WEDNESDAY, MARCH 9, 2011

...Marching towards a common future

BUSINESS REPORT in association with rossiyskaya gazeta, russia

President

Dmitry Med-

vedev is ex-

amining a

universal

identity-

payment

card at a

meeting of

the Econom-

ic Modern-

ization Com-

mission last

week in

Moscow.

Innovation The new card will blend a state electronic ID, driver's licence and replace all social cards; project to cost around $6bn

Kremlin to roll out magic card that does it all

Imagine a piece of plastic that gets you a doctor's ap-pointment, pays your bills, allows you to rent a car or buy a plane ticket and even get Moscow registration faster than the sham ads in the Moscow metro. Presi-dent Dmitry Medvedev promised last week that three years from now all Russians will have this magic multi-purpose card.He set May deadline to the government to work out the funds required to introduce the universal electronic card, or UEC, for all citizens and urged banks to not to take advantage of card users at the meeting of the commis-sion on modernisation and technological development of the economy.The UEC, which will be a kind of Swiss army knife of plastic cards and serves as a combination of a state elec-

OLGA RAZUMOVSKAYATHE TIMES OF MOSCOW

Russia is set to launch a

multi-purpose universal

identity card by 2014. The

master card has, however,

sparked anxieties about its

potential misuse for fraud.

tronic ID, driver's licence, car insurance and migration cards among other possible perks, should be available to Russians by 2014, according to the federal law.The fi ve-year project to cre-ate the new e-card could cost the government as much 150 billion rubles ($5.2 billion) to 170 billion rubles ($5.9 bil-lion), Economic Develop-ment Minister Elvira Nabi-ullina told reporters at the modernisation commission meeting. The cost of card is-suance alone will be 40 bil-

lion rubles, which puts the cost of one card at 265 rubles ($9), Nabiullina said. She promised that all invest-ments would be matched by savings, as the new e-card will replace the Russian ver-sion of social security cards.Banks, however, are scepti-cal. German Gref, chief ex-ecutive of state-run Sber-

bank, one of the three banks that will help finance the card's development said banks have so far been re-luctant to provide funds for the project because it's "of little interest" commercially, Bloomberg reported.Another danger of intro-ducing such a card is the po-tential for identity fraud, which often plagues coun-tries that have introduced systems of electronic iden-tification and rely heavily on cards similar to the UEC, experts say.This is especially the case in Western countries, said Timur Aitov, executive di-rector at the Association of Russian Banks. Medvedev confessed that the government has not found a good answer to the question of protecting its citizens' data and he admitted that personal information often circulates on the Internet. But "on its own, the protec-tion of such information should not be an obstacle to making the decision to issue cards," he said.The fact that the card will use a foreign chip should also not stand in the way of

NEWS IN BRIEF

Gammon India Ltd. , along with Mosmet-rostroy metro building company, has won two tenders for the construction of metro stations and tunnels in Chennai. The con-tract will cost around Rs 19.5 billion ($430 million). The project envisages building about 18 kilometres of underground tun-nels and 19 stations. The construction pro-cess was divided into fi ve lots, each of which was the subject of a separate competition. Gammon and Mosmetrostroy won two of the fi ve competitions. The companies will construct seven underground stations and 6.4 kilometres of tunnel. RIBR

A snowboarding leopard, backed by PMVladimir Putin, has been selected as one ofthree official mascots for the 2014 SochiOlympics. The leopard was chosen togetherwith polar bear and a white bunny at theconclusion of a much-touted telephone andonline vote of more than 1 million people,organisers said. The three swept more than60% of the total vote, which started on Feb-ruary 7. The most popular mascot, with 28%of the vote, was the leopard, which Putincalled a "mighty, fast and beautiful" animalin a meeting with students in Sochi justhours ahead of the announcement. The bearmascot was the favourite of President Dmit-ry Medvedev, Ekho Moskvy radio reported,citing Federation Council Speaker SergeiMironov. The last name "Medvedev" stemsfrom the word "bear." RIBR

Moscow to help build

Chennai metro stations

The Russian engineering and industrialgroup Tractor Plants Concern plans to es-tablish an assembly facility for its CHET-RA branded industrial machinery in India.The new plant should reach its output tar-get of 200 units annually by 2015. The com-pany presented its best models of CHETRAbulldozers and pipe layers at the Mumbaiexhibition last month. It has incorporateda specialised subsidiary, Chetra MachineryIndia Pvt. Ltd. (CMI), to serve as a channelfor supplying innovative products to India.Another JV KAMAZ Vectra Motors Ltd isplanning to introduce fi ve new truck mod-els to the Indian market. ITAR TASS

CHETRA to manufacture

tractors in India

Leopard, Polar Bear,

Bunny Sochi mascots

the project taking off, he said. "[We] will not wait till we create our own chip, oth-erwise it will never be made,” he said.While Medvedev promised that the new card "will im-prove the lives of tens of mil-lions of people" by cutting the red tape and allowing Russians to do everything from paying their gas bills to making a doctor's appoint-ment online, experts see ample potential for the card to turn from a magic wand into a weapon that can be

used against its owner through identity theft. Cases of fraud involving plastic debit and credit cards in Russia run as high as 1% to 1.5% of all cards, and not all of them are reported. The privacy debate should strike a chord in India, which is also in the process of intro-ducing unique identity cards. Nandan Nilekani, an IT en-trepreneur who heads the project, has assured that per-sonal data will not be acces-sible to everybody, as the government gears up to roll

out 600 million cards by 2014. Medvedev has encouraged the government to think about ways to regulate tar-iffs on transactions for com-mercial/ state services, which are controlled by banks.Also, Medvedev has called for “fair and objective” discus-sion of the design of the new e-card and proposed that people make suggestions on the Internet. "I hope that it will seem fairer than the dis-cussion of mascots for our (Sochi) Olympics," he said.

Novosibirsk Electrovacuum Plant–SoyuzHolding Company (NEVZ-Soyuz) and In-dia’s Carborundum Universal Limited(CUMI) plan to construct a large plant formanufacturing nanostructured ceramicsfor medicine, the military, industry andother applications on an industrial scale inthe Novosibirsk region. CUMI is consider-ing the opportunity to establish a joint ven-ture with NEVZ-Soyuz as a co-investor forthe development of ceramics production fa-cilities. In 2007, CUMI purchased a Russianenterprise, Volzhsky Abrasive Works, theagency’s source said.At present, CUMI is reviewing NEVZ-Soyuz investment projects, which were de-veloped under a joint project with the Rus-sian state corporation, Rusnano. Investorsare also investigating the marketing aspectsof this collaboration and studying marketcapacities and possible action at promotingproducts jointly. RIA NOVOSTI

Building plant for

ceramic nanomaterialsIT

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in THE TIMES OF INDIA Every last Wednesdayfrom March www.indrus.in

RussiaIndia

REPORT

The human race has fi nally set foot on the Red Planet. Kind of.In a unique 520-day experi-ment to simulate a mission to Mars, a six-man interna-tional team of researchers completed the first leg of the journey this month. Broadcast live on a giant screen at the real space mis-sion control centre outside Moscow, two crewmen, Rus-sian Alexander Smoleevsky and Italian Diego Urbina, emerged in space suits after eight months of isolation to stage a “landing”.“Today, as I see this Red

DMITRY RODIONOVRIBR

It may take two decades for

a manned mission to Mars,

but we are getting there.

