

During an address in Moscow on Tuesday, Indian External Affairs Minister S. Jaishankar announced a new agreement between India and Russia for the construction of additional units at the Kudankulam Nuclear Power Plant (KNPP) in Tamil Nadu. 

The existing joint project includes operational units 1 and 2 with a capacity of 1000 MW each, while the four remaining units of the same capacity are currently under construction. They are set to be completed by 2027, resulting in a total capacity of 6000 MW.

"Today, we signed some important agreements pertaining to future units of the Kudankulam Nuclear Project," the minister said. In his speech, he called Russia a “special partner” in several domains, such as defense, nuclear power, and space. “Collaborations are done [...] with countries with which you have a high degree of trust,” he added.

Additionally, Jaishankar disclosed that face-to-face discussions on the free trade agreement between India and the Eurasian Economic Zone are set to commence early next year.

Earlier on Tuesday, Jaishankar, along with Russia’s deputy prime minister and minister of industry and trade, Denis Manturov, co-chaired the Intergovernmental Russian-Indian Commission on Trade and Economic, Scientific, Technical, and Cultural Cooperation. These discussions took place at the ‘Russia’ exposition, a prominent exhibition at Moscow’s VDNKH complex.

The two officials covered various aspects of cooperation, including trade, investment, finance, banking, transport logistics, energy, and food security. They also emphasized advancing priority projects in industrial cooperation, according to a report by TASS news agency.

“In recent years, despite the challenges faced by our countries, trade and economic ties have been rapidly developing. There is no doubt that the Russian-Indian trade turnover by the end of this year will exceed a significant milestone of $50 billion and set a new historical maximum,” noted Denis Manturov.

Jaishankar has also explored several exhibition pavilions, including the ‘ATOM’ pavilion, which showcases Russia’s achievements in the development of the nuclear industry.

https://www.rt.com/india/589716-india-russia-ink-deal-kudankulam-plant/

Rupee payments boosting India’s exports to Russia – exporting group, 02.01.2024.

New Delhi shipped engineering goods worth over $1 billion to Moscow last year, according to an Indian trade council.

India’s exports of engineering goods to Russia more than doubled to over $1 billion in the first nine months of last year thanks in part to payments settled in rupees, the news outlet Mint reported on Wednesday, citing a top exporting group.

Deliveries of machinery, auto parts, electrical equipment, and other engineering goods to Russia surged by 130% and totaled $1.03 billion in the period between April and December 2023, according to the Engineering Export Promotion Council of India (EEPC).

Exports of such goods to Russia are expected to reach $1.5 billion by the end of March, said the EEPC, an organization comprising over 12,000 small exporters of engineering goods.

“There is a manifold increase in the export of engineering goods to Russia and demand of our engineering products in other countries is rising,” EEPC Chairman Arun Garodia told the outlet in an interview after the two countries launched a payment mechanism to settle trade in the national currencies.

India and Russia have been working on alternative methods for carrying out transactions after the latter was removed from the SWIFT financial messaging system.

Meanwhile, sanctions have prompted Russia to scrap Western currencies in trade with many of its partners. Thus far, Moscow has signed deals with a number of countries, including China, Iran and India, to trade in local currencies instead of the dollar.

Garodia expects trade in rupees to become more common in the coming years as several countries, including some in Africa, have expressed an interest in establishing payment mechanisms using the Indian currency.

“Exporters are happy that they are receiving payments in rupees for exports to Russia,” he added.

Moscow and New Delhi have maintained close and friendly trade and defense relations for decades.

Russia’s Industry and Trade Ministry recently estimated that bilateral trade will exceed the “significant” milestone of $50 billion by the end of this year.

https://www.rt.com/india/591657-india-russia-rupee-trade/

India to make own tank engines as Germany delays deliveries – media, 02.14.2024.

New Delhi could produce more parts for its Arjun Mark 1 model after manufacturers in the EU country announced a four-year wait.

India is planning to develop its own engines for its Arjun Mark 1 tanks, after German manufacturers anticipated a minimum four-year wait before production resumes, national media outlets reported on Tuesday.

New Delhi is considering accelerating its ongoing indigenous engine development project, sources told India Today TV. The plan involves initially equipping several tanks with German engines, before a transition to the local model. The efforts underscore India’s commitment to bolstering its defense capabilities through indigenous innovation.

According to the Economic Times, the Defense Research and Development Organization (DRDO) has started work on a domestic alternative, expected to be ready for production within three years. The DATRAN 1500 engine, initially designed for the Futuristic Main Battle Tank program, is undergoing modifications to integrate into the new Arjun Tanks, the report noted. The new engine underwent its first round of testing for the future tank program last year.

