Economy

PM’s Russia trip: Sistema issue may be a sore point

Amiti Sen Richa Mishra New Delhi | Updated on March 12, 2018 Published on October 19, 2013






The shadow of Russian telecom major Sistema’s ill-fated venture in India is looming over bilateral trade and investment deals that Prime Minister Manmohan Singh, who starts his Russia visit on Sunday, may be expecting to expedite.

Joint ventures in hydrocarbon exploration, LNG projects, mineral production, mining, and diamond and precious stone supply are being ignored by Russia as it is not happy with the treatment meted out to its telecom company in India, a senior official said.

“Although the PM’s visit would focus on reviving the strong economic ties once shared by the two countries, we doubt whether he can change the Russian government’s mind on crucial projects,” a Commerce Department official told Business Line. While India will be looking to enhance bilateral relations across core sectors, Russia’s interest will mainly be in Defence and nuclear projects.

The fate of top Indian public sector units such as ONGC Videsh Ltd, MMTC, NMTC and Nalco hangs in the balance as Russia takes its time in deciding on the proposals made by these companies for collaboration.

“Top Russian politicians and officials have expressed disappointment with the cancellation of licences given to Sistema in 2008. They feel that it is unfair treatment and are, thus, giving India a cold shoulder in areas of its interest,” the official added.

In all, 21 licences given to Sistema Shyam, the Russian company’s joint venture in India, were revoked following the Supreme Court’s order cancelling 122 licences issued in 2008.. The company had appealed against the judgment, but it could not get a favourable verdict.

Although, Sistema Shyam was recently awarded a Unified Licence to operate in eight circles, the Russian Government, which owns a stake in the company, is still sore. It is rumoured that Russian President Vladimir Putin, too, has a stake in the company. “Whatever happened to telecom companies caught in the 3G scam is unfortunate. However, it was a Supreme Court verdict and not an executive decision,” the official said.

OVL has been in touch with Russian companies — Rosneft, Gazprom and Novatek — to explore further opportunities in that country, particularly in Sakhalin-III, East Siberia, and the Arctic Shelf. However, no concrete assurance has come from Russia. Similarly, Indian companies such as ICVL, SAIL, RINL and NMDC are keen on mining coking/thermal coal and iron ore projects in Russia. But these proposals, too, are stuck.

Bilateral trade is, however, on the rise. Exports to Russia in 2012-13 increased 29 per cent to $2.23 billion.

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Published on October 19, 2013
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