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India lends $1 billion for Russia’s Far East

India lends $1 billion for Russia’s Far East

Context: India announced an “unprecedented” $1 billion line of credit for the development of Russia’s Far East at the plenary session of the 5th Eastern Economic Forum (EEF) in Vladivostok as part of its 'ACT FAR EAST' policy.

What has been the background of cooperation with Russia's Far East?

Expanding economic cooperation has always been the one of the key challenges for New Delhi and Moscow. It was in December 2014, that the countries’ leaders set up a goal to bring bilateral trade and investment figures to $30 billion by 2025.

While the investments from both the sides have crossed $50 billion by 2017, after the acquisition of Essar Oil by the Rosneft-led consortium, the pace of bilateral trade is still far from the threshold set up by the two countries.

The largest state-owned companies as well as private business partners from INDIA have been investing in the Far East, which includes ONGC’s investments in oil and gas projects, the development of coal and gold deposits by Tata Power and Sun Groupdiamond polishing factories which are set up recently by KGK group and M Suresh, among others.

There has been exchange of visits between multiple delegations of state authorities and business from both countries since the beginning of 2019. The latest and largest being the delegation of 4 chief ministers and over 130 companies which was headed by Minister of Railways and Minister of Commerce & Industry Piyush Goyal.

Several MoUs have been signed as a result of these talks, along with a few investments projects in mining, logistics, oil and gas sectors which are likely to be concluded soon.

India-Russia Inter-governmental Agreement on Promotion and Mutual Protection of Investments, which is yet to be signed was discussed during the 20th summit.

It is to be noted that the far East has created a system of preferences which have the lowest level of taxation in the Asia-Pacific region. There are several preferential regimes which have been created here. Till date, 1,786 projects worth above $60 billion have also been set up.

Also, Russia has introduced e-visa option for business people travelling to some of the locations, including the Far East.

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