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India & Russia: New frontiers

world Updated: Oct 18, 2008 01:18 IST
Fred Weir

As global markets sag and Russian industrial oligarchs fall like kingpins, one longtime Russia hand sees big opportunities for Indian businesses to grasp amid the fast-changing economic landscape.

“Russia and India used to be close partners, and the goodwill is still there, but our business ties today are almost embarassing,” says Rajinder Sethi, an 18-year Moscow resident who’s currently chairman of Srei Leasing Russia, which rents out heavy construction equipment to Russian customers.

“Now the rules of the game are changing fast, and it’s time for a new look at an old set of possibilities,” he says.

On the surface, the synergies between Russia and India look extraordinary.

India could be a vast market for Russia’s energy, raw materials, as well as military and engineering technologies. Russian consumers are hungry for the type of goods India can produce, from textiles to pharmeceuticals, as well as its expertise in information technologies and global marketing. But in fact trade turnover between Russia and India has stagnated at under $5-billion annually for the past decade, though it has shown signs of growth in recent years.

The Indian Embassy says there are just 300 Indian companies registered in Russia, working mostly in import/export operations.

Sethi says the huge potential has gone unrealized because “India and Russia have been too busy with the West to pay attention to each other’s markets, as both these markets are to an extent considered ‘difficult’ and require a greater sense of committment.”

But Russia’s economic landscape is undergoing explosive changes. The country’s 25 richest men, most of them billionaire oligarchs closely integrated with Western markets, have lost an estimated $230-billion since the global crisis began, according to Forbes magazine.

Among the chief victims are aluminum king Oleg Deripaska, who’s shed at least $16-billion over the past month and given up his stakes in the German construction company Hochtief and the Canadian auto parts giant Magna International.

Another big loser is Roman Abramovich, famous for buying the British Chelsea Football Club, who is reportedly down a whopping $20-billion in assets and cash holdings.

The economic earthquake has pushed forward Russian state companies, such as the energy giants Rosneft and Gazprom, who have been much more receptive about doing business with India.

Regional Russian businesses, so far unconnected with global markets, are also relatively unscathed and likely to move into the vacuum searching for new, probably non-Western, business players to connect with. For old Russia hands like Sethi, it all smells of fresh opportunity.

“Russia needs to look eastward like never before, and there is India, an old partner ready for new ventures,” he says.