A. D. BONDARENKO

Post-graduate student of MGIMO (U) of the Ministry of Foreign Affairs of Russia

Russia Keywords:, India, bilateral relations, economy, innovations, Technopromexport, Power Machines, KAMAZ, Sistema

Since India's independence, trade and economic relations with our country have been based on intergovernmental cooperation agreements, centralized payments in Indian rupees, and financing from Soviet and then Russian government loans provided to India.

The main focus of the loan was military-technical cooperation, as well as assistance in establishing basic enterprises of Indian metallurgy, heavy engineering and energy. The loans were repaid through the supply of agricultural crops from India.

In 1987, the parties signed a Comprehensive long-term program of cooperation in the field of science and technology. In 1988, an agreement was signed on the construction of the Kudankulam nuclear power plant, and its first power unit is to be commissioned by the end of ^2013.1

Russian-Indian economic relations continued to develop successfully for some time after the collapse of the USSR. The first document regulating relations between the new state, the Russian Federation and the Republic of India, was the Treaty of Friendship and Cooperation signed ⁱⁿ January 1993.2 The internal events of the 90s caused our country to abandon the role of the main partner of India.

It was possible to turn the situation in a positive direction as a result of the state visit of Russian President Vladimir Putin to India in October 2000, during which the Declaration on Strategic Partnership between our country and the Republic of India was signed.³ Since that time, high-level meetings have become annual. ⁴ Mechanisms for regular contacts in the political field and interaction in trade, economic, scientific, technical and cultural fields, as well as in the field of military-technical cooperation have been developed and established.

Due to the growth of the Russian economy, many of our companies have set their sights abroad, including on the market with more than a billion consumers.⁵ The number of Russian companies seeking to enter India is steadily growing, which is reflected in the growth of trade turnover, ⁶ from $5.3 billion in 2007 to $11 billion. In ^{2012.7 Initially, these were the" successors " of} Soviet enterprises that built large industrial facilities in India. Subsequently, new companies appeared-creators and carriers of modern technologies, which India is interested in implementing.

Whereas during the Soviet era, industrialists from our country could count on official or tacit most-favored-nation treatment and support, in the twenty-first century they had to face a new generation of Indian bureaucracy, as well as serious competitors - both national and foreign. Many of our entrepreneurs were not ready for the new rules of the game on the "Indian field".

Let's analyze several problematic situations that Russian companies find themselves in on the Indian market. The most typical questions are those that Technopromexport and Power Machines have raised in the course of their interaction with the National Thermal Power Corporation of India (NTPC Ltd.).

TECHPROMEXPORT AND POWER MACHINES

Contracts for the design, supply of equipment, installation, commissioning and commissioning of the Sipat and Bar thermal power plants (TPPs) with a total capacity of 3,960 MW were signed between NTPC and the above-mentioned Russian implementing companies, respectively, back in May 2004 and March 2005."Sipat was negotiated in the amount of $250 million, TPP " Bar " - about $270 million ⁸. However, the implementation of projects that seem to have been comprehensively reviewed and secured by relevant agreements has been unacceptably delayed.⁹

NTPC showed too strict (from the position of the Russian side) approach to the approval of" candidates " of subcontractor companies, as well as unjustifiably high technical requirements for the equipment that Russian companies were supposed to use.

put it in India. There were discrepancies in the interpretation of the provisions of international standards, determining the terms of procedures for reviewing and approving documentation. During the time that all these issues were resolved, the global market for energy equipment, materials and services, of course, has undergone major changes. Which, in turn, entailed not only the postponement of project implementation deadlines, but also a significant excess of contract execution costs. As a result, there are circumstances in which the costs stipulated in the original agreements with NTPC do not cover the losses of the Russian company under both contracts.

During the negotiations, the Indian state corporation agreed to meet the requirements of Power Machines for the Si-pat thermal power plant project, since all work there was completed by 90%. However, NTPC refused to discuss the progress of the Bar TPP project until the problematic issues with JSC Technopromexport, which supplies boiler equipment for this thermal power plant, are resolved.

Here the situation turned out to be more complicated. FSUE VO Technopromexport, which in March 2005 signed contracts with NTPC for the construction of a "turnkey "" boiler island "TPP" Bar " (3 x 660 MW) in the state of Bihar with a total cost of $456 million, in 2006 changed its ownership form, becoming a joint-stock company. But NTPC refused to recognize the change in the status of the Russian enterprise for a whole year, which caused the" contracted " cost of equipment and work to increase by $200 million.¹⁰ Then NTPC refused to compensate for the additional costs associated with the delay in the execution of the contract (caused solely by the fault of the Indian side). There was also a refusal to compensate for the costs associated with a significant increase in prices for fuel, metals, materials and tariffs for cargo transportation on world markets.

