As part of India’s consistent efforts to present its diverse investment opportunities internationally, a major investment forum took place in Moscow a few months back, demonstrating to the Russian business circles India’s open-to-business sectors such as railways, ports, shipbuilding, chemicals and many others. The Russian companies are actively looking at these opportunities and, in order to support the trend, one of the memorandums signed during Prime Minister Narendra Modi’s recent visit to Russia had been between Invest India and its Russian counterpart – The Russian Direct Investment Fund: the agreement focused on helping the Russian companies invest in projects in India.
And what about investment opportunities in Russia? What sectors in Russia already have India’s major investment presence, and what other business activities the Indian companies can consider? What would be the best way to take these considerations forward?
The vital Russia-India energy bridge has a major investment component. Before large-scale supplies of crude oil from Russia to India started in 2022, the two countries shared a significant history of cooperation in the field of energy. Some of India’s most important oil and gas fields and coal deposits (particularly in the states of Gujarat, East Bengal, Assam, Tamil Nadu, Jharkhand, Chhattisgarh) were discovered and developed with the support of the Soviet scientists and technical experts.
The principal elements of the energy bridge traditionally include cooperation in nuclear power sector and investment into oil and gas assets. Rosatom-NPCIL flagship Kudankulam NPP project is a comprehensive 360* undertaking – from financing to educating personnel. Deepening cooperation in the nuclear energy field featured at July summit in Moscow too, where both sides agreed to discuss and allocate a site for the new VVER-1200 type nuclear power plant in India. Small nuclear power stations with very deep localisation in India will be in focus as well.
India’s largest oil and gas companies such as ONGC Videsh Ltd. (OVL), Bharat Petroresources Ltd., Indian Oil Corporation, Oil India Ltd. invested a total of about USD 16 billion into Russian assets in Sakhalin 1, the Vankor oil and gas field, Taas-Yuryakh Oil and Gas Production, Imperial Energy. Rosneft acquired India’s Essar Oil Limited and is now developing the port and oil refinery in Vadinar, as well as a major retail chain. New investment opportunities were presented to the Indian side during the Moscow meetings. Natural gas assets such as Arctic LNG-2 and others likely received special attention. Investments in coal deposits are being looked at too. With the departure of western investors, more lucrative stakes and assets are on offer to Russia’s partners again.Lesser-known examples of existing Indian business projects in Russia include pharmaceuticals, medical equipment, medical materials and disposable products, construction and construction materials, plastics, chemicals (such as silicon carbide, for instance), gold mining, metallurgy, machine tools, logistics, production and exports of linen, development of wastewater treatment systems, diamond processing, supply of ceramic tiles, and others. There are also more traditional areas of Indian business presence such as textiles and ready-made clothing, tea, coffee and spices, agriproducts, restaurant business, ayurveda and wellness. Fruits and vegetables from India are just starting to make their way to supermarkets in Russia – the volumes will surely grow with the improvements of logistics.For years, bilateral trade between Russia and India was stuck around the level of 10-13 bln USD. In calendar year 2023 it reached record high of 65 bln USD having surpassed the 30 bln USD target much ahead of set time. So Prime Minister N.Modi and President V.Putin have set a new aim of 100 bln USD – by 2030. The statistics coming in 2024 give ground for optimism – in March and in June Indian exports showed the best monthly numbers ever (441 bln USD and 475 bln USD respectively), indicating improving trend with India’s trade deficit with Russia. Russia’s exports are growing too and overall trade volume during January-June 2024 increased by 14% to 38,3 bln USD (this is 58% from 2023 trade volume).
The Indian diaspora is an efficient bridge between the two countries, expanding far beyond the capital city of Moscow. Estimations of numbers of the Indian diaspora in Russia vary – from 25000 members to 50000, including students. Prime Minister Modi’s July programme in Moscow included an emotional meeting with the diaspora. Throughout his trip Prime Minister received a very warm welcome both from fellow Indians, as well as from the Russian people, who feel a very deep connection with India.
Russia is the country of over 146 million people and estimated GDP growth of 3.9% in 2024. The size of the population may not be that large in comparison with Asia’s giants, but these are well-educated people, mainly living in cities. Even Russia’s small towns and villages are not what they used to be some 10-15 years back. Rapid improvements in infrastructure and public spaces, multidimensional digital transformation and growth in disposable income has turned nearly the entire population of the country into demanding consumers. In fact, disbalance between personal investments and consumption is leading to excessive inflation and concerns Russia’s financial authorities most, now. Rate of unemployment is at all-time low. Gradual opening of Russia’s labour market to qualified personnel from India for specific projects – is the need of the hour and high on agenda of both business and regulators.
Investment opportunities in Russia are endless. There is so much work to be done. From the obvious – Russia needs more Indian restaurants (and one of my friends is looking for good Indian chefs right now) – to the less evident sectors, such as, tourism, for instance. As a destination Russia is in-demand among tourists from friendly countries, including India and China, but most importantly, Russia’s domestic tourism flow is growing rapidly. After travelling all over the world in recent years, Russians are now rediscovering their own country. The wealth of nature, culture, art and history make every corner of the country a marvelous touristic attraction. Russia needs more good hotels and resorts, and the experienced hospitality players from India can find excellent business opportunities in the country. The positive consumer sentiment in Russia towards India will help every project fly.
If, as an Indian business owner, you are considering business opportunities with Russia, there are many institutions that can help. Besides Invest India and Russian Direct Investment Fund, Indian business associations like FICCI and CII have well-established links in Russia. Sectoral exhibitions are always a great channel to approach a market. The Indian diaspora clubs – The Indian Business Alliance and The NRI club of Russia have a wealth of contacts and can help. Russian Trade Mission in Delhi and the Indian Embassy in Moscow are working tirelessly too. Soon Indian consulates in St.Petersburg and Vladivostok will be added with two new important locations – Kazan and Ekaterinburg. Roscongress is the famous conference organiser
in Russia with many large-scale annual events all over the country, including St.Petersburg Economic Forum and Vladivostok Economic Forum, the landmark gateway event to the Russian Far East, taking place on September 3-6 this year. Sber, Russia’s largest bank, is expanding its work in India and has very efficient facilitation mechanisms both for the Russian and for the Indian businesses. And, the last but not the least – it is always great to go back to school, even if you run a well-established business. SKOLKOVO India Lab is effectively merging education with consulting: teaching business leaders of both countries about navigating trade, investment and cultural landscape intricacies, adapting business models to new markets and making Russian-Indian partnerships last – the much-needed work.
The author is Head of India Studies, SKOLKOVO School of Management; Senior Research Fellow, Centre for India Studies, Institute of Oriental Studies, Russian Academy of Sciences.