Russia – India

6 September 2022

Russia – India

KEY CONCLUSIONS

Russia and India have a great potential for cooperation and for increasing turnover

“Over 2,700 investment projects worth RUB 6.5 trln are now being implemented in the Far East. Indian business is represented with just 3 projects worth RUB 1.2 bln. There is a huge development potential for our countries and companies. We are ready to support Indian investors any time and help them implement projects both in the Far East or in Russia in general. We are ready to come up with conditions that will ensure fast and comfortable creation of industrial operations,” Anatoliy Bobrakov, Deputy Minister of the Russian Federation for the Development of the Far East and the Arctic.

‘We carry on with our efforts to reimburse for our losses [caused by sanctions, – Ed.]. We need to create ties and cooperation in all areas to make successful decisions. As for ties, we have been talking about the need for international transport hubs. We have developed container transportation. There are complications, but we are looking for solutions for all stakeholders – Russia, Iran, countries of Central Asia – to use these ties between Russia and India,” Pavan Kapoor, Ambassador Extraordinary and Plenipotentiary of the Republic of India to the Russian Federation.

“As for Indian market, we view it as a promising one we need to supply more to and develop mutually beneficial cooperation with. Here are some numbers: in the first seven months of year, India has produced 73.3 mln tonnes of steel, which is 8% more year-over-year. India makes ambitious plans to take its steel production up to 300 mln tonnes by 2035,” Anna Tsivileva, Chairman of the Board of Directors, Kolmar Group.

“I would like to point out the organization of new trade routes between Russia and India and their first results and cases. We have achieved certain results: our vessels have made two return voyages between the seaport of Vostochny and Nhava Sheva, with 17 days in transit. Then the cargo travelled to the western part of Russia by rail. This route has two vessels with the capacity of over a thousand freight services. <…> On 1 October, we are launching the Chennai–Vostochny route expanding the geography of our presence on the east and west coast. Our company’s main goal is organizing weekly transportation to India,” Andrey Velikorodny, Shareholder, Crystal Alliance Shipping.

PROBLEMS

Freight development takes bigger fleet and more containers

“Shipping is the key issue, i.e. the fleet is not big enough. It is also hard for us to rent foreign vessels. I would say that shipping is a strategic industry, especially for the Far East, which requires huge investments with billions of dollars. Yet we have no guarantee that foreign ‘monsters’ will not come back to claim market again. Now Russia has a good opportunity to build on its capacities in container logistics,” Andrey Velikorodny, Shareholder, Crystal Alliance Shipping.

One of the problems we are facing is our container fleet. After the special operation started, our counterparts have taken over 350 thousand containers out of Russia. We have found a solution. We purchase new equipment in China, relocate it to Russia and then send it to India,” Andrey Velikorodny, Shareholder, Crystal Alliance Shipping.

SOLUTIONS

Development of seaport infrastructure

“Indian market is promising and interesting for us. It becomes even more realistic, if we develop the seaport infrastructure, build deep-water seaports for large vessels. It is important because we are talking about a long haul. We need to transport in bulk to avoid the margin being break-even with logistics costs,” Anna Tsivileva, Chairman of the Board of Directors, Kolmar Group.

“We have good relations with India. Our turnover is growing and has reached USD 40 mln at the end of 2021. However, these are all commodities, fuel, and energy, which will continue to develop. <…> Sakhalin sees itself as a participant of the Northern Sea Route. We are developing our infrastructure and plan the port of Korsakov to be the key for both regional and international development, with container transportation going through Sakhalin,” Anton Zaytsev, Deputy Chairman of the Government of Sakhalin Region.

Mutual energy projects

“Indeed, we have supplied trial batches to large Indian metallurgical plants. They are now actively studying our coal. <…> So, the quality of our coal is so high that with little additives it reduces the cost of the metal mix, while keeping or improving its quality, which is important for metallurgy. As of today, up to 80% of the coal India consumes comes from Australia – it is about 27 million tonnes. Russia supplies just 1 mln tonnes [of coking coal, – Ed.], 1.3 mln tonnes of thermal coal, and 1.4 mln tonnes of anthracite. It looms possible to enter those markets, especially that India was to diversify its coal supply and its dependence on Australian coal,” Anna Tsivileva, Chairman of the Board of Directors, Kolmar Group.

The need for payments in national currencies

“The most important factor is to stabilize payments, simplify them, and launch payments in national currencies. At many forums, we are discussing how to intensify the possibility of payments in roubles and rupees. Hopefully these complex issues will be resolved in the near future,” Sergey Cheremin, Minister, Head of the Department of Foreign Economic and International Relations of the City of Moscow, Government of Moscow; Chairman of the Board, Business Council for Cooperation with India.

“I see great promise in launching a roadmap for the Shanghai Cooperation Organisation. In just over a week, I hope this roadmap will be approved by the heads of state and government at the next summit. Within the framework of this interaction, we will have a better chance to build a system of relations, rather than point projects, one-off solutions. <...> There is a big bet on the internationalization of the Chinese yuan. This currency, with due attention from the Chinese authorities and the willingness of Chinese partners, will also be used in Russian-Indian relations. However, the flagship project is the use of the Russian rouble,” Sergey Storchak, Senior Banker, VEB.RF.

“We already have a working mechanism which makes payments clear. Sberbank is also a competence centre for helping Russian companies enter the Indian market, and with financial support, we have experience in supporting company start-ups. We also help Indian companies with entering the Russian market. We are ready to finance non-commodity exports and imports, ready to consider such projects. The office is now in Delhi, and we plan to open another office in Mumbai in 2023. We are waiting for some liberalization steps from India, which will allow us to develop payments in national currencies, we see progress on both sides,” Ivan Nosov, Branch Manager, Sberbank in India.

New logistical solutions

“This year, the Kuril Islands approved preferential treatment. This is an exemption from key taxes for 20 years. The tourist flow [to the Sakhalin region, – Ed.] has increased 2.5 times in the last year. In two years, we will create perfect conditions for air freight, and we believe that all these components will help development of tourism, and of the pharmaceutical industry, and of the localization of business on Sakhalin,” Anton Zaytsev, Deputy Chairman of the Government of Sakhalin Region.

“As an industry expert, I see other areas for the development of logistics solutions. I suggest that colleagues from India organize a joint line to the western part of Russia, to the Baltic states, which have been hit hardest by sanctions,” Andrey Velikorodny, Shareholder, Crystal Alliance Shipping.

“We still do not have direct flights. If in the next year direct passenger flights between the 10 largest cities of the Russian Federation and India are launched, then a lot of things will make real sense and will go tenfold faster [development of cooperation, – Ed.],” Somasundaram Subramanian, Founder, General Director, Eurasian Federation of Oncology (EAFO); Chair, Board of Directors, Eurasian Cancer Research Council (ECRC), Mumbai, India.

For more information, visit the Roscongress Foundation’s Information and Analytical System roscongress.org.

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