India and Russia plan to boost trade to US$20 billion per year by 2015, Indian Commerce and Industry Minister Anand Sharma said during a round table discussion at the economic forum in St. Petersburg.

The two countries announced that they have decided to start negotiations to draw up a trade agreement between the two nations.

The agreement has been termed as a Comprehensive Economic Cooperation Agreement, which indicates that it won’t be as radical as a Free Trade Agreement, but slightly short of it. Such agreements bring down import tariffs between the nations and increase the flow of goods and services.

Russia has also agreed to initiate the consultation with their customs partners — Kazakhstan and Belarus — on the issue. India already has trade agreements with Japan, Malaysia, Thailand and Singapore and is in talks with the European Union.

The Russian and Indian economies are worth US$1 trillion combined, Sharma said. According to him, the countries are stepping up trade relations and have formed six working groups to map out further areas of cooperation.

Machinery and equipment account for more than half of Russian exports to India, while oil and gas account for just 5 percent, Deputy Prime Minister Sergei Ivanov said.

"This economic cooperation can no longer be limited to the purchase of defense equipment or investment in oil and gas, although these are highly valued by both countries, but must extend beyond government to government trade and investment. Our common target is to achieve US$20 billion in trade by 2015," said Anand Sharma.

Sharma also took up the issue of increased market access for Indian manufacturers in Russia, mainly in the pharmacy and agricultural products sector. Making a case for equivalence in quality standards for Indian companies, the commerce minister sought ease of rules for the companies in the pharmacy sector. He said that specific steps like setting up production units in Russia, streamlining registration process, sharing of information on drugs imported by Russia, setting up a task force, and market access for drugs that are exported to the United States, European Union and Japan, need to be taken up.

"The Indian pharmaceutical products are of international standards and cheaper than other markets on an average by 30-40 percent," he said.

Pharmaceuticals and aircraft manufacturing are promising areas of cooperation, Ivanov said, adding that he regrets that Russia and India cooperate insufficiently in civilian aviation and suggests that India take a closer look at certain Russian jetliners.

"We are rather experienced in cooperating in such a sensitive sphere as warplanes. I propose to take the next step and to cooperate in civil aviation," he said.

India may be interested in modern medium-range jetliners, such as the Sukhoi SuperJet 100 and Antonov An-148, he said.

"We may also think about MS medium-range aircraft and, in the future, about long-range aircraft," Ivanov said.

He also regrets a decline in bilateral economic contacts and trade, which happened at the end of last year.

"I have to say that we had an alarming tendency of slowing trade at the end of last year," Ivanov said. He called on businessmen of both countries to bolster economic relations.

The total trade between the two countries currently stands at US$8.5 billion. Indian investments in Russia stand at US$5 billion while that of Russia in India stand at US$3.5 billion.

The main Indian exports to Russia are pharmaceuticals; tea, coffee and spices; apparel and clothing; edible preparations; and engineering goods. Main Indian imports from Russia are iron and steel; fertilizers; non-ferrous metals; paper products; coal, coke and briquettes; cereals; and rubber.

The two countries also decided to set up a two million tons a year iron and steel plant near Bellary in the Indian state of Karnataka.