Trade tension with US pushes India to coal deal with Russia

India wants to strike coal deal with Russia to reduce its reliance on US, Canada and Australia

News Desk

Islamabad: The trade rift between India and United States (US) has pushed the former to consider a plan of striking coal deal with US arch Rival-Russia to reduce its dependence on its traditional suppliers such as the US, Canada and Australia.

The US and India have been long-standing allies especially two countries in engagement of civil nuclear technology. Trade has been an important part of the relationship. Following tense trade relations with China, US also entered into a row over market access and tariffs.

The tension was escalated when the US suspended Indian trade privileges from its Generalized System of Preferences (GSP), a 43-year-old program which gives US market access to less developed economies. India had been the biggest beneficiary of the scheme.

In 10 years, the South Asian country is expected to need twice more coal than it consumes today, the head of Far East Russia Investment and Export Agency Leonid Petukhov said, after a meeting with Indian businessmen in New Delhi. During the visit the official also met with Indian Minister of Petroleum and Natural Gas Dharmendra Pradhan to discuss the possible shipments.

“India is interested in joint projects with Russia to develop coking coal and is going to increase exports of this fuel from Russia,” he said, adding that the agency is assisting both Russian and Indian companies in this.

Pradhan said that the supplies of coal from the remote Russian region can surge, as it is more attractive in terms of price, as well as connectivity to the ports and sea transport, the Times of India reported, citing the minister.

Coal India Limited and Indian Steel Association have already visited and inspected coal mines in Russia’s Far East, while several Russian producers, such as Kolmar, EVRAZ and Mechel, have sent test shipments to India. Those samples are reportedly being tested at the Indian plants.

India imports more than 50 million tons of coking coal, which is a key element for steel production, and is seeking to diversify the sources of the material. However, the share of Russian coal supplies to India is quite low, and stands around 1 percent, according to Petukhov.

Indian steel and energy companies reportedly want to import up to 9 million tons of the raw material from Russia annually. However, Indian partners ask Russia to develop inland as well as port logistics and rail connectivity in the Far East to facilitate the growth of supplies. They also want Russian firms to consider concessions and preferential terms for Indian companies.

Earlier this year, the first deputy minister of Development of Russian Far East said that Moscow aims to boost the coal supplies six fold – to 28 million tons – by 2025.

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