Business Report THE ECONOMIC TIMES IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

WEDNESDAY SEPTEMBER 11, 2013

STATISTICS

Ruble/Rupee dollar rates

Stock Market Index

BRICS’ Share

BRICS Currency Fund

Russians on Syria strike

DIPLOMACY: BRICS countries show solidarity, set up $100 billion Currency Reserve Fund

G20: Syria eclipses progress on curbing tax evasion, reforms The Syrian crisis divided G20 leaders in St. Petersburg last week, but a host of economic issues like combating offshore tax havens united them. Public debt and structural reforms, however, did not get due attention.

A weakening currency is not uniformly bad news. The depreciating ruble will boost exports, with food retailers and auto industry likely to be biggest winners.

The G20 summit is not typically a war conference. It is, in fact, usually about finance. So while the unresolved crisis

in Syria overshadowed all other business at the St. Petersburg conference last week, many observers watched closely for the G20 to carry out its core function as a staging ground for concerted action on the interna-tional financial system.

Indeed, in recent years, the group has played a vital role in calming the waters dur-ing the worst of the financial crisis.

So, Syria aside, how did it do this time?In short, the scorecard was mixed.Member countries made progress on

tightening up cooperation on tax enforce-ment across borders, but big differences per-sisted between developed and developing countries over national debt levels.

Russia, as the host country, also made a series of proposals, including a new $100 billion fund to be maintained by emerging economies that would act as an alternative to the International Monetary Fund.

“One of the key items on this summit’s agenda was structural reform,” explained Evsey Gurvich of the Group of 20 Expert Council. “Each country adopted an individu-alised plan for doing this, including plans for lowering the tax burden on entrepreneurs and improving infrastructure.”

Syria aside, one of the most attention-grabbing announcements came from Vladimir Putin, who signaled that the BRICS (Brazil, Russia, India, China and South Africa) group of developing nations had agreed

Economists predict the falling ruble will boost exports and tax revenues and provide a boost to car-makers and oth-

er local vendors. Some economists predict that the ruble, now trading around 33 to the dollar (down from 30 at the start of 2013), may sink to 37 by year’s end. This calculation has been fuelled by many factors that range from concerns about the end of quantitative easing in the US to statements by Russian

ARTEM ZAGORODNOVRIBR

ARTEM ZAGORODNOVRIBR

upon creating a $100 billion reserve fund to steady currency markets, a de-facto alterna-tive to the IMF and Bretton Woods-based global financial system. “Developing coun-tries like China and Russia are demanding a larger say in how organisations like the IMF spend their money as they are now the credi-tors,” said Martin Gilman, former director of the IMF in Russia. On paper, debt topped the summit’s agenda. G20 countries had earlier examined targets for debt reduction, an idea that made little headway.Host country Russia has a record low debt-to-GDP ratio of 11%, compared to the Eurozone’s 92.2%

Finance Minister Anton Siluanov that a weaker ruble would have benefits for Russia. Sluggish performance in the European Union, Russia’s largest trading partner, and less-than-rosy forecasts for domestic GDP growth are other additional reasons.

The slide is not as dramatic as that of 1998, however, when the ruble went from six to the dollar to nearly 30, and when Russia’s oil companies made windfall profits by sell-ing crude in dollars while booking profits in rubles. Oil companies will not benefit to the same degree this time, because new tax

at the end of March and America’s 103% (at $16.7 trillion) and over $500 billion in reserves.

While austerity and debt reduction have indicated a growing rift between developed and developing countries, tax evasion and offshore havens were surprising points of mutual understanding.“In order to fund the other initiatives of the summit like job creation and infrastructure, you have to find ways to optimise finances. First – a new automatic system of exchanging informa-tion on where international companies pay taxes will be in place by 2015. This is direct-

ed at minimising both legal and illegal ways companies use to reduce their tax burden. Second – tax legislation across different countries will be standardised within one-and-a-half to two years to minimize loop-holes. Finally – rules governing companies’ abilities to change tax residences in various jurisdictions will be optimized.”

Much of the above-mentioned initiatives were overshadowed by the looming threat of a US attack on Syria. “The G20 agenda was hijacked by the Syrian issue,” said Gilman. “Debt reduction and structural reforms did not get the attention they deserved.”

Leaders of G20 economies hold their meeting at the Konstantinovsky Palace in St. Peterbsburg, Russia.

In an effort to withstand a future shake-up of their cur-rency markets, the BRICS countries — agreed to cre-ate a $100 bil-lion currency reserve fund.

Falling ruble: Rising stars for chosen few

ANALYSISREAD AT INDRUS.IN

The Indian diplomacy can look back with satisfaction at the G20 summit in St. Petersburg.

The summit’s declaration echoed India’s concerns over the spillover ef-fects of volatile currency withdrawals on the emerging economies. It rec-ognised the principle of levy of taxes on the “multi-national companies” where they make profits - upholding a principle India espouses.

Third, the BRICS, which met on the sidelines of G20, decided to create $100 billion fighting fund to steady the currency markets of member states that face the prospect of destabilisation due to an expected pullback of US monetary stimulus. Now, much work needs to be done to make political statements a technical reality, but in multilateral diplomacy too, every journey of a thousand

miles begins with a single step.However, towering above all this

has been the Syrian question. The beating of war drums in the Eastern Mediterranean by the US and a clutch of four or five allies could be distinctly heard in the northern Russian city at the Gulf of Finland. A profound sense of disquiet was palpable that some-thing of momentous consequence to regional and global security and the functioning of the international system is unfolding. And India upfront articu-lated its concerns and found itself on the “right side of history.”