That Gagarin moment: Mars dream gets real

Space 500-day simulated mission to Red Planet raises hopes

Russian Al-

exander

Smoleevsky

and Italian

Diego Ur-

bina stretch

their legs on

a fake Mar-

tian land-

scape after

eight

months in

cramped

conditions

Video atwww.indrus.in

tion last June as a part of the Mars-500 experiment to gauge the physical and psy-chological effects of a long-term mission. Before they rejoin life on Earth, their handlers will subject them to the claustrophobia, stress and fatigue that real space-farers experience. The experiment is being conducted by the Moscow-based Institute for Medical and Biological Problems, in collaboration with the Eu-ropean Space Agency and China’s astronaut training centre. Their simulated craft comprises several in-terconnecting modules, in-cluding a greenhouse where fresh produce is grown, and with living quarters just around 20 yards long and less than four yards wide. There is a built-in Martian surface model for three planned space walks.During the simulated fl ight, the team has an internet link to Earth, but this is de-liberately prone to the breakdowns anticipated during a trip to Mars. De-pending on its orbit, Mars is located 35 million to 250 million miles from Earth. While the main condition of space travel – weightless-ness – is missing, the crew sleep in bunks at a 12-de-gree angle to create a feel-ing of unfamiliarity. “Each crew member has the right to end the experiment and walk out,” said Boris Morukov, director of the mission. A similar trial at the insti-tute 11 years ago broke down when a Canadian vol-unteer said a male colleague tried to forcibly kiss her. Two other team members came to blows.But there is plenty of time to get the crew dynamic right: experts do not expect a manned Mars mission until the mid-2030s.

Race Emerging market stocks are getting expensive

And... they are off. Devel-oped market (DM) and glob-al emerging market (GEM) stocks are out of the blocks in the race for best returns in 2011. After an easy win in 2010, when the GEMs trouched the DMs, most of the big names in the sport - China, Brazil and India - have tripped, coming out of the blocks at the start of this year. GEMs took in over $100 billion in 2010 of fresh money, but some $13 billion fl ooded out again in the fi rst month of this year on the back of rising fears that spik-ing infl ation will derail the GEM story. For the fi rst time in a decade, DMs have outperformed the GEMs: the MSCI World Index, has rallied 6.2% while the MSCI Emerging Mar-ket's index was up by only 2.8%. Pundits have been pointing to the better than expected economic perfor-mance of the DMs and there has been a fl ight to "quality", but what is really happening is a correction of over-shoots. Since the DMs are so obvi-ously screwed by their hor-rible debt and deficit posi-tions, while most GEMs are back to double-digit growth, the emerging markets have become hot and so much hot

money flooded into these markets that central banks in some, like Brazil and Tur-key, have been forced to put up administrative barriers and capital controls to keep the unwanted liquidity out.The result sourced in part from the US decision to re-lease another $600 billion of quantitative easing (QE2) in November, has sent infl ation soaring around the world, a

problem made worse by the return of the food price crisis from 2008, which was tem-porarily suspended by the fi -nancial crisis that started that autumn. Investors have begun to sell GEM stocks, as they are clearly getting ex-pensive. However, they are starting to buy DM assets, as

they have clearly gotten too cheap after being ignored for nearly two years. HSBC re-leased a note on February 18 saying that DMs won't beat GEMs this year, "because the valuation of the MSCI Emerging Markets Index has become too attractive to pass up".Said HSBC's Hong Kong-based equity strategist Garry Evans, "We remain comfort-able that GEM will outper-form DM during 2011. Though GEM might contin-ue to underperform for a lit-tle longer, it is highly unlike-ly to do so for the year as a whole. We fail to fi nd a rea-son why the long-term struc-tural outperformance of the EM universe should not con-tinue." Of all the GEMs, Rus-sia has done best, mainly, as it missed out on the rally in 2010: Russia alone took in new money - and was con-tinuing to take in new money in the fi rst two weeks of Feb-ruary, as its stocks caught up with the other GEMs.

Developed markets back in equity raceWho will win 2011 equity

sweepstakes? Time will tell.

But for the first time in a

decade, developed markets'

stocks have outperformed

those of emerging markets.

BEN ARISBUSINESS NEW EUROPE

Of all the emerging markets, Russia has done the best, as it continues to take in the new money.

Medvedev has promised the new card will improve lives of millions by cutting red tape.

Planet surface, I can already feel how inspiring it will be to do it through the eyes of the first human to step on Mars. I salute the explorers of tomorrow,” Urbina said in a radio link-up with offi-cials, cosmonauts and media at the control centre. Smoleevsky also dedicated the sortie to the fi rst human space fl ight made 50 years ago this April 12 by Yuri Ga-garin. Remotely assisted by Chinese colleague Wang Yue, they performed atmo-spheric, soil and other tests that Mars explorers will one day carry out. They then planted the fl ags of Russia, China and the EU. The team of male volun-teers, which also includes two more Russians and a Frenchman, went into isola-

