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Economics

"BRICS: in the Mirror of Times" Role of the USSR in establishing an industrial base in India

The ninth episode of the joint TV BRICS and GAUGN project is devoted to the USSR's participation in projects related to the industrial sphere

In the ninth episode of the joint project by the TV BRICS International Media Network and GAUGN "BRICS: in the Mirror of Times", dedicated to joint projects of the Soviet Union and India in industrial fields, Elza Shirgazina, Junior Researcher at the Centre for the Indian Ocean Region of the National Research Institute of World Economy and International Relations (IMEMO) of the Russian Academy of Sciences, described how the USSR helped create an industrial base in the South Asian country.

The project was supported by a grant from the Russian Ministry of Education and Science as part of the federal project "Popularisation of Science and Technology".

India today is one of the fastest growing economies in the world. The foundation for such rapid development was laid decades ago, not least by the Soviet Union. How did Moscow help create an industrial base in this country?

Industry.jpg

What were the prerequisites for cooperation between the Soviet Union and India in the industrial sphere?

Bilateral cooperation determined the presence of several factors, which I would conditionally divide into external and internal. From the point of view of the Soviet Union, here is a revision of the foreign policy line with a focus on the national liberation movement that is gaining momentum in the countries of Asia and Africa. And India, in fact, was one of the leading such centres, so the USSR was interested in establishing friendly relations or at least relations of neutrality with the leading centres.

From India's point of view, both internal and external factors have also played a role here. It is necessary to pay attention to the balance of forces in the international arena during this period. Washington in the 1950s was moving towards establishing military-political ties with Pakistan, which, of course, could not please the Indian leadership. Pro-Western politicians at this point lost their popularity in society, and, accordingly, voices began to grow louder that it was necessary to establish mutually beneficial co-operation not only with Western countries, but also with the countries of the socialist bloc.

In addition, from the very early days of independence in 1947, India's political leadership fully recognised the need to expand industry as a key sector for the development of the country's economy. In this light, Soviet aid and support were the indispensable tools that enabled India to modernise its national economy in a fairly short period of time and to perform very well.

Ties were particularly intensified after 1955, when the countries exchanged high-level visits. It is from this period, perhaps, that we can speak of the most active phase of bilateral co-operation in the development of Indian industry.

And which industrial areas had the most developed projects?

The most striking examples of industrial cooperation between the USSR and India were such sectors as metallurgy, heavy industry, oil and gas industry, and India's energy infrastructure. In November 1957, a bilateral treaty was signed in New Delhi, whereby the parties agreed on the necessity and possibility of building heavy industry in India. The Soviet Union undertook the design, material and technical support of this process, and provided highly qualified personnel. In addition, the terms of all these projects were much more favourable than those offered by Western companies or banks. For example, while a German company offered construction at 12%, the Soviet Union offered a loan at 2.5% - a tangible difference for a developing country.

Metallurgy.jpg

Moreover, an important point is that the Soviet Union took over the training of highly skilled personnel from India. That is, at the initial stage there was a direct participation of our personnel, Soviet personnel in construction.

Subsequently, specialists educated in the USSR could already independently continue to develop the national industry with advisory support, so to speak, from the Soviet Union. Some of the best known such examples of cooperation in the field of metallurgy include the Bhilai Steel Plant, Bokaro. Heavy engineering was developed at plants in Ranchi, Hardwar - incidentally, Hardwar is still producing high-power turbines and generators. In fact, the logistical base that was established by the two countries back in the middle of the twentieth century is still fully functional and beneficial to India today.

How did the energy sector develop during the formative period of USSR-India relations and where did it lead?

The second half of the 1950s saw the beginning of geological exploration in India, sponsored and provided entirely by the Soviet Union. In particular, the USSR provided not only logistical equipment for the exploration of oil and gas fields in India, but also specialists. As a result of cooperation, the countries have been able to find oil and gas fields in western India - in Gujarat, Punjab, and the Bombay Vault. Although India's energy, oil and gas resources are not so vast and for the most part it has to import energy resources, there is a need to process the material it receives. Here too, in the logic of economic development, the Soviet Union also helped in the construction of refineries in India. They are also still functioning: they are the Koyali plant, the Kachin plant, the very famous Barauni plant. This is as far as cooperation in the field of oil and gas is concerned.

In addition, the Soviet Union helped in the construction of dams and hydroelectric and thermal power plants in India. Full-scale co-operation in the energy sector has quite deep historical roots.

Given such close cooperation, was there anything in common in the industrial organisation models of India and the USSR?

Yes, certainly the Indian leadership has fully studied the economic model of the Soviet Union, and India's industrialisation was based on some very, shall we say, similar elements to the Soviet Union, including economic development based on centralised five-year plans. India's last five-year plan only ended in 2017. Customs protectionism is another example of an element of the Soviet economic system. In fact, all these elements lasted until 1991 when India liberalised its economy under pressure from the World Bank. A fairly large backlog has existed for nearly half a century.

Cooperation.jpg

How would you assess the current state and prospects for Russia-India cooperation in the energy and industrial spheres?

Our economies are complementary - this is talked about a lot and very often. We have a very strong record of friendly and productive relations, cooperation has indeed led to a real improvement in India's national welfare. For this reason, I think the prospects are very good and, basically, each country is developing its economy in a way that is complementary to that of the other. We can mutually benefit from energy, information and communication technologies, and various kinds of nanotechnologies.

Are there any real projects going on right now?

If we talk about the energy project, the implementation of NPP construction is ongoing, cooperation in terms of purchase and sale of energy resources is also very important - this is also a very important aspect of our bilateral cooperation today. It can be noted that there are good prospects for the development of energy projects not only on a bilateral basis, but also on a trilateral basis, for example, with the involvement of Iran, i.e. all three countries are interested in this. The energy sector, on the one hand, is very important for India because in any case a growing economy requires energy consumption. With limited resources of its own, India is always interested in bringing in external partners to provide this aspect of its operations. Actually, energy supplies from Iran are also one of the priorities for the development of the Indian economy. Trilateral development, say, of some formats, would probably be useful for Russia, Iran, and India.

Photo: istockphoto.com

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