06
Co-operation
RUSSIA INDIA REPORT
BOOKMARKS www.rus-ind.com More about Russian-Indian trade
IN ASSOCIATION WITH ROSSIYSKAYA GAZETA
and economic cooperation
www.sistema.com Look for information about Sistema
THE ECONOMIC TIMES SATURDAY, DECEMBER 29, 2007
Russia-India news
Tendencies AFK Sistema looks to the future by buying small mobile operator
Russia to sell India
300 upgraded tanks
AFK Sistema Aims to Become
Rosoboronexport, Russia's with the negotiations said:
state arms exporter, has "the matter concerns upgrad-
signed a contract with India ed T-90S tanks; there will be
to supply 347 T-90S tanks about 120 vehicles in the first
worth $1.24 billion. Against shipment."
Pan-Indian Operator
all odds, Russia remains In- Russia and India have been
dia's chief supplier of military negotiating the contract for
hardware largely thanks to its several years.
telecommunications services The Foreign Investment and Vodafone turned out to
readiness to export technolo- T-90S tanks must gradual-
including fixed line services.
RIR Dossier
Promotion Board usually have made the right decision.
gy, and good relations be- ly replace the outdated T-55
Indian legislation allows oper- makes decisions within a It is not possible to gener-
tween Rosoboronexport's and earlier T-72 versions. All
ators to provide both GSM
Sergey Cheremin, born in 1963
month. This is a routine proce- ate money and get a huge
management and Indian au- in all, India plans to adopt
and CDMA services. The two
in Kislovodsk. Graduated with
dure but technically compli- profit margin in India immedi-
thorities. 1,657 new T-90S tanks.
standards use different tech-
honors in 1989 from the
cated because it involves get- ately after entering the mar-
The news that India signed India agreed to sign the
nologies, and need different
Moscow State Institute of In-
ting the approval from 18 de- ket.
a large contract with Russia new contract despite prob-
CAPEX and business logistics
ternational Relations, complet-
partments, including finance Everyone who enters an
came from a source in a fed- lems that have plagued other
also differ. This is why many
ed his postgraduate course at
and interior ministries. emerging market plays on
eral department. agreements with
operators in India prefer to
Moscow State University spe-
We know that this is a diffi- capitalisation, investing hun-
Another source familiar Rosoboronexport. GAZETA
choose a specific format. In
cializing in global economic is-
cult task and so we were not dreds of millions of dollars in a
Russia we use both technolo-
sues.
surprised that it has taken a company that will be worth
gies and therefore want to
1991-1992: worked as Deputy
bit longer than expected. I billions, and possibly tens of
BrahMos to increase
have a universal licence to op-
CEO at Printbank
have no reason to say that we billions of dollars several years
erate in India and an option to
1992-1998: CEO of the
faced administrative obsta- later.
production of cruise
choose.
Moscow Export-Import Bank
cles; on the contrary, the de-
1998 - 2000: Vice President of
partment heads involved in Why have you decided to be-
The Cellular Operators Associ- the process positively sup- gin your Asian foray in India
missiles
Ural Trust Bank
ation of India has appealed in
2000 - 2003: Adviser to the
ported Sistema’s intention to rather than China?
court to terminate your GSM
President of Severo-Vostochny
work in India. The Chinese do not allow for-
The Russian-Indian joint ven- of the [BrahMos] cruise mis-
licence. What are you doing to
Alliance Bank where he subse-
eigners to work in their mobile
ture BrahMos will buy a man- siles.
protect your stance?
quently became President.
You failed to take over Aircel market. Sistema participated
ufacturing plant in south- The contract on transfer of
The Indian Foreign Invest-
2004: appointed CEO of MBRD
in repayment of India’s debts in the talks about this issue
western India to increase the plant's ownership to
ment Promotion Board al-
Bank, since April 2005 worked
to Russia. Why? between the governments of
production of its supersonic BrahMos will be signed Janu-
lowed us to invest in Shyam
as the Chairman of the Board
We planned to acquire Aircel Russia and China, but no deci-
cruise missiles. ary 1, 2008.
Telelink and buy a 74% stake
there. Since that time, he has
at a time when it was reason- sion has been made so far.
