Russia and India Business Report by Russia Beyond

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WEDNESDAY OCTOBER 7, 2015

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

DIPLOMACY: Moscow rules out ground troop operations in Syria, not to join US-led coalition against IS

STATISTICS

Russia’s Syria Gamble: Will the new air strike strategy work?

Ruble/Rupee to dollar rates

Russia’s decision to launch preemptive air strikes against the Islamic State militants in Syria is aimed at stemming the tide of radicalism. The move also seeks to bolster the position of the Assad government against terrorists SERGEY PETROV RIBR

TASS

High stakes: Russian Sukhoi Su-34 strike fighter at Syria’s Hmeimim airport duration of the Syrian Army’s offensive operations.” In a press conference in New York last week, Russian Foreign Minister Sergei Lavrov said that Russia is fighting in Syria not only against the ISIS, but also against other terrorist groups like the al-Nusra Front, a wing of Al-Qaeda. After the first airstrikes were carried out, Russian authorities flatly denied reports

appearing in some media that these strikes were not directed against the IS, but against “moderate” opposition forces that are trying to oust Assad, and that during these air raids civilians were killed. US Defence Secretary Ashton Carter has alleged that Russia’s bombing was carried out in areas where there were no Islamist militants from the ISIS, and added that the Kremlin’s strategy in the region “was doomed to failure”.

Stock market index in India and Russia

What Russians think of Moscow’s role in Syria

ALYONA REPKINA

ussia officially became involved in the Syrian conflict from September 30. Shortly after receiving approval from the Federation Council to use the country’s armed forces abroad, Russian aircraft struck the first blow against Islamist terrorists. Moscow contends that Syrian President Bashar al-Assad had requested the Russian military contingent, thus making them the only foreign armed forces legally based in Syria. The campaign is a preemptive strike”, designed to stem the spreading tide of Islamic extremism in Syria and is aimed at supporting a legitimate government in its fight against terrorists from the Islamic State (IS), an organisation banned in Russia. At the same time, Moscow has no intentions of joining the US-led coalition against the IS, under the current circumstances. “There should be in place either consent of the government of the territory where the armed forces are to be used, or there should be a UN Security Council mandate to use foreign troops. With regard to Syria, the US-led coalition has fulfilled neither of these legal requirements. Thus, they are in flagrant violation of international law,” said Russian Foreign Ministry spokesperson Ilya Rogachev. Moscow has placed clear limits on the country’s involvement – there will be no Russian ground troop operations in Syria. “We certainly are not going to plunge into a conflict, as they say – head first. Our activities will be implemented strictly within the defined framework,” President Vladimir Putin said at a meeting with members of the government. According to him, the air operations are “limited in time – for the

Rebutting the allegation, Putin said that reports of civilian deaths were an “information attack”, and stressed that these began coming out even before the strikes were actually carried out. Operations against the IS were planned a long time ago, and were jointly approved in negotiations between Russia’s Ministers of Defense and Foreign Affairs and the UStes, noted Sergei Karaganov, Dean of the Faculty of World Economy and International Affairs at the School of Economics. The meeting between US President Barack Obama and Putin in New York was the final step. The Kremlin’s new international project pursues both strategic and tactical goals, say experts. The strategic part consists in an attempt to come out of isolation, with a view to reclaiming its role as a key player in world politics. As for tactical objectives, by engaging in a joint struggle against the IS, Russia hopes to soften the sanctions imposed against it. In addition, Moscow also intends to strengthen the position of Assad, as well as demonstrate to voters a foreign policy success. Vladimir Yevseyev, an expert, believes that attacks by the Russian Air Force against IS positions will be more effective than those hitherto carried out by the proWestern coalition. Air attacks should support ground operations of the Syrian Army and its allies – Iranian and Iraqi troops. The purpose of these operations is to take back about half of the country’s territory and then organise Geneva-3 Talks, that is, new negotiations with the moderate opposition. In Moscow, they all too well understand that there is a risk of Russia becoming bogged down in the Syrian quagmire and Moscow’s entry into the Syrian war raises the risk levels for all participants in the conflict.

