Over the past 5 years, business with India has ceased to be something exotic and is already arousing active interest in the Russian business community. India continues to be one of the priority partners of Russia, and the areas of cooperation have expanded significantly over the past years. Talks of Indian investments in the Russian media sphere began after Narendra Modi announced that Russia provided a $ 1 billion loan for the development of the Far East at the WEF 2019.
At the same time, Indian investments in Russia amount to about $ 9 billion as of the beginning of 2020, but they are concentrated mainly in the oil and gas industry as well as the pharmaceuticals. In this special review, we will analyze the most significant Indian investments in Russia.
Top 10: Wartaman International Traders, $ 3.5 million
The Republic of Ingushetia is not the most obvious place for Indian investment, but it was here that the Indian Wartaman Corporation decided to localize the production of ophthalmic equipment. The deal was announced at the SPIEF-2018, during which the president of the group signed an agreement with the head of the Republic of Ingushetia, Yunus-Bek Evkurov. As part of the investment project, the company partially concentrated the production of its equipment, supplies, lenses and pharmaceuticals in Ingushetia. The launch of the project is planned for 2020. The company will be creating up to 200 jobs in Ingushetia.
Top 9: PSK Pharma, $ 35 million
PSK "Pharma" launched the company in the special economic zone "Dubna" in the Moscow region. The implementation of the project was announced back in 2014, and construction began in 2017, which was completed in 2018. In 2018, the company entered into an offset contract with the Moscow Region Government for the supply of 26 drugs for the treatment of bronchial and oncological diseases. The contract value amounted to about 1.7 billion rubles. In total, the company’s portfolio contains about 60 drugs, mainly complex generics, which are currently either undergoing registration or are already being produced. The company employs about 200 people, of which more than 30 are involved in the expansion of Research and Development in the pharmaceutical field.
Top 8: Surya Group JV with BTK, investment volume, $ 50 million
The textile industry is also a priority for Indian investors. Surya Group, owned by Ravi Navlani, in 2017, as part of the import substitution policy, created a joint venture with BTK, where the textile production cycles were partially localized.
Top 7: Carbonandum Universal ltd, $ 60 million
In 2007, Indian Carbonandum Universal ltd bought for $ 10 million a controlling stake in Volzhsky Abrasive Plant OJSC located in the Volgograd Region from VAZ, and in 2008 signed an agreement with the regional administration on additional investments in the amount of $ 50 million. Indian investments allowed to significantly expand current plant capacities, as well as build a new site for the smelting of silicon carbide with a total production of about 100 thousand tons per year.
Top 6: Sun group, $ 200 million (Klyuchevskoye field)
Sun group is a large private Indian investment company specializing in investments in real estate, energy, mining and high technology. Its founders often visit Russia as part of government delegations and agreed to cooperate with Denis Manturov, and also signed an agreement with Rusnano. The main project of the group in Russia is located in Siberia - the Kliuchevskoye gold deposit. His group acquired back in 2007, and during that time attracted a number of partners in the development: China National Gold Group Corporation, the Russian Far East Development Fund, the TransAfrica Capital Limited investment company from South Africa and the Antonio de Moraes investment fund from Brazil. The total investment in the project amounted to $ 500 million, of which about $ 200 million according to expert estimates are accounted for by the Sun Group.
Top 5: SunInBev, $ 250 million
One of India's first major investment projects was implemented in 1999, when Sun Interbrew sealed a deal with AB InBev to create a Russian subsidiary based in Klin. Initially, the deal was estimated at $ 130 million, the company invested about the same amount over the past 20 years in the expansion and modernization of production. The company’s portfolio includes brands such as Bud, Hoegaarden, Stella Artois, Brahma, Lowenbrau, Staropramen, Siberian Crown, Klinskoye and Bagbir.
Top 4: Pharmasynthesis, $ 500 million (factories Irkutsk, Ussuriysk, Tyumen, Bratsk, St. Petersburg)
This enterprise is a prime example of the effectiveness of “soft power”. Vikram Singh Punia studied at the Irkutsk State Medical University and then founded his company in Russia. The company began operations in 1997, in 1999 the first plant was built in Irkutsk. To date, the company has opened a number of new sites: in Ussuriysk, Tyumen, Bratsk and St. Petersburg. Pharmaceuticals specializes in the production of generics and innovative drugs against tuberculosis, cancer drugs, drugs for the treatment of diabetes, hepatitis, blood diseases, as well as drugs for the treatment of AIDS. According to the data for 2019, the company produces more than 50 million packages of medicines per year, and the volume of the investment program for 2019-2021 is about 20 billion rubles. Intensive growth of the company is achieved, including through the implementation of the import substitution policy and the protectionist policy of the Ministry of Industry and Trade of the Russian Federation on the pharmaceutical market.
Top 3: Tata Group, $ 560 million (Krutogorovskoye coal deposit)
Tata Group is a large Indian holding, best known for its automobile brand, which, incidentally, has also been present in Russia for a long time in the format of contract manufacturing. However, the company's largest project is related to the coal industry. In 2019, a large investment project was announced at the WEF to develop the Krutogorovskoye coal deposit in Kamchatka. At the moment, the project is undergoing the approval stage. India’s interest in this product is not accidental - the country is experiencing a construction boom and a serious increase in demand for steel, the production of which requires coking coal.
Top 2: ONGC Sakhalin-1, $ 1 billion
In 2001, the Indian giant ONGC first entered the Russian market, buying from Rosneft 20% in the Sakhalin-1 oil and LNG project. The volume of Indian investments in the project amounted to about $ 1 billion. The deal allowed India to sign a long-term contract for the supply of oil. However, in 2006 the situation changed and Rosneft bought back 20% for the amount of $ 1.37 billion, which became a very profitable investment for ONGC.
Top 1: ONGC 49.9% of Vankorneft and 29.9% of Taas-Yuryakh oil and gas production, $ 5 billion
In 2016, after 10 years of searching, ONGC again triumphantly returned to Russia, closing its largest M&A deal with Rosneft on the purchase of a stake in the Vankor field in the Krasnoyarsk Territory and Taas-Yuryakh in Yakutia. The deal was announced at the “Russia Calling!” Forum organized by VTB. The company is interested in long-term supply of the growing Indian market with oil supplies and is actively investing in foreign projects.
Indian investments in Russia mainly relate to the oil and gas and pharmaceutical industries and the bulk of them were in the 2010s, but one can notice their diversity: FMCG, textiles, gold mining, and the mining sector. We expect that in the next 10 years, the volume of Indian investments could double and reach $ 17 billion, primarily due to the implementation of new projects in the Far East, which are already a state priority in India.
Attracting an Indian investor in a project requires experience and understanding of the business culture of India. The RAUIE members regularly participate in business events with Indian partners and discuss their projects.
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