Commercial relations between India and Armenia date to the medieval period, the first recorded visit being that of Armenian trader Thomas Cana who reached the Malabar Coast in 780 AD. In the 16th century, Armenian communities emerged in Kolkata, Chennai, Mumbai and Agra. In the Soviet era, Armenia (the smallest of the Soviet Republics and the most industrialized) was an important market for Indian products like medicines, textiles, garments, leather goods and light industrial items. 

India’s trade with independent Armenia remains insignificant despite a Trade Agreement. According to the National Statistical Service of Armenia, bilateral trade in 2002 was US$ 5.6 million, most of it (US$ 4.33 million) being Indian exports of foodstuffs (essentially meat), electrical equipment, car batteries, optical equipment, plastics, pharmaceuticals and other chemical goods. Since 2003, Indian sugar, rice and cars are coming in. Armenia’s exports consisted of non-ferrous metals, raw rubber, books and textiles. 

The growing but still low volume of direct bilateral trade is probably due to unfamiliarity with each other, the blockade on the eastern and western borders by Azerbaijan and Turkey (leading to much higher transportation costs) and import of Indian goods from Moscow or Dubai.

To promote India-Armenia trade and investment, the Embassy, which focuses on commercial issues, has formulated a non-exclusive "four plus one" policy of sector-specific cooperation. The four sectors in which Armenia seeks India’s assistance are small and medium industries (including light engineering), information technology, agriculture, and science and technology (including health), while the plus one" is investment by Indian companies in export oriented industries in Armenia..

Commercial Agreements signed 

1. Agreement on Trade and Economic Cooperation - New Delhi, March 11, 1 993

2. Treaty of Friendship and Cooperation – New Delhi, December 14, 1995 

3. Agreement on Economic and Technical Cooperation – New Delhi December 14, 1995 

4. Air Services Agreement - New Delhi, December 5, 2002. 

5. Agreement on the Intergovernmental Commission on Trade, Economic, Scientific and Technological, Cultural and Educational Cooperation - Yerevan, July 26, 2001

6. Agreement between the Bureau of Indian Standards and Department for Standardisation, Meteorology and Certification of Armenia in Standardization, Certification and Accreditation- Yerevan, July 26, 2001

7. Bilateral Investment Promotion Agreement – New Delhi, May 23, 2003

8. MoU between FICCI and Union of Businessmen and Manufacturers of Armenia (UMBA) – New Delhi, May 2003

9. Agreement on Avoidance of Double Taxation, New Delhi, October 2003 

10. Memorandum of Cooperation on Information Technology, New Delhi, October 2003

Information Technology

IT is one of the fastest growing sectors of the economy. Some 50 domestic and 15 foreign software companies presently operate in Armenia, the largest being HPL Armenia, a subsidiary of silicon-valley Heuristics Physics Labs Inc. Some American-Armenians have already established incubators to service US-based clients. Armenia seeks to position itself as a provider of IT enabled services in niche areas, but is now quite clear how to go about this. In July 2000 the Armenian Minister of Industry and Trade wrote to EAM seeking India’s assistance in promoting information technology, especially IT administration and legislation, as well as in setting up technology parks. In May 2002, the US Embassy in Yerevan offered to fund (USAID) a visit by Indian experts to explain the Bangalore concept to Armenia. India participated in an EU-sponsored international conference of Information Technology on "E-development for Caucasus region" in Yerevan in April 2002. In an October 2002 meeting with Ambassador, the President and Foreign Minister reiterated their interest in sharing India’s IT experience. The India-Armenian Intergovernmental Commissions (July 2001 and May 2003) stressed the importance of cooperation in this area. The visit of an Indian IT delegation is awaited in 2003.

Under a World Bank funded project in 2002, MDP Consultants, New Delhi worked (unsuccessfully) on Integrated Financial Systems Management software for the Armenian Treasury. NIIT wants to set up its training operations in Armenia. 

At the initiative of the Embassy, the world-bank funded Enterprise Incubator Foundation of Armenia (estd April 2002) is in touch with NASSCOM to explore possibilities for placement of Armenian ICT entrepreneurs in successful Indian companies for internship purposes.

Industry

Armenia was possibly the most industrialized of the former Soviet Republics, producing a range of light and heavy industrial goods (automotive equipment, machine tools, power plants, forklift trucks, lathes etc.) for the other Republics and for Eastern Europe. The implosion of the Soviet Union and the collapse of its assured markets saw a dramatic reduction in capacity utilization. The machine tools industry, for example, operates at 8-10% of its capacity. Aware of the near impossibility of reviving the heavy industrial sector, the Government focuses on small and medium industry (in an October 2002 the President of Armenia referred to an army of small and medium entrepreneurs in Armenia) that, during the Soviet era, contributed some 30% of state revenue. Following an ITEC funded visit to India in February 2003 by the Director and Deputy Director of Armenia’s Small and Medium Entrepreneurship Development National Centre, we hope to arrange an exhibition of small and medium industries from India (through NSIC) in Yerevan in 2004.

Diamond cutting and polishing contributes a fifth of Armenian exports. Raw diamonds are imported from Russia (under a five year quota system) and re-exported to Belgium and Holland. Some 30 companies operate in this sector. In April 2003, an Indian diamond exporter signed an agreement for export of cut and polished diamonds to Armenia. 