GEOPOLITICS: Syria crisis vindicates Russia’s position on Middle East crisis

Putin declares war on IS, hegemonic powers Putin’s UN speech and meeting with Obama underlined the need for remaking global order

REUTERS

ANDREI KOROBKOV Special to Russia Direct

he speech of Russian President Vladimir Putin to the UN General Assembly on September 28, with its mention of a broad-based coalition to take on the Islamic State of Iraq and the Greater Syria (ISIS), attracted a lot of media attention for the impact that it might have on global security. Once again, he laid out Russia’s concerns over the NATO expansion, the increasing influence of radical Islamist organisations, and the crisis of the international system founded after World War II. Putin also warned against what he describes as the hegemonic influence of certain powers (implying the US) and reiterated the reasons for Russia’s policy in Ukraine, such as the power vacuum that emerged after the collapse of the USSR and NATO’s expansion eastward. Some see Putin’s speech at the UN and his meeting with President Barack Obama in New York as a political victory, marking his triumphant “return” to the world’s political arena after a period of 10 years in which he did not address the UN General Assembly. However, this is not about Putin’s

triumphant return. The fact is that both Russia and the West view the world as a vast Eurocentric playground. This system, which dominated the world in the post-war era, is now unravelling before our very eyes. Therefore, just because the West “excluded” Putin for a while does not mean that he “left” world politics; on the contrary, in Russia his prestige and influence in the last two years have grown significantly, especially in the so-called Global South. Meanwhile, the US is beginning to understand that 45 years of supporting groups hostile to the regime of Syrian President Bashar Assad has not only failed, but facilitated the rise of movements far more aggressively inclined toward the West. In recent days the situation has been exacerbated by information leaked to the press about huge sums of money spent on training fighters from Syria’s “democratic opposition” – first the news that most of the trained group immediately switched allegiance to ISIS, and then that around USD500 million had gone on training another such unit consisting of five (!) soldiers. So it is not just a matter of total disarray and the lack of any clear concept in Syria, but of manifest large-scale cor-

ruption. Therefore, we must recognise the fact that the Assad regime is a far lesser evil than either the ISIS or the total collapse of the Syrian state. It is a bitter pill for the West to swallow, since it vindicates the Russian president and underscores the importance of Russia in settling the Middle East crisis. Incidentally, the process of rethinking the US policy in the Middle East began much earlier, in the first years of Obama’s presidency, the culmination of which was the signing of an agreement on Iran and the de facto recognition of the failure of the previous tactic and the need for coordinated action against the common enemy in the form of Sunni fundamentalism. Will this lead to compromise in other areas, including Ukraine? Yes, and no. A Middle East agreement per se will not cause such a shift. But the overall dynamics of the conflict are certainly pushing the West in that direction. There are at least three factors nudging the West toward a possible compromise. First, European leaders are horrified at the migration flows from the Middle East and do not want to encounter an even larger exodus out of Ukraine. Second, the ineffectiveness of the Ukrainian army is by now well understood. Third, there is growing irritation in the West over the lack of real reform and the growing corruption in Ukraine. These factors could indeed help bring about some progress. However, the unfolding 2016 US presidential campaign makes any concessions to Moscow very risky for Obama, who is already portrayed as having ceded the strategic upper hand to Putin in the Middle East. This year’s meeting of the UN, already important because of the 70th anniversary milestone, has taken on an even greater meaning now that we have seen Putin and Obama outline their views of the future in such stark contrast.

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

E |C |O |N |O |M |Y WEDNESDAY OCTOBER 7, 2015

BUSINESS: Competition intensiﬁes in telecom sector with Tele2’s push in Moscow posing challenge to Russia’s top three operators

NEWS

Brave new world for tech ﬁrms: Russia plans to offer tax breaks AFP/EASTNEWS

Bajaj Auto has begun exporting its popular Pulsar range of motorcycles to Russia. A few containers have been already shipped. The Pune-based manufacturer is the second Indian company after Royal Enﬁeld to export two-wheelers to the growing Russian market. Bajaj has appointed a local partner that will be distributing the bikes across the country. RIBR

Tax incentives will attract more funds and shore up high-tech sector amid economic downturn ALEXEY LOSSAN RIBR

ussia plans to offer tax incentives to portfolio investors trading in stocks of technology firms in a bid to help the sector attract funds and expand. The move comes as Russia’s Technology, Media and Telecommunications (TMT) industry enters a new stage of development. Telecom firms are battling market saturation and a festering recession, spurring competition for clients and the market share. Meanwhile, internet connectivity has expanded considerably throughout the country, creating new horizons for technology startups and e-commerce. The result is a brave new world of challenges and opportunities for Russian tech firms. Now the Cabinet is prepping plans to eliminate the capital gains tax on income from the sale of securities traded in the innovation and investment market sector of the Moscow Exchange, the Cabinet’s press services said. Deputy Economic Development Minister Oleg Fomichev told Vedomosti newspaper that benefits would apply to both legal entities and to individuals, and would stay in effect until the end of 2022. In order to get the benefit, the investor must own the securities for at least one year. Prime Minister Dmitry Medvedev told a cabinet meeting that innovative companies attract investors’ money by issuing securities for the period of their projects – for one or two years. According to the Moscow Stock Exchange, benefits will be extended to the shares of 29 issuers, including the state-owned technology investment corporation Rusnano. “In spite of the

