India, Russia to benefit from old economic pact

India, Russia to benefit from old economic pact
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First Published: Wed, Apr 01 2009. 01 24 AM IST

 Talks on: Sistema Shyam’s CEO and president Vsevolod Rozanov. Madhu Kapparath / Mint
Talks on: Sistema Shyam’s CEO and president Vsevolod Rozanov. Madhu Kapparath / Mint
Updated: Wed, Apr 01 2009. 01 24 AM IST
Mumbai: India and Russia are set to benefit from an economic treaty they signed in 1993, which offsets India’s debt to Russia against Russian investment in India’s infrastructure.
Talks on: Sistema Shyam’s CEO and president Vsevolod Rozanov. Madhu Kapparath / Mint
India has made available $700 million (Rs3,570 crore) for investment to Russia, the Kommersant newspaper reported on 18 March, quoting an unnamed source. CNBC-TV18 could not independently verify this.
India owes Russia $1.97 billion under the agreement, as on December 2007, the latest finance ministry data available show. The debt, denominated in rupees, is held in an escrow account maintained by the Reserve Bank of India.
“There is definitely a trend which indicates Russia is getting involved (in India),” Tom Mundy, equity strategist, emerging markets at Moscow-based investment bank Renaissance Capital, said by phone from Moscow.
The treaty was recently in the news when Kommersant reported the Russian government could pick up a 20% stake in Sistema Shyam Teleservices Ltd, majority-owned by Russia’s Sistema Group, which also owns Russia’s largest mobile phone operator, MTS.
Sistema Shyam Teleservices’ president and chief executive Vsevolod Rozanov told CNBC TV18 earlier this week that talks were on with the Russian government for the stake sale, adding that details were yet to be worked out.
Investments in telecom through this treaty are allowed as the Indian government has placed the sector in the infrastructure category.
cnbc@livemint.com
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First Published: Wed, Apr 01 2009. 01 24 AM IST