Russia invites India to resource-rich far east in a bid to counter-balancing China

NEW DELHI: Moscow’s invitation to New Delhi to enhance its economic presence in Far-Eastern Russia -- a region where Chinese businesses and citizens have made significant inroads – appears to be Kremlin’s attempt to counter-balance Beijing in the resource-rich territory twice India’s size.

Russian Deputy PM and President Vladimir Putin’s pointsperson for Far-East Russia, Yury Trutnev, is visiting New Delhi next week to attract Indian investments, persons familiar with the development told ET. The visit is being viewed as a key exercise to harness untapped potential in Indo-Russian economic partnership. Diversifying economic relations is a priority for both New Delhi and Moscow.

The Far Eastern Federal District is the largest but the least populated of the eight federal districts of Russia, with a population of roughly 6.3 million. The region is rich in resources such as unused land, timber, tin, gold, diamonds, and oil and natural gas. The Russian government has announced several initiatives to attract investments in the region, including an agricultural SEZ and the Vladivostok Free Port Project.

Moscow would also seek investments in the region from companies seeking business opportunities in industries such as timber, coal and diamond mining, and production of metals such as gold, platinum, tin, and tungsten.

Russian experts who did not wish to be named indicated to ET that Moscow is sensitive to growing Chinese presence – particularly new settlers from the country - in the region. “This pattern could change demographics of Far-east Russia and growing presence of other countries including India will help to bring balance,” pointed out an expert.

India was the first country to establish a resident consulate in Vladivostok in 1992. India’s existing engagement with the region is limited to isolated pockets, such as the Irkut Corporation in Irkutsk where the Mig and Sukhoi aircraft are built. Other Indian business interests in the region include the $6 billion worth of investments by ONGC Videsh Limited in the Sakhalin 1 hydrocarbon project, according to people familiar with the subject.

Opportunities for collaboration with Indian companies include such sectors as agriculture, mining, port development and infrastructure, diamond processing, and agro-processing, according to Indian officials. Andhra Pradesh and Punjab have shown interest with some of the projects in these sectors in the Russian Far East.