Army chiefs discuss terror, training, Indra-2015 exercise Chief of the Russian Ground Forces, Colonel-General Oleg Salyukov, held talks with India’s Chief of Army Staff General Dalbir Singh and “discussed issues involving reformation of the Ground Forces of Russia and India, the methods of combating terrorist threats, weapons modernisation, and the development of combat training systems,” said a statement. They also discussed the the Indra-2015 – that will be held in India this November.

India to launch BrahMos missiles from Su-30MKI The Indian Armed Forces will launch a BrahMos supersonic cruise missile, jointly developed by India and Russia, from a Sukhoi Su-30MKI ﬁghter this fall, an Indian Defence Ministry source said.“The ﬁrst stage of the missile test will start at the end of October — beginning of November,” the military source told RIA Novosti. He added that testing of the missile will take place in four stages. RIBR

It’s comeback time: Indian producers set to stir Russian tea pot

Russia to replicate visa-free group tourism for Indians

Indian tea-producers are firming up strategy to regain their share in the Russian market DADAN UPADHYAY RIBR NIKOLAY KOROLYOFF

Rostourism is working on a visa-free exchange plan for tourist groups between Russia and India, Valery Korovkin, representative of the Federal Agency for Tourism, said. The visafree exchange programme between Russia and China forms the basis for the new project. But the minimum number of members in the group from India will be reduced to three (for China, a visa-free group must comprise at least ﬁve people). RIBR

Igor Butman to enthrall India with blind musicians © RUSLAN KRIVOBOK / RIA NOVOSTI

The famed Russian jazz maestro Igor Butman will perform with his band in India this month He will participate in an international jazz festival ‘Jus’ Jazz 2015’ across Goa, Mumbai and Delhi with his quartet, featuring the visually challenged Oleg Akkuratov. His performance will take place in Delhi on October 7-8. RIBR

economic downturn, the activity of mobile phone and mobile Internet users continues to grow rapidly,” Hedge. pro’s Managing Director Ilya Buturlin told RIBR. Meanwhile, competition in Russia’s telecom sector is set to heat up further still amid an aggressive push by telecom operator Tele2 into the capital city, Moscow, in October. The move poses a challenge to the country’s big three telecom firms: MTS, MegaFon and VimpelCom. “The operator will offer easy-to-understand tariffs at low prices and without any hidden conditions to residents of Moscow and Moscow Region,” Tele2 said. The Tele2 brand is still being used for mobile services in Russia despite the exit of its previous owner, Sweden’s Tele2, from the market last year. The telco serves 14 percent of the 242.3 million mobile subscribers in Russia as of the end of June, according to experts. Most Russian companies in the telecommunications industry show steady growth. In particular, the proceeds of Russia’s most popular social network VKontakte surged in the second quarter of 2015 by 41.4 percent and reached 1.4 billion rubles ($21.17 billion). The company has said its growth is mainly due to the development of mobile and video advertising. According to recent reports, the revenue of T2 RTK Holding (the firm operating the brand Tele2) increased by 7.1 percent year-on-year in the second quarter of 2015 and amounted to 23.6 billion rubles ($357 million). “Tele2 shows good progress in the ‘new’ regions, the combined company’s positions are also strong in the key regions. But much will depend on how well the new operator will be able to

n Indian delegation comprising 11 major tea producers and three distributors visited Moscow in September to meet buyers at the World Food Exhibition-2015. It was the tea delegation’s second visit this year after a trip in February, coinciding with “Prodexpo-2015.” Sujit Patra, additional secretary of the Indian Tea Association, led this delegation which underlined India’s strength, particularly in higher-value orthodox (hand-processed) tea over the more usual CTC (crush-tear-curl) tea. The Russian market has been a major consumer of Indian orthodox tea, but now has also taken to CTC in a big way. India exports around 208 million kg of tea annually, around a quarter of which went to Russia. However, recently India’s tea exports to Russia have fallen to 40 million kg. Indian tea exporters feel there is huge scope to bring it back at least to the previous level of 50 million kg. Russia imports around 160 million kg of tea annually. Russia is the world’s fourth largest tea consumer, and India is making a strong effort to tap this large market aggressively, after a gap of ten years. Indian tea exporters have been trying to woo the Russians to increase imports of tea from India as a balancing act following India’s slumping exports, mainly since the Iran payments crisis. They also now want to take advantage of the falling rupee against the dollar, as this will help the Indian tea exporters to raise their earnings. The task of bridging this gap will not be easy. A member of the Indian delegation told RIBR that producers and exporters in India face several problems which they must resolve to win back a large share of the Russian tea market. This includes very tough competition,