India ordered 118 Arjun Mark 1-A Main Battle Tanks (MBTs), known colloquially as ‘Hunter Killers’ and valued at 75.2 billion rupees ($900 million), in 2021. The tanks are manufactured by the state-owned Heavy Vehicles Factory in Avadi, Chennai. The Arjun Mark 1-A represents a leap forward in technology, boasting new features and a higher indigenous component compared to its predecessor, the Mark-1. The tank is armed with a formidable 120mm rifled gun and fortified with Kanchan armor.

The Indian Army currently relies primarily on Russian tanks, including around 1,900 license-built T-72M1s and around 1,500 T-90Ss, third-generation Russian main battle tanks developed to replace the T-72, according to Indian media. The Arjun tank finds itself in an intermediate position. While its turret and overall silhouette resemble those of the T90S, its indigenously developed Kanchan explosive reactive armor (ERA) mirrors heavier Western models, resulting in a hybrid with constrained operational capability. Last year, the Indian Army also invited proposals from private defense industry players and state-owned companies for the overhaul and extension of T-72 main battle tanks, which are more than four decades old.

https://www.rt.com/india/592432-india-arjun-mark1-tank-delay/

Indian exporters see ‘tremendous’ potential in Russia – industry chief, 02.14.2024.

Local currency settlements will significantly benefit businesses trading with Moscow, Ajay Sahai of the exports federation told RT.

New Delhi can significantly increase exports to Russia and reduce the existing trade deficit by using payment mechanisms in local currencies, the head of the Federation of Indian Export Organisations (FIEO) has told RT. Ajay Sahai, the director general and CEO of the body, predicted that bilateral trade could reach $65 billion in 2024, after exceeding an unprecedented $50 billion last year.

Imports from Russia are expected to account for just over $60 billion of the total figure, while exports from India are likely to exceed $4.5 billion. Last year, India exported $4 billion worth of goods to Russia, largely driven by engineering products, according to data from the Indian Commerce Ministry. The trade deficit has been widening largely due to imports of discounted Russian oil by India amid Western sanctions imposed on Moscow.

“The good thing is that many of the Indian companies are looking to Russia in a big way. A lot of small and medium companies have also shown interest in their trade with Russia,” Sahai said.

With many Western companies moving out of Russia, he added, there is a significant opportunity for India to further increase its exports to the country.  Despite intense scrutiny from the West, bilateral trade has witnessed massive growth in new areas such as iron, machinery, electronics, chemicals, ceramics, and agriculture, Sahai noted.

Referring to the payments mechanism used by the two countries, he said it takes “a little time” for any new system to be put into place and utilized, but much of the trade between India and Russia will be in local currencies “in time to come.” “The advantage of local currency is that you are sure of how much you will be getting as a part of export proceeds and you do your costing based on the local currency; there is no fluctuation in that,” he added.

New Delhi and Moscow implemented a mechanism to facilitate bilateral trade in local currencies after Russia was cut off from the SWIFT international payment system. As trade witnessed a sharp rise, Moscow has reportedly accumulated a surplus of more than $40 billion in special vostro accounts in Indian banks in the local currency. Russian officials have repeatedly called for greater commitment from Indian financial institutions to adopting rupee-ruble payment mechanisms on a larger scale to facilitate growing transactions.

“The moment we allow the Russian companies to liquidate the rupee balance which is lying in India, probably they will be more interested to supply to India also in rupee and we will be, therefore, exporting more in rupee which will help in significant internationalization of rupee also over a period of time", said Sahai.

He made the comments against a backdrop of the Indian government pressing ahead with plans to make the Indian rupee a more widely accepted currency for international trade and investment.

https://www.rt.com/india/592427-indian-exporters-see-tremendous-potential/

India ‘easily’ world’s fastest-growing economy – IMF, 03.02.2024.

The country’s GDP surged 8.4% between October and December 2023, data has shown.

India is the world’s fastest-growing economy and its expansion in the final quarter of last year exceeded expectations, according to International Monetary Fund (IMF) executive director Krishnamurthy Subramanian.

Indian gross domestic product (GDP) grew 8.4% between October and December 2023, representing the fastest pace in six quarters, data published by the country’s statistics service on Thursday showed.

“If you look at the GDP numbers, India’s poised for about 8% growth this year, that makes India easily the fastest-growing economy in the world,” Subramanian said.

The fourth quarter expansion reflects strong private consumption and upbeat manufacturing and construction activity, exceeding Reuters’ estimates of a 6.6% growth.

The Indian government has also raised its GDP growth outlook for fiscal year 2023-24 from 7.3% to 7.6%.

Subramanian attributed Indian economic growth to a shift in the government’s focus toward higher capital expenditure, which has increased significantly over the last few years.

“I do expect the focus on capital expenditure to continue and the fiscal math also is looking very responsible,” he added.

The Indian Finance Ministry presented a preliminary budget in early February, forecasting that the fiscal deficit for the 2025 financial year will decline to 5.1% from the revised 5.8% for 2024. The ministry also highlighted the government’s plan to boost spending on infrastructure.

https://www.rt.com/india/593499-india-fastest-growing-economy/