Prime Minister Manmohan Singh told the world leaders that any interna-tional action in Syria should be within the framework of the United Nations and the world community should wait for the report of the UN inspectors on the alleged use of chemical weapons

Why Syrian question matters for India

M. K. BHADRAKUMARForeign policy analyst

Read the author’s blog indrus.in/blogs/realpolitik

in Syria. He stressed that there has to be certainty first as to what really happened in Syria. The prime minister voiced India’s strong opposition to armed interventions aiming at “regime change.”

On an issue of supreme importance to the US foreign policy that may well come to define Barack Obama’s presi-dential legacy, India and the US find themselves poles apart. It needed an extraordinary strength of conviction on the part of the Indian prime minis-ter to say what he said – and Russian President Vladimir Putin took due note of it – since, conceivably, the Indian stance might well cast a shadow on Manmohan Singh’s upcoming meeting with President Obama in Washington some two weeks from now.

Uncharitable critics in India who want to throw mud at the government on any and every issue in an election year have leveled accusations that the ruling Congress Party is “appeasing” the Muslim electorate in the country or, are belittling the resonance of the Indian stance on Syria by pooh-poohing that what happens in that remote Middle Eastern country on the Mediterranean is not really India’s “business.” Both accusations are churlish. The Syrian question finds the Muslim world curiously divided, with Saudi Arabia enthusiastically support-ing a US-led military intervention and even offering to bankroll the opera-tion. So, what is the “Muslim opinion”

one is talking about and how does India’s principled stance become an “appeasement” of the Indian Muslim electorate? It belies logic. India is with Pope Francis rather than King Abdullah the Custodian of the Holy Places.

Now, why is it the Syrian question profoundly concerns India – unlike the dozens or hundreds of military in-terventions the US has made through modern history? Indeed, the spectre of the rise of radical Islamists, inevitable spillover of the conflict to the region as a whole, including the Persian Gulf where around 6 million Indians work and live and contribute to India’s invis-ible earnings to the tune of $15 billion annually, near-certainty of cascading rise in oil prices that could put addi-tional burdens on the Indian economy – these are “bread-and-butter” issues for the Indian people.

Besides, India is deeply concerned over the weakening of a pillar of in-ternational law and implications of a possible US attack, which can unravel a secular, multi-ethnic state. It could cre-ate a precedent in the Greater Middle East, which tomorrow could come handy for “conflict resolution” in the Hindu Kush. In sum, this is one of those agonising moments when it is prudent not to ask for whom the bell tolls.

rules mean the state will collect most of the surplus oil profits. “The real beneficiary [this time] is the state budget,” says Chris Weafer, founding partner of Moscow-based Macro Advisory. Other beneficiaries should include domestic producers as the costs of imported goods increase. “One of the biggest winners will be Russia’s burgeoning auto industry,” says Weafer.

A recent World Bank study ranked Russia as Europe’s largest economy, and the world’s fifth-largest in terms of purchasing power. Local winners could include Russian food re-

tailers like Dixie, Russia’s only publicly listed meat-producer; Cherkizovo; and Magnit, the firm some call “Russia’s Walmart.” Exports should also benefit from a cheaper ruble. “A Russian company called VSMPO-AVISMO is Boeing and Airbus’s largest supplier of tita-nium,” says Weafer. “The aircraft manufactur-ers are now getting that input cheaper.”

The weaker ruble also means Russia’s food exports to the U.S. – like caviar and crab legs (valued at $175 million in 2012, according to the U.S. Census Bureau) – will be less expen-sive. And this could be a great time to buy a diamond for that special someone. “Russia’s Alrosa is the world’s second-largest diamond exporter after South Africa’s De Beers,” says Weafer.

REUTERS

AP

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

Business Report WEDNESDAY SEPTEMBER 11, 2013

B |U |S |I |N |E |S |S |

NEWS

Russia will hand over the INS

Vikramaditya to the Indian Navy on

November 15 at a formal ceremony

in Severodvinsk. The delivery date

was confi rmed by India’s Defence

Secretary R.K. Mathur at talks held

in Moscow. The full testing cycle is

scheduled for completion by October

15. Indian Navy specialists expressed

satisfaction with the Sevmash yard’s

employees’ work on the INS Vikrama-

ditya over the last 8 months. RIBR

On September 1, Russia lifted the

temporary ban on the Indian rice

imports, which was introduced due

to the khapra beetle found in the

Indian rice. Experts say although

Russia’s rice production has grown

three-fold, the consumption of exotic

rice fl avours like Basmati and Jasmin

has grown. And India as the biggest

aromatic rice producer stands a good

chance to fi ll this niche on the Rus-

sian market. RIBR

Indian and Russian soldiers are set

to conduct a 1-day joint exercise of

mechanized forces called Indra in

October-November at the Mahajan

ranges in Rajasthan. The aim is to

practice “employment of mechanized

forces as part of peace-keeping/

enforcing operations in a semi-urban

terrain under the UN charter.” Despite

close defence ties, the two armed

forces have not exercised much

together. RIBR

The 7th Russian-Indian trade and

investment forum will be held in Saint

Petersburg on September 20. The

forum will involve holding discussions

on many areas, including energy,

oil and gas, medical and pharma

industry, agriculture and tourism.

Alexei Ulyukaev, Russia’s Minister of

Economic Development, and his Indian

counterpart Anand Sharma, will head

the Russian and Indian delegations

respectively. RIBR

P S Raghavan, Special Secretary in

India’s Ministry of External Affairs,

will be India’s new ambassador to

Russia, key sources in the Indian

government said. Raghavan will

succeed Ajai Malhotra who retires on

November 30. RIBR

INS Vikramaditya to be handed over to India on Nov 15

Russia opens up for Indian rice again

India, Russia to hold joint exercise for peace-keeping

Investment forum in St. Petersburg to boost business

Raghavan likely to be India’s next envoy to Russia

INSIGHT

It has been a year since Russia formally joined the WTO. The country waited 18 years to join

the world’s biggest trade club, but a year later, the milestone seemed to have been noted only by those jour-nalists with nothing else to report.