in terms of quality and lower pricing of tea from rivals, Sri Lanka and Kenya. Sri Lanka, a producer of the orthodox variety, and Kenya, a producer of CTC tea, have emerged as major exporters of tea to Russia. Tea producers from European countries, including “Ahmad Tea” and others, have also gained a place in the Russian market. In their talks in Russia, the Indian delegation discussed issues related to quality, pricing, packaging and shipment of tea to Russia. They also discussed trademark protection and Geographical Indicator (GI) tags given to Indian tea, including world-famous brands “Assam,” “Darjeeling” and “Nilgiris.” Russia has agreed to extend the benefit for registration of trademarks and GI for Indian tea as available to WTO member-countries. “I think the measures discussed during the meetings with our Russian counterparts and buyers will certainly help protect the quality of famous Indian tea brands and boost tea exports to Russia in the near future” said Patra. To avoid negative consequences of the sliding ruble, the Indian tea industry is also exploring possibilities to adopt the rupee-ruble trading mechanism for stepping exports to Russia. A joint working group of representatives from central banks of both countries is working on the issue. The Indian Tea Association asked the Indian Tea Board to seek an early resolution to this payment mechanism. An agreement could be signed during Prime Minister Narendra Modi’s Moscow visit for the annual Indo-Russian summit with President Vladimir Putin this December. Indian tea companies are also looking to revive tea exports to Russia by forming joint ventures with Russian counterparts to meet their warehousing needs, to pack and store tea under strict control.

GETTY IMAGES

Bajaj begins export of Pulsar range of bikes to Russia

The number of 4G subscribers in Russia increased by 9 percent in the second quarter of 2015

“We register the growing demand for mobile data services,” said Ivan Tavrin, head of mobile operator Megafon. compete with the big three in the ‘capitals’ – Moscow and St. Petersburg,” said UFS IC analyst Peter Dashkevich. The companies in the sector that showed negative returns have suffered mainly due to the collapse of the ruble. However, they have improved their basic indicators. Thus, the net profit of

the mobile operator MTS decreased by 19 percent year-on-year to 28 billion rubles ($423.4 million) in the first half of the year. However, MTS’ income increased between January and June by 3.3 percent to 202.9 billion rubles ($3.05 billion). MegaFon’s revenue from mobile services increased by 0.8 percent and amounted to 66.8 billion rubles ($1.01 billion) for the second quarter of 2015, compared to the same period last year. “We register a growing demand for mobile data services. Our optimal line of batch tariff plans contains an increased volume of mobile Internet, a wide variety of devices with support for 4G,” said MegaFon’s head Ivan Tavrin. He added that the

number of 4G subscribers increased by 9 percent in the second quarter of 2015. Undervalued Stocks Due to a range of factors, including international tensions and deprecating ruble, the shares of Russian firms currently trade at steep discounts to their international counterparts. Russian companies’ valuations are currently roughly between a third or half that of their foreign counterparts, he said. According Dashkevich, an additional risk for the Russian TMT companies is posed by the need for the purchase of equipment in foreign currency while having their earnings in rubles.

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

R |E |G |I |O |N WEDNESDAY OCTOBER 7, 2015

DEVELOPMENT: Moscow ﬁrms up plan to raise $977 million investment in 2015, and around $3.7 billion in 2016 for transforming the resource-rich region

Russia focuses on Far East opportunity Kremlin has launched ‘pivot to Asia’ policy to shore up Far East region, which borders China ALEXEY SERGEYEV RIBR

