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Thursday, August 13, 2020

Interview with Russia’s Minister of Industry & Trade: ‘Eyeing engagements beyond defence with India’

The two sides are planning to work together to use working schemes and payment mechanisms in national currencies, developed by the Central Bank of Russia and the Reserve Bank of India.

Written by Anil Sasi | New Delhi | Updated: October 6, 2018 9:49:43 pm
Denis Manturov

The 19th India-Russia annual bilateral summit that starts off here Thursday could see the signing of key agreements between the two sides, including the deal for the S-400 surface-to-air missile system. Denis Manturov, Minister of Industry and Trade of the Russian Federation, who is part of the visiting delegation headed by Russian President Vladimir Putin, expects increased engagements to go beyond military sector cooperation. The two sides are planning to work together to use working schemes and payment mechanisms in national currencies, developed by the Central Bank of Russia and the Reserve Bank of India, he said in an interview with The Indian Express. Excerpts:

Mr. Manturov, what are your expectations from the upcoming annual summit? Will cooperation in defense area remain a part of the strategic partnership, or you presume that the partnership will go beyond the Military and Technical Cooperation (MTC) to expand in other sectors?

India is our long-standing friend and partner, and we have serious plans for expanding cooperation with it. Of course, I am not talking only about the MTC sector, but also about a number of civil industries. We consider a combination of trade in goods and services with the development of technological and industrial partnerships in promising industries as one of the key approaches to the development of our cooperation. Given high competition in foreign markets, it is important to offer our partners opportunities to develop their own technological base, as well as complex solutions for current production problems. These are the areas that we are actively trying to develop.

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A good example of such partnership is helicopter construction industry, in particular cooperation between Russian Helicopters Holding, which is part of Rostec State Company, and the Indian corporation Hindustan Aeronautics Limited (HAL) in the framework of a joint venture with prospects of manufacturing of light-weight multi-purpose Ka-226T helicopters under the “Make in India” program.

According to the existing agreements, the Indian side will receive 200 Russian Ka-226T helicopters, 60 of which will be manufactured in Russia, while the remaining 140 – in India. It should be noted that the India’s helicopter market is extremely interesting for Russian companies. Russian Helicopters mentioned above are also studying possibilities of supplying Mi-171A2 and Ansat helicopters to a number of private Indian partners.

The vectors of development of cooperation in the aviation sector are, in fact, much wider, but at this stage I would suggest that we wait for certain agreements between Russian and Indian companies.

Another promising area of cooperation is medicine. One of the holdings under Rostec SC, National Immunobiological Company (Natsimbio), is already working in this

direction. The company supplies active pharmaceutical Indian-made substances to the territory of Russia for the manufacture of finished pharmaceutical products. The volume of supplies over the first 9 months of 2018 amounted to $ 1.5 million.

Another high-tech and innovative holding under Rostec SC – Shvabe – is ready for cooperation with Indian partners in a number of healthcare areas, including telemedicine.

In this case, we are talking about the creation of the national telemedicine system, including organization of regional segments, introduction of services, and equipping of healthcare organizations with appropriate equipment. Shvabe Holding also provides on a turn-key basis services for healthcare institutions of various profiles, including design and construction of proton treatment cancer centers, modular PET/CT centers, and implementation of mobile medicine projects. We are ready to supply medical equipment produced in Russia to India in the following areas: anesthesiology, resuscitation, neonatology, ophthalmology, cardiology, gynecology, laboratory diagnostics, physiotherapy and rehabilitation, including solutions for VR rehabilitation. Speaking about other high-tech areas, Shvabe is ready to cooperate in a wide range ofother areas. These are “smart city” technologies, which include the creation of modern innovative infrastructure, “smart houses and networks”, energy efficient technologies, introduction of mobile services, convenience and safety of urban infrastructure. It also includes creation, management and operation of smart transport systems, implementation of complex road and transport projects, energy service projects, including the creation of electricity metering systems and replacement of lighting equipment.

