Russia and India Business Report by Russia Beyond

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WEDNESDAY JULY 1, 2015

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

DIPLOMACY: Moscow backs greater intra-BRICS coordination on security issues and reform of the global system

Mapping evolution of BRICS: Prototype of New World Order

STATISTICS Ruble/Rupee dollar rates

Russia is set to hold 7th BRICS summit in Ufa, which is expected to remap the contours of global governance with the launch of New Development Bank. Russian experts talk to RIBR about what the future holds for BRICS. GEVORG MIRZAYAN, NIKOLAY SURKOV

greater coordination among BRICS countries. “To coordinate foreign policy positions, it is necessary to begin by signing a declaration on the guiding principles for BRICS countries – something like the ASEAN Bali Concord. It is also necessary to propose an international five party commission at the deputy prime ministerial level to coordinate economic cooperation,” said the expert.

RIBR

Mapping the future The main goal of the organisation is the actual shift to a multi-lateral world in which international law is respected. “BRICS is the personification of network diplomacy in its best understanding”, and the activities of the association are based not on the dictates of a single country but on finding a consensus, said Deputy Minister of Foreign Affairs Sergey Ryabkov. Furthermore, the evolution of BRICS has been initially aimed not for the establishment of alternative instruments for global governance, but for the strengthening of already existing instruments, explains Suslov. “In so far as the West does not want to share its dominant position and use it for international political goals (as is clear from the sanctions applied to Russia), BRICS has started establishing parallel international structures. We are not talking about replacing, for example, the World Bank with the

EPA/VOSTOCK-PHOTO

aving emerged as a purely formal organisation for rapidly developing countries, the BRICS grouping has become a club of states which are united not only by economic indicators, but by a convergence of positions on the international environment. One of the main factors consolidating the bloc was the sense of “under representation in western centric international organisations”, says Dmitry Suslov, the deputy director of the Faculty of World Economy and Politics at the Higher School of Economics.

Leaders of BRICS countries at the 6th BRICS summit in Fortaleza, Brazil. BRICS Development Bank, but about the foundations of global governance fitting together,” added the expert. On the way to achieving its specified goals, BRICS will not evolve into a fully-fledged, centralised organisation, says Associate Professor Sergey Veselovsky at the Department of Global Processes. “BRICS in no way can be integrated for a

number of reasons. Beginning with the fact that the member states are located a huge distance from each other, and concluding with the fact that the main feature of all the member states is their very keen sense of sovereignty and freedom of action”, says Fedor Lukyanov, the editor of Russia in Global Affairs. Academician Georgy Tolaray advocates

Why BRICS for Russia? Given the potential of BRICS – the five member countries make up 40% of the earth’s population, and their total GDP is more than 20per cent of the world of global GDP – Russia attaches great importance on its participation in the organisation. “Although Russia is not the most economically powerful country in BRICS, it creates cohesion in the group. Firstly, Russia is the only member state which has friendly relations with all the other countries,” says Suslov. “Secondly, it is the only member state which is considering the establishment of a new system. Russian strategic thinking fits the existence of BRICS in an ideological framework.” In the context of new disagreements with the West, BRICS has become important for Moscow, because this association can be a tool for reforming the global system as a whole. For this reason Russia has initiated discussion on security issues within the BRICS format and its partners, concerned by growing instability in the world, have supported this initiative. So, at the end of May, Moscow hosted a meeting of deputy foreign ministers of the BRICS countries, devoted to the situation in the Middle East.

Stock Market Index

The BRICS Bank

SCO in numbers

NEW HORIZONS: Assembly will help in rapidly implementing decisions, ﬁnal decision can be taken in India next year

BRICS set to widen canvas, plans to create parliamentary assembly The assembly will focus on harmonising legislations of five countries and make recommendations to leaders NIKOLAY SURKOV RIBR

t the first parliamentary forum for BRICS held in Moscow on June 8, the participants agreed to start exploring the possibility of creating a parliamentary (or inter-parliamentary) assembly. The final decision on the creation of such a body might be made as soon as next year at the forum

in India. The chief purpose of such a mechanism, according to First Deputy Chairman of the Federal Council Committee on International Affairs Vladimir Dzhabarov, is to harmonise the legislation of member countries. Moreover, it is an additional platform for discussion where parliaments will be able to prepare recommendations for leaders. “Parliaments will be able to raise and discuss any questions. The results will be

brought to the consideration of the countries’ leaderships,” said Vasily Likhachev, member of the State Duma committee for CIS Affairs. According to Likhachev, the BRICS parliamentary assembly can accomplish two fundamental tasks. The first is developing laws that are either the same or closely resemble each other, their standardisation, and, with time, the elaboration of common laws. The second is bringing the parliamentary community together to resolve the most important issues such as nuclear non-proliferation, reforming international institutions, reforming the IMF, and defending international law.

“It will be possible to develop various interparliamentary international initiatives,” added Likhachev. Citing an example, he said that Russia and China are promoting initiatives in the UN for the demilitarisation of outer space and for introducing a code of conduct to the information sphere. Inter-parliamentary dialogue will help to simplify the implementation of decisions taken in national legislation. “Parliamentary accompaniment is essential to the rapid implementation of the decisions of the countries’ leaderships,” said Deputy Chairman of the State Duma Sergei Zheleznyak. First of all, we are speaking of the launch of the New Development Bank and the Currency Reserve Pool. An analysis of the BRICS countries’ legislation will now be conducted. Approaches to cybersecurity will be studied attentively,” said Zheleznyak.

ALYONA REPKINA

BIG PICTURE RUSSIA DIRECT IS A FORUM FOR EXPERTS AND SENIOR RUSSIAN AND INTERNATIONAL DECISION-MAKERS TO DISCUSS, DEBATE AND UNDERSTAND ISSUES IN GEOPOLITICAL RELATIONS AT A SOPHISTICATED LEVEL.