mid multi-billion dollar energy deals with China and worsening relations with western countries, Russia is in the midst of a massive reorientation of its foreign policy known as the “pivot to Asia.” Yet the domestic leg of this platform presents Russian policymakers with a tremendous challenge: the development of Russia’s vast Far East region, a landmass that is almost as big as the continental United States, but has a population roughly equal to that of Denmark. Russian officials fret that if left undeveloped and unattended, this enormous, sparsely-settled region could be swallowed up by an influx of immigrants and capital from Asia. The Russian Far East, with only six million inhabitants, shares a long border with China, which has a population of 1.4 billion. Officials have, therefore, forged a plan to spur the region’s development by funneling 3.5 trillion rubles (USD53 billion) to the Far East, with the goal to bring in 80 per cent of that figure from private investors and companies through specially-targeted incentives. The policy, ultimately, must be a balancing act for Russia: to use the Far East’s proximity to rising Asian markets as a means of attracting investors, while not allowing the region to be overrun by the expanding power of Pacific-Rim nations. “Financial flows are gradually moving away from the EU and the US and closer to the Asia-Pacific, since this region has all the required resources with next to no administrative barriers and is developing stronger trade ties with Russia, which is of immense importance for domestic investors,” said Anton Soroko, an analyst with Moscow’s Finam investment company. “Such ambitious plans of attracting private investment seem justified, given the serious prospects of the region,” said Dmitry Bedenkov, chief analyst at Russ-Invest Investment Company, The government aims to raise 64 billion rubles (usd977 million) of investment in 2015, and 243 billion rubles (USD3.71 billion) in 2016. The population of the Russian Far East has been falling rapidly. In 2015, for the first time in years, the Far East achieved natural population growth. Moreover, as Russian Prime Minister Dmitry Medvedev said during a cabinet meeting in May 2015, the region showed “growth rates that are much higher than anywhere else in Russia” in 2014, with a promising advance of

20 per cent in agriculture and five per cent in industrial production. Key issues Experts say infrastructure remains one of the major problems hampering the growth of the Far East. To resolve it, the government is aiming to direct some of the investment to the development of ports. In December 2014, President Vladimir Putin pledged to provide the region’s largest city, Vladivostok, with a free port status. This special status — which has previously helped Hong Kong and Singapore become major trade centers, and transformed the Chinese city of Shenzhen from a fishing village of 3,000 people into a vast metropolis with 15 million inhabitants — usually implies duty-free import of goods. But the measures will not focus exclusively on Vladivostok: according to Russia’s Association of Sea Commercial Ports, the ports of the Far East handled 135.3 million tonnes of goods in the first ten months of 2014, with the traffic reaching 12.9 million tonnes in Vladivostok alone. In order to attract the attention of investors, Russian authorities held an economic forum, the Eastern Economic Forum, in Vladivostok in September 2015. “Today, we see the future of the Far East as one of the key centers of social and economic development of the whole country which is to be effectively integrated into the fast-growing Asia-Pacific region as a whole,” the president said. The focus of everyone’s attention at the Forum was on a two-pronged strategy of the Russian government for boosting the economic development of Russia’s Far East. The first aspect was the establishment of advanced special economic zones in Eastern Russia. The second was the rebirth of free port Vladivostok, the so-called porto franco, with relaxed state regulations on customs, taxation and visa regime. More than 80 large investment contracts worth over 1.3 trillion rubles were finalised at the Forum. The largest projects signed at the forum included, among others, an agreement for construction of the Amur gas processing plant between Gazprom PJSC and the Ministry for Development of the Russian Far East, an agreement between RusHydro JSC and VTB Bank PJSC for refinancing of the debt of “Energy Systems of the East” RSJC, and a power engineering development cooperation agreement between Rosatom Group and the Government of Chukotka Autonomous Okrug and others.

ALYONA REPKINA

Special terms and speciﬁc zones for enhacing ﬂow of investment Advanced Development Territories will help Russia to build trade ties with Asian economies KIRA EGOROVA RIBR

ussia has established a new cabinet-level government agency — the Ministry for Development of the Russian Far East — which has come up with a proposal to carve out specific zones known as “Advanced Development Territories,” or ADTs, in several Far Eastern regions that will offer preferential conditions for investors. Firms established in ADTs will receive tax breaks for 5 to 10 years, pay reduced customs duties and will be entitled to a preferential income tax and value added tax (VAT) regime, officials say. “The ministry’s goal is to build an ecosystem for new investors,” said

But the ministry is also currently in talks with 10 foreign investors. Australia’s Tigers Realm Coal Ltd. (TIG) is planning to invest in the development of the Bering coal basin at the proposed Beringovsky ADT. Japanese company JGC Evergreen has already invested USD35 million in a greenhouse complex in the Khabarovsk ADT. Another Japanese investor, Sojitz, intends to build an international terminal at the Khabarovsk airport. Singapore’s Baoli Bitumina confirmed its intention to invest in the Khabarovsk ADT and build a high-tech plant for the production of bitumen. According to Tonkikh, the ministry is ready to sign an investment agreement worth USD100 million with Baoli by September 2015. Tonkikh added that a Samsung unit engaged in the assembly of automotive technologies will also eventually become a resident of one of the ADTs,