All in all, enterprises of Rostec SC, which are, by the way, around 700, are ready to provide Indian partners with a wide range of effective solutions – from automation systems to complex infrastructure projects.

Explained: What S-400 air defence system deal with Russia means to India

The Indian side is interested in settlements in national currencies in such industries as pharmaceuticals, light industry, agriculture and engineering. Do you think it is possible?

Last summer, on the sidelines of SPIEF-2017, leaders of our countries adopted the St. Petersburg Declaration of the Russian Federation and the Republic of India: A vision for the 21st century, according to which our countries intend to coordinate efforts to promote the implementation of the system for mutual payments in national currencies in bilateral trade to reduce its dependence on other currencies. We are planning to work together to encourage the business community to use working schemes and payment mechanisms in national currencies, developed by the Central Bank of Russia and the Reserve Bank of India. The transition to mutual payments in national currencies will become a good impulse for increasing the volume of mutual trade and ensure reaching the turnover over $ 25 billion, which will certainly be a remarkable achievement.

India and Russia intend to achieve the turnover of $ 30 billion by 2025. How do you think this can be achieved?

Last year, India ranked 17th among Russia’s trading partners. To achieve the targeted mutual trade turnover of $ 30 billion by 2025, an annual increase of at least 15% is required. This is an ambitious target that requires new approaches in cooperation and a significant expansion of sectoral cooperation.

First of all, I would like to mention the work on concluding an agreement on a free trade zone. We expect that the first round of negotiations on this issue will be held this autumn. However back in January we already discussed general approaches to the formation of a document in the framework of technical consultations of the Eurasian Economic Union with India.

It is also planned to engage modern tools to promote domestic products. In particular, the Ministry of Industry and Trade of Russia together with the Russian Export Center JSC are implementing export support mechanisms, including issuing preferential loans to foreign buyers of Russian high-tech products, and other mechanisms.

Moreover, we are working to increase the recognition of Russian brands in foreign countries. For example, the REC group supported 194 companies in 2017 supplying products to the Indian market. The total volume of supported exports amounted to $260 million. The products of the timber industry and the metal processing industry and civil engineering received the largest amount of support (56% and 32%, correspondingly). As of the end of July 2018, the trade turnover exceeded $ 6 billion, which is 20% more as compared to the same period of last

I would also like to note another important step – involvement of new manufacturers. First of all, we are talking about small and medium enterprises. At that, we have to consistently remove significant restrictions and barriers in mutual trade and investment activities.

What is the progress in cooperation between our countries in the field of energy and gas pumping equipment?

A promising branch of cooperation between our countries is engine-building. A Rostec holding company – ODK JSC – is ready to supply energy and gas pumping equipment to India: gas turbine power plants with a unit capacity from 2.5 to 25 MW, steam and gas plants with a total capacity of up to 60 MW and gas pumping units with a unit capacity from 4 to 25 MW with gas turbine engines. Moreover, the company is ready to participate in the construction of distributed energy facilities and reconstruction of older power equipment, replacing it with new ones based on gas turbine engines. We are also ready to provide any maintenance support for the delivered equipment throughout the entire life cycle.

Most recently, in May this year, ODK JSC concluded an agreement with the Indian company EDAC Engineering Ltd. on cooperation in the area of supply and promotion of Russian-made energy equipment to the Indian market. This is an important step towards the development of cooperation in this field.

Do you see opportunities for Russian companies to invest in projects such as the Delhi-Mumbai industrial corridor, same as Indian companies investing in technology parks that are created in Russia to promote industrial development?

We positively assess the dynamics of cooperation in the field of investment cooperation between the Direct Investment Fund of Russia and the National Investment and Infrastructure Fund for the implementation of joint investment projects. There is significant potential for further expansion of investment cooperation between the DIF and the National Investment and Infrastructure Fund, both within the framework of the existing investment cooperation mechanisms and in new directions. For example, together with another partner of the DIF from the Middle East, a large international operator of port infrastructure DP World, a tripartite agreement was signed on investments in infrastructure development. I am sure that bringing together three players of this level will ensure an extremely effective implementation of joint projects.

