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PLASTINDIA was invited
to participate in INTERPLASTICA 2002 exposition
held at Moscow on September 16, 2002. The exhibition was spread
over 6500 sq. mt. with 300 exhibitors from 25 different countries.
The foreign participation occupied more than 4500 sq. mt. compared
to about 1800 sq. mt. occupied by the Russian participants. Mamata
Machinery, Lohia, Cincinnati Ferromatics were the other participants
at the exhibition. PLASTEMART is very happy to bring the impression
of Mr. Arvind Mehta about the exhibition and the business environment
of Russia.
RUSSIA TODAY IS A NEW RUSSIA
Present Russian Government is action-oriented. In last 8 years,
the country has seen the set up of 500 fully occupied departmental
stores, stacked with international quality products. Demand is booming
in all sectors and the masses are fashion conscious, so there exists
a huge untapped market. Natural resources like Crude Oil, Gas and
Minerals contribute in a big way to the Government Treasury. Russia
plans to join WTO by 2003 to attract investment in Russia. Investment
laws like Income Tax Laws, Patent Laws, Profit repatriation/Company
Laws, Labour Laws etc. are being changed to welcome foreign investments
and to suit WTO.
Though the political relation of Russia with India is very good,
the economical relation is not too healthy as India lags in superior
quality products and services. Lack of the Indians to ADAPT TO CHANGE
has caused them to lose out in Russia. From being at the topmost
position in Russia, Indians have hit the bottom position today.
Russians want quality of international standards and Western countries
are encashing that demand. GDP growth of Russia is 3.9% while Inflation
is 14%.
Italy, Germany and Austria now dominate and as a result of getting
into Russian market, the European economy has become more stable.
China, Korea, and Taiwan are also visible. India has failed to impact
the Russian economy inspite of its strong political relation with
Russia. India is out because it has not adapted to the 180º
change in Russian economy i.e. from centralized purchases to free-market-economy.
Now everything is in private sector. Government is releasing its
controls on business activities and now market economy decides purchase.
Education
Education is free in state-schools upto XI th standard. Private
schools charge fees. No reservation on basis of caste or creed.
Literacy level of Russia is 80%. Now, English-learning by small
children is given importance.
Environment
There is no littering habit amongst people. Roads are clean but
only 95% clean by European standards. Government does the waste
management without any fuss and without blaming plastics.
Currency of Russia is Roubles and approximately 1 US$ = 31.5 Roubles.
Lending rates are high i.e. @ 17% Roubles while Fixed
Deposit rate @ 11%( Fixed Deposit for US$ 6%). Banks are now updating
and changing to new order. As on today, getting LC is very difficult.
Today, business can be done by appointing good local middlemen,
who are available.
Import Duties Vary from 5% to 25%. VAT is 20% - 10% on essential
like food and 20% on non-essential. All items are covered by VAT.
No one is exempted. + 5% Sales Tax is Non VATABLE. Income Tax rates
are 13% for personal and 24% for companies.
Infrastructure
Russia is totally well connected by very good roads – 4 Lanes
and 3 Lanes highways. Earlier Communist Government did this with
an eye on defense, nuclear war and total control. Russia has one
of the best underground Metro Rails in the world. There are seven
layers of underground running trainsThe population of the City of
Moscow is 9 million while cars in Moscow in is 4.5 million. Sales
of Mercedes Benz is the highest in Moscow than rest of world. Petrol
price is 11 Roubles(Rs. 20) per litre. Power supply is uninterrupted
and about 0.23 Roubles(45 Paise) per unit while In India we pay
on an average Rs.4.50 per unit. Phones, E-mails, Cell Phones, Internet
are all freely available.
Today whatever polymer is produced locally is consumed. Very little
is imported. As they are rich in oil, gas, minerals etc. plants
are immediately set up. Now all plants are in private sector. Labour
in generally skilled in Russia and the minimum wage specified is
US $ 100. But on an average labours get US$200 - US$300 per month
for 8 hours duty from Monday to Friday working days. There are no
more strikes now.
There are around 500 processors of plastic products but machinery
is very less. Thus there is tremendous scope for Indian plastics
machinery makers provided they fulfil Russian requirements. Russia
imports 400 – 500 Injection Moulding machines per year mainly
from Germany.
How to do business - Today
There are daily AEROFLOAT flights between Delhi and Moscow costing
US$ 500 – 600 (both ways inclusive). Hotel rate is around
US$ 100 per day. Taxi charges US$ 5 per hour. Indian food is available
but costly. No direct business with party is practical. So one has
to do business via Russian agents only, who speak local language
and know local market. One can have assistance and payment from
agents who are genuine and interested (This route is suggested in
discussion with Indian Embassy officials also).
First of all, one should visit Russia, meet maximum people, participate
in exhibitions or visit their exhibitions with English-knowing Russian
interpreter. Russian visas are strictly by invitation only. Hence
the visit has to be planned well in advance.
Inference
Russia is a big booming market, rich in oil, gas and mineral resources
and also defence-oriented technology. Indian plastics machinery
makers of international quality stand with benefit the most if this
huge market for plastic products including plastics packaging is
tapped. NRIs in Russia can be our marketing people as they have
strong national feeling that India should progress and they know
local market well. In this regard, Indian Business Alliance, Moscow
which is having 83 members, can be of help.
Participation in exhibitions will definitely help if one’s
own platform is ready. India’s strong political ties with
Russia could be of great help. Russians have high regard for Indians.
Above all, Indians have skill, talent, technical backing and confidence.
Where we lack is the knowledge of ‘What the Overseas Customer
Wants’. We should change accordingly and encash this opportunity.
For further details, Click
here to contact us.
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