Ivan Tonkikh, the head of the Direct Investments Department of the ministry. The measures are part of an overarching attempt by Russia to build trade ties with Asian economies while developing its sparsely-populated Far East region. Under the current scheme, investors will be able to participate in an ADT only by opening a subsidiary that has partnered with the Russian Far East Development Corporation, the company managing the ADTs. Investors will then be permitted to hold up to 49 per cent share in this partnership. Firms from Australia, Japan, Singapore and South Korea are already showing interest. According to Mr. Tonkikh, a handful of anchor investors, all Russian companies, are already working in each ADT.

with USDfive million investment. “We expect that by the end of the year, there will be at least five foreign companies among the residents. We expect to see the full list of approved investors and a final work plan in two to three years,” Tonkikh said. In June, 2015 Russian Prime Minister Dmitry Medvedev launched the first three ADTs. The Khabarovsk and Komsomolsk ADTs are in the Khabarovsk Territory, while the Nadezhdinskaya ADT is in Primorye. Earlier this year, the government approved another six ADTs, which will be launched in the Far East soon. These zones will be formed in the Primorye Territory, Chukotka, Kamchatka, the Republic of Sakha (Yakutia) and the Amur Region. Russia would like to use the ADTs to make its Far Eastern region a transport and logistics hub. “We can offer logistics solutions to China, Japan and Korea, all of which have space constraints,” said Aleksey Chekunov, the head of the Far East Fund. The success of the ADT programme fully depends on the development of logistics and distribution facilities, according to experts in the region.

ENERGY: Driven by new oil pacts, India’s oil imports from Russia are projected to grow ﬁve-fold, which could lead to 50 per cent increase in bilateral trade

Target India: Rosneft set to oil and fuel economic ties Rosneft’s deals with Indian oil firms can make Russia a key player in India’s energy security VINOD KUMAR RIBR

PRESS PHOTO

ndia is set to loom high as an important strategic market for Russia. Until now, oil imports from Russia accounted for less than one per cent of total imports, but very soon this figure could instantly grow five-fold. In September during the Eastern Economic Forum, Rosneft and ONGC signed a contract for the sale of a 15 per cent stake in the Vankorneft Project, which will allow Indian companies to extract oil from the largest deposit ever discovered and placed into operation in Russia in the last 25 years. “This will give impetus to the devel-

opment of our partnership, and possibly cooperation on other large-scale oil and gas projects, involving exploration and extraction in the region,” said Igor Sechin, CEO of Rosneft, after the contract signing ceremony. In July, during the SCO Summit in Ufa, Rosneft and India’s Essar concluded a 10-year contract to supply 100 million tonnes of oil for further processing at a refinery in the Indian town of Vadinar. The Russian and Indian companies also signed an agreement on conditions of entry for Rosneft into the authorised capital of the owner of the refinery – Essar Oil Limited. Alexander Pasechnik, head of analytical department of the National Energy Security Fund (NESF), drew attention

Chairman of Rosneft Management Board Igor Sechin and Managing Director of ONGC Videsh Limited Narendra Verma to the entry of Rosneft into the charter capital of an oil refinery in Vadinar – with a 49 per cent stake. “Refinery facilities have high marginality, and India is a very promising growing market,”

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said the expert. Currently, the retailer Essar Oil Limited operates 1,600 gas stations. Rosneft and Essar are considering strengthening the capacity of the latter’s retail division. The parties

are also discussing plans to increase the capacity of the Vadinar Refinery, at which the company processes 20 million tonnes of oil annually. “Against the background of a possible economic slowdown in China, India comes to the fore, and is becoming a global engine of world economic development. Now this region is experiencing a new wave of industrialisation and urbanisation,” said Alexander Pasechnik. He stressed the long-term growth in the total number of gas-powered vehicles, the main consumers of the oil refining industry. During January-August 2015, the demand for hydrocarbons in India increased by sevenper cent. At the same time, India lacks sufficient resources of its own. In the coming years, oil production is expected to reach about 40 million tonnes per year (13 per cent of demand by 2030) and gas around 50 billion cubic me-

ters (43 per cent of demand in 2030). “The signed agreements are of a strategic nature. The implementation of the conditions in these signed documents will have a significant impact on the scale of economic cooperation between Russia and India. Bilateral trade will increase by more than 50per cent. thereby opening up broad prospects for the development of dialogue, both in profile as well as related industries,” said Sechin.

Well of opportunity Initial recoverable reserves in the Vankor Field, as of January 1, 2015, are estimated to be 476 million tonnes of oil and condensate, and 173 billion cubic meters of gas. The deposit has an area of 447 square kilometers.