The Armenian textile sector offers some possibility for bilateral cooperation, since garments manufactured in Armenia enjoy duty and quota free access to CIS, and quota free access to Europe and North America. 

Agriculture

Agriculture contributes approximately a quarter of Armenia’s GDP. Some 38 milk-processing enterprises produce 320,000 tonnes of pure diary products and 22,000 tonnes of cheese annually. Four concrete areas in the agricultural sector have been identified for cooperation – rain water harvesting, buffalo breeding (improvement of Armenian stock), poultry farming, and dry land farming. The visit of an Indian team of experts is awaited. Indian tractors should arrive in Armenia in 2004 against a US$ 5 mn Indian Government grant.

Direct flights

Following a bilateral air services agreement and MoU initialled in February 1996 (signed in December 2002) Armenian Airlines flew twice a week between Yerevan and Delhi from June-October 1998 (carrying 4,905 passengers both ways). Flights were suspended owing to alleged mismanagement (both by Armenian Airlines and their Indian agent) and several heads rolled. Armenian Airlines owes substantial sums of money to at least two New Delhi hotels. In October 2002 meetings with Ambassador, both President Robert Kocharian and Foreign Minister Vartan Oskanian stressed that direct flights would boost bilateral commercial relations. However, in April 2003, Armenian Airlines declared bankruptcy.

Banking

In 1994, Armenia proposed an interbank agreement between their Central Bank and Reserve Bank of India. Although our RBI does not have formal MoUs with any Central Banks, and prefers cooperation through visits, correspondence etc. the matter is under discussion.

EXIM Bank has recently launched a programme in association with the European Bank of Reconstruction and Development, London, to support Indian exports to CIS and East European countries. The programme envisages an EBRD credit enhancement facility to enable EXIM Bank to confirm Letters of Credit from designated banks and covers all types of goods and commodities, transport, and other services.

Armenia and the North South Transport Corridor

India-Armenia trade mainly goes through the Iranian port of Bandar Abbas. Armenian formally applied top join the May 2002 India-Russia-Iran North South Transport (Mumbai-St Petersburg) Corridor Agreement that seeks a cheaper and faster alternative to the Suez route. 

India-Armenia bilateral trade

There is substantial divergence between official figures from the two countries, partly explained by the routing of India exports via Dubai or Moscow (they would thus be reflected in Armenian import statistics as Indian products but in our records would figure as exports to UAE or Russia).
 

(In US$ million)
Particulars	1997	1998	1999	2000	2001	2002	2003
India’s Exports	0.67	3.67	3.90	5.4	5.25	4.28	5.97
India’s Imports	0.02	0.26	0.003	0.4	0.07	0.32	0.04
Total Turnover	0.69	3.93	3.90	5.8	5.32	4.6	6.01

(Source: National Statistical Service of Armenia)

The Embassy’s target for 2004 is a 25% rise in Indian exports.

Indian Investment in Armenia

Faced with financial problems in 1999, First Dynasty Mines of Canada sold 42% of its Ararat Gold Recovery Company (a joint venture established in 1998 with Armgold of Armenia) shares to Sterlite Industries of India. Some 30 India experts now run AGRC that plans to recover 14 tonnes of gold by 2007. There is also a large investment by Indian diamond cutting and polishing major Rosy Blue in two factories. All are reported to be doing well. An Indian-owned British company (Ransat PLC) took over Nairit Rubber Factory in 2001, but the deal soured (with ferocious mutual recrimination) in 2002 and was cancelled in mid-2003. 

Recent Developments 

Following his visit to India (arranged by the Embassy), a leading Armenian car dealer tied up with Mahindras (April 2003) to introduce the Scorpio (Mahindra vehicles are also assembled in Georgia). The first Scorpios were launched on 15 August 2003 to a spectacular response. The 100^th vehicle is expected in August 2004. 

The first ever business delegation from India (exporters of rice, wheat, sugar, tea) led by a Joint Secretary in the Ministry of Consumer Affairs, Food and Public Distribution visited Armenia in April 2003 and identified business partners. Indian rice and sugar entered the Armenian market in July 2003. The first ever contract for direct export of Indian cut and polished diamonds to Armenia was signed in March 2004.

The Federation of Indian Chambers of Commerce and Industry (FICCI) and the Union of Businessmen and Manufacturers of Armenia (UMBA) signed an MoU in May 2003.

Following a very successful visit to Armenia by Secretary, Indian Systems of Medicine and Homeopathy in the Ministry of Health and Family Welfare along with a business delegation in June 2003, Indian Ayurvedic medicines should enter the Armenian market in 2004.

The first ever buyer-seller business meeting for Indian products in Armenia and Georgia was organized by the Embassy in end-August 2003 in Yerevan and Tbilisi in cooperation with the Council for Leather Exports. The response was overwhelming. The Embassy plans to organize three such business meetings every year.

A 25 member Armenian business delegation visited India in October 2003 with President Kocharian. Several agreements were inked.

Market surveys

The Mission has carried out market surveys for the following sectors in the Armenian market: leather, jewellery, automotive components, pharmaceuticals, textiles, wheat. These are available on request to Indian industry.

Source : Indian High Commission, Armenia