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50th Anniversaryof Manned

Space Flight

BUSINESS REPORT IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

Economy

WEDNESDAY, MARCH 9, 2011

Andrei

VolodinSPECIALLY FOR RIR

in the wake of the global fi -nancial crisis refuses to turn into an energetic develop-ment stimulating the world economy. Under the circumstances, a “free geometry” of interna-tional economic relations will help both in the search for new “points” and spaces of growth, and in the modern-ization of national-economic complexes in the process of multilateral cooperation. It will also help lower the fi nan-cial risks by diversifying the “pool” of world reserve cur-rencies. Secondly, South Af-rica’s accession to the BRIC space refl ects already exist-ing foreign economic ties be-tween it and China (the PRC is South Africa’s largest trad-ing partner), as well as its close cooperation with Brazil and India, ties which have been developing on a solid in-tergovernmental footing for more than a decade. Russia will have to quickly rid itself of its distasteful status as an outsider in this strategically important field. Thirdly, South Africa has the most de-veloped and diversifi ed econ-omy on the African continent. It is a sort of “beachhead” for expanding BRIC’s economic engagement with the conti-nent whose potential for de-velopment has not yet been properly assessed. In its turn, South Africa is entirely aware that its joining BRIC may act as a powerful multiplier of its growth and development, as was the case with Australia, thanks to its close economic cooperation with China. Moreover, the BRIC countries have evidently not forgotten the fact that at least 90% of portfolio investments enter the economies of African states through fi nancial insti-tutions in Johannesburg. Fourthly, South Africa’s ad-mission to BRIC may be just the bright beginning of a new process which will soon in-volve such “new regional leaders” as Indonesia, Iran, Turkey, Egypt, Argentina, Venezuela, etc. The leaders of these countries know that the regenerative growth of the world economy in and of it-self does not turn into its as-cendant and energetic growth. It’s clear that con-scious effort will be required, and this effort will have to be made outside the space of the “traditional” leaders of the world economy. If this logic is translated into specifi c actions, then we may well become witnesses to the formation of a new “fourth world project”, to borrow the terminology of Egyptian economist Samir Amin. As you may recall, the three pre-vious projects — “the state of general prosperity” (devel-oped capitalist countries), “the Bandung project” (de-veloping countries) and “capitalism without capital-ists” (the world of socialism) — determined the dynamic of mankind’s development in the post-war period right up until the end of the 1980s. Who knows? Perhaps this “fourth world project” will prove to be one of long dura-tion and will lead the world economy and humanity out of the current impasse?

Economists often refer to Brazil, Rus-sia, India and China (BRIC) as potential

“locomotives” of world de-velopment. British fi nan-cial analyst Anatole Kal-ecki considers that a steady development of the world economy depends on the vitality of large and larger nations — China and India, also Brazil, Russia, Indo-nesia, Egypt, South Africa, etc. This vitality will ulti-mately be determined by the ability of the ruling cir-cles in the world commu-nity’s “new infl uentials” to effectively expand and in-crease the capacity of their domestic markets, stimu-late solvent demand on the part of the population and turn the middle class into the driving force of social development. Brazil, Russia, India and China, while working to-gether, are at the same time guided by principles of “sensible egoism”. Sensing daily the inability of the “traditional” centers of the world economy (the US, Western Europe and Japan) to cope with the growing swell of global problems (fi nancial, industrial, secu-rity, ecology, climate, etc.), the BRIC nations are striv-ing to create a space that is relatively free of the “tur-bulence” of global econom-

ic processes. Given these aims, it is logical that mem-ber-nations would want to progressively expand BRIC’s economic space. History does not stand still: it is a “living, developing process”, as the German statesman Willy Brandt wrote more than two de-cades ago. The attractive-ness of BRIC nations lies, evidently, not just in the possibility of creating one of the most capacious “do-mestic” markets in the world. According to the In-ternational Monetary Fund, BRIC’s economic space will account for 61% of world economic growth in 2014. Not surprisingly South Af-rica had to wait several years before receiving a for-mal invitation to join BRIC towards the end of 2010. At first glance, the South African economy, which is only a quarter of Russia and India’s GDP, does not look like a viable partner for BRIC. However, Brazil, Russia, India and China took a long-range strategic view. First of all, the de-pressed development of economies in the West and Japan continues, while their regenerative growth

OPINION

BRIC and South Africa: prospects of integration

Andrei Volodin is Senior Re-searcher with the Russian Academy of Sciences’ (RAS) Institute of World Economy and International Rela-tions.

BRIC's economic space will account for 61% of world economic growth in 2014.

South Africa is a sort of beachhead for expanding BRIC's engagement with the continent.

New Horizons Rusnano signs pact with SUN group to develop promising sectors like nano materials and bio-tech

Indo-Russian high-tech

collaboration has entered

the nano phase with a deal

between Rusnano and SUN

group. The sky is the limit!

In a major foray into India’s promising high-tech market, Russia’s state-backed nano-technology corporation is mulling a joint venture for the production of solar bat-teries. The idea emanated when Rusnano CEO Anatoly Chubais flew from snow-sodden Moscow to India early February to iron out the details for “nano-collab-oration” with India. What he saw impressed him. “I hadn’t expected the nano-industry in India to be so well devel-oped. And I’m not just talk-ing about scientifi c research. I’m talking about the devel-opment of nano-industry re-lated business in India.”“In all the areas we dis-cussed, we met potential partners with experience working in vigorously devel-oping business,” said an ex-cited Chubais. Chubais, one of the heavyweights of the Russian market reforms of the 1990s, was appointed to head Rusnano a year after it was set up in 2007. Chubais signed a collabora-tion agreement with SUN Group, a private, Indian fam-ily-owned investment group active in Russia. The two companies will study the most promising sectors for business development in nano-technology. They will also be looking at expanding Indo-Russian collaboration

in global technological chains. SUN Group will help Rusnano’s engineering companies fi nd Indian part-ners to set up joint ventures.Rusnano sees India as a rap-idly growing region with an attractive domestic market. “We are interested in its size and drive to develop indus-tries and technologies. There is successful work being car-ried out in India in technol-ogy and innovation, and we are interested in a number of them,” Chubais stressed. The most interesting areas for collaboration are solar ener-gy, nano-materials and bio-tech. Rusnano has much to offer the Indian side. “For ex-ample, take a joint business

model for an Indian compa-ny in optoelectronics tech-nology. We can offer such a company the possibility of relocating its business to Russia while being based on Indian designs. We can fi nd an engineering partner who will be able to develop it. We will also be able to develop the scientifi c and technical support needed.” He cited incentives like tax breaks and easier land permits for manufacturing to attract In-dian fi rms to set up shop in Russia. “We can also provide access to capital and consid-er very long-term fi nancing deals, such as for a period of ten years,” said he. Rusnano has also offered its

expertise in nurturing a mar-ket for innovative products. In the three years since it was founded, Rusnano has con-sidered over 2000 projects. It is also fi nancing the develop-ment of detectors for explo-sives and drugs. A quarter of the projects in Rusnano’s portfolio were ini-tiated by foreign partners. Russia is already working actively in nano-technology with the US, Israel, Finland, South Korea and Taiwan. Chubais has no doubt that India will be added to its list of partners. “Give us fi ve or six months and by that time we will have made some con-crete decisions and signed contracts”.

