Trade relations between India and CIS countries discussed in New Delhi

19 October, 2016

On October 19, the Federation of Indian Export Organizations in collaboration with the Ministry of External Affairs and Ministry of Trade and Industry of India organized a seminar on the development of trade and economic relations between India and CIS countries.

Representatives of the Indian government agencies, businessmen, ambassadors and diplomats of CIS countries attended the event. The participants noted that the economic relations between India and the CIS member states do not reflect current economic potential and expressed their willingness to take the necessary steps to boost trade with India.

The Ambassador of Armenia A. Martirosyan delivered a speech.

I would like to welcome the participants of this forum and thank the organizers for providing me the opportunity to address this distinguished audience.

Before elaborating on the very topic of the forum, allow me make some comments concerning the notion of the CIS from a geo-economic perspective. Having been established in 1991, today it consists of nine member states and two associate members. The commonality of the states is defined not only by their erstwhile socio-economic and political unity but also by the similarities of societal transformations launched in these states since the collapse of the Soviet Union. The socio-economic reforms carried out in CIS member states were to varying degrees based on the concept of the Washington Consensus. This package of neoliberal policies for big bang privatization of state owned assets, radical financial and trade liberalization and fiscal discipline has changed national landscapes dramatically. Some industries did not survive the fierce international competition, while some new ones emerged as a result of it. Countries with abundant natural resources undoubtedly suffered less than others and became prime destinations for foreign direct investment and trade promotion, thus exposing themselves on the radars of resource thirsty powers, including India. Further geopolitical developments introduced some corrections to the economic strategies of CIS member states, as a result of which we witnessed a divergence in the geo-economic paths of those states over the last two years.

The Eurasian Economic Union was established on the foundation of the Customs Union between Belarus, Kazakhstan, and Russia, with Armenia and Kyrgyzstan joining in 2015. In the meantime, Moldova, a CIS member state, Ukraine, an associate CIS member state and Georgia, a former CIS member state all preferred to further deepen their economic integration with the European Union and signed the Deep and Comprehensive Free Trade Agreement with the block. In the long run, these varying vectors of geo-economic development will define not only the socio-economic and political patterns of each respective country, but also the ways and means through which they collaborate with external markets. This is an important factor which is to be taken into consideration by Indian business community.

Taking into consideration its geo economic interests, Armenia joined the Eurasian Economic Union. While its small market of 3 mln people was admittedly not attractive enough for Indian businesses, we believe Armenia's membership in the Eurasian Economic Union has significantly changed the situation by creating a single market of 170 mln people.

The small size of the economy, combined with the scarcity of natural resources have defined the basics of state building in Armenia and made institutional development and capacity building an utmost priority. Due to policies carried out by the government of Armenia in cooperation with the international institutions, Armenia has the highest ranking in the Ease of Doing Business and the Democracy Ranking Index, and the lowest in the Corruption Perceptions Index among members of Eurasian Union.

In the meantime, our economic integration within the Eurasian Economic Union has not come at the expense of our relations with the EU and the USA. From 2009 to the end 2013, the Republic of Armenia explored the potential of the EU's "Generalized Scheme of Preferences" (GSP) preferential trade regime and was granted the new “GSP+” regime by the European Commission in January, 2014, thus providing it preferential access to the EU market in the form of zero duties or reduced tariffs on over 6400 products of Armenian origin. A range of Made in Armenia products are also under a preferential trade regime for exporters to the US, thus making Armenia an attractive manufacturing hub not only for the Eurasian markets but also for the EU and the US.

To further improve the business environment and make it more attractive for foreign investors, two free economic zones have been established in Yerevan, the capital of Armenia. One is specialized in high tech and ICT development, and the second one in jewelry manufacturing and diamond cutting. Several large-scale projects carried out in collaboration with “Microsoft”, “D-Link”, “National Instruments”, “Synopsys”, “Mentor Graphics”, “Nokia”, “Intel”, “Cisco”, “IBM”, “GFI” contribute to the promotion of innovative ideas in ICT field, venture funding, investments and personnel training. I`m very pleased to inform you that since 2011 the Armenian-Indian Centre for Excellence in ICT has become one of the focal points for the modernization of the technological education system and for training of highly-qualified IT specialists. Equipped with a state-of-the-art High Performance Computing Facility, the Centre focuses on providing short-term and long-term advanced ICT trainings, R&D activities, certification and consultancy in different areas of interest. The Armenian-Indian Centre stimulates collaborative R&D in Bio-Informatics, Embedded Software and High Performance Computing. The policies carried out through public-private partnership provided quite promising outcomes in the IT sector. During the last five years, this industry recorded average annual growth of around 20% and its turnover reached 600 mln USD in 2015. We believe that the ICT sector could become one of the pillars of Armenian-Indian economic collaboration.

Taking into account the existing potential and capacity, combined with the abovementioned trade regimes, textile and pharma manufacturing could also become promising fields for export oriented and mutually beneficial cooperation.

Existing infrastructure and infrastructure that is currently under construction enables the effective transport of goods from India to Armenia and beyond using Iran in the south and Georgia in the north as transit countries. There are no political obstacles involved in this dynamic, as both Armenia and India enjoy good relations with Iran and Georgia, thus allowing for the exploration and effective application of multimodal transportation schemes. The real game changer is the Int`l North-South Transport Corridor; a multi-modal route from India to Russia via Iran, which will lower freight costs and container transit times by 40%, thus making interregional trade much more competitive.

The Eurasian Economic Union is currently expanding its trade activities beyond its borders, as exemplified by the signing of a Free Trade Agreement with Vietnam in May 2015.

As we know, the Indian Commerce and Industry Ministry has commenced discussions on the India-EAU FTA and the government of India has established an interagency commission to study the optimal strategy of cooperation with the Union, and my government is eager and prepared to play an instrumental role in this promising endeavour.

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