Why? First, by the time Russia acceded to the WTO, the average import customs duty had dropped from 20-22 percent in the early 2000s to 10.4 percent.

Under the terms of Russia’s ac-cession to the WTO, it will eventu-ally drop to 7.8 percent – a much less dramatic change. In addition, the cut in tariffs for the most over-valued goods, such as alcohol, has been postponed until 2016-2018, so consumers do not notice any dif-ferences as of yet.

Secondly, the Russian authorities are already doing all they can to pre-vent imported goods from compet-ing with domestic ones.

The cut in duties on imported cars has already been offset by the “disposal charge” and the cut in alcohol duties will be balanced by a rise in excise taxes. And a reason to limit imports of foodstuffs can always be found.

Third, consumer demand in Russia today is very high, so there is no serious reason to cut retail prices. In spite of the growth of im-ports in the first half of 2013 (by 5-9 percent for food and 12 percent for clothing and footwear), prices are not going down and will not do so in the near future.

Today, it can be said that the only beneficiary of W.T.O. accession among economic sectors is retail trade. As of Sept 1, import tariffs will be cut by a further 1-3 percent on more than 5,000 goods, a move which will bring extra profits of between $300 and $400 million to traders.

But even that move is unlikely to

make a difference to the majority of consumers.

The other sectors of the economy have not yet gained much. Commodity exports are not regulated by its rules and the 100 or so restrictive measures with regard to Russian goods will not be lifted until 2015-2017.

Likewise, there is no visible break-through in agriculture. To be sure, an undoubted benefit of WTO member-ship is that it will increase competition in the Russian domestic market and, should the windfall oil profits dimin-ish ever so little, the process might drive prices down (to compensate for some negative effects of the pos-sible crisis). Yet, as long as economic growth continues, that is virtually un-noticeable.

One important and positive change, however, is that under the new condi-tions, Russia will have to reckon with rules set in some place other than the Kremlin.

The first test is already looming: the EU has filed a lawsuit against Russia, challenging the legality of the 5 per-cent disposal charge on imported cars. Russia will almost certainly lose the case and then consumers will feel for the first time that the government can no longer get away with every-thing.

This is the only real benefit from the WTO: it will teach Russia’s bureaucra-cy to play by rules different from those it sets itself. After all, the WTO has long ceased to be the leader in promoting the ideals of free trade. Its place has been taken by the numerous regional integration organisations.

Russia’s first year within the World Trade Organisation is only the first step on a long journey. So far, it has made little difference to the majority of the population and even most com-panies, but it may induce the Russian elite to take a serious look at the limits of its own power. And that in itself is worth the price accession.

One year on, WTO, a work in progress

VLADISLAV INOZEMTSEV Professor of economics

TRANSPORT: Revamping of Baikal-Amur link to cost $17 bn, can create half a million new jobs

BUSINESS: HC products can be used in T-50 5thGen fi ghter jet

Reviving Asia-Europe rail route

Eyeing India’s carbon fi bre market

Russia mulls a plan to modernise an old rail link, which can boost industry in Far East and Siberia

Russian Composite HC plans to set up R&D facility in India and focus on defence sector.

An ambitious programme of railway expansion in Russia’s Far East promises to create new

trade routes between Asia and Europe. At least $17 billion is to be invested in modernising the ageing Baikal-Amur Mainline (BAM) and Trans-Siberian railways. Supporters of the plan say that it will create half a million jobs and boost industry in Siberia and the Far East region.

Described by former Soviet leader Leonid Brezhnev as “the construction project of the century”, critics recall the building of BAM 50 years ago. When the Soviet Union was dissolved, many mining and industrial projects in the region were cancelled and the line was greatly underused.

Besides upgrading tracks to increase freight capacity, the BAM-2, as the modernisation plan is called, could greatly shorten the route for delivering goods from Asia to Europe. This may be a good reason to extend it from the present terminus at Sovetskaya Gavan to Sakhalin Island off the Far East coast. The government is not deterred by the project’s lengthy repayment period; it could be 50 years or more before the railway pays for itself.

Andrew Chan Yik Hong, managing director of capital projects and infra-structure for PricewaterhouseCoopers in Malaysia, believes Russian Railways could offer a credible alternative route to sea transportation between coun-tries of the Asia-Pacific Economic Co-operation (APEC) region and Europe. “To do that, first the infrastructure

With India’s carbon fibre com-posites market poised for dramatic growth, Russian

Composite Holding Company (Composite HC) is now honing its strategy to establish its presence in this niche market. The company is planning to establish cooperation with Indian companies in the R&D sphere and later shift to product supplies. Finally, after five years, Composites will seek to cre-ate a JV for production of ready-made composite components in India, and is initially eyeing the defence sector.

One of the first projects where Composite HC products can be used is the much awaited fifth-generation T-50 PAK FA jet fighter, the export ver-sion of which is jointly developed by Russia and India. Up to 70 per cent in the body skin of the fighter and 40 per-cent of the entire structure are made

ILYA DASHKOVSKY RIBR

ALEXANDRA KATZ RIBR

backwardness has to be overcome, long-term and costly investments need to be made in the railways and customs services must be improved,” he says. This overland route, he notes, would go a long way towards elimi-nating the risks from piracy, unstable regimes and natural disasters that be-devil the sea route.

