Tatiana Bokova, Intern of the Russian National Committee on BRICS Research – special for InfoBRICS
Since the outbreak of the Russian-Ukrainian conflict, Russia, distanced from Western markets following the sanctions, has been forced to establish new economic and business contacts, and renew existing ones. Russian companies examine countries that have the conditions to operate and expand. Russia is increasingly strengthening its relations with the East and boosting contacts, including with the BRICS members. Faced with sanctions, the Middle Eastern and Indian markets look very favourable for Russia, and because of their high population size, benefit from the overall background.
In the current situation, India is the second largest market that would interest Russian companies and also to export-oriented businesses in Russia. With the establishment of bilateral business cooperation, the enterprises have opportunities to realise their potential, and Indian brands will develop and set up their branches in Russia, capable of replacing European and American companies. Both countries are currently interested in developing promising areas such as military-technical cooperation, nuclear energy and space. However, the two economies are likely to establish contacts in the areas of entrepreneurship, small and medium-sized businesses, information technology, high-tech, biotechnology, etc. Trade between Russia and India, meanwhile, has shown unprecedented growth, and bilateral trade could reach $30 billion by 2025.
Within the framework of the India-Russia Strategic Partnership, various institutionalised mechanisms are functioning to ensure regular interaction and increase the level of cooperation between the states. An annual summit is held between the Prime Minister of India and the President of the Russian Federation, during which the parties sign important agreements and documents covering, among others, the area of entrepreneurship and business.
The Russian side views the Indian market as a potential for development and expansion. The most important thing is to carry out a proper marketing, analyse the target group and the needs of Indian buyers and, based on these comments, offer its services or products. At present, because of orientation towards the East, entrepreneurs meet potential suppliers in large Indian cities and open specialised bank accounts in their own country for transactions in rubles and rupees.
Business cooperation with the Indian side has been conducted for many years. Major businesses of the two countries are already implementing projects in the hydrocarbon, chemical, information technology, pharmaceuticals and diamond industries in Russia and India. For example, Rosneft holds a stake in the Indian company Nayara Energy Limited, whose assets include an oil refinery, a port and a network of 5,000 petrol stations. SIBUR Holding and its Indian partners have started production of butyl rubber in India.
Also, as a successful case, is the Russian company Tsifra, which is creating a “digital mine” at the Pakri Barwadi coal mine (Jharkhand, the mine operator is Thriveni Earthmovers). The project is introducing, for instance, a load and fuel monitoring system and increasing equipment life through predictive analytics, which is simplifying some processes and improving bilateral results.
Studying the Russian business experience in the Indian market, Russia’s largest coal supplier, Siberian Coal Energy Company (SUEK), recently opened a representative office in India and is now conducting conversations. The office will present cooperation opportunities with numerous companies in the energy and metallurgical sectors to invest in coal or power projects in India. In addition, SUEK has exported 1.25 million tonnes of coal to India, double the amount exported for the whole of 2021.
The two countries are currently engaged in over 100 joint R&D activities on promising topics, including aviation, to create a solid foundation for the future development of high-tech industries in Russia and India. Besides aviation and manufacturing, both sides join forces in the medical field and continue to counter Covid-19. For instance, the Russian Direct Investment Fund (RDIF) and the Indian biopharmaceutical company Stelis have joined forces to produce and supply at least 200 million doses of the Russian vaccine Sputnik V.
IT companies capture India
India is currently a gigantic market with great potential for the Russian IT sector. IDC research was published in April this year showing that the Indian IT services industry reached $14. 15 billion in 2021 and showed a 7.2% growth rate. India also has the second largest number of IT companies in the world and is also recognised as one of the most promising markets in the world for information technologies. Many experts have pointed out that with the start of the Ukrainian conflict, all the processes contributing to the entry of Russian companies into the Indian niche market have sped up enormously.
Initially, the first step for Russian IT companies to enter the Indian market was the signing of a partnership contract between the two largest IT associations in Russia (Russoft) and India (Nasscom), which provides for the creation of joint Russian-Indian IT enterprises for building smart cities, optimising urban transport systems, etc. In addition, the Russian Foundation and the Indian Council had earlier agreed to establish business contacts and promote software localisation projects in the markets of the two countries, as well as the participation of Russian companies in IndiaSoft.
In 2018, the two sides advanced cooperation in the field of information technology. First, twelve residents of the Skolkovo Foundation’s IT cluster took part in IndiaSoft, the largest regional IT conference. According to its results, ABBYY Language Services, AlterGeo and C3D Labs intend to expand their presence in the Indian market. Second, at the first India-Russia Strategic Economic Dialogue held in St. Petersburg, India and Russia agreed to strengthen cooperation in areas such as blockchain networks and artificial intelligence.
Russian companies that supply the Indian market promise multiples of growth for their businesses, according to top executives. For the 10 Russian IT companies preparing to enter India, the local market promises at least USD 100 million. In May this year, the cloud service MoiSklad reported the programme was already available for Indian users. The company director said that the company plans to reach 300,000 customers by 2025. The service also has plans to further expand its geographical footprint in Latin America.
“Entering the new large market of India will make it possible to maintain the growth rate of MoiSklad, on the one hand, to diversify risks and, on the other hand, to enable the service, by adapting the product to new tasks, to gain even more experience and feedback for product improvement, including for users in Russia,” noted the head of the service.
With the tightening of sanctions, the risks have increased both for Russian companies needing products abroad and for large global businesses that want to avoid such deals in order not to fall under the sanction’s rules. In this regard, companies from Russia, including in the IT sector, are reorienting themselves to the market of Eastern states and trying to build business cooperation with such countries as China, India and others. Experts mention that Russian enterprises have splendid opportunities to gain a foothold in the Indian market while customers are loyal to local vendors and keep up demand for their products despite the situation in Russia and the global environment.
Russia and India see each other as strategic partners and attach great importance to bilateral interaction. While both countries have differences in geopolitical interests and other aspects, one should not underestimate the basis and potential for cooperation between Russia and India in the areas of military industry, politics, and economic development. In addition, we should see the mutual interaction not only through bilateral contacts but also through integration within the framework of inter-state cooperation mechanisms, such as RIC, BRICS and SCO.