The issue was repeatedly raised to a high and even the highest level. As a result of negotiations between the energy Ministers of the two countries and at a meeting of the Russian-Indian Intergovernmental Commission held in 2008, the Indian side agreed to continue resolving the issue of compensation and a new contract execution schedule.

According to the calculations of Techno-Promexport, the amount of compensation should be about $35 million ¹¹. After several rounds of negotiations, NTPC agreed to a three-year extension of the contracts, but agreed to increase their value by only $165 million. Only in 2010, after the direct intervention of the then Prime Minister of the Russian Federation, Vladimir Putin, was it possible to convince the Indians ^of India to finally settle this issue. As a result, NTPC representatives signed a protocol extending the contract implementation period until 2014.

JSC "KAMAZ"

In April 2009, together with its Indian partner, the Vectra Group, a joint venture was established for the production of heavy-duty vehicles "KAMAZ" ¹³. The site for the production of Russian cars was the plant of the Indian partner, located in Hosur, Tamil Nadu. According to Indian legislation, the controlling stake, in this case, should be 51% owned by a foreign investor, i.e. KAMAZ OJSC, and the remaining 49%, as expected, will be under the control of the Indian partner - the Vectra Group. This enterprise will be able to produce up to 5 thousand trucks per year14. In addition to assembly, the company had to deal with their sale and after-sales maintenance.

According to the press service of the plant, the share of Indian components in each car should be at least 30%, and in the future this share will be increased to 80%. In the shortest possible time, a dealer network was created covering the territories of not only India, but also neighboring Bhutan. According to the plans of the plant's management, by 2015 the enterprise should reach its design capacity of ¹⁵.

However, these plans had to be adjusted already in early 2012, when the Indian plant was completely paralyzed by an illegal strike. ¹⁶ The fact is that the production of Russian cars was deployed on the site previously occupied by the Czech company Tatra, which by then had curtailed its activities in India. Local trade unions demanded to hire some of the workers previously dismissed by Czech employers. This requirement was met by the management of the Russian-Indian joint venture. Soon, another group of local residents also demanded to enroll them in the staff of the new enterprise. Having been refused, the Indians broke into the factory and began to interfere with the process of assembling cars.

The problem was resolved only at the end of May 2012 after the intervention of Russian diplomats, as well as several court decisions that affected local authorities. But it is still not clear how soon the company's operations will be fully restored, which for almost six months suffered losses due to the inaction of the police and state authorities.

SISTEMA AFK

Sistema Shyam Teleser-vices Ltd (SSTL), a mobile operator operating under the MTS India brand, has been operating in India for several years. Initially, the announced investment volume of the Russian side was $5.5 billion, which was to be invested over 7 years ¹⁷. In 2011, the joint venture's shareholders included the Russian government represented by Rosimushchestvo, which purchased 17.14% of SSTL's shares with a total value of $600 million.¹⁸ Based on the results of the company's activities, it was planned to launch an IPO (free sale of shares) with the aim of raising up to $300 million ¹".

However, in February 2012, the Supreme Court of India announced the revocation of 122 licenses for pre-employment services.-

The number of 2G cellular service providers in the entire country issued after January 1, 2008,20 21 out of ²² SSTL licenses were revoked. According to the judges, these frequency resources were issued by the previous Minister of Communications and Telecommunications A. Raja, who was arrested and imprisoned, in violation of the established procedure. According to investigators, the damage caused to the state as a result of the activities of an unscrupulous official was estimated at $101 million.²¹ The court opinion noted that all the affected companies are not major market players and only 5% of mobile service users will suffer from the termination of their activities.

If at the beginning of the trial, the heads of key ministries supported the Supreme Court's decision, then later they revised their position. In March 2012, the Government of India filed a "limited complaint"²² with the highest judicial instance, challenging the revocation of licenses from mobile market players. In May 2012, a request from the President ^of India23 was also sent with a request to formulate a legal opinion for further legal regulation of the country's telecommunications industry. In response, the Supreme Court ordered the Government of India to hold an auction for the distribution of radio frequency licenses until August ³¹, 201224.

Sistema, in turn, has taken a number of legal measures to protect its interests.²⁵ In particular, the Supreme Court's decisions on suspension of licenses were appealed, which, however, were rejected.

It should also be noted that this issue was raised by Russian officials at meetings with their Indian counterparts. In March 2012, Russian President Dmitry Medvedev discussed this issue with Indian Prime Minister M. Singh. It was noted, in particular, that if a Russian company is unable to participate in the auction, Sistema may file a claim against the Indian government demanding the return of the amount invested in India on the basis of the existing bilateral agreement of 1993 "On the Promotion and Mutual Protection of Investments" ²⁶.

