6 Months agoThe Lion is on its way to SPIEF. Before we arrive in St. Petersburg, take a deep dive into Indo-Russian cooperation in Heavy Machinery.
This year, as India and Russia mark 70 years of diplomatic ties, India is Guest Country at the St Petersburg International Economic Forum (SPIEF) from June 1-3, 2017. In the run- up to SPIEF, we take a closer look at collaborations in heavy engineering.
Heavy Engineering: Close Ties
India and Russia have a long-standing partnership when it comes to engineering. India’s first economic agreement with Russia was to set up a steel plant at Bhilai in 1955; soon followed by an agreement to set up another steel plant at Bokaro.1 Uralmash supplied heavy equipment to almost all the large-scale metallurgical plants in India, including steel plants in Bhilai, Bokaro, Vishakhapatnam and Rourkela. Eight of India’s sixteen heavy industry projects in the 5 year plan of 1956-1961 were built with Russian help. More recently, the Heavy Engineering Corporation (HEC), Ranchi signed agreements with Russia’s CNIITSMASH to establish a Centre of Excellence in India and modernise HEC’s facilities.2 Also in 2015, Solar Energy Corporation of India signed an MoU with the Russian Energy Agency to construct solar plants in India.3
Meanwhile, HEC signed an MoU with Rosatom, Russia's state nuclear energy corporation, to locally manufacture equipment to be used in the Kudankulam nuclear power project, India’s single largest nuclear power station.4
In 2016, Uralmash and SRB International formed a JV to manufacture heavy equipment for India’s steel and mining sector to boost ‘Make in India’ and raise bilateral India- Russia trade and investment volumes.5
Uralmash and SRB International have cooperated in supplying and servicing heavy equipment to Indian companies for many years, including Steel Authority of India (SAIL), National Minerals Development Corporation (NMDC), Coal India and Jindal Steel & Power Ltd (JSPL).6
The Heavy Engineering Equipment and Machine Tools Industry — a part of the Capital Goods sector — is the backbone of India’s entire manufacturing sector. The Capital Goods sector contributes 12% to the manufacturing sector in India and provides direct employment to ~1.4 million people and indirect employment to ~7 million people.7
The National Capital Goods Policy was approved in 2016 with an aim to increase production of capital goods from USD 35 billion in 2014-15 to USD 115 billion in 2025 and raising direct and indirect employment from the current 8.4 million to 30 million.8
The policy aims to increase “exports from the current 27 percent to 40 percent of production. It will increase the share of domestic production in India’s demand from 60 percent to 80 percent thus making India a net exporter of capital goods.”9
This year, Russia was the “Partner Country” at International Engineering Sourcing Show (IESS) at Chennai. A large 120-member delegation from Russia exhibited their technology and products at IESS in March 2017.10 11
India’s increasing spend on logistics infrastructure, the Smart Cities project, and changing trends in power generation and distribution, all present immense opportunities.
For example, take the cooperation between the state of Andhra Pradesh and Morinfosistema-Agat to create an integrated system for water transport monitoring. This work is being carried out in partnership with Bharat Electronics Limited and Larsen & Toubro.12
“Russia and India both have huge potential in the form of human resources, and the focus on engineering as an area of cooperation is a natural fit.”13
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