Rupee debt row resolved, joint defence transporter on cards

PM IN MOSCOW

In a breakthrough, India and Russia today resolved the issue of using the rupee-debt fund, totalling Rs 8,000 crore, for Russian investments and trade, and signed an accord for developing and producing a multi-role transport aircraft. Russia also agreed to participate in a special economic zone (SEZ) being set up in Orissa.

The two sides inked four agreements after the eighth Indo-Russian summit talks between Prime Minister Manmohan Singh and Russian President Vladimir Putin.

Singh flagged the low bilateral trade saying, "If Russia's trade with China is $36 billion and with the European Union more than ¤ 200 billion, I see no reason why Indo-Russian trade should languish at $4 billion ." At a press meet with Putin, Singh said the two countries agreed to double their efforts to reach the trade target of $10 billion by 2010.

Singh, on his second visit to Russia in two years, said the two countries discussed ways to "substantially upgrade" their economic ties, which he said should form the bedrock of the partnership.

Singh and Putin also discussed the recommendations of the joint study group on trade expansion.

India and Russia were to sign an agreement for setting up four additional light-water reactors in Kudankulam in Tamil Nadu but last-minute hitches came in the way.

Singh also met Russian Prime Minister Viktor Zubkov, who said Russia was ready to actively participate in an SEZ in Orissa.

"I would like to mention the special progress by the two sides in setting up a joint venture for production of titanium dioxide and other titanium products in Orissa," said Zubkov.

The Russian companies are ready to "actively participate" in the SEZ, he said.

Zubkov said his government had allowed the country's second-largest public sector bank, Vneshtorgbank (VTB), to open its branch in India to facilitate bilateral trade and investments.

India and Russia also signed an agreement for co-development and co-production of a new transport aircraft to replace the aging AN-32 fleet of the Indian Air Force. The total investment of $600 million will be shared equally. The Russian contribution would be paid out of the debt India owes to Russia under the rouble-rupee agreement.

According to the two countries plans to sell 60 aircraft to third countries.The project will be a joint collaboration between Bangalore-based Hindustan Aeronautics Limited (HAL) and Rosenbroexport Agency of Russia.

The agreement was signed on the sidelines of Prime Minister Manmohan Singh's visit to Moscow.