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TECHNOLOGY: The app, which became popular during Hong Kong demonstrations, is now being used by over 5 million people

FireChat ignites a revolution: Moscow via Silicon Valley RIBR

hen thousands of protesters took to the streets in Hong Kong a year ago to demonstrate against restrictive new election rules, the crowds were so large that cell networks were soon overpowered. The protesters’ solution: FireChat, an off-the-grid smartphone app that links handsets together using the smartphone’s Bluetooth or Wi-Fi connectivity to create a mesh network of users within 60 meters of each other. The more users in a network, the better it works. During the Hong Kong demonstrations, FireChat was downloaded more than 100,000 times, putting it at the top of the list of the former British colony’s Google Play and App Store. The app, barely a year old at the time, rocketed to international fame in no time. FireChat then started catching on in Iraq, where the authorities restricted access to social networks as a way of countering the spread of radical Islam. For now, the top four countries where FireChat has become most popular are the US, Hong Kong, India, and Russia. Russian roots It is fitting, perhaps, that the app has been catching on in Russia, given its Moscow-via-Silicon Valley history.

The idea for the FireChat app first came to Stanislav Shalunov, a graduate of Moscow State University’s Faculty of Mechanics and Mathematics, in 2001. But the technology only became feasible with the spread of Bluetooth.

Beyond text and instant-messaging “Forget about SMS and IM; an era of peer-to-peer networks is coming,’’ said Micha Benoliel, a co-founder and CEO of Open Garden. “Our invention is a step towards the next phase in the development of the Internet: networks created by the people and for the people.” The firm has announced ambitious plans to extend connectivity to the vast number of people who still live off the grid of the World Wide Web. “Our goal is to provide communication to everyone, to the people of the world. We want to facilitate communication to the five billion people who are not connected to the Internet today because they cannot afford it,” Shalunov told RIBR. “And to improve communication for people who can afford to connect to the Internet, but experience disruptions. Most of these disruptions have nothing to do with revolutions. Sometimes they are caused by failure or weaknesses in cell phone infrastructure or by capacity overload in crowded places”. The use of the app peaked during the Hong Kong protests in September 2014. It was then in the Google Play store for Android smartphones that FireChat made it into the “from 500,000 to one million” users category. The app’s user base grew further thanks to protests in Moscow and cell phone signal disruption in Paris after the Charlie Hebdo attack.

“We want to facilitate communication to 5 bn people who are without Internet because they cannot afford it,” - Shalunov A decade later and a continent away, Shalunov co-founded the San Francisco startup Open Garden, the parent company of FireChat, in 2011. The seed capital of $100,000 for the firm came from Micha Benoliel, the programmer behind Skype monetisation. This year the number of FireChat users exceeded five million people. Until recently, the messaging app made it possible to communicate in group chats open to everyone, but the new FireChat will allow users also to exchange private messages. In order to launch an offline message, the developers had to resolve numerous tasks, including coding and operating system compatibility. All private messages in FireChat are coded and only the sender and the recipient can read them.

Stanislav Shalunov

REUTERS

ANDREI RASKIN

GETTY IMAGES

The messaging app, founded by a Russian, allows users to communicate by creating off-the-grid peer-to-peer networks using Bluetooth or Wi-Fi

To communicate via FireChat, users must be within 60 meters of each other Stanislav Shalunov ﬁrst thought of FireChat app in 2001. A decade later he co-founded the San Francisco tech start-up Open Garden, together with Micha Benoliel, the programmer behind Skype monetisation; Greg Hazel, who supervised the development of BitTorrent client Utorrent, and systems architect Taylor Ongaro.

The developers are now trying to shed the image of the app as a revolutionary tool. “Indeed, FireChat became popular thanks to various protests around the world. But I see it as my task to get rid of this revolutionary subtext,” said Anton Merkulov, the Open Garden rep in Moscow. In order to communicate via FireChat, users must be within 60 me-

ters of each other. This allows them to create a peer-to-peer mesh network, in effect, their own communication network. Inside it, messages are sent from user to user. FireChat makes it possible to exchange text messages and pictures. In the future, developers hope it will be able to transmit voice and video too. Open Garden will now focus on boosting daily use of FireChat.

