Expansion to the north: how India conquers Russia
Indian investments in the Russian economy amount to more than $ 8 billion and are concentrated primarily in the oil and gas and pharmaceutical industries
In 2019, India will significantly expand its participation in the Eastern Economic Forum. And while Russia, in the main, traditionally cooperates with India in the area of the military industry, Indian companies have begun to enter our market more actively, and not from the most obvious niches. How does India conquer the Russian market?
Backlog from the West
The Russian market is the tenth largest in the world, it is smaller than the European and American ones, so the Indians prefer to work with the West (India’s trade turnover with the United States in 2017 amounted to $ 126 billion). In addition, Indian companies have been working with European and American markets for decades, all interaction models have already been debugged. When Indian companies enter the Russian market, they are confronted with complete incomprehension. For example, European companies send an order with a prepayment, after which India starts to implement it. Domestic entrepreneurs are accustomed to buying ready-made collections first, and then ordering something – according to this model, they cooperate with China. In India, everything is just under the order.
However, several giants are already present in our market – for example, the Tata Group, which has invested $ 560 million in a project for the extraction and processing of coal in Kamchatka.
Pharmaceuticals are highly developed in India, and a number of Indian entrepreneurs in Russia have launched their pharmaceutical companies at a high level. One such entrepreneur is Vikram Punia. He himself came to Russia from India, graduated from the university and launched Pharmasintez with the support of his Indian partners. The company is among the top ten drug suppliers to Russian hospitals. Also, since the end of last year, an ophthalmologic plant of the Indian company “Vartamana International Traders” has been operating in Ingushetia. Until the end of 2020, investments in this project will amount to 200 million rubles. In general, India ranks third after Germany and France in terms of the supply of medicines to Russia.
Another example is the Welspun corporation, which recently appealed to the Russian Council for the Development of Foreign Trade (SRVT) to enter Russian networks like Pyaterochka, Auchan, Metro, X5 Retail Group, Detsky Mir and is now actively negotiating, our data. It is a global player, the third largest textile manufacturer in the world, whose products can be found in Disney souvenir shop and on Wimbledon court, on Walmart, J C Penney and Macy’s networks. Moreover, it is the largest Indian energy and steel company, the second largest pipe manufacturer in the world.
Also recently, the Council for the Development of Foreign Trade received a request from the Embassy of India for analytics of the Russian timber processing market and the selection of potential partners for Indian companies. India is ready to invest in Russian wood processing and logging, to purchase commercial wood. The Far East has great potential here, as there is a message by sea.
In general, Indian investments in the Russian economy (more than $ 8 billion) are concentrated primarily in the oil and gas and pharmaceutical industries. While the main problem in the absence of direct communication. Therefore, the geographical proximity of the region has an important influence. Joint projects of Indian investors in Chechnya are actively discussed. In December, a factory for the cutting of precious products was opened in Grozny at the expense of the investment of the director of Indian HVK International, Sani Sakaria. In the future, a branch in Moscow is planned.
Organizations and departments play an important role in increasing turnover. Excess regulation hinders the growth of trade and investment. In particular, it is not always clear to businessmen which authorities to turn to when a problem arises, because of bureaucratic confusion, the development of projects stops, which creates an additional financial burden on businessmen. Following the results of the St. Petersburg International Economic Forum – 2018, it was decided to create a “one window” for investors from India, where you can address any questions that may arise. To help Russian entrepreneurs, parliamentarians have formed a list of more than 30 mutual administrative barriers hindering the development of trade relations and requiring elimination. To establish full-fledged trade relations, a package of proposals was formed, including a direct flight connection with Delhi.
Particular attention is paid to cooperation in the field of innovation in the framework of the project “Russian-Indian bridge for innovation.” The project was organized by the Russian development institutions: the Russian Venture Company (RVC), the Skolkovo Technopark and the Department of Science and Technology of India (DST). The project involves strengthening cooperation in the field of innovative entrepreneurship and the emergence of new companies from the partner country in the markets of both countries. As a result of the program, it is planned to conclude partnership agreements between Russian and Indian development institutions and entrepreneurs.