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www.rusembassy.in Embassy of the Russian Federa- tion in India www.russiancentre.org.in/eng Russian Centre of Cul- ture and Science in New Delhi

RUSSIA INDIA BUSINESS REPORT

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

THE ECONOMIC TIMES WEDNESDAY_MAY 12_2010

Cooperation

New economic chemistry

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The Mahindra company is in- terested in building wheeled tractors in Russia. We have talk- ed to the management of the Russian Tractors company and they confirmed that there are still niches in the tractor range in Russia that are not covered. But at the same time, our man- ufacturers are also interested in assembling tractors in India, although these would be heavy ones. This is a two-way street.

Are any contracts for high-tech products being contemplated?

There is an intergovernmental agreement on cooperation in the use of nuclear energy for peaceful purposes, and a “road map” was signed during Rus- sian Prime Minister Vladimir Putin’s visit to India in March. Space cooperation is develop- ing. A document has been signed on the creation of a joint ven- ture to produce equipment to receive signals using the GLO- NASS system. A system of sat- ellites will soon be put into orbit, and this will provide ex- tensive coverage and access across the world. What’s more, GLONASS is cheaper than its main rival. Russia could also offer India an advanced tele- health system which has a range of competitive advantages.

Will the outcome of the BRIC on April 15 change the global eco- nomic picture, and how will it in- fluence the development of trade within the club?

We believe that opportunities

the possibility of a long-term agreement on grain supplies with Russia. There is also talk of doing this in China.

Grigory Sarishvili, Head of the Department of Asian and Afri- can Countries at Russia’s Min- istry for Economic Develop- ment.

will emerge in the areas of trade and investment cooperation, and also in improving mutual accounting in national curren- cies. We believe that the crisis has bottomed out and the BRIC countries are beginning to emerge from recession. Joint projects will not only have the most positive effect on trade within the club but will also cre- ate synergy – both for the econ- omy of the group itself and for the global economy as a whole.

How is cooperation going to de- velop in agro-industry?

In the last 2–3 years Russia has

regained its position as a major world exporter of grain, which has been reinforced by its ex- ports to India and China. India itself provides a lot of grain. However, because of climate in- stability and the rapid popula- tion growth, India is exploring

What’s behind Russia’s in- creased activity on the grain market? Only recently Moscow itself needed to import this type of produce.

What helped this a lot was the bringing of order into the agro- industrial sector in Russia and fi ne-tuning of some specifi c fi - nancial instruments. Last year, we even increased the areas sown, improved the quality of storage and processing of agrarian produce, and ironed out the logistics. A discussion is under way with some foreign investors about the possibility of them being in- volved in work to create a port, an elevator and a trans-ship- ment base in the Far East. Plans are also being developed to ex- pand the capacity of the Trans- Siberian Railway.

There is a view that the BRIC countries regard Russia primar- ily as a source of energy re- sources.

That’s not the case. For exam- ple, Russia’s relations with India include many joint proj- ects in areas of telecommunica- tions, space, and nuclear power station construction. We recent- ly reached an agreement on the construction of new blocks at the power station in Koodanku- lam, and a site has been allocat- ed for construction of a nuclear power station in Haripur (West Bengal). This pact also provided

NEWS IN BRIEF

Investors sign off on anti- corruption pact

Russia can offer India an advanced tele-health system, which has a range of competitive advantages.

for the serial construction of re- actors in India, which will not only make it more cost-effective for India, but will also spur lo- calized production. Indian

companies will be involved not just in the construction work, but also in planning and con- struction the buildings and structures.

Import/export structure

The leading foreign compa- nies working in Russia pledged their support to the government's growing anti- corruption drive by signing a pact in the middle of April. Corruption remains a cancer that is holding Russia's eco- nomic development back and costs the state upto $300 bn a year, according to some sourc- es. Since the start of this year, the government has upped the stakes and started Russia's first serious drive to combat graft. The police force is being reformed and the state has set up two new anti-corruption units in both, the General Prosecutor's office and the In- terior Ministry that oversees the police force. A total of 40 members of the Russian-German Foreign Trade Chamber, representing some of the leading foreign in- vestors in Russia, came to- gether and signed off on the non-binding pact. RIR

US, Canada and Denmark back Russia’s entry into WTO

SOURCE: WWW.ECONOMY.GOV.RU

03

Looking beyond the Moscow ring road

Indian businessmen working in Russia have identified the nine constituent regions of the Russian Federation with the best climate for investment.

ALEXEI CHICHKIN

ROSSIYSKAYA GAZETA

The Indian Business Alliance (IBA), an association of Indian businessmen in Russia, in April prepared a research report on the fi nancial, economic and so- cial trends in Russia’s regions. The report, signed by IBA Se-

nior Vice-President Atul Khurana, was entitled “Russia is more than just Moscow.” The report notes in particular: “Russian business is mainly concentrated in Moscow. But Russia effectively only starts outside the Moscow ring road…” Regarding post-crisis recovery, it notes: in the major- ity of regions this process will take much longer than in Mos- cow and St Petersburg, since these two megapolises are the biggest fi nancial and economic centres in the country. “Moscow

was also ‘awash’ in ‘oil money’, and was one of the most notice- able centres of consumption on the planet. Yet many regions are literally bogged down in op- pressive poverty…” According to the report, only 14 out of ap- proximately 80 regions of Rus- sia are still donors to the feder- al budget. In reality, the oil and gas regions – the Timan-Pecho- ra basin, Tyumen Region, Bash- kortostan and Tatarstan – earn big money, along with Moscow and St Petersburg. But this tends to aggravate the econom-

ic imbalances between the re- gions and the problems in Rus- sia’s overall anti-crisis policy. Regarding regional policy, the report notes that “the govern- ment is unhesitatingly putting financial resources into the poorest regions, because the economic recession has in- creased the pressure on their budgets by reducing their tax revenues. But such ‘injections’ of money into the regions may well make it more difficult to fulfil the government’s $1 trn programme to develop the re-

gional and inter-regional infra- structure.” Regarding the regional climate for investment, the report iden- tifi es the nine regions with the best investment climate, citing recent research by Deutsche Bank: Moscow, Moscow Re- gion, Saint Petersburg, Samara Region, Krasnodar Region, Ni- zhny Novgorod Region, Tatar- stan, Rostov Region and Bash- kortostan. According to the Indian analysts’ date, these ac- count for almost half of Rus- sia’s GDP.

A number of countries, among them the United States and Canada have last week offered support for Russia's bid to ac- cede to the World Trade Organ- isation (WTO). Washington is positive about Russia's plans to join the WTO, US Assistant Secretary of State Philip Crow- ley said at a daily press briefi ng in Washington. "The issue of Russia and the WTO did come up as a part of our efforts to deepen economic cooperation, not only with the United States but with other major trading countries around the world," he said. RIR

NIKOLAY KOROLEV

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