Indian Economy News

India, Russia to put in place a 'Green Corridor' to enhance bilateral trade

New Delhi: India and Russia are trying to put in place a 'Green Corridor' between the two countries for smooth facilitation of goods to enhance bilateral trade that has performed far below potential despite the strong political ties.

The issue figured -- ahead of the October annual Summit -- during the meeting between Russian Deputy PM Dmitry Rogozin and Indian foreign minister Sushma Swaraj here on Tuesday.

The idea of Green Corridor was mooted by Russia's Federal Customs Service. It has proposed that the two countries create a list of entrepreneurs or companies whose goods, on a reciprocal basis, will not have to pass customs inspection during border crossings, according to sources familiar with the subject.

Russia is already implementing the Green Corridor project with Finland and Turkey. Moscow has also signed such agreements with China and Italy. The Russian government considers Green corridors as one of the most important levers for increasing mutual trade. It has been learnt that India has shown interest in the project.

The volume of current Indo-Russian trade is about $10 billion. Both countries have set a target to raise it to $30 billion by 2025, and mutual investment from $10 billion to $15 billion.

"The main advantage of the 'green corridor' is that goods being transported by entrepreneurs will not have to undergo customs inspection and examination when crossing the border -- measures now commonly used to minimize risks. This also applies to documents. Samples and specimens will not be taken. The provision of original copies of documents is not needed, and so on," explained a person familiar with the matter.

Both parties would have lists of entrepreneurs or companies that customs services of the two countries characterize as "bona fide participants in foreign economic activities". To include one's name on the registry, a number of criteria need to be met: the company must have no outstanding unpaid customs duties and absence of rulings on administrative violations in the countries among which the project is being implemented.

The mechanism itself should work as follows - an electronic pre-declaration is issued for the cargo, it is assigned a unique individual number in accordance with the identifier in the "green corridor" registry. The customs inspector thus already knows what goods are being shipped and does not need to inspect them -- then without stopping, the cargo passes through the customs clearance post.

In addition, it is assumed that for green corridor participants, there would be a separate post and a special inspector to serve them at the customs terminal.

Meanwhile, Russia is keen to expand its footprints under the Make in India initiative. During the 5th meeting of India-Russia Working Group on Modernization and Industrial Cooperation here in August, both sides expressed interest in expanding cooperation between Russian and Indian companies in different sectors including mining, fertilizers and civil aviation.

In the civil aviation sector, Russia is willing to develop Indian technical and production capabilities in this field, and potential supplies of the jointly produced equipment to third countries. Moscow has sought more information about Russian companies participating in the $90 billion Delhi-Mumbai Industrial Corridor. Russian truck manufacturer Kamaz wants to set up unit in India.

India has expressed interest to jointly develop iron ore and coal mines in Russia, which will be high on the Modi-Putin summit agenda besides expanding Indian presence in the oil and gas sector of Russia. The volume of Indian investments in Russia's oil and gas sector could reach $15 billion in the next five years.

Swaraj and Rogozin also discussed the issues of fast-tracking negotiations of the Joint Study Group on the proposed Free Trade Agreement (FTA) between India and the Custom Union (Russia, Belarus, Kazakhstan), hasten development of the International North-South Transport Corridor (INSTC), and upgradation of Chabahar seaport as scheduled by 2018 to improve connectivity to Central Asia and Russia.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.