Pyatnitskaya Street, was within walking distance to the Red Square and Kremlin. In its heyday it used to broadcast programmes in 84 languages of the world with the help of powerful transmitters situated in all corners of the country. After the Soviet collapse, the state propaganda behemoth was dismantled due to a cash crunch; broadcasts in many languages, including regional Indian languages, were closed. However, the reorganised “Voice of Russia” continued its broadcasts in Hindi, Urdu and Bengali to cover three major South Asian nations – India, Pakistan and Bangladesh. Renamed as “Radio Rus,” Moscow Radio continued its broadcasts in Hindi and Urdu till the merger of “Voice of Russia” in the media conglomerate “Rossiya Segodnya”, which on November 10, 2014 launched its multimedia platform Sputniknews with Radio Sputnik. The radio service was available on FM, digital radio broadcasting DAB/DAB+, as well as mobile phones and the Internet.

However, on February 4, 2015 the Hindi broadcasts were terminated by Radio Sputnik, bringing an end to an era, which began at the height of World War II, when the German forces were moving to capture Stalingrad. This was the beginning of a long relationship between people of India with Soviet Union/Russia. In hundreds of cities, towns and villages across India there are clubs of dedicated listeners of Radio Moscow, who up to last year have been annually meeting in Delhi with the editors of their favourite radio. But now this relationship is over. In 2009, to mark the 80th anniversary of Russia’s foreign broadcasting a tome was released with the title: “The Voice, Known to the World”. Alas, Radio Moscow is no more; its voice would be missed in the ether.

MEDIA

Remembering heyday of Moscow Radio: Nostalgia for the ‘missing voice’ in ether band and heard clear and crisp voice saying: This is Radio Moscow! Since then, amid the propaganda and counter-propaganda by Pakistani, Chinese radio stations, BBC World Service on one side and All India Radio on another, Radio Moscow turned out to be objective and refrained from broadcasting unverified reports, earning the trust of Indian listeners. I clearly remember, how with our neighbours throughout the 22-day war, we would tune in to the Radio Moscow preceded by its call tune, which later I learnt was, tune famous song “How big and wide is my native land”. Later, I found out its broadcasts in Hindi, Punjabi, Urdu, Bengali and many more Indian languages. Obviously, Radio Moscow was also a major player in the East-West propa-

VINAY SHUKLA Eurasia analyst

t was 50 years ago in September, when many Indian air bases were targeted by the Pakistani Air Force as Islamabad launched its abortive Operation Gibraltar to grab Jammu and Kashmir from India. As hostilities escalated, a blackout was ordered in the north Indian cities. Delhi A and B stations of All India Radio were ordered to shut their medium wave broadcasts from dusk to dawn so as not to act as guiding beacon for the attacking Pakistani aircraft. Those were the days

without satellite-based GPS, so just like in the World War II era, medium wave transmitters were used by pilots to orient themselves and find their way over the blacked out terrain. Amid the fierce battles raging day and night, the only source of news were shortwave transmissions and it was very difficult to figure out anything amid the static crackling in the ether. Frustrated by the failure to catch any friendly station on the shortwave, I again switched over to medium wave

Мoscow on two wheels

Museon

0 km

Crimean embankment

ganda blitz during the years of the Cold War, but it was neither anti-India, nor vitriolic in commenting on the Indian realties. On the contrary, Radio Moscow, reaching out to millions of Indians in their respective languages, was ‘sympathetic’ to India in comments and focused on telling about the rich culture, history and literature of the vast country. My first encounter with Radio Moscow in person was in 1972, when they invited me, a student of Moscow University, to work as part time announcer-cum-translator. The studios of the ‘Inoveshchanie” (Foreign Broadcasts Service) were situated in the awesome building of the GosteleradioSSSR – The State Committee of the USSR for Television and Radio Broadcasting, at 25,

The longest one is 16 km long: from Muzeon to Victory Park

The most impressive one is around the central quays (5 km)

bicycle paths are well equipped around the city

cycle routes

T R AV E L 2 M O S C O W. C O M

16 km

Victory Park

You just have to sign up: - Log on to www.velobike.ru - Or through a mobile app - Or at the bike rental terminal station

For every taste For lovers of spectacular scenery, there are bikeways in 50 metropolitan parks

The uniﬁed city bike rental system comprises 300 stations and 2,700 bicycles

How to use the bike rental services?

Read the author’s blog http://in.rbth.com/blogs/ the_ﬂying_troika

Gorky Park Luzhniki Bridge

Pushkinskaya Embankment

Neskuchny Garden

Vorobyovy Gory

Pushkinskaya Embankment

Andreevskaya Embankment

The city’s main cyclists’ celebration is the Moscow Veloparad (Cycle Parade). In 2015, more than 20,000 enthusiasts participated in it

For professionals there is a cycling track on Krylatsky Kholmi

For romantic getaways, there is the territory of Moscow State University and the viewing platform on Vorobyovy Gory