Dreaming big with nano-tech

NATALIA FEDOTOVA RIBR

Rusnano CEO Anatoly Chubais (extreme right) with SUN group's vice chairman Shiv Khemka (second from left) and

BrahMos Aerospace JV CEO Sivathanu Pillai (extreme left) in India

“India captures your soul,” exclaimed Alexander Fink, director for international cooperation of the Russian Research Institute, Hydro-project. Late last year, Hy-droproject signed a pact with KSK Energy Ventures Limited K.A., under which Russian engineers will de-velop a technical design for the Upper Subansiri hydro power plant on the Sub-ansiri river in India. The new power plant will boast a 230-metre high con-crete dam. With 2,000 MW capacity, it could supply power to India’s entire north-east and satiate the demand for cheap energy in West Bengal and other industrial areas in Northern India.Hydroproject plans to com-plete paper work on the proj-ect in November this year. “We have sent two geologists there, and should complete exploration and engineering studies before the monsoon season strikes. By the end of this year, we must submit a

Renewables Russian hydro design firm signs a pact for building 2,000 MW plant on Upper Subansiri river

Hydropower cooperation is

set to scale new heights

with a new power plant that

can satisfy energy needs of

India's northern region.

technical design for the plant to the customer,” Fink said. Hydroproject, part of the RusHydro holding company, is one of Russia’s oldest en-gineering institutes special-ising in the development and design of hydraulic engi-neering facilities. Hydro-project has a successful track record of working in India. In 2006, the Russians assist-ed India in building its larg-est hydropower complex, the Tehri, in the state of Uttara-khand located in the highly seismic Himalayas. The 260-metre high rock and earth-fi ll embankment dam houses a fi rst-stage, 1,000 MW un-derground power plant. Four more units at 100 MW each are scheduled for launch later this year, with eventual total capacity planned at 2,400 MW. The new hydro-power complex’s successful operation came as a surprise to many as the area is prone to earthquakes. Engineers from Hydroproject used ad-vanced design software that has already kept the power plant up and running suc-cessfully for fi ve years now. The Upper Subansiri project is no less complicated. “Sub-ansiri is a very full-fl owing river, a major tributary of the Brahmaputra. And this is

Power panacea for North India

VLADISLAV KUZMICHEV RIBR

the first large hydropower complex to be built on this river,” said Fink. The com-plex should come online in 2016. A concrete dam will cut across the river, and a 2,000 MW underground power plant will generate electricity. The Russian en-gineers advised the client to abandon the underground design in favour of a surface-located plant. Besides, Hydroproject is par-ticipating in creating a unique hydropower complex in neighbouring Bhutan. Called the Sankosh River hydro-power complex, Hydroproj-ect has already completed an investment feasibility study. A 285-metre high dam, to be built there, will be one of the world’s fi ve tallest. The com-plex will have a 4,000 MW ca-pacity, which will be trans-mitted into India’s heartland across West Bengal. Russia is also helping India establish its own complex hydropower project monitoring service. “Facilities start falling ill right after birth, just like ba-bies. That’s why monitoring them is essential,” said Fink. India has asked Hydroproject to train their specialists, who have already completed courses taught by Russian in-structors.

$30bn industry

by 2015

Rusnano is looking to create a viable nano-industry in Rus-sia capable of achieving $30 billion worth of production on the open market by 2015. Around $870 million has been earmarked for a range of nano-technology proj-ects in Russia. Russia is now fourth in the world (about $570 million) in investments in this sector, after the US ($3.3 billion), Japan ($2.6 bil-lion and Germany ($800 mil-lion). Rusnano’s main areas of interest are solar energy, nanostructured metals, medi-cine and biotechnologies, ma-chine building and metal pro-cessing, optoelectronics and nanoelectronics.

$220 mn plan for solar PV cells

With India setting an ambi-tious target of 20,000 MW of solar power generation capacity by 2022, the Indi-an government and Rusnano are considering a $220 mil-lion joint venture to manufac-ture solar PV module-grade silicon ingots. This could in-volve building a manufactur-ing facility in Russia where ingots will be produced and then exported to India. India is looking at sourcing 2000 tonnes of silicon ingots from this venture. India has a slew of solar PV module manufac-

turers like Moser Baer, Tata BP Solar and IndoSolar, but there are almost no produc-ers of silicon ingots. Officials of India’s department of sci-ence and technology are keen to include a strong research component into the joint ven-ture which would enable Indi-an scientists to participate in further development of solar photo-voltaic cells. "There is a huge demand for silicon wa-fers as efforts are on to meet the 22 GW solar power target under the National Solar Mis-sion," an official said.

Yevgeny DodCHAIRMAN OF THE

MANAGEMENT BOARD

The RusHydro development model provides for entering international markets. Our main focus is clearly on hy-dropower and we are enter-ing regions that have abun-dant water resources, are experiencing high demand and have a favourable invest-ment climate. We have drawn up our roadmap: Southeast Asia and India, Latin Amer-ica and Africa and Turkey. The most interesting thing is that we can develop vari-

ous cooperation models. We can act as the main construc-tion contractor together with Tekhnopromexport, for in-stance. We can bid for equip-ment installation and engi-neering work, an area where the experience and expertise of our design and engineer-ing teams can be useful. We can discuss equity invest-ment. We can also limit our discussions to just manage-ment and energy transmis-sion. We have a number of diverse scenarios to offer our partners. This gives us an ad-vantage. We are considering interesting options in India.

THE LONG-RANGE VIEW

RusHydro CEO: India has huge potential

The main thing is that we are not only looking at build-ing just hydropower plants, but also water-storage, tidal and wave energy stations. In-dia is a place where we are likely to work on complete-ly new projects. It’s is a huge country with a growing po-tential, growing demand and has its own specific character. But it is also a country abun-dant in water resources. We should definitely go to India and work with our Indian col-leagues.

From an interview with

Kommersant newspaper

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Website of the Embassy

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www.rusembassy.inSee our new design

Subscribe to the e-paper www.indrus.in

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BUSINESS REPORT IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA Technology

WEDNESDAY, MARCH 9, 2011

IN BRIEF

President Dmitry Medve-dev has signed a decree under which he can oblige the state agencies to pres-ent the bills which they are developing for a public dis-cussion on the Internet. Three months later, the fed-eral agencies will have to report to the president on the discussion results. It’s possible that following the Law “On Police” and “On Education”, online users will see a new draft of the Law “On Government Pro-curement”. Some of the more signifi cant bills will be subject to an online pub-lic discussion by the presi-dent. The decree was signed by Medvedev in early Feb-ruary. In accordance with the decree, “draft federal constitutional laws and federal laws, concerning the social and economic policies of the Russian Fed-eration” may be presented for public discussion by the presidential decision. The draft laws will be published by the federal state agen-cies, involved in their devel-opment. RIBR

Online public

debate of bills

Web-search company Yan-dex and anti-virus software developer Kaspersky Lab fl y the Russian fl ag in a 2011 ranking of the world's most innovative companies. The Moscow-based companies are both new entrants in the list, released by US business journal Fast Company re-cently. The Russian pair sits proudly in The World's 50 Most Innovative Companies above global giants of the genre such as Microsoft, Cisco and Samsung. Yandex, which holds a 65% share of the Russian inter-net search market ranks at 26, with Fast Company praising it for being one of the few around the globe to have fended off US giant Google - which sits sixth in the list. Kaspersky Lab, the world's fourth-biggest maker of secure content management systems makes its debut at 32, with Fast Company admiring the way it harnesses Rus-sia's legions of hackers to help it fi ght viruses. Nevertheless, the US domi-nation of the rankings is evident, with Apple in top spot, followed by Twitter and then Facebook in third positions. RIBR