Can ISIL bring US, Russia together?

June Report VITALY NAUMKIN Middle East expert, professor

HI-TECH AND SCIENCE CITIES In June, Russia Direct released a new brief examining the topic of Russian hi-tech and science cities. New efforts to modernize the Russian economy have taken on even greater significance with the introduction of Western sanctions and recent volatility in global energy markets. This report highlights the early successes and challenges of Russia’s modernization drive, with an emphasis on the role of the state in supporting innovation efforts at the local level, primarily through the creation of new technoparks.

he rapid advance of radical Islamist terrorist groups, representing a threat both for Russia and the US, is one of the dominant trends in the Middle East at the moment. Moscow and Washington have mostly asymmetrical interests in the region. The US, not to mention its allies, still remains a major buyer of Middle Eastern oil; a number of states in the region are strategic partners of the US, having signed bilateral security and defense treaties, so there are American military bases there. Russia has none of these. On the other hand, Moscow cooperates both with countries that have a difficult relationship with the US and with some of its partners, like Turkey. On the whole, Moscow arguably does not have any vital in-

terests in the Middle East. Accordingly, Russia and the US do not have any serious contradictions there, even if their administrations have different takes on certain regimes and events. Hypothetically, this could create an opportunity for both countries to cooperate in the areas where they have common interests. But what are those common interests? First and foremost, there is the need to fight against international terrorism and extremism. Russia and the US both want stability in the Middle East. Even if Washington, as many believe in Russia, has actually been seeking to create “controlled chaos” in the region, I do not think this would correspond to the long-term interests of the US. Regime change in the countries that are hostile to (or not controlled by) Washington, would create problems

for the US, rather than advantages. When will Libya be controllable and who will control it? Not the US. It is no coincidence that realist American politicians, like Henry Kissinger to name but one, have criticised the country’s reckless intervention in the affairs of the regional states. But could Russia and the US cooperate today to, for instance, restore stability in Libya? However, the US-Russia cooperation, even in the areas of common interests, is affected by a number of constraints. The main one is the deplorable state of bilateral relations and the resulting deep mistrust between the two governments. Even once the Ukrainian crisis is settled, the situation is unlikely to change significantly. On the one hand, the US supports several Islamist groups considered “moderate” in some Arab world countries that suffer from terrorism. In turn, Russia believes these groups are almost as dangerous as the al-Nusra Front, the al-Qaeda branch operating in Syria and Lebanon. Terrorists must not be divided into “good” and “bad.” On the other hand, Washington refuses to cooperate with the Syrian government, regarded by Moscow as an important partner in the fight against terrorism. Even if we assume the counter-terrorism cooperation between the two countries would be advanced to a level corresponding to the threat, Russia will not be ready to join any coalition led by the United States, and the US will

never refuse to be the leader. Russia, which learned some valuable lessons from America’s (and its own) experience, would under no circumstances conduct military operations in the Arab countries, or even conduct airstrikes there. Moscow will in any case insist on submitting the issue to the UN Security Council (where it wields a veto). Nevertheless, Russia is willing to cooperate both with the West and with regional states in the fight against terrorism, preferring to work with legitimate governments. Moscow is especially concerned about the growing numbers of jihadists from Russia and Central Asia fighting for ISIS (Islamic State). I think the need to stand together against a common threat will eventually prompt Washington and Moscow to make amends. But considering all these constraints, the cooperation will likely be low-profile. At best, the parties will coordinate their efforts and share relevant information, while acting on their own or, perhaps, along parallel directions. That said, even this kind of trust will be helpful for mending the rift between the countries. Vitaly Naumkin is the director of the Institute of Oriental Studies of the Russian Academy of Sciences.

Read the opinion section in.rbth.com/opinion

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

P |O |L |I |T |I |C |S WEDNESDAY JULY 1, 2015

GEOPOLITICS: India, Pakistan expected to join SCO as members; integrating Eurasian Economic Union and Silk Road key priority

NEWS

SCO set to expand, focus on terror

India to be partner at Innoprom-2016 Industrial Exhibition

priority. Eurasian Economic Union (EAEC) and the Silk Road Economic Belt (SREB) are among such projects. There are ideas about fund development, on the Development Bank,” the diplomat says. Another important issue that is set to figure prominently is the integration of EAEC and SREB. Moscow believes that the SCO could become a platform for developing the interaction of these two mega-projects, like formation of a consultation mechanism on the SCO platform. Observers fear competition and talk about the two “bears” - Russia and China - caught up in a den. However, Bakhtiyor Khakimov, the special representative of the President of Russia for SCO, does not agree. “Not two bears, but two people who are getting along well and helping each other,” he said. According to him, Russia and China are doing everything possible to avoid competition between the EAEC and the SREB: “Appropriate instructions and directives have been given. There are government orders in this regard. Discussion is underway. The contacts between the EAEC and the PRC have been established. The Chinese hope that the EAEC format will move forward while the comprehensive Russian-Chinese contacts will be preserved,” he said in an interview

NIKOLAY SURKOV RIBR

India to install PS-90 engine on Multi-Role Transport aircraft SHUTTERSTOCK/LEGION-MEDIA

