RussiaIndia

The race for the burgeoning Indian telecom pie just got hotter. Russian-owned Sistema Shayam Teleservices is making its India dream come true.

NATALIA FEDOTOVA

RIR

An auction that began in mid- spring will allow Indian and international companies to compete for the right to build third-generation mobile net- works in India. However, a subsidiary of the Russian tele- com giant AFK Sistema has begun offering services similar to 3G in the Indian market much before that. The race for a slice of India’s lucrative telecom pie has just got hotter. Last November, Sistema Shyam Teleservices Ltd (SSTL), a subsidiary of AFK Sistema, a major Russian holding company, began mar- keting MBlaze, a new type of Internet service allowing data transfer at 3.1 MB/sec. High- speed Internet access under the MBlaze trademark is avail- able to subscribers in 24 cities, including every major urban centre of India (Mumbai, Kol-

...Marching towards a common future

The big issue: Eurobonds

Russia returns to the sovereign debt market

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BUSINESS REPORT

BANGALORE ● MUMBAI ● NEW DELHI ● WEDNESDAY, MAY 12, 2010

A Report from The Economic Times In association with Rossiyskaya Gazeta

Boom time for telecom

Interview $20 bn target in India-Russia trade by 2015 won’t be a problem

New economic chemistry

Contrary to popular stereotype about military supplies dominating bilateral trade, civilian products account for as much as 80 pc of the trade basket, says Grigory Sarishvili, Head of Department at Russia’s Ministry for Economic Development.

VLADISLAV KUZMICHEV

RIR

kata, Chennai, Bangalore and Delhi). The main “perk” that comes with both CDMA2000 and 3G is high-bandwidth Internet access and all the opportunities that it brings. Web browsing speed under these standards is much greater than in earlier mobile

networks; it nearly matches the performance of cable Internet. “The CDMA2000 standard, which we are promoting in India, allows us to offer data transfer services at a level that in GSM networks is only avail- able to 3G users,” says SSTL’s president and CEO, Vsevolod

Rozanov. Russian media reports say that SSTL has already built cellular networks using the CDMA 2000/800 in 11 of India’s 22 districts; its subscriber base approaches one million custom- ers.

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Economy A stronger domestic demand is expected in the next few quarters

Optimism grows, as unemployment rates dip

Prime Minister Vladimir Putin was upbeat on Russia's prospects during his annual report to the Duma, calling an end to the crisis, but admitting there was still a long way to go before Russia returns to stable growth.

BEN ARIS

RIR

Russia's underlying economy has recovered faster than what a majority of analysts had hoped

S

this year. The biggest fear that unemployment would rise through until the autumn, has failed to materialise, as the job- less rate in March remained flat at about 8 pc of the working population, following a fall in February. Indeed, nearly all economic in- dicators have had surprising re- sults. The Central Bank of Rus- sia (CBR) dismissed its own warnings that the sector could face a second wave of the crisis

in April; the CBR chairman, Ser- gei Ignatyev declared on April 15 that "there will be no second wave of the financial crisis". As the recovery gathers pace, the feel-good factor is also starting to percolate into the popular consciousness, which is reflect- ed in both, spending and con- sumer confidence, both of which have risen steadily in recent months. Consumer confidence had risen for three months in a row by the start of April and

more importantly, retail sales have also started to increase again. Consumer spending (not oil prices) have become the main economic driver in recent years. Real incomes were up over 7 pc in 2009; so despite the crisis, the man on the street actually has more roubles in his pocket than ever before. Even so, spending power has been curtailed by the collapse of consumer lending, though this is also showing signs of life after state-owned retail banking giant, Sberbank re- ported an increase in lending in March for the first time in al- most a year.

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How has trade between Russia and India changed over the last 5 years?

In absolute terms, it grew by 150 pc and in 2009, it amounted to $7.5 bn. Civilian goods dominat- ed, accounting for not less than 80 pc of Russian–Indian trade. Russia’s main export goods were aviation equipment and spare parts, mineral fertilizers, fossil fuels, nuclear power station equipment, rolled steel, monitor- ing and testing equipment, elec- tric power equipment and power cables, diamonds, newsprint and printed products. Russia’s im- ports from India included medi- cines, tea, fruit and vegetables, tobacco products, knitwear and textiles, freight and passenger transport vehicles, telephone equipment, graphite and ferrous alloy products, and fish.

We would be happy if our trade and economic relations could develop this dynamically with many countries. Our leaders have set $20 bn trade target with India by 2015. Ac- cording to Russia’s customs sta- tistics, in January–February 2010, our trade grew by 39.3 pc. At the same time, there is virtu- ally no imbalance in the trade: exports and imports are both growing equally.

Which sectors of the Russian economy might be of interest to Indian investors?

Indian companies such as OVL, GAIL, Indian Oil, Coal India, Reliance Industries and TATA are already driving the Indian investment in Russia. India’s ONGC is participating in devel- oping oil and gas deposits in the Sakhalin-1 project. It has ac- quired Imperial Energy, which is engaged in exploiting oil depos- its in Tomsk Region. The ICICI bank is developing its subsidiary bank in Russia. TATA Motors has set up an assembly plant of Indian low-tonnage trucks. KUMI International has started production of abrasives in Volgo- grad Region.

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PHOTOXPRESS

India's ONGC has shown interest in partnering with Russian oil and gas majors to invest in different regions of Siberia and North Russia.

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