The idea has support among some Russian businessmen. Ziyavudin Magomedov, owner of the Summa Group, which manages ports in the Far East, the Baltic and Black Sea, is vigorously promoting the project. He blames slow processing of goods at customs and port services for making the Russian route to Europe less com-petitive than other options. A container is held at customs in the Far East port of Vladivostok for 13 days, and takes another four to five days to be pro-cessed through the port. In Singapore, by contrast, a container is held at customs for only about two days and moved through port on the same day it

is released. Russia is also losing out to its closest rivals, Shanghai in China and the port city of Pusan in South Korea.

Magomedov believes that less than 1 per cent of all Asian freight goes to Europe via Russia at present. His com-pany argues that the traffic could go up fivefold, with each additional percent-age point yielding an extra $1 billion for the Russian economy.

More than 90 per cent of freight is moved around the world by sea. Argues a skeptical Mikhail Burmistrov, general director of market research firm InfolineAnalitika: “Under other economic conditions, the Trans-Siberian Railway made economic

sense: in the late Eighties, it carried huge amounts of freight and paid its way. Now everything has changed and it is utopian to talk about railway com-peting with the sea,” he says.

It’s not that the idea of railways chal-lenging waterways is new, but these proposals have more to do with poli-tics than economics. When a similar project was announced in Colombia, observers noted that the country was thus trying to attract more American investments by scaring investors with the bogey of Chinese expansion.

This is not the first attempt by Russian Railways to take business away from the Suez Canal. As early as 2008, the company announced it was building a railway from the Russian Far East to the North Korean port of Rajin. The project was billed as part of the project to create a transport route from Asia to Europe via Siberia.

87cities lie along the route of the Trans-Siberian Railway, fi ve of them with more than one million people.

8 time zones are crossed by the railway between Moscow and Vladivostok.

The Trans-Siberian rail dream is back on track.

Compsoite HC has ambitious plans for expansion in India.

KSENIA SHVETSOVA RIBR

The new law establishes responsibility for uploading pirated films and gives copyright holders the right to file lawsuits against offenders.

Debate erupts over anti-piracy law

On the same day (August 1) when the new anti-piracy law came into effect, the Russian

court received its first lawsuit from a copyright holder: head of ‘Kino Bez Granitz’ (Films Without Borders) Sam Klebanov complained that the VKontakte social network was illegally distributing movies. Although the law-suit was rejected as being incorrect, ex-perts anticipate an easier time for film distributors on the Russian market.

Under the new law, once the court accepts a claim of copyright infringe-ment, it can block the website in ques-tion temporarily, even before court proceedings begin. In such cases, the court notifies the Federal Service for Supervision of Telecommunications,

Information Technology and Mass Media, which, in turn, informs the ser-vice provider. The service provider has three days to demand that the owner of the website containing illegal con-tent shut it down. If the owner refuses to comply, the service provider will be duty-bound to block the website. Internet companies have been highly critical of the new law, including search engines Yandex and Google, the Mail.Ru holding, major torrent trackers and a host of other smaller sites. Internet majors fear that the law’s loose termi-nology could harm honest users.

“The fact is that in its current version, it may involve significant risks for the industry stemming from resources being blocked by mistake or illegally (for instance, when blocking specific IP addresses, completely unrelated websites are likely to be blocked too),”

says Anton Malginov,head of the legal service at Mail.Ru.

Conversely, lawyer Pavel Katkov, who was involved in drawing up the anti-piracy law as part of the working group at the Ministry of Culture, be-lieves that responsible internet com-panies will incur “zero losses.” “Russia is the only country where a complaint goes through two government filters: the courts and an executive body, the Federal Service for Supervision of Telecommunications, Information Technology and Mass Media.”

Copyright holders are, however, hoping that the new law will boost their business. “Reducing piracy will help monetise certain software prod-ucts, create conditions for fair competi-tion, and open up new opportunities to develop different media segments,” says Sergei Petrov of STS Media.

of composites. It allows the T-50 to not only carry more weapons but be virtu-ally invisible to radars. The export ver-sion of the T-50 fighter for which New Delhi has allocated almost $25 billion is expected to be ready in five years.

“India and Russia are quite similar in terms of composites market develop-ment patterns. India’s market has huge potential considering the cooperation between our countries in many areas,” says Evgeny Minaev, adviser to CEO, Composite HC.

According to research company Composite Insights, India’s carbon fibre composites market is expected to grow to $53 million by 2018. Lucintel experts believe that the Indian market will grow 12-15 per cent in the next five years with increasing demand from automotive and wind energy markets apart from the current demand from aerospace and defence industries.

Russia is a late comer to India as all

the global leaders, including US com-panies Zoltek, Hexcel and Cytec and Japan’s Toray Group, have already been present in its market for decades.

Since 2011 Composite HC has been actively participating in industry exhibitions in India and have signed non-disclosure agreements with lead-ing composites consumers including HAL, Larsen & Toubro, Mahindra & Mahindra. Minaev says the challenge for his company in India is to create a market demand for better quality products as Indian customers tradi-tionally buy the lowest quality and cheapest composites.

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Business Report IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

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WEDNESDAY SEPTEMBER 11, 2013

IT POWER: Vendors intensify marketing spend for bigger share; Kaspersky signs up Sachin Tendulkar as brand ambassador

Russian fi rms ready for India’s antivirus battleLate, but ready to conquer, leading Russian antivirus vendors are crafting ambitious strategies to up their share in India’s burgeoning IT market.

Russian antivirus vendors entered the Indian market quite late compared to global industry

leaders, which had entrenched their presence in India for the past 10-15 years. That did not, however, prevent some of them from gaining leading positions. Recently Kaspersky Lab, the leader of the Russian antivirus market, announced its plans to scale up its market share from 15 to 25 percent in India.