Kaspersky,

Yandex global

innovators

Rosnano and the Russian Venture Company, two cor-porations responsible for promoting the Russian economy’s modernisation, actively use Facebook and Twitter to work with scien-tists, startup owners and experts. Their social net-work groups have become discussion boards waiting to be transformed into a sort of venture project ex-change, where investors and inventors will meet. Another example of using a “virtual focus group” to get insight into complex technological processes is provided by the Federal Grid Company (FSK man-ages Russia’s unified na-tional electric grid). The company is using Twitter to gather ideas and sugges-tions for the upcoming roundtable discussion on next-generation intellectu-al networks at St. Peters-burg Economic Forum in June. RIBR

Facebook and

Twitter for

modernisation

Trends Cloud computing set to be the next big thing

“Extraordinary potential” – this is how California’s then-Governor Arnold Schwarze-negger glowingly described Russia’s technological fu-ture during his visit to the country in October, encour-aging investors to partici-pate in the Skolkovo inno-vation hub.While the hub begins to form in the suburbs of Moscow, and may someday bring re-search and development div-idends to President Dmitry Medvedev’s hoped-for diver-sifi ed economy, the ongoing business of IT is returning to its pre-crisis glory.In 2010, Russia's IT market value was estimated to be $20 billion, according to Interna-tional Data Corporation, a prominent international IT analytics fi rm. The US mar-ket is estimated at $531 bil-lion, while China had $96 bil-lion in IT business last year.Last year was “surprisingly good” for the IT industry, said Robert Farish, regional di-rector at IDC for Russia and the CIS, adding that the 30% growth was nearly twice of what had been forecast. Though computer hardware sales returned to pre-crisis levels by mid-2010, and

Russia's IT industry has

bounced back. Medvedev's

innovation agenda and the

surge in PC sales will ensure

the boom will last longer.

many mid-sized projects were ordered and completed, major outsourcing deals — in which companies divest themselves of their IT de-partments and allow exter-nal service providers to do their IT — did not take off. This year, industry players expect continuing growth while the government pre-pares to spend big to provide Internet-based services to the people. Observers have consistently seen a direct link with Russia’s IT spend-ing and the price of oil. So with black gold approaching $100 per barrel, the market looks good for 2011.“Certainly, the continued mobilisation of resources fo-

cused on Skolkovo and Pres-ident Medvedev’s innovation agenda was a highlight of 2010,” said Ron Lewin, man-aging director at TerraLink, a major IT services company in Russia and Kazakhstan.Skolkovo is trying to differ-entiate itself by focusing on research and development in science and technology, and not just IT. But the local view of the project is sometimes sceptical. Others call Skolk-ovo “a political project” and

refuse to comment on it, say-ing that in Russia, business and politics are best not mixed. Microsoft Russia head Nikolai Pryanishnikov called Skolkovo a long-term project with “good pros-pects” that might take doz-ens of years to create.But Skolkovo alone is not enough to modernise the economy. Hubs like it should be created across the coun-try, Pryanishnikov said.Almaz Capital pledged $30 million to build a cloud com-puting incubator, the first project to be approved. Mi-crosoft, Cisco, Siemens and Nokia have all announced intentions to participate in Skolkovo.Regardless of grandiose projects, the average citizen has felt the power of IT in the palm of his hand or at fi nger-tips, as smart phone and per-sonal computer sales boomed. “The PC market and smart phone market both grew in excess of 60% in 2010 in unit terms,” Farish said. The product offering has changed a lot between 2008 and 2010, and prices significantly dropped, not just for Russia. “Now there are products for a far-broad-er range of potential buyers than there were before,” Far-ish said. This brings out fi rst-time buyers — students and families buying computers for their children, analysts say. Many foreign IT manu-factures until recently have

computing — in which large corporations get their IT, or parts thereof, as a service, and don’t have to be concerned with where or on what plat-form the work is being done. “Everything is going cloud,” said Owen Kemp, president of Newclouds and former vice president of HP. Kemp says it has multibillion-dol-lar potential in Russia and more than trillion-dollar prospects worldwide. Cloud computing will allow compa-nies to cut IT budget spend-ing by 10% to 30%, said Al-exander Galitsky, an IT venture capitalist and Skolk-ovo board member."The share of IT services in the total volume of IT mar-ket in Russia is lower than the average in the world and is significantly behind Eu-rope and the US. I think the time has come to change that,” explained Microsoft’s Pryanishnikov. Cloud servic-es have, however, been slow to gain acceptance in the Russian market.

of hands before reaching the local market, analysts say.Shamil Shakirov, president of I-Teco, a leading systems integrator, pointed out unre-liable delivery times by the vendors as one of the key problems in the relationship between foreign and Russian companies. One reason for the missed deadlines was

vendors' conservative esti-mates of sales for 2010 early on, which resulted in cut-backs in production capaci-ties. Currency fl uctuation is another factor. The govern-ment has been struggling to bring IT companies onshore for the last 10 years, as it would increase customs duty and tax revenues.Things began to change in 2006, when the IT market size began to become attrac-tive to foreign companies, and the current boom helps them to want “to create equal opportunities for all”, Ana-toly Karachinsky, president of IBS Group Holding, one of the country’s biggest IT com-panies, said. Some progress has been made, with Hewl-ett-Packard fi nally opening its local PC production facil-ity, along with partner Fox-Conn, in St. Petersburg in April 2010, and Microsoft’s decision to switch to ruble-based contracts last month.Market players unanimously call 2011 the year of cloud

IT market back to pre-crisis glory days

OLGA RAZUMOVSKAYATHE MOSCOW TIMES

45-year old antivirus-software

designer Yevgeny Kaspersky

is one of the most successful

businessmen in Russia

Russian citizens are feeling the power of IT. PC and smart phone markets grew over 60% in 2010.

Now, online malls entice two-tier cities

Retail Revolution Ozon blazes a new trail from Moscow to Vladivostok

RACHEL MORARJEE RIBR

Russia's online mall Ozon.

ru's success has spawned a

loyal clientele in big cities.