India has agreed to install the Russian PS-90 engine on the multi-role transport airplane which the two countries are developing, United Aircraft Corporation (OAC) head Yuri Slyusar told. “The Indians have agreed to the PS-90. The project itself will replace the Antonov group of airplanes which in the near futures will begin to leave service en masse “, said Slyusar at the Aviation salon at Le Bourget (France). Ria Novosti

he Russian chairmanship of the SCO will culminate in the summit in Ufa on July 8-10. The organisation will have to decide upon the acceptance of new members, as well as to counter the wave of religious extremism, which threatens to cover Afghanistan and the countries of Central Asia. But the main intrigue is the interaction within the SCO framework of two regional heavyweights - Russia and China. The adoption of the Strategy of Development of the SCO to 2025 and the beginning of the accession process of two new member countries - India and Pakistan - are expected to become the two milestone events of the upcoming SCO summit. At the recent St Petersburg International Economic Forum, President Vladimir Putin confirmed that India and Pakistan may join the SCO at the upcoming summit. Russian diplomats claim that the SCO has no plans to become a militarypolitical bloc. “There is neither military line to SCO nor collective power. There is already CSTO for these needs,” Russian Foreign Ministry’s representative says. “Large-scale infrastructure and technological projects are the

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The SCO summit in Ufa will decide on inducting new members and focus on countering ISIL

India has accepted to be a partner at the Innoprom Industrial Exhibition, to be held in Yekaterinburg in July 2016. Denis Manturov, Russian Minister of Industry and Trade, had extended the invitation at a meeting with the Federation of Indian Chambers of Commerce and Industry last December. China is the partner country this year. Ria Novosti

The communication between two regional powerhouses - Russia and China – could hold the key to the future of the SCO forum. to RIBR. “We need to combine the potential of Russia and China. Our cooperation will play a special role in the framework of the SCO and BRICS,” he said. Focus on security and terrorism Security issues will also figure high on the agenda of the SCO summit, as the members, especially the countries of Central Asia, are now facing the threat of the “Islamic State” (ISIS). At the conference “Security and stability in the SCO region”, held in Moscow on June 4, Russian Foreign Minister Sergei

SECURITY: Plans include testing aviation-compatible version of BrahMos-A

tential terrorists and militants returning after having participated in armed conflicts. BRICS and SCO The SCO summit in Ufa will be held contemporaneously with the BRICS summit. Therefore, a joint meeting of the leaders of the SCO, BRICS and the EAEC has been scheduled. As explained by the Special Representative Bakhtiyor Khakimov, “it will be a meeting in the format of free discussion where all the participants will be able to discuss all the issues.”

EXPERT’S TAKE

More BrahMos power for India Craft new export Indian Armed Forces have ordered three more strategy to Russia regiments of famed supersonic cruise missiles

Clean Ganga: Russia willing to send specialists to India

VIKTOR ASTAFIEV RIBR

he Indo-Russian joint venture BrahMos Aerospace, which manufactures the BrahMos supersonic cruise missile, celebrated another anniversary, with some new goals. These include equipping three other military regiments with the BrahMos, testing an aviation-compatible version of the BrahMos-A, and also developing smaller versions of the Brahmos-NG and hypersonic BrahMos-2. BrahMos Aerospace was founded in 1998, and named after the Brahmaputra River in India and the Moscow River in Russia. “BrahMos has certainly made India proud to possess an advanced high technology weapon system, which no other country in the world has”, said A.P.J. Abdul Kalam, India’s former president, speaking at an official ceremony. In the past year, 62 missiles have been delivered to the Army, Navy

MARINA LYSTSEVA / TASS

ALAMY/LEGION MEDIA

Russia is ready and willing to help India in cleaning the Ganges River riverbed, reports Regnum news agency. Nuritdin Inamov, a senior ofﬁcial of Russia’s Ministry of Natural Resources and Environment, announced the results of the working meeting with Amit Telang, Head of the Economic and Commerce Wing at the Indian embassy in Moscow. “We are ready to aid our colleagues for cleaning the riverbed of the Ganges and to send specialists who will estimate the volumes of work expected as soon as July,” said Inamov. RIBR

S. K. Mishra, BrahMos Aerospace Chief executive, said the testing of an aviation version would take place onboard a Su-30 MKU. and Air Force against the contracted for delivery of 60 missiles to the first BrahMos Squadron of the Indian Air Force. Abdul Kalam said he was sure that BrahMos Aerospace would achieve new heights this year and, in June 2016, would begin to supply the aviation version, the BrahMos-A, to the

IAF. Sudhir Kumar Mishra, Chief executive of BrahMos Aerospace, said the testing of the BrahMos-A would take place onboard a Su-30MKU this year. An RIBR source close to the Ministry of Defence said on condition of anonymity that Indian Armed Forces had earlier ordered a fourth regiment of BrahMos missiles. “By the end of the year we want to order another two – accordingly a fifth and sixth regiment,” the source said. Each regiment comprises four launching vehicles and 90 missiles and costs around 2000 crore rupees ($300 million). In April, the Army decided to arm a third regiment with the BrahMos. BrahMos has successfully handed over three Technical Positions (TP) to the Indian Army and two TPs for the IAF in different locations in the Western, Central and Eastern sectors of India. “We have also given ourselves the task of creating smaller versions of the BrahMos/BrahMos-NG and, over the next 5-10 years, develop the hypersonic BrahMos /BrahMos-2/”, Mishra said. The BrahMos-2 is likely to achieve speeds greater than Mach 7, or seven times the speed of sound.

MULTILATERAL: NDB will focus on sustainable infrastructure development in developing countries

BRICS set to launch new ﬁnancial architecture The Ufa summit in Russia will see the formal launch of the BRICS New Development Bank. ALEXANDRA KATZ RIBR