In 1998, Russia and India es- The Brahmos missile, named
in it, we view this as definite
also served as the Vice Presi-
ably priced. But like any or-
tablished a joint venture, after India's Brahmaputra
permission. From the view-
dent of Sistema and Head of
ganisation we try to minimise Do you plan to expand beyond
BrahMos Aerospace, to de- River and Russia's Moskva
point of the regulator, there
External Relations.
spending and hoped to use In- Rajasthan?
sign, develop, produce and River, has a range of 180
are no obstacles that could dia’s debts to Russia for in- Rajasthan has half the popula-
market a supersonic cruise miles and can carry a conven-
stop us from investing more in vestment in infrastructure. tion of Russia and is a very at-
missile. tional warhead of up to 660
the development of the com- Have you come across any ad- Our talks with India’s Fi- tractive market, but Sistema
Sea-based and land-based pounds. It can hit ground tar-
pany. ministrative obstacles in In- nance Ministry and other de- wants to become a global
versions of the missile have gets flying at an altitude as Russian companies, which are
company?
As for the lawsuit, it was dia? Have you had to resort to partments indicated that Indi- company and will have to
been successfully tested and low as 10 meters (30 feet) still very much emerging in
We see it as our key Indian as-
not filed against Sistema, but using un-businesslike prac- an colleagues would prefer to move on. We have filed re-
put into service with the Indi- and at a speed of Mach 2.8, the global markets are using
set and gaining an important
against the Telecommunica- tices? keep the money in India in the quests for licences in 21 states
an Army and Navy. which is about three times some original tactics.
presence in Asia. The Indian
tions Ministry which issued Sistema is a public company form of foreign investment. in India, in accordance with
The plant has all the facilities faster than the U.S.-made Industry analysts did not take
telecoms market is one of the
the licence to Sistema. The and has never resorted to us- But at the time there was no local legislation, and expect to
and over 250 qualified per- subsonic Tomahawk cruise too much notice when Russian
most promising in the world.
last hearing showed that the ing un-businesslike practices. agreement between the fi- get permits soon.
sonnel to launch production missile. RIA-NOVOSTI consumer services giant, AFK
We predict that it will take
Ministry’s decision did not vi- It always works in compliance nance departments of Russia We plan to become a pan-
Sistema bought a 10% stake
five to ten years for the mar-
olate any legislation. with legislation. and India on de-freezing these Indian operator. To do this, we
in small Indian mobile
ket to become saturated so
funds. The said documents do not need to buy more Indi-
Russia in talks with
operator, Shyam Telelink. But
we have enough time to build
were approved only several an assets. It is enough to have
now that Sistema’s
an infrastructure.
Sistema: Facts and Figures
months ago. a licence and be prepared to
India on contracts for
shareholding is likely to In the meantime, we nego- invest heavily in infrastruc-
increase to 74%, it is obvious
But Shyam Telelink works
Sistema is the largest and Venture Capital. In
tiated with Aircel’s owner, Mr ture, which has to be built
military helicopters
that there is a more ambitious
only in Rajasthan. Isn’t it too
private sector consumer addition, Sistema maintains
Shiva Shankaran, who was from scratch.
strategy behind the
small for your purpose?
services company in Russia a portfolio of other
also talking with other appli- We have very good partners
acquisition.
India’s mobile market has
and the CIS. Founded in businesses, including:
cants. We eventually decided in India, who have experience
been seriously overpriced. We
Russian arms exporter for military service. He also
1993, the corporation Tourism, Radio and
that the price was too steep in building networks. We ex-
Rosoboronexport is negotiat- said Russia and India are
YEVGENY ARSYUKHIN
could have entered it by buy-
develops and manages a Aerospace Technology,
and withdrew the offer. pect problems, but we do not
ing with India over deliveries considering the possibility of
ROSSIYSKAYA GAZETA
ing Hutch Essar. But we did
portfolio of market-leading Medicine and
fear them and because we
MOSCOW not think it was reasonable to
of Russia's Mi-17 multirole modernizing the Mi-24 heli- businesses in selected Biotechnology. The
It is said that the mobile mar- studied the Indian market for
pay $11 or $12 billion, as much
military helicopters. "We be- copter gunship, which is cur- service-based industries. In corporation also has
ket is not very profitable in In- four years making a deliberate
lieve that Rosoboronexport rently in service with the In-
Sergei Cheremin, Vice Presi-
of its technology is about five
dia because operators fight decision to buy Shyam Telelink
dent of Sistema, interviewed
years old. Our goal is to cre-
total, companies controlled financial investments in the
will soon sign a contract," An- dian military. Shibitov said
for every cent. Can your man- despite its small size, we are
below, states that the aim is
ate a pan-Indian operator
by Sistema serve more Petroleum sector.