Are there opportunities for cooperation between small and medium business in Russia and India at the regional level?

As a result of my meeting with Suresh Prabhu, Minister of Trade and Industry of the Republic of India, in September this year on the sidelines of the Eastern Economic Forum, an agreement was reached to hold the Forum in January 2019 inviting small and medium entrepreneurs. At the moment, we are actively preparing for this event, which, I am sure, will give additional impulse to our mutually beneficial cooperation.

It was reported that the MS-21 aircraft will be publicly demonstrated for the first time at an air show in China this autumn. Do you expect any delays? Have the tests been completed? Can the MS-21 find its niche in the Indian market?

The main task of the MS-21 program today is to meet the deadlines for certification tests, the test program involves two MS-21-300 airplanes operating flights at the aerodrome of FRI named after M.M. Gromov. Two more test airplanes are being manufactured in Irkutsk. We decided not to distract the planes from their work. Since the exterior of the MS-21 airplane is already well-known in the world, we are planning to present the passenger version of the airplane. This will be the third aircraft. It is already assembled, and engineering systems are being mounted now. The presentation is planned for next year, possibly in Russia. I would like to remind you that the Russian government is the main investor of the MS-21 program, and Russian airlines will be first customers of the airplane.

Today the portfolio of confirmed orders for MS-21 is 175 units. This is enough to cover the production capacity for several years ahead. Aeroflot will be among our first customer, it will receive a total of 50 airplanes.

We clearly understand that it is the successful operation of the airplane by domestic airlines that will be able to effectively promote the airplane on the global market. And our ambitions definitely lie beyond the domestic Russian market. Russia wants this airplane to be actively operated by other countries and will continue to work on it.

What do you think is the key factor for the further development of industrial cooperation between Russia and India?

Russia and India have a lot of natural resources and advanced technologies. I am sure we need to effectively use the competitive advantages of each country and compensate for each other’s shortcomings, as well as reasonably use natural resources, for example, by placing energy-intensive production facilities in regions with a large amount of green power.

In Russia, we can offer ready-made solutions that can be interesting to our partners from India. I specifically mean the joint work on creation of new capacities for the production of deep processing aluminum goods in the framework of the so-called technological valleys or clusters in Eastern Siberia.

The main advantage of such clusters is their proximity to enormous reserves of green hydropower, and this is their advantage in comparison with many other regions in Asia, which are characterized by rather scarce energy resources. India is no exception. Other advantages are the availability of a raw material base, in particular, production of primary aluminum and semi-finished aluminum products, low tariffs for hydro resources, skilled personnel, well-equipped infrastructure, as well as benefits for investors.

We offer Indian partners to take part in the development of aluminum clusters in Russia and use the benefits that it brings for the supply of finished products with low ecological footprint to the Russian market and to the markets of third countries.

How do you think, what role can the Aurus brand play in strengthening the position of the Russian automotive industry in the global market?

First, I would like to say that creating a car from scratch is an extremely difficult and ambitious task. And we have managed to successfully implement it. As part of the automotive Aurus project, we have also developed an international cooperation of enterprises that created and then industrialized the new modern automotive platform. Our project will help Russian car-makers to get back to the streamline in the area of car-making and create new domestic cars that are not worse than any world analogues. The development of the project allowed us to consolidate resources of the Russian automotive industry and organize intersectoral scientific, technical and industrial cooperation to bring the Russian automotive industry to the leading global positions.

Competitiveness in any industrial sector and, specifically, in the automotive industry depends on many factors. And we know about extremely high requirements for development and production of luxury cars. The creation of Aurus cars is a serious stage for the Russian automotive industry and for strengthening its role in the global market. All scientific and technical competencies that have been accumulated in the project will have a significant impact on the development of the Russian automotive industry. Domestic companies can use technical achievements, know-how and technologies to develop their business at the global level.

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