You are here: Home » Companies » News
Business Standard

Russia, central Asia new frontiers for Indian firms

JSW Steel to construct & operate mill in Georgia; Tata Tea buys controlling stake in Russian packaging & distribution firms

Ishan Bakshi  |  New Delhi 

That Indian have forayed into developed markets such as the US and western Europe is known. What isn't is the fact that, such as JSW Steel, Tata Power and Srei Infrastructure are now stepping up operations in central Asia and Russia. While JSW Steel has entered into a venture to construct and operate a steel mill in Georgia, Srei Infrastructure has expanded its operations in Moscow to enhance its leasing portfolio and reach more local Tata Tea has acquired controlling stake in a Russian packaging and distribution company.

For these companies, a key challenge is access to low-cost long-term financing, especially in countries perceived as risky. Seshagiri Rao, joint managing director and group chief financial officer, of JSW Steel, said, "JSW Steel wanted to set up a steel plant in eastern Europe to take advantage of the growing demand for steel, but faced difficulties in raising funds. Initially, commercial banks were sceptical and considered it too risky an investment."

It was then that European Bank of Reconstruction and Development (EBRD) stepped in. The bank, which has an 'AAA' rating, can borrow funds at low rates and use these for projects perceived as risky.

Sunil Kanoria, vice-chairman and non-executive director of Srei Infrastructure Finance, said once EBRD stepped in, "it is easier to get financing because of their validation". The bank has also helped finance Lakshmi Mittal's operations in Kazakhstan, Romania, Ukraine, Macedonia, etc.

Riccardo Puliti, managing director (energy and natural resources), EBRD, said, "There are opportunities for India to export technology, engineering manpower and capital" to central Asia and other parts of the former Soviet Union. "The old Silk Road is culturally and physically close to India. For India, there countries are good neighbours to have," he said at an event here on Monday.

"As Indian companies are increasingly expanding their global footprint, EBRD is a source of long-term funding and providing local knowledge to companies," says Nandita Parshad, director (power and energy utilities), EBRD. "Indian companies could use countries such as Egypt and Romania as a springboard to enter other markets," she adds.

Since 2004, the EU-Egypt association agreement has helped establish a free-trade area, with no tariffs on industrial products and significant concessions on agricultural products. By setting up manufacturing facilities in Egypt, Indian companies can access the European market at zero tariffs in particular product lines.

While the EBRD's operations initially centred on Russian and Western European countries, it expanded these to include Turkey and Mongolia and, recently, West Asia. Though EBRD doesn't operate in India, it partners Indian companies in countries in which it operates.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, September 30 2014. 00:34 IST