“Traditionally, our growth has been a result of our strong channel network. In the last three years, we have con-solidated our channel presence and we are further increasing our reach in tier 2 and tier 3 cities,” says Maxim Mitrokhin, director of operations, Kaspersky Lab, Asia-Pacific. “During this period, we have also invested heavily in building the brand through effective marketing campaigns and consistent PR efforts.”

Kaspersky started operations in India in 2010 with Hyderabad-based Zoom Technologies as a national dis-tributor. The company is understood to have invested $2 million within the first

ALEXANDRA KATZRIBR

year of operations. Later, Kaspersky appointed Pune-based SAKRI IT Solutions as its national distributor that carried all major marketing and sales activities in the consumer segment. In 2012, Kaspersky Lab expanded its direct presence in India, shifting main operations to a new Mumbai office.

Kaspersky’s late arrival in India was made up by massive spending on marketing and advertising. Having had actor Jackie Chan as its global brand ambassador since 2009, Kaspersky signed up a multi-million dollar deal with Indian cricket idol Sachin Tendulkar. “Cricket is religion in India. The youth of this nation look up to Sachin Tendulkar as a huge inspira-tion. We are naturally excited to be associated with the cricketing maes-tro,” Mitrokhin says. The company’s earnings in India stood at about $8-10 million in 2012 with $6.7 million in the consumer segment, according to Gartner. Kaspersky Lab said its global turnover topped $612 million in 2011.

The potential of the growing IT security industry, especially in small and medium enterprise segments, attracted another security company associated with the Kaspersky brand, EgoSecure. The company is led by the

ex-wife of Eugene Kaspersky, Natalya Kaspersky, who was a co-founder of the Kaspersky lab and its chairperson till 2011 when the couple finally split.

Natalya took over InfoWatch, a subsidiary of Kaspersky Lab formed in 2003 that specialises in enterprise DLP (Data Loss Protection) solu-tions. In 2012, InfoWatch separated from Kaspersky Lab while the former bought back all the shares in the com-pany belonging to Natalya Kaspersky. In 2011, InfoWatch acquired Cynapspro GmbH, a German company specialis-ing in enterprise endpoint protection. The company was then transformed into EgoSecure. Later Mrs. Kaspersky invested in another German company, antivirus provider G Data, acquiring a 16.3 per cent stake in it in 2012.

Recently, EgoSecure launched its India operations by appointing the Zoom Technologies as its distributor and announced investing around $1 million in setting up an R&D facility next year. The company is eyeing a 10-15 per cent share of endpoint security market targeting mostly banks, gov-ernment agencies and the corporate sector. Dr. Web, one of the pioneers of Russian antivirus industry, started operations in India in January through Chennai-based Netflix Technologies.

It is quite difficult to define the price for retail consumer products in India, Eugenia Hamrakulova, the head of international partner relations depart-ment at Dr. Web in Moscow, told RIBR.While every product in India has its MRP, dealers and resellers purchasing from larger distributors at discounted prices can set up their own price for the

Kaspersky Lab shifts to new offi ce in Mumbai, plans to up its market share from 15 to 25 per cent in India

EgoSecure, a Russian fi rm, is targeting banks, government agencies and the corporate sector

$240million was the worth of Indian IT security market in 2012, according to Gartner.

11per cent is the share of Kaspersky Lab in the security segment in the Indian market.

end-user. There are about 30 antivirus brands

in India, half of which are very active in the market. In 2012, Gartner estimated the Indian IT security market to be about $240 million, with consumer segment accounting for $61.7 million. The industry players estimate consum-er segment value in the range of $110-$160 million. The value of the Russian antivirus market is around $300-334 million in 2011-2012. According to Gartner, Symantec is leading in India, with 48.7 per cent share, followed by

Quick Heal, a Pune-based company with almost $35 million in turnover in 2012. In the enterprise segment, their positions shift: Quick Heal leads with 29.6 per cent share and Symantec fol-lows it closely. Kaspersky has 11 per cent in the consumer segment and 9.4 per cent in the enterprise segment. But industry players put QuickHeal and Kaspersky at the leading positions in the consumer segment, followed by Symantec while in the enterprise seg-ment Symantec is leading followed by TrendMicro and McAfee.

The value of the Russian antivirus market was around $300-334 million in 2011-2012.

India enhances its presence at MAKS-2013 international air show and aims high as Indo-Russian defence ties step up from buyer-seller to joint research stage.

New JV set up

Top 5 Russian innovations on display

One of the key deals at MAKS 2013

was a memorandum signed by the

state-owned corporation Rostec and

aircraft manufacturer Bombardier to

establish a JV to assemble the short-

haul Q400 aircraft in Russia. Experts

expect the demand for the plane in

Russia and the CIS to reach 250 units

by 2030. Rostec is planning to launch

assembly in eighteen months. Rostec

and Bombardier will contribute to

the joint venture on a parity basis.

Investment in the project is estimated

at around $100 million. Rostec will

build a manufacturing plant at the Uly-

anovsk Port SEZ in 2014, while Bom-

bardier will contribute the requisite

intangible assets, including production

technology, design documentation,

intellectual property rights, and know-

how. Localisation of assembly in

Russia is scheduled to begin in 2015.

The plant’s design capacity will reach

24 aircrafts a year.

1. The new NO25E radar system has no

equivalent in Russia and will be installed

in the Mi-28N ‘Night Hunter’ helicopter.

2. The Tu-214R radio-electronic and

optical-electronic intelligence aircraft,

one of the most secret aircraft in Rus-

sia, is based on the Tu-214 passenger

aircraft.

3. New mobile aerostat systems 60m2

and 80m2 in volume intended to monitor

given geographical areas.