Lavrov made it clear that the ISIL is more dangerous than “al-Qaeda” and Russia is concerned about the emergence of units of this organisation in Afghanistan, which is close to the borders of the Central Asia. Lavrov proposes to work in two directions. Firstly, to assist the “restoration of peace and stability in Afghanistan,” and secondly, “to continue developing rapid exchange of information between the competent authorities”, involving, among others, the countries with observer status, to prevent attempts to involve citizens in the radical movements, to identify po-

he BRICS New Development Bank will be launched at the first session of its Board of Governors in Moscow on July 7. Russian Deputy Finance Minister Sergei Storchak announced at the St. Petersburg International Economic Forum that the BRICS Bank will be ready for action after the maiden meet of the governors. After several years of intense negotiations, BRICS leaders finally established a $100 billion Contingency Reserve Arrangement (CRA) and the New Development Bank (NDB) at the Sixth BRICS Summit in Fortaleza, Brazil, in July last year. The countries agreed to share the $50 billion initial subscribed capital of the bank, and hence the voting rights, equally. Analysts believe the launch of the BRICS bank will give member countries the opportunity to fulfil their economic ambitions and will boost infrastructure investments in the emerging econo-

mies whose infrastructure development needs cannot be currently met by existing multilateral financial institutions such as the World Bank, Asian Development Bank (ADB) and others. According to Amar Bhattacharya, Senior Fellow at the Global Economy and Development Program at Brookings Institution, infrastructure remains the major growth constraint in most emerging and poor countries. “1.4 billion people have no access to electricity, 0.9 billion have no access to safe drinking water and 2.6 billion no access to basic sanitation. Annual financing needs in those countries combined are estimated at between $ 1.8 and 2.3 trillion”, he wrote in a paper in 2013. The situation has not significantly changed since then. Given the ongoing changes in the geopolitical system and global economics, the importance of having its own financial instruments has become vital for BRICS countries, especially for Russia which will assume the presidency of BRICS at the Ufa summit.

The NDB will focus on funding infrastructure and sustainable development projects in BRICS countries and other parts of the developing world through loans, guarantees, credits and equity investments. The focus on infrastructure is not only logical, according to experts, but unavoidable because, despite the existence of multilateral development agencies, the need for investments is higher than they can provide.

K.V. Kamath, the ﬁrst president of NDB, says the Bank will focus on ﬁnancing viable projects where money can be recovered. The role of national development banks is to assist the New Development Bank in a fast manner to be functional. In Ufa, we will sign special memorandum for the New Development Bank,” Vladimir Dmitriev, Chairman of the Bank for Development and Foreign Economic

Affairs (Vnesheconombank) said at SPIEF 2015. “The challenges that we see in terms of work that has to be done in developing countries are great. BRICS countries need new developing partners and this bank is such a partner”, said Kundapur Vaman Kamath, the recently appointed first President of the NDB. Kamath underlined that that the Bank will look for financing not just important but also bankable projects. K.V. Kamath, the former head of India’s largest private bank ICICI and former chairman of Infosys Limited, has been nominated as the first President of the BRICS NDB for a 5-year term a month ago. Yang Shaolin, Director General of the Department of International Economic and Financial Cooperation, Chinese Ministry of Finance, pointed out the uniqueness of bank’s governance structure: “While the existing institutions are predominately controlled by developed counties, this is a new experiment where five developing countries share their voice equally. We also will try our best to improve the operating structure and make it more efficient and effective”, he said.

S C RALHAN President, FIEO

ndia-Russia bilateral trade rose from $1.6 billion in 2001-02 to $6.35 billion in 2014-15. The latest figure released by the Department of Commerce shows a moderate growth of five per cent in bilateral trade during the last fiscal. While Indian exports declined by one per cent, imports from Russia grew by around nine per cent. However, we are nowhere near to realising the potential. While Russia is the 8th major exporter in the world, with exports of over $490 billion in 2014, yet its share in India’s imports is 0.95 per cent. Similarly, India’s share in Russia’s imports is about 0.78 per cent. India commands a sizable share only in tea & coffee (8.6 per cent), pharma (3.53 per cent ), marine (3 per cent ), tobacco (2.8 per cent ) and iron & steel (1.92 per cent). However, in the last ten years we constantly lost our share in many sectors. This calls for revisiting our strategy so that our exports to Russia are in line with rising Indian capability in exports and increasing imports in Russia. India and Russia are working towards a free trade agreement between India and the Eurasian Economic Union, which also includes Belarus and Kazakhstan. Unfortunately, we are either having negligent or no share in top imports of Russia. India’s share in top 10 imports of Russia is a meagre 0.61 per cent. There is potential for Indian exports to Russia in footwear, rubber goods, furniture, lighting equipment, tools & implements, poultry, meat products and dairy products. Similarly, opportunities exist in IT, telecommunication, construction and engineering services, R&D services, waterways and maritime transportation. The recent sanctions by EU has opened new opportunities for enhancing exports of Indian products. While market access may be provided due to the place vacated by EU countries, we have to take advantage of the present situation to cement our place in Russia and in other CIS countries. Strict adherence to quality parameters is a fundamental requirement in the quality-conscious Russian market. There is a lack of awareness of India’s potential in diverse fields. The India Show organised in Moscow in

September, 2014 helped to advertise India’s potential, but this has to be followed by sector-specific initiatives and regular exchange of visits of business delegations. There are also challenges like lack of information on existing opportunities, logistics and language barrier. I will advise my Indian companies to have serious commitment and work on a long time frame for developing business in Russia. While challenges on the banking front do exist, yet the opening of branches of Russian banks in India and Indian banks in Russia has helped to provide necessary comfort to importers and exporters of both countries. The facilitation at the customs in Russia will definitely help in increasing India’s exports. The issue of NTBs also needs to be addressed by the government. Given the high volatility in ruble, we need to work on the rupee payment

India’s FTA with EEU and a greater awareness of opportunities in the wake of EU sanctions will help in scaling up bilateral trade. mechanism so as to support our exports to Russia. In addition to trade, investment cooperation has been envisaged in hydrocarbon, power, coal, nuclear power, fertilizers, IT, pharmaceuticals, construction and engineering services and mineral and metallurgy. There is scope to increase Indian investments in Russia which are estimated to be about$ 6.5 billion. India is taking important initiatives in some of the fields where Russian cooperation would be most needed, including defence, space technology, nuclear energy and smart cities. India and Russia have set up a goal to scale bilateral trade to $30 billion by 2025. This is a challenge, but can be achieved with concerted efforts of the government as well as the industry. We hope that the FTA between India and EEU would be worked out and the North-South Corridor will be exploited by India to reach this target.