Internet shopping is now

set to storm the regions.

been running an offshore business, in which they sell their products to Russian partners’ branches abroad, leaving them to transport the products and navigate the murky waters of customs. This resulted in vendors los-ing control over their pricing in the market because their products went through a lot

PC penetration 52% by 2011-end

With an installed base of 69.1 million personal computers by the end of 2010, Russia has achieved a penetration rate of 43.6%. The Communica-tions and Press Ministry es-timates that it will grow to 52% by the end of 2011, while last year's 66.4 million regu-lar Internet users will grow to 80.2 million. With the goal of increasing transparency, the government’s planned spend-ing of 80 billion rubles ($2.6 billion) in 2011 on IT systems

to provide bureaucratic ser-vices to the people is a key element in the battle for effi-ciency and against corruption.As a part of this programme, called “The Informatization of Society”, the ministry is au-diting and consulting on the IT budget of nearly every ma-jor federal agency. Last year, 227,000 citizens paid their traffic fines online, 177,000 created accounts in the pen-sion fund and 100,000 re-ceived passports online.

Twelve years ago, a group of science fi ction enthusiasts in St Petersburg figured out there was no place to buy their favourite books. So they set up Ozon.ru, which over the following decade went from selling sci-fi nov-els to everything from DVDs to cutlery. It’s now Russia’s answer to US online giant, Amazon. The secret of Ozon’s success offers valuable tips to entrepreneurs in brick-and-mortar companies who are hoping to tap the coun-try’s growing consumer mar-ket. “Because Russia is so big, the delivery challenges are extremely complex,” says Ozon CEO, Bernard Lukey.Defying the fi nancial crisis, Ozon’s orders grew by 2% in 2009, as more Russian shop-pers decided to shun the country’s glittering malls and pick bargains from the comfort of their homes. Rus-sia’s biggest markets remain in its two largest cities, Mos-cow and St Petersburg, but the demand in Russia’s re-gions has exploded, with Ozon’s business there surg-ing 200% in 2009.About one-third of Russia’s increasingly wealthy 143 million consumers are on-line. Russia’s internet mar-ket is growing at a double-digit clip, with users in spring this year going up 23% on 2009, according to Russia’s Public Opinion Foundation.

For online marketers, Russia offers two appealing quali-ties: It’s one of five countries in the world where Google isn’t the market leader, and Russia is now the second biggest online market in Eu-rope in terms of users, hav-ing overtaken the UK last year. The total advertising market in Russia was about $7.5 billion in 2010, with about 11% of that going to online ads. The market is ex-pected to grow to about $10

but a disproportionate num-ber of people online live in Moscow or St Petersburg, with more than 70% online in the former and only slight-ly less in the latter.However, Ozon’s numbers show that internet penetra-tion in Russian second-tier cities and rural areas is like-ly to be the next frontier for growth. Lukey expects in-ternet shopping to rise sharply in the regions as broadband becomes more available. “It will be a very big market and is growing all the time,” he said.Ozon has a sizeable market in the second-tier city of Tver, where its warehousing operation is situated, and is now focusing on building up its business in the Pacific port city of Vladivostok.It has continued to blossom by taking on delivery chal-lenges head-on. “When peo-ple order online, because the ordering process is quick, they also expect their goods to arrive very quickly,” says Lukey. Ozon, therefore, has had to pioneer a variety of different delivery options, including setting up its own courier service, O-courier, so that orders can reach cus-tomers in major cities at a much lower cost. Ozon has also set up a net-work of collection kiosks in Moscow and St Petersburg where customers can collect their orders and pay in cash if they want a faster service than the Russian post can offer. Ozon’s own courier service delivers around 3,000 orders a day in the capital and another 1,000 orders a day in St Peters-burg.

The Russian market for eBooks and devices to read them (readers) is expanding exponentially. Whereas only a few thousand readers were sold in 2007, sales jumped to 60,000 in 2008, 250,000 in 2009 despite the crisis and recorded 470,000 in 2010. The market has grown over seven-fold in two years.The average cost of a reader in late 2010 was about 110

Gadgets Pirates are killing the business, say publishers

The eBook reader market in

Russia has grown seven-fold

in the last two years. The

printed books have sadly

suffered a cut in demand.

euro for a model with a TFT screen and 175 euro for a model with an E-Ink display. The cost of the latter de-clined by almost 30% over the previous year, says Mari-na Rozhkova, who analyses the Russian mobile gadget market. Pocketbook prod-ucts are the most popular in Russia with a 40% share of the market, followed by Sony (29%), Lbook (12%) and other manufacturers. EKSMO, one of Russia’s largest publishing houses, reports the market for tradi-tional books, on the other hand, shrank almost 15% in 2009, continuing a trend seen in previous years.

After registering 145,000 new books three years ago, the Russian Book Chamber recorded only 59,500 new books in the fi rst half of 2010. The decline in overall circu-lation totalled 17.2%.But the readers are not the only ones to blame for the contraction in the book mar-ket, circulation and royalties. “It’s the pirates who are kill-ing the book business, not the eBooks,” said Vladimir Obruchev, the director of the non-fi ction group at EKSMO. “It’s virtually impossible to convict people who distrib-ute illegal eBooks because their server could be located anywhere.”

E-readers storm market, printed books threatened

ARTUR LOYANICHLOREMASER

Japan’s Mitsui & Co. recent-ly bought 14.9% stake in the Russian company QIWI, which manages a huge net-work of payment machines installed at shopping malls, train stations and entertain-ment venues. These machines accept payments for mobile phone and Internet accounts, utilities, money transfers and other purposes a person may need without going to the bank and waiting in line.

Tie-ups QIWI retains control, targets Southeast Asia

Japan’s Mitsui has become a

co-owner of QIWI, Russia’s

largest payment machine

operator. They are betting

big on Asian markets.

Analysts guess it paid any-where between $4m and $80m for the stake. QIWI management has re-tained a controlling interest with 63.7% of equity, with another 21.4 % held by Mail.ru Group.

Around 80% of Russian mo-bile phone owners use pay-ment machines. Payments through terminals should have reached around 750 bil-

lion roubles in 2010. QIWI controls upto 45% of this market. The tie-up with Mitsui is strategic. “In contemplating the transaction, we pre-sumed that Mitsui’s assis-tance with our international expansion will open the broadest development pros-pects for us,” said QIWI Group President Andrei Ro-manenko. The Russian com-pany is targeting primarily Southeast Asia for expan-sion. The region is ripe for the payment machine business: cash is popular and compe-tition is all but non-existent, with scratch cards still the main tool for topping off mo-bile phone accounts.

Mitsui to power Asian dream of payment machine leader

SVETLANA SOROKINARIR

Payments through terminals was close to $750 bn in 2010. QIWI controls 45% of the growing market.

billion by 2012, with online spending increasing to 13% of total spend, according to Russian daily news provider Kommersant. Unlike oil, gas and many oth-er formerly state-owned sec-tors, the online businesses, which have sprung up over the last 10 years have been able to set their own rules for doing business, free from the corruption and vested inter-ests that sometimes are seen in other sectors.