DEFENCE: BrahMos fl aunted aerial version of supersonic cruise missile for Sukhoi

Moscow air show revealed the new growth phase in Indo-Russian defence joint ventures

Bolstered by growing defence co-operation with Russia, India has rapidly expanded its footprint

at the 11th International Aerospace Show, better known as MAKS-2013, which was held from August 27 to September 1 in Zhukovsky, a satellite town of Moscow.

This year, Indian aerospace giant Hindustan Aeronautics Limited (HAL) and New Delhi-based Indo-Russian joint venture, BrahMos Aerospace Limited, had set up impressive stalls in the prestigious front row pavilions next to the main Russian pavilion of the United Aircraft Corporation – an um-brella organisation for the entire spec-trum of military and civilian aircraft industry of the former Soviet Union.

Over 900 Russian and foreign aero-space companies from 43 countries participated in the MAKS-2013, which also saw the signing of a clutch of deals worth $12 billion. The Russian aerospace salon, which is becoming grander with every passing year, began in the summer of 1992 as Moscow Air Show. Since 1993, it is being held at alternate years at the Ramenskoe airfield of the Gromov Flight Research Institute, which boasts of Europe’s longest runway of 5403 metres.

At the MAKS show, BrahMos Aerospace Limited, a joint venture between India’s Defence Research and Development Organisation (DRDO) and Moscow-based NPO Mashinostroyenie, had for the first time displayed the aerial version of the ‘world’s best’ supersonic cruise missile for Sukhoi Su-30MKI multi-role fighter with a catchy slogan: Many Missions, Many Targets – One Missile System. It also displayed a model of submarine with a battery of underwater launched BrahMos cruise missiles, giving it the capability of precision strikes at the land targets of the enemy. The joint

India raises profi le at MAKS-2013VINAY SHUKLASpecialy for RIBR

venture has transformed the India-Russia defence cooperation from a ‘buyer-seller’ relationship to joint re-search, development and manufacture of new cutting-edge platforms. The HAL is the key player in this mutually empowering cooperation with Russia.

The development of Sukhoi Su-30MKI multi-role fighter in mid-1990s on the basis of Su-27UB trainer aircraft is the first success story spawned by joint efforts of Russian designers and engineers and experts of HAL and Indian Air Force. “This aircraft was tailor-made to meet the require-ments of the Indian Air Force,” S. Subrahmanyan, Managing Director of HAL’s Nasik (MiG) Complex, told this writer at MAKS-2013. Under the Sukhoi transfer-of-technology, the HAL is now assembling these state-of-the-art fighters at its Nasik Complex, along

with the production of AL-31FP aircraft engines at its Sukhoi Engine Division in Koraput. This multi-role fighter is now Russian defence industry’s ‘hottest’ export item.

The HAL is currently working with Russia on two joint projects for the development and production of fu-turistic fifth generation fighter (FGFA) and Multi-role Transport Aircraft (MTA) for the armed forces. A joint venture company has already been set up to implement the MTA project.

The FGFA project is based on Sukhoi’s T-50 PAK-FA project. Subrahamnyan, who looks after the joint projects with Russia, said that a team of 25 Indian experts was based in Moscow and the two sides have al-most completed ‘Deep Design Phase’ (DDP) for the Indian variant of the FGFA, which would be lighter because

of massive use of composite materials than the all metal T-50 prototypes. At MAKS-2013 air show, three T-50 air-crafts gave an impressive demonstra-tion of its aerobatics skills.

Subrahmanyan expressed confi-dence that the first jointly designed prototype will take to skies in 2015 and the induction of FGFA could begin as early as 2017.

The air show also saw the sealing of big business contracts. Under the Indian government’s offset require-ments, Russia’s MiG fighter jet maker has signed two additional contracts with an Indian private company worth $55 million.The biggest surprise of the MAKS-2013 for Indian visitors was the mobile integrated TOR-1 ME air defence surface-to-air missile system mounted on TATA cross-country 6x6 and 8x8 truck chassis.

4. The fi rst prototype of the new

multi-role Ka-62 helicopter, fi tted with

the latest avionics, more than half the

blades and the airframe are made from

polymer composites.

5. The new generation ‘Vityaz’ (Knight)

S-350E medium range air defence mis-

sile system works in conjunction with

all-aspects radar and a command post

based in a BAZ vehicle.

Read more Indrus.in

BORIS EGOROV RIBR

The first launch is planned for December 2013, says Praveen Pathak of BrahMos Aerospace

‘BrahMos missiles to bolster strike power of India’s armed forces’

At the MAKS-2013 interna-tional air and space show, RIBR caught up with Praveen

Pathak, General Manager (Market Promotion & Export) at the premises of BrahMos Aerospace. Speaking in flawless Russian, Pathak shared his insights about the supersonic mis-siles that derive their name from the two great rivers of India and Russia: Brahmaputra and Moskva.

Replying to a question about when the Indian Air Force would get its first BrahMos-missile armed Su-30MKI, Pathak said the first launch is planned for December, and the commissioning will take place in July 2015. He was convinced that the BrahMos missile will substantially in-crease the strike capabilities of India’s armed forces, Navy and Air Force. The missile, he stressed, can hit strategic targets: warships, aircraft carriers or nuclear power plants. Hitting such a target would essentially put an end to a conflict by inflicting very serious losses on the enemy. He added that time is of essence in winning a mod-ern war.

Pathak gave an example of the Iraq war when a strike with 1,000 Tomahawks destroyed Iraq’s mili-tary capacity. According to Pathak, the BrahMos missile is ready to fire. “We need four minutes at the most to prepare for a launch. It takes the missile five minutes to cover 300 kilometres. In nine minutes, we can fire hundreds of BrahMos missiles at the enemy and destroy their capabili-ties,” he explains.