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

E |C |O |N |O |M |Y WEDNESDAY JULY 1, 2015

BUSINESS: New amendments, which include simplifying the registration process of drugs, can open new opportunities for Indian companies

Challenging times for Indian pharma ALEXANDRA KATZ Specially for RIBR

ussia-India pharmaceutical cooperation is entering a new phase in which innovation and competitivenss wil hold the key. Some amendments in Russia will test the Indian pharmaceutical sector. India provides antibiotics, hepatitis vaccines, medication for intestinal infections and anti mycotics to the Russian market. There are currently more than 800 Indian medications certified in Russia. If in 2010 Russian imports of pharmaceuticals from India comprised more than 30 per cent of the total volume ($553.1 million as of 2010 prices), then in 2014 this volume dropped to 25 per cent. Analysts note that the share of Indian products in the Russian market traditionally makes up no more than three per cent. In the sales structure of Indian products, prescription medications dominate. The implementation of the Russian development strategy for the pharmaceutical industry Pharma 2020 means the active development of local generic companies which compete in terms of quality and price with Indian companies. Establishing a unified customs territory within which pharmaceutical products can be handled without paying customs duties, is one of the reasons for the lack of noticeable growth in the share of Indian companies in the Russian market, according to Nikolay Bespalov, development director at analytical company RNC Pharma. The

Pharma 2020 strategy will, he said, open opportunities for Indian companies to expand their presence in the market due to product localisation. Fluctuations in the exchange rate a have led to a drop in profits of Indian companies in the Russian market and CIS countries. According to the last report from Dr. Reddy’s Laboratories at the end of the last financial year, the company’s revenues in Russia dropped by nine per cent in dollars despite a rise of 30 per cent in rubles. Ranbaxy Laboratories, Glenmark Pharmaceuticals and others also saw a drop in sales in the Russian and CIS market. Sushil Kumra, head of the Russian representative office of Lupin Ltd., one of the largest Indian manufacturers, operating in Russia for the past 15 years, said that in 2016, in the public procurement sector, they may introduce restrictions on the access of foreign goods in the presence of two or more similar products already being produced in Russia, Belarus and Kazakhstan (the so called “three’s a crowd” decision), which will become another challenge for Indian players. Analysts at RNC Pharma say that among such measures, in addition to the “three’s a crowd” decision, there are the one-time indexing of prices for drugs on the list of vital and essential drugs in the low-middle price segment, the introduction of compulsory licensing for certain drugs, and the conclusion of long-term contracts for the supply of drugs. Among the many problems in the Russian pharmaceutical market, the main issue for foreign producers is the

registration of medicines in Russia. Indian manufacturers preparing to register new drugs in Russia are awaiting amendments to Law No. 61-FZ “On Circulation of Medicines” to enter into force on July 1, 2015. These amendments, among other innovations, will simplify the registration process for certain categories of products. Starting July 1, 2015, the state registration procedure will last only 160 days; 50 days less than earlier. The new amendments, in particular, provide for the moving of clinical trials outside the state registration system, as well as a new procedure for the definition and registration of ‘orphan drugs’: drugs intended for the diagnosis, prevention, and treatment of rare diseases.

PRESS PHOTO

Indian pharmaceutical companies will have to gear up to deal with new changes in norms and regulations relating to pharma business in Russia

The amendments to the Russian Law “On Circulation of Medicines”, to enter into force on July 1, 2015, are expected to facilitate the state registration procedure for some categories of pharmaceutical products and reduce its duration by 50 days.

WAY AHEAD B.P. SINGH General Director, ZAO Coral-Med

he Russian pharmaceutical industry is always a lucrative and attractive market, despite the economic recession in the country and devaluation of national currency, caused by sanctions. It has affected us in short term liquidity but we are hoping that this crisis will open many new opportunities and doors for our company. As our business partners like Simpex Pharma, Panacea Biotec Ltd and Lupin India are coming forward to

make a long term strategy in supporting Pharma 2020. It resulted in the establishment of production of up to 60 per cent of drugs from the list of vital life-saving drugs within the country. To take advantage of the growing Russian pharmaceutical market, several pharmaceutical majors are investing in Greenfield manufacturing projects in Russia, and Indian companies are coming forward with local manufacturing (in Russia) and are investing in domestic R & D to develop complex medicinal molecules locally, especially in the sphere of life-saving drugs. And this gives confidence to us and to the local partners to join hands together in developing new drugs with the best quality in the domestic R&D with the support of Pharma 2020 programme.

VIKRAM PUNIA SINGH President, ZAO Pharmasyntez

think the tendency is that Russian medicines will eventually replace the Western ones. People have this stereotype that Western drugs are of very good quality. But the production of those Russian factories that have the Ministry of Industry and Trade GMP certificate is of the same high quality, and the prices are much lower. Under Pharma 2020, specific measures to support pharmaceutical industry are being taken.

As an Indian businessman who’s been working in Russia for a long time, I have three specific recommendations for Indian companies doing business in Russia: Firstly, it’s important to work seriously with all the documents on pre-clinical and clinical trials and prepare a file, which would be in conformity with the requirements of the Russian regulatory bodies. Secondly, one should localise one’s production in Russia and enjoy the same preferences as the Russian producers. And last but not least, one should find reliable local partners who could deal with registration, production (localisation) and the promotion of the goods and sales. Or, one could independently open an office that consists completely of the Russian staff.

