BUSINESS

RUSSIA: THE BEST MIRROR IS AN OLD FRIEND

Russia is best recognized amongst international investors for its energy industry, as a leading exporter of oil and natural gas. However, those investing in Russia are also observing its emerging information technology (IT) and telecommunications sectors. In particular, the country’s software industry is one of the fastest rising markets in the world.

We think Russia has progressed a great deal as an investment destination in the past two decades and holds great potential, though there is still more work to be done to open the markets and infuse investor’s confidence.

Russia has never been the easiest country to comprehend. Winston Churchill designated the country as a “riddle, wrapped in a mystery inside an enigma,” and today a lot of investors would share his perspective.

Russia has one of the largest populations in the world – around 150 million people – many of whom have been getting slowly better-off for the past decade and are spending an increasing amount of their income on luxury goods, services and holidays.

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“The Russian economy really went through some difficult times but as of the beginning of the year it really reached a floor and is coming up and we expect growth to resume at the end of this year or early next year,” Kirill Dmitriev, the Chief Executive of the Russian Direct Investment Fund (RDIF) has said.

That means Russia’s economy is anticipated to return to growth and has opportunities to fascinate foreign investment.

His comments come as Russia’s economy starts progressively to recover even if Russia’s global political standing is at a low point due to its unwavering support for the controversial Syrian regime and it current attack of eastern Aleppo.

Russia’s economy entered recession last year amidst a global slump in oil prices and western economic sanctions that were forced on the country for its annexation of Crimea in early 2014 and role in pro-Russian uprising in eastern Ukraine.

The International Monetary Fund predicted in its latest World Economic Outlook that Russia’s economy could return to growth in 2017 and that its recession had been shallower than expected. It forecast a contraction in Russian GDP of 0.8 percent this year but growth of 1.1 percent in 2017.

Russia enhancing cooperation with Andhra Pradesh, Rajasthan & Maharastra

Russian Trade Minister Denis Manturov visited the states of Rajasthan, Andhra Pradesh and Maharashtra to deliberate various investment opportunities across sectors.

Russia’s Minister of Trade and Industry during his three-day tour across Indian states, discovered the potential of these three Indian states for the Russian government and for private businesses across sectors.

In Andhra Pradesh (A.P.), two Russian companies; United Shipbuilding Corporation (USC) and TechnoNICOL Corporation – signed Memorandums of Understanding with the A.P. Economic Development Board (AP-EDB). While USC is looking to cooperate with the state to establish shipbuilding facilities and develop infrastructure for other shipbuilding projects, TechnoNICOL Corporation and its Indian partner SUN Group are looking at creating a cluster for waterproofing, roofing and insulation products manufacturing in A.P. The investments in the latter project could reach $60 million.

Chief Minister of Andhra Pradesh N. Chandrababu Naidu emphasized the various investment opportunities and strategic advantages Andhra Pradesh has. The Chief Minister stated that this is the right time to invest in India and when compared to other states, Andhra Pradesh can provide an outstanding market for investments in a wide range of sectors given the availability of rich natural resources. He stressed areas such as aerospace and defence manufacturing, automobile and auto components, biotechnology, electronics, energy, mineral-based industries, petroleum, petrochemicals, leather, textiles and apparel for possible collaboration.

According to official sources, there were discussions on the areas of Russia-Rajasthan collaboration, including in mining and agriculture. The Russian delegation’s visit follows Ms. Raje’s participation in the international industrial trade fair, Innoprom-2016, held in Russia earlier this year.The Russian delegation also met Rajasthan Chief Minister Vasundhara Raje. They looked into the scope for alliance in the fields such as mining, agriculture, infrastructure development and heavy engineering and machinery.

Ms. Raje said there was a strong potential for growth in Rajasthan’s trade with Russia. “With increasing economic growth, the infrastructure requirements in Rajasthan are growing and Russia can help address this need,” she said in a statement. Russia could complement Rajasthan’s efforts in strengthening the State’s engineering industry, specifically in automotive, mines and minerals sectors, said Ms. Raje.

India’s SUN Gold Ltd, China National Gold Group Corporation, OJSC ‘Far East and Baikal Region Development Fund’ and private investors from South Africa and Brazil, Transafrica Capital and Vox Capital have reached an initial understanding on participation in this project that could be a significant incentive for the industrial development in the Russian far East.

Mantrurov also said Russian Railways are currently in talks with India for participation in the Delhi-Mumbai Industrial Corridor Project, one of the most aspiring and costliest infrastructure projects in India at the moment.

‘An old friend is better than two new friends’, says Modi

The India-Russia relationship is not a marriage made in heaven but it is certainly one of the longest standing international alliances between two major countries. It is also one that is facing testing times and risks derailment due to policies of Russian leadership as regards to its orientation and rendezvous with India’s principal adversary Pakistan.

“Russia and India are allies in ensuring strategic security and stability, and building an equitable world order. We work closely within the leading multilateral organisations such as BRICS, the G20, and the UN. This October marks 16 years of the signing of the key instrument for Russian-Indian relations, the Declaration on Strategic Partnership. We have done much to further the entire mechanism of bilateral ties during this period,” said the proud President of Russia Vladimir Putin.

India and Russia recently signed 16 agreements to intensify economic engagement between both the nations on the sidelines of the 8th BRICS summit in Goa.

Signing of Memorandums of Understanding and Exchange of MOUs between India and Russia took place on 15^th October 2016 in presence of Modi and Putin. Both the leaders witnessed exchange of 16 agreements and 3 announcements across different fields. India and Russia signed key defence and energy deals and also collaborated in space technology by signing an MoU between ISRO and Russia’s state space agency.

Both the nations also extended corporation in railways development for increasing the speed of trains between Nagpur and Secunderabad has also been agreed upon by the two countries. Narendra Modi and Putin jointly unveiled a plaque for the Unit 2 of the Kudamkulam plant and laid the foundation stone for the Units three and four of the Kudamkulam nuclear power plant.

During the joint press briefing, Prime Minister Narendra Modi praising Russia and India’s bond said,” An old friend is better than two new friends.” Modi praised Putin and said that the President provides stability to the mutual relationship. During his address, Modi said that the agreements on the manufacturing of kamo 250 helicopters were significant for India and specified that the launch of unit 2 and 3 of the Kudamkulam nuclear power plant exhibited the extent of the India-Russia nuclear co-operation.