Speaking about prospects of BrahMos purchases by Russia’s Armed Forces, Pathak said: “They are legally prohibited from buying foreign-made arms and must only use domestically made ones. This approach has been changing lately, particularly as far as joint products are concerned.”

The Indian representatives raised that issue during Russian Prime Minister Dmitry Medvedev’s visit to MAKS on August 27. “Six warships have been built for the Indian Navy

and there is an outstanding order for six more for Russia’s Navy,” he said.

“Adoption of the BrahMos by the Russian Armed Forces is a matter of cooperation,” he explained. “Both partners should have this product. The Russian-Indian agreement dating back to 1998 required Russia to purchase and use BrahMos missiles. We hope this will be the case before long.”

Pathak said that a joint supervisory committee consisting of Russian and Indian representatives had identified 14 countries for the Brahmos mar-keting promotion. “We are working closely with those countries, taking part in shows and promoting our prod-ucts. But it is too early to talk about any specifics.”

Pathak struck an upbeat tone for the trajectory of Russia-India cooperation in the defence sector. “We kicked off the joint project with a budget of $350

million, including $50 million that was added for our airborne variants. Today, our orders exceed $6 billion.” “Over the past 15 years, we have achieved a level no other company has been able to achieve throughout the history of Russian-Indian relations. In addition, we are expecting an increase in orders over the next ten years,” he said.

Asked if there were any plans to jointly develop a hypersonic mis-sile, Pathak replied that earlier an agreement was signed with Moscow Aviation Institute. He said: “Figuratively speaking, we are ‘pushing’ Russia to-wards developing a hypersonic missile. We are also working with many Indian companies and testing various op-tions.” But he also singled out the main challenge of finding materials resistant to very high temperatures. “We already have engines of a new design. It is fair to say that a hypersonic missile is only held back by the lack of the requisite materials for the hull,” Pathak stressed.

In nine minutes, we can fi re hundreds of Brahmos missiles at the enemy and destroy their capabilities, says Pathak

PHOTOSHOT/V

OSTOCK-PHOTO

REUTERS

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

Business Report WEDNESDAY SEPTEMBER 11, 2013

F |E |A |T |U |R |E

MUSIC: Singer acts as a cultural ambassador to promote ties

Sonu Nigam weaves a musical spell in MoscowShowered with affection and gifts, the popular singer wants more Indians to explore Russia and invites Bollywood directors to shoot their films here

Sonu Nigam’s maiden visit to Russia proved to be a memorable occasion for the Indian singing

sensation as well as his countless fans in the country. Performing in Moscow was like a dream come true. “Since my childhood, my siblings and I were told by our parents that Russia is our friend, and we have a great love for Russia,” Nigam told RIBR in an interview.

There was a touch of magic in the air as a large audience of fans, both Russians and Indians, turned up at the prestigious Crocus City Hall on a warm summer afternoon. Sonu Nigam sang blockbuster Bollywood film songs, in-cluding “Dil Mangta Hai Dildar Soniye” (from Mujhse Shaadi Karoge), “Kal ho na ho” and “Kiska Hai Yeh tumko”. Many Russians in the crowd were dressed in traditional Indian clothes, with some fans making the long trip from St Petersburg just to get a glimpse of their singing hero. The high point of the concert was singing the song “Abhi Mujh Mein Kahi” from Agneepath. He said this song is like a prayer to him and he only performs it for very a special audience.

ELENA KROVVIDIRIBR

If Nigam wove a spell in Russia with his electrifying renditions of popular Bollywood numbers, he, too, was charmed by the beauty of the place and its people. “The greatness, warmth of the people, history, and its rich legacy is what I liked about this coun-try, ” he says. The 40—year-old singer’s visit to Moscow was arranged by the Overseas Bihar Association (OBA), a socio-cultural organisation of Indians established in May, 2012 in Moscow to promote Indian culture. The adula-tion Sonu Nigam got in Moscow was truly overwhelming. In keeping with Russian concert traditions, fans went up to the stage to hand over bouquets and other gifts. A teary-eyed admirer gave the star a Matryoshka and tried to teach him how to pronounce the Russian word for doll (kukla), which Sonu repeated almost without an ac-cent. “I was truly overwhelmed. For me, music is not just profession; it’s a state of mind. So when you see your art and your work appreciated by people from so far, who don’t understand your language, it is truly moving.” “I have be-come more of a fan of Russian people than they will ever be of me,” he adds. “My doors are open for any composer and any producer from Russia,” said

Nigam, touched by the love showered on him in Russia.

Sonu Nigam’s visit and impressions may just be what is needed to boost cultural ties between the two coun-tries and bring Bollywood film crews to Russia. “You know, two days ago, I was using whatsapp and I told my friend who is a very big director in India (Mani Ratnam) that he must come to Moscow and make a film here,” Nigam said. “This place should be more ex-plored by Indians! I am already making Moscow popular on Twitter. Everybody who follows my tweets knows: he is in Moscow and he’s enjoying it there. So hopefully, many more Indians will come to Russia after reading that.”

At the August 10 concert, the singer also paid an emotional tribute to his mother who passed away recently and appealed to the audience to spend as much time as possible with their parents. “10th is a very special date for me because it is my mother’s birthday and I lost my mother just a couple of months back. I am taking a lot of “Ms” with me now. “M” for mother, “M” for music, “M” for Moscow, “M” for memo-ries. I hope this “M” for Moscow is not the last for me.”

“I explored many countries but it’s the first time when I bought two extra bags to fit all the gifts from my Russian fans. I will make a special Russian corner in my house in Mumbai now.