TECHNOLOGY: Russia explores export option as top industrial enteprises, including RZD, Gazprom and Transneft, get ready to acquire superfast computers

Russia sets new benchmarks in supercomputers Rosatom is investing in developing its own supercomputers for nuclear power industry ANDREY RETINGER RIBR

upercomputers ‘Made in Russia’ are creating a new buzz in the innovation ecosystem. Russia, which once lagged behind in developing supercomputers, has now gained momentum. Supercomputers of Russian manufacture are already operating in a number of Russian industrial enterprises. The RZD is obtaining them and Gazprom and Transneft are interested in them. Supercomputers can also be in demand abroad. “We have our own programming platforms that have been worked out for atomic weapons complex enterprises. We are currently

The all-purpose supercomputer is designed for a broad spectrum of engineering calculations and can be directly installed at an employee’s work station. The computer includes servers with 300 GB of RAM, a computing cluster with 1,248 computing kernels, and 5 TB total operating memory. The system uses the Linux OS. The supercomputer was initially created for using in the design of new nuclear power stations and optimising various processes in already existing power units. But with the help of such a powerful computing center it is also possible to perform other precise calculations. For example, one can calculate all of the parameters of a new passenger airliner, create a model of it, and test it in virtual flight that will absolutely correspond to reality. Thanks to supercomputer technologies, it is no

using these programmes ourselves actively,” says Rosatom’s CEO Sergey Kirienko. The first supercomputers of Russian manufacture made their debut in 2010. The Federal Nuclear Center in Sarov (VNIIEF) and Snezhinsk is engaged in producing them. Five years ago several models of personal supercomputers – for all-purpose and specialised use – were created there. Kirienko said that the company has always invested a lot great deal of money in developing its own supercomputers because of the impossibility of using foreign ones in the nuclear power industry. This goes for software as well as “iron.”

longer necessary to conduct expensive tests on the mock-ups and prototypes of any complex engineering creation – from the most modern and high-tech buildings in planning, for example, those to be built in seismically active

The ﬁrst supercomputers were manufactured in Russia in 2010. Since then, the demand is growing, specially in atomic industry. regions, to ocean platforms that extract and process oil. In this way, supercomputer calculations greatly reduces the time and expenditures needed for creating a new product. It also makes it possible to quickly change

the parameters and construction design “while in progress,” perfecting them and making them resistance to any negative influences. Research on powerful atmospheric conditions, for example, hurricanes or tornados, on containment and the external shell of a nuclear power station is conducted on supercomputers. The supercomputer programmes are being launched in developing countries as well. India has started the supercomputer programme National Supercomputing Mission (NSM): Building Capacity and Capability. Roastom perfects its own supercomputing technologies every year. “Back in 2011, Russian nuclear scientists built and used supercomputers at the petaflop level , and this means making it to the top ,” Alexander Uvarov, an expert.

Saving lives Rosatom’s science creates platforms not only for technical calculations but also for medical equipment that saves human lives. The NIIEFA Institute has created an apparatus applied during contact radiotherapy (brachytherapy) – the Agat Smart device. It works on the following principle: an isotope is supplied from a special column, which makes it possible to act on the tumor locally. It can take one, two or three sessions, depending on the severity of the tumor. In the Russian nuclear industry, there is currently a large programme for the development of isotopes for medical purposes for brachytherapy and creating radiopharmaceuticals.

DEFENCE: Package includes on-board communications and data transfer systems, says Konstantin Biryulin, Head of Russian delegation at Paris Air Show

Talks on for modernisation of Su-30MKI jets Russia and India are firming up contracts for joint programmes on development of FGFA and MTA RIBR

ussia and India are discussing comprehensive modernisation of the Su-30MKI fighters, Konstantin Biryulin, head of the Russian delegation, said at the 51st International Paris Air and Space Show. “Together with our Indian partners, we are now holding talks on the comprehensive modernisation of the Su-30MKI aircraft, which were delivered about 20 years ago,” Biryulin, the Deputy Director of the Federal Service for Military and Technical Cooperation, said. “The modernisation package would include on-board communications and data transfer systems, as well as

radar equipment of the Su-30MKI fighter jets. All of these systems will be modernised,” he said. According to Biryulin, Russia and India are preparing contracts for joint programmes involving development work on a fifth-generation fighter aircraft (FGFA) and a military transport multi-purpose aircraft (MTA). “The preliminary technical design stages for these aircraft have already been completed,” said Biryulin. “At present, negotiations are under way to conclude final contracts on research and development work for the creation of these aircraft,” the Russian delegation head said. Exploring Indonesia Market Biryulin also stated that Russia had

EPA/VOSTOCK-PHOTO

NIKOLAI GORSHKOV

the Su-35. These aircraft are currently being flown by the Russian Air Force, and have a good track record. In addition, the Indonesian Air Force already has experience in operating Sukhoi aircraft,” Biryulin noted.

A file photo of Su-30MKI aircraft, to be modernised for India. submitted tender documents to supply Su-35 aircraft to Indonesia. “The necessary documentation to participate in the Su-35 tender was submitted in accordance with the procedure established by our Indonesian partners,” he said. He added that the

Russian company Rosoboronexport OJSC is participating in the competition to supply new fighter jets to Indonesia. “During preliminary negotiations, the parties agreed that the most appropriate fighter jet for the country is

China Connection Russia is, however, not considering assembly of aircraft engines in China. Russia is not considering licensing the production of aviation engines for military aircraft in China, said the head of the Russian delegation at the Paris Air and Space Show. “Issues related to the licensed production of Russian military aircraft engines in China, were not discussed,” he clarified in response to a question from TASS about whether the FSMTC was considering an opportunity to build Russian military engines of the AL-type in China (for Sukhoi fighter jets) or RDtype (for JF-17/FC-1 fighters).

