How important is India’s first region-specific line of credit that India is extending to Far East of Russia?

Addressing an international gathering at the Plenary Session of the 5th Eastern Economic Forum (EEF) which is currently being held in Vladivostok, the Indian Prime Minister, Narendra Modi made a significant announcement when he stated that India is ready to extend a USD 1 billion line of credit for the investment in and the development of the Russian Far East Region.

Significance of the Russian Far East for India

• India was the world’s first country to open a consulate’s office in the city of Vladivostok. India has been closely aligned with the progress of the Russian Far East Region and as engaging with the region is in line with India’s policy goal of “Act East”.
• Hence, the Government of India has decided to give a USD 1 billion line of credit for the development of the Russian Far East.
• This is the first time the Indian Government has actively extended a line of credit for the development of a specific region of any country.

Significance of the Indian’s government’s offer

• The announcement made by the Government of India is significant as it acts as a stepping stone for the government’s ‘Act Far East’.
• The offer made by the Government of India will add a new economic dimension to the decades-old friendship between India and Russia and build up the economic diplomacy between these two countries.
• India is also interested in increasing trade between these two countries. This includes Indian Interest in tapping the immense amount of hydrocarbon reserves found along the coast of Russia’s Far East.
• PM Modi called the EEF a historic opportunity and will provide a new dimension for the relationship between India and Russia.
• PM Modi also pointed out that the Siberian cranes migrate every year to the Indian State of Gujarat, showing a unique dimension of the relationship between the two nations.

Ongoing Cooperation

• Currently, the Indian companies have invested over USD 7 billion to get a holding in the various oil and natural gas fields in Russia.
• Indian overseas Oil & Natural Gas Exploration & Production Company, the OVL has acquired a massive stake in the Vankor field in Russia.

India is also one of the largest consumers of Russian made arms and ammunition. India has in the past bought over 70% of its defence armament from the Russian arms industry and is currently looking to manufacture Kalashnikov assault rifles in India.