Online ads got 11% of $7.5 bn pie

Foreign investors are en-thused. Russian internet group Mail.ru’s IPO was 20 times oversubscribed when it debuted on the London stock market, as punters

rushed to grab a slice of Rus-sia’s growing online pie.So far, around 43% of Rus-sians have internet access, many of them at their place of work rather than home,

Ozon.ru has struck a balance between fast orders and

cheap delivery across Russia.

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BUSINESS REPORT IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA Lifestyle

WEDNESDAY, MARCH 9, 2011

Denis

TerekhovSPECIALLY FOR RIBR

the Russian social networks. Russian users were quick to feel at home at the hereto-fore-unknown Facebook. Local fan pages have been growing at a pace their glob-al peers can only dream of. For example, the Russian page of the Social Media Club (a community of web communication profession-als) quickly became the larg-est among all global branch-es o f th i s non-profi t organisation. There is, however, an oppo-site trend. Russian investors’ equity stakes in global web projects have exceeded the value of the entire Russian Internet. Russian expansion is not limited to content: it extends to investments, too. After consolidating domestic web assets, Digital Sky Technolo-gies (DST), a company owned by Russian entrepreneurs Yuri Milner, Grigory Finger and Alisher Usmanov, has been busy scooping up at-tractive assets worldwide. These include the promising group discount system Gruppon and the online game developer Zynga. And their share of Facebook in

terms of users (DST controls around 10% of Facebook with more than 500m regis-tered accounts) is already ten times the number of Rus-sian Facebook users.The company’s portfolio contains more than 20 large Russian and international projects, and judging by their ambitions, the trio won’t stop there. Yandex is the only major project in Russia not under DST control; this in-vestment company, there-fore, can grow only via glob-al acquisitions. Some call DST a Web version of Gaz-prom, Russia’s gas behemoth with global ambitions.Russian investors are also eyeing Twitter, which is also growing rapidly. This has much to do with the person-al participation of Russian President Dmitry Medvedev, Russia’s most prominent Twitter user. People close to Medvedev say Twitter helps the president monitor public opinion online by reading messages users send him. The president not only reads, but also responds. In Decem-ber 2010, well-known blog-ger Inna Smbatyan twittered that she had a dream where she had dinner with Medve-dev. The president jokingly replied that he didn’t have dinner at all because he worked late into the night preparing for his address to the Federal Assembly.

Any Russian web technology con-ference is not complete without

a debate over whether global portals will eventu-ally squeeze out their local rivals and if so, when. What industry experts don’t argue about, however, is that Russia is in a one-of-a-kind situation.As Google and Facebook march victoriously across the planet, an outstanding trend in Russia’s Internet landscape over the past couple of years has been the growing strength of local companies like the search engine Yandex and the social networks, Od-noklassniki (Classmates) and VKontakte (In Con-tact). According to LiveInternet, not only didn’t Yandex lose its search market share in 2010, but increased it by 5.2% to 64.1%. Google’s share in Russia fell by 1.9% to 21.5% of total search queries. Yandex’s fi nancial performance also im-proved, as revenue rose from $290 million in 2009 to $416 million in 2010. Ru-mours of a Yandex IPO are getting increasingly louder. What is the secret behind the company’s success? In fact, Yandex has become an all-encompassing homepage for many Rus-sians who use it as a start-ing point for surfi ng the In-ternet . The share of English-language search queries not being that large in Russia has also played a role. Besides, there are two more reasons that I believe explain a lot.If you compare websites of Russian companies with their American peers, for example, you’ll notice that Western websites are mini-malistic. Russian compa-nies tend to overdo it with design and embellish-ments, denting their sites’ functionality. Another rea-son is that Yandex opens hyperlinks in a new win-dow, whereas Google adds new tabs to the same win-dow, which slows down the search. These are small things, but they all com-bine into making Yandex the leader.Facebook made a giant leap forward in Russia over the first nine months of 2010. Some say it rode on the success of The Social Network movie, which is little more than a two-hour Facebook commercial. What’s important, while lagging behind its Russian peer VKontakte by the number of registered ac-counts (around 5 million in the Russian Facebook vs. more than 100 million in VKontakte), the global net-work boasts just 250% less traffic. Plus, the Russian Facebook users are per-ceived as the most ad-vanced target audience by large advertisers.While back in March last year it seemed that Face-book had little hope of catching up with VKontak-te in the medium term, Fa-cebook managed to capita-lise on mistakes made by

OPINION

When local brands outstrip global icons

Denis Terekhov is Managing Partner, Social Networks Agency.

Twitter helps Medvedev monitor public opinion by reading messages users send him.

Russian investors' stakes in global web projects exceed the value of the entire Russian Internet.

News Tweets were the first to report Moscow airport attack. News agencies followed the blasts half an hour later!

While Russians in metros

prefer twitter and blogs for

their daily fix of news, it's

premature to write the

death of traditional media.

The old media versus new media debate has acquired a new piquancy in Russia in the aftermath of the terrorist attack at Domodedovo Air-port in January this year. Of-fi cial media outlets in Russia have faced little criticism from the public for their slow and unprofessional coverage of the recent emergencies in Moscow, such as the Moscow airport attack and the na-tionalist protests against im-migrants at the Manezh Square in December. Thirty minutes after the Do-modedovo bombing, my friend called me and asked “Are you ok? Are you at home?” I answered “Yes. What happened?” “Don’t you know what happened? Jour-nalists never know what’s happening. Look at Twitter,” he said. The first messages about the terror attack ap-peared on twitter much ear-lier than in the official media. The popular Moscow-based business portal Slon.ru re-constructed the events in the airport on January 24. The fi rst tweets about the ex-plosion appeared on Twitter minutes after the bomb went off at 16.32. News agencies reported the bombing half an hour later. The Dozhd news channel and Kommer-sant FM radio were running reports of the event with eye-witness accounts at 17.30.The first amateur video of scenes of Domodedovo after the bombing, taken on a mo-bile phone, was posted on Twitter at 18.20. Ten minutes later this video aired on the RT television channel.The main Russian television channels, however, contin-ued to broadcast soap operas and talk shows, while for-eign media such as CNN and BBC carried live broadcasts from the airport and provid-ed expert comments.Alexei Navalny, a popular

programmes. Millions of people who live in Moscow and used the metro that morning did not have access to any information and could not understand what had happened or why certain stations were closed.A poll conducted by the All Russian Public Opinion Cen-ter (VTsIOM) found that res-idents of big cities such as Moscow and St. Petersburg trust well-established media sources less than their unof-ficial counterparts. Only 34% of respondents from these cities trust official media, while 45% prefer to get information from alter-native sources. This may be because the number of Inter-net users per capita in Mos-cow and St. Petersburg is higher than the national av-erage and most popular bloggers live in these cities.However, for most of those who live in small towns and villages in Russia, television and newspapers are still the main sources of information. The survey discovered a trend: the smaller a residen-