At the same time, Biryulin added that Chinese interest in Russian engines remains as strong as ever. “The Chinese side, with a certain periodicity, turns to Russia when it needs to purchase various types of engines, both to ensure the operation of previously supplied Russian-made aircraft, and for the production of its combat aircraft – the JF-17/FC-1 Thunder,” Biryulin said. Africa Calling “Countries on the African continent have shown an interest in acquiring weapons and military equipment produced in Russia, and in particular, modern aircraft such as the Su-30,” said Biryulin. Among the possible buyers of Russian aircraft, the Russian delegation mentioned Ethiopia, which currently operates Su-27 fighters. “Ethiopia has also expressed interest in the purchase of Russian military products. The armed forces of this country already operate weapons and military equipment that was manufactured in Russia,” he explained.

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

F |E |A |T |U |R |E WEDNESDAY JULY 1, 2015

CULTURE: From Moscow to Siberia, Yoga Day saw thousands of Russians perform asanas across the country and experience mental calm and wellness

Celebrating power and harmony of yoga

PRESS PHOTO (3)

It was one big yoga festival in Russia on June 21. Over 30,000 people across 80 cities practised yoga, testifying to its growing popularity

RIBR

ussia’s decision to co-sponsor the India-initiated United Nations Resolution to mark June 21 as International Yoga Day was hardly surprising since there has been a dramatic surge in its popularity in this country lately. The most famous practitioner of the Indian spiritual, physical and mental discipline is Prime Minister Dmitry Medvedev. During his presidency (2004-2008), yoga gained immense popularity in the country. The enthusiasm and love for yoga was all too visible in Russia on June 21. The Indian diplomatic missions in Russia partnered with regional governments, the Yoga Federation of Russia, socio-cultural organisations and Yoga centres to organise celebration across the country. Festive events were held in 80 cities of Russia, with over 30000 people practising yoga. Vladivostok had more than a thousand participants in its programme. The mayor of the Siberian city of Novosibirsk arranged for special zones to be set up in parks to hold yoga demonstrations. The biggest such event was organised in Moscow’s historic Sokolniki Park by the Embassy of India and the Yoga Federation of Russia. It hosted a

INTERVIEW

yoga demonstration that was visited by more than 2,500 people. India’s ambassador to Russia P.S. Raghavan inaugurated the event. He warmly welcomed the participants, many of whom came with little children, who then viewed the video message of Prime Minister Narendra Modi on a giant screen. Valeria, a renowned Russian singer and an avid yoga enthusiast, agreed to be the brand ambassador for yoga in the Russian Federation. A lot of special T-shirts with the IDY logo and yoga mats were given out to yoga afficionados in various locations, where IDY events were held. A publication in Russian and English on yoga was brought out, and 10000 copies as well as 10000 DVDs of the common yoga protocol were sent out across Russia. The yoga instructor of the Embassy of India, along with about a dozen other instructors, demonstrated Yoga asanas. It was curious to observe first a master class by an Indian yogin, which was conducted in a serene, meditative manner, followed by a Russian yoga teacher, who proceeded in a very rhythmical and energetic way. A brief history of yoga in Russia Russian fascination with yoga dates back to more than a hundred

years ago. Legendary theatre director Konstantin Stanislavsky famously included several yogic asanas (poses) into his Stanislavsky System as a means for developing attention and concentration. In 1971, Viktor Boyko, a Soviet construction engineer, became a strong follower of B.K.S. Iyengar at the young age of sixteen, and eight years later he translated a book written by his yoga guru. It wasn’t until the 1980s that the Soviet Ministry of Health sent PhD student Elena Fedotova to India to study yoga and visit various ashrams. She met Iyengar, whom she managed to invite to Russia. The rest is history. Yoga - a booming industry Over the last two decades, the number of yoga practitioners has increased ten-fold to more than a million. The Russian language version of Yoga Journal, which celebrated its tenth anniversary recently, estimates that 1.3 million practitioners spent close to $1 billion on the discipline last year. Moscow, whose only options at the start of the millennium were a studio of Iyengar Yoga and Ashtanga Yoga, along with classes at the Indian Embassy’s Jawaharlal Nehru Cultural Centre, now has 268 yoga studios, according to Yoga Journal.

INTERVIEW

DR. SURESH BABU

The right way to ﬁght mental stress Dr. Suresh Babu says more Russians are turning to yoga to cope with lifestyle-related diseases. ELENA KROVVIDI

In Russia, people often turn to Yoga to cope with lifestyle diseases like back pain, diseases from sitting or standing for a long time, arthritis, muscle stiffness, joint stiffness. Also, Yoga can help minimise the effect of stress-related ailments that are prevalent in Russia nowadays such as insomnia, some cardiac problems.

RIBR

o mark the first national ‘Day of Yoga’ in Russia, RIR spoke to Dr. Suresh Babu, practitioner of Hatha Yoga and eminent Yoga teacher at Moscow’s Jawaharlal Nehru Cultural Centre. The Indian guru has held master classes on various aspects of traditional Yoga practices in many cities across the Russian Federation. PRESS PHOTO

ALYONA LININSKAYA

Day of Yoga celebration at Moscow’s Sokolniki park was the biggest festive activity in Russia, with more than 2,500 people present despite early start and light drizzle. Indian Ambassador P.S.Raghavan (in the middle) inaugurated the event.

How popular is yoga in Russia? In most parts of Russia, majorly in big cities, yoga has become a part of daily activities of people. I gave yoga master classes in cities like Kazan, Ufa, Krasnodar and Tula, through the Embassy. Once you feel a taste of yoga, you can’t escape it. In Russia most people practise Hatha yoga. I often combine elements of different yoga practices in my classes.

What diseases are wide-spread in Russia, and how can Yoga help cure them?