drei Shibitov, general director the Mil plant could within
agers play this game? confident. I am convinced that
to develop the minor asset
through smaller investments
than 80 million consumers
of the Moscow Mil helicopter the next one or two years
The rumour is not true. For ex- we have enough managerial
into a major player in the In-
and with cutting-edge tech-
in Russia, the CIS and Corporation at glance:
plant, said. There are current- sign contracts for the deliv-
ample, Vodafone has had ma- resources and enough people
dian market.
nologies. Eastern and Western Revenue $10,862.8 million
ly some 12,000 Mi-17 heli- ery of Mi-28H Night Hunter
jor success in India. They paid in Moscow willing to work in
Europe. The corporation's OIBDA $4,023.5 million
copters (NATO reporting attack helicopters to the
a high price and Vodafone India to implement this ambi-
India’s Foreign Investment
How easy is to acquire a GSM foundation businesses are: Net Income $813 million
name Hip-H) in use all over Middle East, Latin America,
shares fell by 5% after the ac- tious project.
the world, while 70 countries and North Africa.
Promotion Board has ap-
licence for your new asset?
Telecommunications, High Assets $20,131.5 million quisition of the Indian asset.
have officially adopted them RIA-NOVOSTI
proved Sistema’s request to It is possible to file a request Technology and Real Earnings per share $85.0 While investors did not think For full interview of
increase its stake in Shyam for a universal communica-
Estate. Sistema's high (The data is taken from the it was wise to pay so much for Cheremin, log on to
Telelink from 10% to 74%. tions licence in India which al-
potential businesses are: 2006 Annual Report and
a foothold in the Indian mar- www.rbth.rg.ru
What are your plans for the lows for provision of general
Retail, Finance, Mass Media Accounts)
ket, they were proved wrong
Indian frigates to moor
to Severnaya Verf
Military-Technical cooperation For mutual benefit
Three more frigates for In- the bureaucrat hoped. A
dia may be constructed in source with shipbuilding
Russia. The overall worth of community specified that
the contract will be at least the negotiations had been un-
$1.7 billion and Severnaya derway since 2006 and India
Russia, India set to develop
Verf could be the key con- would probably apply to Feder-
tractor. al Service for Military and
The fact that Technical Cooperation already
Rosoboronexport is in talks in April or May.
about supplying to India an- The sources say
other three frigates under Rosoboronexport is consid-
Project 11356 has been re- ering St. Petersburg Sever-
a fifth-generation fighter
ported by a source with one naya Verf (United Industrial
of profile departments in Corp) as the key contractor,
Russia. “The consultations and cooperation with
Russia's defense industry has
eration fighter, the prototype op a fifth-generation fighter. the new fighter program. problems, eventually pre- tories in every plane.
are active and we count on Baltiysky Works is also pos-
started the construction of a
US F-22 Raptor fighter, first It will take $600-800 million The Indian leadership ferred Stealth characteristics In addition, the fifth-gener-
signing the contract soon,” sible. KOMMERSANT
prototype of a fifth-
took off on September 7, 1997. to design the engine, the most seemed inclined to co-operate and supersonic cruise speeds ation fighter will be fitted
generation combat aircraft. A
Two weeks later, Russia's expensive element, and anoth- with the United States and to to super-agility. with advanced avionics, long-
Russian-Indian advanced
Sukhoi Su-37 Berkut, another er $1.5 billion to launch serial obtain F-35 JSF know-how. The future Russian-Indian range weapons and other ra-
multirole fighter is being
prototype fifth-generation production. However, Washington, which warplane would probably out- dio-electronic equipment for
Russia wants new
developed by Sukhoi, which is
fighter, flew for the first time. Moscow considered China refuses to share technologies maneuver any other similar hitting any conceivable target.