In March 2013, following the decision of the Indian government to reduce the starting prices for frequency resources, SSTL took part in an auction for their acquisition. This step was preceded by her analysis of the development of the Indian mobile services market and its prospects. As a result, the company decided to stay in 9 of the 22 districts of ²⁷ countries to ensure the maximum financial result and the optimal return on investment scenario.

Despite the relatively successful resolution of the dispute in the telecommunications sector of India, the situation has become a serious signal for foreign investors. Many of them are reviewing their plans to enter this market due to changes in the investment climate, open lobbying of interests of groups of local industrial holdings, protectionism policies and a vague program of actions of the country's leadership in this area.

* * *

India has emerged as a major player on the global stage in recent years, performing brilliantly against the backdrop of a global recession. However, the results achieved can be quickly "dispersed" by the wrong steps of the government.

¹ http://timesofindia.indiatimes.com/india/Kudankulam-nuclear-plant-to-attain-criticality-by-mid night-tonight/articleshow/2105 8107.cms

² Treaty of Friendship and Cooperation between the Russian Federation and the Republic of India. New Delhi, January 28, 1993 // LexPro Expert Legal System Website - http://open.lexpro.ru/ document/237808#l

³ Declaration on Strategic Partnership between the Russian Federation and the Republic of India. New Delhi, October 3, 2000 / / Website of the President of the Russian Federation - http://archive.kremlin.ru/ text/docs/2000/10/80628.shtml

⁴ http://rusembassy.in/index.php?option-com_alphacontent&view =alphacontent&Itemid-171 〈=en

⁵ Russian-Indian trade and Economic Cooperation / / Website of the Russian Foreign Ministry - http://www.mid.ru/bdomp/ns-rasia.nsf/ 1083B7937ae580ae432569e7004199c2/9b5323fe8b738008442579570033 b5d2!OpenDocument

⁶ http://www.mea.gov.in/Portal/ForeignRelation/Russia_unclassi-fied bilateral_brief_January_2013.pdf

⁷ http://www.rustrade.in/rus_downloads/Cooperation/2012 - 03-05_Trade%20goods.pdf

⁸ http://indscan.in/powertracker/ntpcs-sipat-stpp-stage-iii-project/

⁹ Vedomosti. 10.11.2010 - http://www.vedomosti.ru/newspaper/ article/24921 l/indijskij_mir

¹⁰ http://www.livemint.com/Home-Page/ZbWpy2ql3o0jIEOhR rX2eI/NTPC-extracts-firm-closure-deadlines-from-Russian-firms.html

¹¹ http://www.vegaslex.ru/text/34695

¹² http://www.kommersant.ru/doc/1563944

¹³ Russia Today. 25.02.2010 - http://rt.com/business/kamaz-india-trucks-production/

¹⁴ http://articles.economictimes.indiatimes.com/2010 - 08 - 04/news/ 27611880_l_heavy-duty-trucks-assembly-unit-hosur-plant

¹⁵ http://automotivehorizon.sulekha.com/kamaz-vectra-plans-to-invest-60-million-in-india_newsitem_ 894

¹⁶ http://www.sify.com/finance/kamaz-vectra-hosur-plant-shut-down-news-default-kd3sacajfaa.html

¹⁷ http://www.medianama.com/2009/03/223-goodbye-rainbow-shyam-sistema-to-announce-mts-launc h-in-chennai-tomorrow/

¹⁸ http://www.kommersant.ru/doc/1611738

¹⁹ http://www.livemint.com/Money/Gq5SXusAOTexigZqy7A2e M/Sistema-Shyam-may-launch-IPO-this-year.html

²⁰ http://www.thehindu.com/news/national/supreme-court-scraps-upas-illegal-2g-sale/article2853159. ece

²¹ http://www.thehindu.com/news/national/cbi-intensifies-probe-into-2g-allocation-during-nda-regime /article2868941.ece? ref-relatedNews

²² http://timesofindia.indiatimes.com/topic/Government-Review-Petition-on-2G-verdict

²³ http://www.thehindu.com/news/national/sc-to-give-opinion-on-2g-presidential-reference-on-thursda y/article3939264.ece

²⁴ http://www.medianama.com/2013/01/223 - 2g-scam-revoked-li-censes-extension/

²⁵ http://articles.economictimes.indiatimes.com/2012 - 03 - 26/news/ 31240490_l_brics-summit-sstl-sistema-shyam-teleservices

²⁶ http://www.thehindu.com/news/international/medvedev-to-take-up-sistema-with-manmohan/article 3207081 .ece

²⁷ http://www.thehindu.com/business/sistema-bags-spectrum-in-eight-circles-for-rs3639-crore/article4 496571.ece

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