Some of the greatest composers are from Russia. I want to take this soulful Russian music to India and share it with Indians. There should be more interaction between our countries in the sphere of music.

IN HIS OWN WORDS

Music Connects: Bollywood singing star Sonu Nigam charmed his Russian fans at a concert in Moscow and fell in love with the country and its people.

SPORTS: ‘I feel this connection between India and Russia’

Keshavan high on winning Sochi gold gloryI am getting better and better, and now it’s time for me to give my best, says veteran luger

Shiva Keshavan has the unique distinction of being the first Indian to compete in luge at the

Winter Olympic Games. The 32-year-old now seems headed for bigger glory as he prepares to win a medal at the 2014 Sochi Olympics.

Keshavan, who has set numerous records, says that his fascination with winter sports stems from his child-hood in the snowy Himalayas. He recalls: “We used to make our own skies and sledges out of wood. Then, I took part in various competitions like National Winter Games that have been taking place since 1996.”

It seems hardly believable, but for a long time in his career, the Indian luge legend didn’t have a personal sled. Keshavan told RIBR in an inter-view: “At my first Winter Olympics in Nagano (Japan) in 1998, I wanted a better sled, so I bought an old sled from the Korean team. Then I started making my own sled with the help of other competitors. My first ten years in sport I didn’t have any equipment

ALEKSANDER TOMASSpecially for RIBR

of my own.“This time round, preparing for

the 2014 Winter Olympics in Sochi, Keshavan visited the host city last year. The sportsman says that it was an amazing experience for him but it was very different from what he had expected. First of all, he braced himself for severe Russian climate but weather in Sochi turned out to be a nice sur-prise. “There are palm trees close to the airport,” Keshavan says. Then on

the way to the venue he didn’t know how Russian people would be. “From my experience, I`ve never met many Russians speaking English, so I thought it would be difficult to interact with them. I also heard that Russians are more reserved than us and it`s difficult to make friends,” he says. But he was glad to discover that people were re-

ally friendly. “They used to come to us and tried to get to know us, and even if somebody spoke very little English, he still tried to say something,” Keshavan reminisces fondly. The sportsman also adds that he really enjoyed it and also was quite amazed to see all the infrastructure already created for the Olympics. So he immediately liked the place and believes that these good feelings about the place helped him to perform. The sportsman speaks about his upcoming participation in the Games with enthusiasm. “I am look-ing forward to going back again. I felt this connection between us, I mean the connection between our two countries that has been there for a long time. Despite the fact that we are very different in culture and language, we can be good friends,” Keshavan says.

He is planning his next visit to Sochi in November. There will be seven days of training and a certain amount of runs that every athlete has to do before the Olympics.

Keshavan speaks with confidence about his chances of performing well in the Sochi Olympics. He points out that his best result was in Turin 2006 Winter Olympics, and in his best run he was 24th. “I am getting better and better. Last year, it was my best season and I had my personal best runs on most of the tracks,” he says. But the luger points out that it will be very important for his success if the govern-ment can provide an international coach. He says he has given an applica-tion for this. “Now it`s very important to improve on my previous performance. Already, we came so far. I hadn’t im-agined this before. I will try to give my best.”

It will help a great deal if the Indian government can provide us with an international coach

There are more than a hundred parks and garden estates in and around Moscow,

which the public can visit. Even the choos-iest visitor will find something to tickle

their fancy here. Russia and India Business Report suggests some of the best ways of

spending time in Moscow’s open air. (http://en.travel2moscow.com/where/

visit/parks/)

3. SAVOUR FINE ARCHITECTURE The Arkhangelskoye estate – now to the north-west of Moscow – was first laid out in the 1780s. The landscape is adorned with palatial buildings, and structures in the style of Roman villas or terraced French chateaux – paths and lawns line the grounds, along with many antique marble statues.

1. GO FOR A SWIMThe best place for a summer break

at the waterside is Serebryanny Bor woods. You can see rare flowers here. You can ride a bike or take a swim in the beautifully clean water or in winter, you can go skiing and skating.

2. ENJOY A STROLL IN COMFORTMoscow’s most famous park is Gorky

Park, in the very centre of the city, on the banks of Moskva River. Visitors can enjoy free park-wide wi-fi, chic cafes with wa-terside views, an open-air movie-theatre – and the famous winter ice-rink.

4. CATCH A CONCERTAnother of the

city-centre parks, the Hermitage Garden, has pleasant outdoor restau-rants, ping-pong tables, and an array of concerts – which you can enjoy by buying a ticket.

6-7. SOAK IN HISTORYTwo parks in the south-east of Moscow are within just a few metro stops – the Museum-Park of Kolomenskoye, and the Open-Air His-torical Park of Tsaritsyno. Kolomenskoye was a royal summer residence. In the 17th century, Tsar Alexei Mikhailovich built a unique wooden palace there. Today, it’s the only park in Russia to retain its original layout as an English park.

5. HAVE FUN WITH KIDSThe Kuzminki-Lublino

Park is in the south-east of town. A river runs through the estate, which has two manor houses, five muse-ums, horse stables with a music pavilion, and twenty-six children’s play areas.

8. GO FOR A PICNIC IN THE WOODS

The Losiny Ostrov, or Elk Island Park, is the largest of all of Moscow’s parks, covering forty-four thou-sand square miles, of which woodland makes up 80%. It was a favoured hunting park with the Russian Tsars. The park has picnic spots, marked walking trails, and sports facilities.

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GORKY PARKSEREBRYANNY BOR ARKHANGELSKOYE ESTATE HERMITAGE GARDEN KUZMINKI-LUBLINO PARK KOLOMENSKOYE TSARITSYNO LOSINY OSTROV PARK

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