part of Russia's United
Production versions of the and India to be the best part- even with its closest allies, of- aircraft because the F-22's The Indian electronics indus-
nuclear contracts in India
Aircraft Corporation (UAC),
F-22 Raptor and the US-EU F- ners. However, Beijing prefers fered some rather harsh terms maneuverability is similar to try will provide an invaluable
and India's Hindustan
35 Joint Strike Fighter are to develop its own aircraft en- to New Delhi. that of the revamped Su-27 contribution to developing au-
Moscow is seeking new con- the construction of another Aeronautics Limited.
currently available. The latter, gines, and India is more inter- This October, Russia and In- Flanker featuring vectored- tomated electronic counter-
tracts to continue nuclear con- four nuclear reactors in
which is referred to as a gen- ested in state-of-the-art de- dia agreed to jointly develop thrust engines. This Russian measures (ECM) systems, se-
struction work in India. Russia Koodankulam. A memoran- YURY ZAITSEV
eration five-plus fighter, signing methods and does not the fifth-generation fighter plane features AL-37-FU en- cure data-exchange networks
has been building the dum on the project was signed MOSCOW
seems to out-perform the for- want to manufacture "ready- and to manufacture it at Hin- gines with round rotatable and fire-control systems for
Koodankulam plant in the during President Putin's visit
mer. made" planes. dustan Aeronautics Limited nozzles and can attain super- long-range tactical missions. -
southern province of Tamil to India in January. Atom-
The new fighter aircraft,
Unfortunately, Russia has Russia and India started ne- (HAL) and Sukhoi Military sonic cruise speeds. Its com- Yury Zaitsev is an
Nadu since 2002, and has al- stroyexport, Russia's nuclear
which will feature high ma-
so far failed to master produc- gotiating on the joint fifth- Aviation Complex plants. bat efficiency has been en- academic adviser at the
ready delivered two nuclear re- power equipment and service
neuverability and stealth to
tion of the purely experimen- generation fighter program in India's Defense Minister A. hanced because the Su-27 can Russian Academy of
actors to the facility. "We ex- export monopoly, is building
ensure air superiority and pre-
tal Su-37, built by Sukhoi at its 2003. New Delhi insisted that K. Antony said the agreement bank sharply at high angular Engineering Sciences
pect contracts to build nuclear the Koodan_ku_lam plant in
cision in destroying ground
own expense. Nevertheless, the new plane be developed heralded a new stage in bilat- speeds and along short trajec- en.rian.ru
facilities at this location [in line with an initial 1988 agree-
and sea targets, will be built
the plane's lay-out makes it from scratch. Moscow was eral co-operation aiming to
Koodankulam], as well as new ment between India and the
at the Komsomolsk-on-Amur
possible to streamline various not very happy about this be- develop new-generation
ones," Russian first deputy Soviet Union, modified by an
aircraft-manufacturing plant
engineering solutions under cause it implied another high- weapons and military equip-
in Russia's Far East.
This issue has been conceptualised by
prime minister Sergei Ivanov addendum signed ten years
the Advanced Tactical Air- ly expensive project. ment. This will become one of
said. later. The plant is designed to
Flight tests of the fifth-gen-
craft (PAK FA) program. Apart from outstanding the most ambitious Russian-
INTERNATIONAL MEDIA MARKETING, RESPONSE
Indian Prime Minister Man- have a capacity of 2,000 MW,
eration fighter will begin as
The United States and Eu- achievements, bilateral mili- Indian military programs.
adqueries@timesgroup.com
mohan Singh said during his and Russia has granted India
early as 2009 and mass pro-
rope spent over $20 billion on tary-technical co-operation The fifth-generation fighter
visit to Moscow in November a loan on beneficial terms to
duction of the aircraft may
the F-35 JSF program. There- has been marked by major must retain in-flight stability ● Feature Co-ordinator:
that Russia and India were build the facility.
start by 2015, the Sukhoi air-
fore, experts believe that Rus- setbacks and even conflicts. and control at 90-degree-plus Mehernosh Gotla (mehernosh.gotla@timesgroup.com)
drawing up an agreement on RIA-NOVOSTI
craft maker earlier said.
sia should team up with a for- And this explains why it took angles of attack. The United ● Design: Resp-Art
The world's first fifth-gen-
eign partner in order to devel- India so long to get involved in States, which faced similar
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