Russia has issued its strongest appeal yet to India to resolve amicably the row over the cancellation of 2G licenses of Sistema Shyam TeleServices Ltd (SSTL), vowing to take all available measures to protect Russian investments in India.
“We are extremely concerned over the problems of Russia’s biggest investor in India and hope very much that the Indian side responds to our concerns,” said Sergei Gavrilov, head of the Property Committee in the State Duma, the lower house of the Russian Parliament.
SSTL, where Russia’s conglomerate Sistema holds a 53 per cent stake, lost 21 licenses when India’s Supreme Court, in February, cancelled all 122 2G spectrum licences, on the ground that they had been issued in a “totally arbitrary and unconstitutional” manner.
However, the Russian legislator said SSTL had broken no laws and it was unacceptable that the company should now buy 2G spectrum through an auction, as ordered by the Supreme Court, at prices 10 times higher than what it paid in 2008.
“We hope the Indian government resolves the dispute on a legal basis and compensates SSTL for the losses it has sustained,” Mr Gavrilov told a press conference in Moscow on Friday, called to set forth the Russian position on the 2G row.
Mr Gavrilov, who heads an all-party working group the State Duma set up earlier this month to protect the interests of its companies working in India, said the SSTL dispute was a test case for the ability of the Russian state to stand up for its investors abroad.
If the problem is not resolved on the basis of a bilateral investment protection treaty within a stipulated six-month period, which expires in August, Russia would take the case to the Stockholm arbitration court, the Russian legislator said. He also raised the possibility that Russia could retaliate tit-for-tat.
“We would hate to take mirror counter-measures that could seriously hit Indian business in Russia and put our ties in deep freeze,” Mr Gavrilov said.
Curiously, the Russian legislator issued this tough warning shortly after Commerce Minister Anand Sharma reportedly assured Russian officials at an economic forum in St. Petersburg that the Indian government would seek an amicable solution to the dispute.
Mr Gavrilov said Russia saw SSTL as a “flagship investment project” between India and Russia that should pave the way for other big-time investment deals in both countries.
“We are ready to invite Indian strategic investors to take part in the coming sell-off of stakes in top Russian state companies in telecommunications, energy, transport and infrastructure planned for the coming Autumn,” he said.
“Russia holds its doors open for Indian business and our relations are expected to be given a new impulse later this year that should not be marred by such unpleasant incidents as the 2G row,” the Russian legislator said referring to the coming visit of President Vladimir Putin to India.