tial settlement, the more its inhabitants trust official media sources. Secondly, the credibility of alternative news sources has increased since 2008, while the number of people who trust official media has decreased.But despite this, it’s prema-ture to talk about the death of the traditional media. “Re-cently, there has been a lot of talk about the death of tra-ditional media. However, it is not yet time to lay it to rest,” said Olga Vdovina, the depu-ty director of the MediaGu-ide.ru Internet portal, which focuses on the media indus-try. “New media can cover the news faster than televi-sion, radio, magazines and newspapers for several rea-sons. Bloggers do not need to wait for an editor-in chief or media owner to approve their posts. They are also not obligated to check the infor-mation they share with read-ers,” she said. “Most bloggers write anonymously using nicknames. Their posts are often very subjective. It seems the only benefi t of new

media is the quick distribu-tion of information. How can bloggers compete with top media corporations which have a large professional staff?” Vdovina asked.Paradoxically, even some popular bloggers agree . “We will not receive news from Twitter, either today or in ten years time. The mass media will fi nd news on social net-works and report it to us. That’s why it is called the mass media,” wrote Anton Nosik, one of Russia’s top bloggers. “Regarding televi-sion, it didn’t die when fi lm crews arrived two hours late to Domodedovo. It died when it wanted to decide for us what we want to watch: news, soap operas or ‘The Big Laundry’ show. In 2011, it is the audience that makes such decisions.”"The question of what are the most popular and reputable media sources is also a gen-erational question. While young people prefer the In-ternet, many middle-aged and elderly people trust tele-vision more.”

Twitter challenges old media

SVETLANA KONONOVARUSSIA PROFILE.ORG

Social media around the world: Facebook dominates globally

27 MN or one-fourth of adult Russians visit at

least one social network no less than once a month. The number of people using so-cial networks has increased by 22% over the past year.

12 MN is the daily number of users of the most pop-

ular Russian social network, 'In Contact'. 7.2 mn log onto 'Classmates' and 5.3 mn visit 'My World'. 1.2 mn use Face-book on a daily basis.

345 PERCENT and 257 percent

were the growth of Twitter and Facebook users in Russia. They are Runet’s most rapidly growing social networks.

THE NUMBERS

The blogging

bug bites elite

In 2010, Russia’s political elite became fascinated with Twit-ter. Besides President Dmitry Medvedev, about 80% of all regional heads opened ac-counts in the social network-ing site, as well as employees of the federal ministries, may-ors, and deputies. New forms of communication with the public have also emerged: re-ports are issued directly from meetings, users are surveyed, and the public’s concerns are received via Twitter. “The flight is delayed by an hour and a half…" blogged gov-ernor of Kirov Region Nikita Belykh, while sitting at the Vnukovo Airport. For some, a micro-blog has been a means of mobilisation. “Today, at 16:00, Yabloko will hold a ral-ly for interethnic peace near the monument to Griboedov. Join us,” said the party’s lead-er, Sergey Mitrokhin.

Virtual Reality Listen to Kishore Kumar on Vkontakte.ru, Russia's answer to Facebook, that has 75 million users

India has a population of nearly 1.2 billion with a per capita real income of $810. Russia is home to 141 mil-lion people with per capita income of $3,970 i.e. almost fi ve times the income spread over just 12% of India’s pop-ulation. But at more than 40% internet penetration,

Russia has only half of

India's internet users, but

blogging is more popular

for airing views and

dissent, especially among

the youth.

Russia has about 60 million users – significantly less then India’s 81 million at only 7% penetration. De-spite these differences, both Russia and India are addict-ed to e-mail, search engines and social networking. The buzz that Russian Presi-dent Dmitry Medvedev ap-parently learned of the Mos-cow airport terrorist attack over Twitter shows the power of social networking in Rus-sia. In fact, Medvedev recent-ly won the best Russian-lan-guage blogger award for his Twitter and Zhivoy Zhurnal (Live Journal) accounts.

Reaching over 200,000 fol-lowers and another 84,000 followers for the English page (@MedvedevRussiaE), the Russian president wishes the country on important holidays, comments on secu-rity issues and even posts pictures and answers ques-tions by other Twitter users.Even if the Indian prime minister isn’t tweeting, plenty of others are. Shashi Tharoor, a former minister and UN diplomat, is one of the high-profi le politicians using Twitter, creating quite a stir in India’s staid politi-cal class. Bollywood bigwigs

Shah Rukh Khan, iconic fi lm star Amitabh Bachchan and Aamir Khan post up-dates regularly.According to the Boston Consulting Group’s report ‘The Internet’s New Billion’, 75% of India’s most popular sites are international – the highest amongst BRIC countries – a phenomenon attributed to the prevalence of the English language. Brazil’s Orkut leads the

pack on the Indian network, followed by Facebook and Twitter. In Russia, however, due to the predominance of Russian language, local con-tent and sites top the list. Vkontakte.ru – a site mod-eled on Facebook – is the most popular site in Russia and some former Soviet re-publics with over 75 million registered users, some of whom likely maintain dual or multiple accounts. Inci-

dentally, when compared to Facebook, Twitter and Orkut, Vkontakte has other uses. Where else can one add Hindi music and listen to old Kishore Kumar num-bers? Unlike India, Russia enjoys blogging more than social networking. In Rus-sia, 33% internet users spend their time blogging vs. 15% on social network-ing sites. With the electronic media largely in the Krem-lin’s grip, people fi nd blog-ging an outlet for airing their views and challenging policies.With the increasing popu-larity of English, greater availability of content in local languages, and fatter wallets, the social network-ing phenomenon can only get stronger. India’s young population will ensure that it goes in the right direction. But Russia’s population is shrinking. Perhaps, it's time Medvedev started tweeting about population control. As for Dr. Manmohan Singh, we’d be glad to hear any-thing he wants to tweet!

Why do Russians like blogging more than Indians do?

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Russian blogger, described this as the death of official media in the country. “What happened at Domodedovo is horrible, but it is too early to comment on it. However, right now we are watching the fi nal death of television and traditional media as a source of up-to-date infor-mation in an emergency,” he wrote. “News agencies, radio and television - they all are quoting messages from Twit-ter. I first thought about it when the events on Manezhn Square were broadcast there [on Twitter]; now it has be-come obvious. For the first hour and a half, there is only Twitter.”Other bloggers also pointed out that the coverage of the bombing at Domodedovo in official media was as slow as reporting on the terrorist at-tacks on the Moscow metro on March 29, 2010. When two bombs exploded in the Mos-cow metro, at 7:56 a.m. and 8:36 a.m., state TV channels reported the news much later, and continued to broadcast entertainment

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