Do you think there is a difference between Russian and Indian yoga teachers? Russian teachers mostly focus on Hatha yoga, do more asanas etc. Russians often have good flexibility and power. Being an Indian yoga teacher, I am more into teaching, breathing and relaxation techniques. Do you think it’s difficult for Russians to practise yoga because of the lifestyle differences? Yoga brings harmony and discipline.; It helps to adapt to any kind of situation. For example, I came from India and yoga helped me to adapt to the Russian climate. How can awareness of yoga be raised in Russia? Holding master classes in different Russian cities is a good way. We are trying to spread that awareness through the Embassy.

MOVIE: Wins 4 prizes at Mumbai ﬁlm festival

DR. MOHAMMED ALI

‘Battalion’ strikes a chord in India

Ayurveda carves a niche in Russia

Russian film depicts heroism of first Russian Women’s Battalion of Death during World War I.

Unlike Europe where people prefer antibiotics, Ayurveda is becoming popular with Russians

SERGEY PETROV RIBR

yurveda, the centuries-old system of holistic medicine in India, is rapidly becoming popular in Russia. It’s no longer an exotic choice. Now, the number of health-conscious Russian patients who prefer herbal medicines, oils and massages as ways of treatment and crave for attention that they don’t get in modern hospitals is on the rise. In this interview with RIBR, Dr. Mohammed Ali, head of the Ayurveda “Kerala” clinic in Moscow, shares his views on the current state of Ayurveda in Russia and speaks about his medical practice in the country. Have you noticed a change among people using Ayurveda over the past few years? Ayurveda is becoming increasingly well-known; more people recognise the word “Ayurveda.” I came to Moscow 18 years ago, when people barely knew about it, and I had to explain to them what Indian herbal remedies were and that there were no chemicals in them. This is no longer necessary anymore since people know what it is: it was suggested in Goa

Has the financial crisis affected your business? We are not suffering overly much from the crisis for two reasons: firstly, the more expensive, luxury clinics are hit harder than ours – we have a more loyal price category, so maybe that’s why we do not feel the effect of the difficult economic situation so strongly. In addition, saving money on their health is the last thing people will do. Secondly, there are even some advantages in the current situation: people have started to leave the country less; they stay in Moscow but don’t want to sit in the house, so they come here for a massage. I have not noticed a decrease in the number of clients. We tried not to raise prices much when the rate changed; we stayed consistent. Those who have savings in dollars or euros now pay less. So, we have not suffered. How many clients do you get per month? I can say that we have 20,000 clients. We opened seven years ago. How do you assess the market in Russia, compared with other markets?

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Kerala to Moscow... Dr. Mohammed Ali, head of the Ayurveda “Kerala” clinic in Moscow, has worked in Russia for over 15 years. He graduated with Ayurveda BAMS certiﬁcate from the prestigious Ayurvedic institute in Kottakal, Kerala. He treated the 1988 Chernobyl nuclear tragedy victims suffering from radiation. Dr Ali got Doctor’s degree and postgraduation at the Russian People’s Friendship University.

On an average, if you compare it with Europe, people know a lot more about Ayurveda here. In Europe they are more careful. People here trust it more, 100%. Such clinics as we have, where there are so many employees, such conditions, such a level as can be found in the best Indian clinics do not exist anywhere in Europe. In Europe, clinics are usually something like massage salons where the word “Ayurveda” is not even used. In

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Russia though, people know about Ayurveda and respect it. They accept it not as some kind of mystical thing but as a centuries-old Indian medicinal system. And business in this sphere, it seems to me, is much better to build here. In Russia, it is possible to study Ayurveda, at PFUR. How do you assess the level of Ayurvedic instruction in Russia? It is very good that Ayurveda is being taught in Russia. But in order to become a doctor, it is not enough. In India, Ayurvedic medicine is a fullscale parallel medical system from the first course to the last and in six years one must study Ayurveda alongside modern medicine and pass a course in Ayurvedic anatomy, psychology, and pharmacology. It is also necessary to go through practical training in a hospital that only uses Ayurvedic medicines and procedures. This is difficult here. If there will be a complete five- or sixyear Ayurvedic education in Russia some day, then there will be more positive developments in Ayurveda, but there is still a lot of work to be done.

utting across borders, the Russian film about the exploits of the 1st Russian Women’s Battalion of Death has struck a chord in India. When the revolution took place in Russia during the third year of the WWI, the country faced a political crisis leading to the collapse of the Russian Army. The Provisional Government made an unprecedented decision to create a women’s battalion, under the command of Mariya Bochkareva, to challenge men to defend the Motherland. The women served beyond all expectations, setting an example of courage and self-sacrifice. The movie won four prizes at the Mumbai International Film Festival this year for best film, lead female role (Mariya Aronova), script and editing. “Once again the world has acknowledged the greatness of Russia’s acting tradition. Mariya Aronova performed brilliantly in this fateful role! In making ‘Battalion’, we hoped that the movie would be understood by viewers from around the world. After all, for all of us, despite language and culture, the idea of women and war is incompatible,” said producer Igor Ugolnikov. He stressed that it was “a pleasant surprise that Indians could experience

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RIBR

somewhere; somewhere in Europe they had a consultation. There is more confidence in Ayurveda now.

PHOTOXPRESS

ELENA KROVVIDI

the subtleties of the film. In China, for example, the story appears to have been too complicated. “ “Russia has always had a strong interest in Indian culture and in Indian cinematography. It is particularly nice that the film was so well received at the Mumbai film festival. I will secretly tell you that I really hope that someday I will make a film with my favourite actress, Aishwarya Rai,” Ugolnikov said. Battalion, directed by Dmitriy Meskhiev, was released in Russia on February 20, 2015. The film had a budget of $10 million and has already made $7.5 million in the movie theatres. Before Mumbai, it won awards at the Russian film festival Vivat, Kino Rossii (Vivat Russian Film) and The Honolulu Film Awards in Honolulu. Ugolnikov was also awarded the gold medal at the ‘Dvoryansky Mir’ film festival for loyalty to military-patriotic themes on the Russian silver screen.

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