The most important agreement relates to purchasing additional 29 MiG 29Ks carrier based fighter jets valued at approximately US$ 1.2 billion for the Indian Navy. Further, an agreement on the commercial contracts for the joint development of fifth generation fighter and multi-role transport aircraft, is also likely. Many of the problems which plagued the India- Russia collaboration in defence for some years, have been taken care of at both official and political levels; and there are expectations that a decision will also be taken before the visit on the final price of the Russian-built aircraft carrier Admiral Gorshkov.

In the civilian nuclear energy area, agreement is likely for the setting up of four nuclear reactors, two in Tamil Nadu and the two others in the eastern India including one in West Bengal. Though the site of Haripur in Midnapore district was mentioned earlier in West Bengal, there are political problems in choosing the Haripur site due to the opposition of the Trinamool leader Ms. Mamata Banerjee, and it is possible that new sites will be considered for setting up the Russian-aided nuclear power reactors.

As regards Indo-Russian trade, the growth has not been satisfactory and the two Governments have identified a lot of areas where stepping up of trade is possible provided some of the problem areas are properly tackled. For instance, India is interested in procurement of rough diamonds from Russian Federation on a long term basis. India is the largest processing centre of rough diamonds in the world and Russia is one of the largest producers of rough diamonds. Though India has been able to procure rough diamonds directly from Russia, the quantities imported continue to be small; and India is now interested in the Russian side increasing the allocations of rough diamonds to India keeping in view mutual benefit.

Tea exports to Russia from India are also having problems needing immediate intervention at the high level. Indian Tea Board is of the view that the prevailing duty rate on packaged tea is 15 per cent of CIF value while there is no import duty on import of bulk tea in Russia. This duty differenetial discourages exports of good quality tea from India to Russia. At the September meeting of the Indo-Russian Joint Working Group, Russian side was requested to remove the duty differential between bulk tea and packaged tea in Russia.

Further, there are problems regarding blending norms. In Russia, there is no norm for labelling a blend as Indian tea. As such Indian tea suffers from a negative image in Russian market because of a sizeable quality of poor quality tea from third countries are blended and sold as Indian tea in Russia. Now Indian side wants that Russia should enact a legislation recognising only those blends to be called Indian tea in which Indian tea is not less than 75 per cent by weight.

As the Indian industry sees it, the problems being faced by Indian businessmen in obtaining business visas for visiting Russia is a major impediment in India's efforts for expanding business-to-business contacts and generating awareness about the business opportunities. The Russian side has however linked the issue of simplification of visa regime for Indian businessmen to the signing of a Re-admission Treaty. India now wants Indian businessmen to be granted visa on the basis of letters issued by the Indian chambers and the export promotion council.

Indian Government is not at all happy about the slow growth of bilateral trade with the Russian Federation. During the last five years, bilateral trade between India and Russia has increased by 30 per cent per annum but this is far less than the potential. India's trade with China has increased many times in the last few years and what is significant that this growth has taken place without active Government intervention. Mostly, the private companies have been active in Sino-Indian trade. Both the Indian and the Russian Governments have agreed to enhance the bilateral trade to US$ 20 billion by 2015 and on an average, this will require a growth rate of at least 25 per cent.

During the current fiscal 2009-10, in the first six months April to September, India's exports to Russia decreased by 39 per cent over the corresponding period while imports from Russia declined by 24 per cent during the same period. Main items of export suffered during the period were drugs, pharmaceuticals, fine chemicals, transport equipment, machinery and instruments while the items of import declined were fertilizers, non-ferrous metals, coal, coke, briquettes, etc.

Indian industry wants Prime Minister Manmohan Singh and the Commerce Minister Anand Sharma to take up the issues with Prime Minister Putin during this visit so that the irritants are removed and the India-Russian trade and investment is put on a fast track to achieve the target set for 2015. (IPA)