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Vladimir Putin: Good afternoon, dear ladies and gentlemen.

I am glad at this new opportunity to speak before the representatives of Indian business. Before such a respectable audience, in which well-known business people have gathered working in the field of the economy, directly linked with cooperation between India and the Russian Federation.

People in our country well know what huge contribution the business community has made to the present-day achievements of India. The rates of economic growth impress. Yesterday evening we touched on this topic in an informal conversation with the Prime Minister. The economy is expected to grow by about 10 percent. This is an outstanding result. I would say — a real breakthrough. To a significant extent, all this occurs thanks to well considered decisions, ability, your ability included, to find a niche in the world economy. To deal with such partners is both profitable and forward-looking.

Many of you have long since been fruitfully cooperating with Russia. Just as I was entering this hall, I had a chance to greet some of those present here. A large part of them spoke Russian, having had direct contacts with Russia for years. You understand well the breadth of opportunities which Russian-Indian economic partnership is opening up, as well as the specifics of the problems pertinent to it.

Two years ago in Mumbai I spoke of what steps were being taken in Russia to improve the economy and create a favorable business climate.

Today this work is yielding a concrete result. And it is already obvious that the positive trends in the Russian economy bear a stable character. For the fourth consecutive year we have a sufficiently high rate of industrial growth. By preliminary estimates, industrial production in the first three quarters of 2002 rose by 4 percent.

For Russia, this is a good indicator, especially against the background of the recession of the world economy. Moreover, some industries exhibit even a higher development rate. In particular, the nonferrous metals, food, fuel and energy sectors of the economy. If we are to speak of the fuel and energy field — growth there will exceed 8 percent. The metallurgical industry is also approaching this figure. What's especially gratifying is that the food and processing industry will reach a growth of about 7 percent.

The reduced tax load on business helps stable economic growth in many ways. Here a whole set of drastic measures has been taken in recent years.

Not only the tax, but also the judicial, administrative and pension systems are being modernized in the country. Work is under way to improve the activity of the natural, or structural, monopolies.

We are also working to create an effective system of support for small and medium-sized businesses, since we regard their active development as an essential element of the formation of a modern business environment. I know that in India, special attention is being paid to this sector. For a long time, the legal base has been streamlined. It would surely be interesting to learn your experience here. Much has been done in India on this issue, including with a view to fighting unemployment.

Also invariable is our course toward consistent integration into the world economic system. We are earnestly getting ready for entry into the WTO — naturally, on the terms acceptable for interests of the national economy.

We also consider that a flexible investment attraction policy has a great significance for increasing economic growth rates. For this purpose measures are being implemented to maintain macroeconomic stability and preserve the steadiness and predictability of the rate of exchange of national currency.

The gold and foreign exchange reserves of Russia, of its Central Bank have been steadily growing and at a sufficiently high rate. Monthly growth is about 1 billion dollars and by the end of the year will reach, according to our forecasts, 50 billion dollars. Along with a steady decline of inflation, real population incomes grow. In the current year, by preliminary estimates, this growth will constitute about 6 percent.

Approximately the same figures have been notched for the previous two years. We consider this an acceptable, satisfactory result.

Russia has done quite a lot for the legislative support of business, the creation of equal and transparent work conditions on the market. We are paying special attention to the adoption of international accounting standards and to the protection of shareholders' and investors' rights.

Many of our foreign partners have already assessed the benefits of investment cooperation with Russia. I think that representatives of Indian business too will be able to find interesting and promising projects for investing their capital.

As is known, the transition to market principles in Russian-Indian trade was accompanied by objective difficulties which, in their turn, led to a drop in the volume of our trade turnover. Frankly speaking, there was nothing unexpected about that volume drop. Today Russia's share of Indian foreign trade remains on the level of 1.2 percent, and of Indian imports 1 percent. The proportion of high technology products thus far is very small, and trade continues to be based on a narrow range of goods, very sensitive to market requirements.

However, the positive, qualitative changes in our economies today create a number of additional stimuli for growth of effective pragmatic cooperation in the most diverse fields of business. And there have already appeared serious indicators that the situation is definitely improving, if slowly.

There are a number of good examples of our cooperation in the investment sphere. Our state oil company Rosneft and India's Oil and Natural Gas Corporation are carrying out the big investment project Sakhalin-1. Gazprom is engaged in prospecting and field development on India's shelf in the Gulf of Bengal. We have gotten down to practical work to build the Kudankulam nuclear power station.

It is our strategic task to develop the transport infrastructure. The Coordination Council for the North-South international transport corridor, and two special working groups have been established for its solution. I am convinced the implementation of the projects in the field of the development of the infrastructure will serve not only the interests of the two countries, but also will generally constitute an important factor for livening up business activity and deepening economic integration on the Eurasian continent. I think that the solution of problems in the area of infrastructure development will create good prerequisites for work in the field of small and medium-sized business.

Expanding cooperation in high technologies also promises considerable mutual benefits. A real buttress here is the weighty scientific-technical potential of Russia and the recognized successes of India in the most diverse fields, including biotechnology, software and communication systems. I am convinced that close cooperation is key to strengthening our positions in the global technological market.

The future belongs to the establishment of joint ventures. In our opinion, it would give a good return to invest a part of the Indian debt in joint ventures in India. But also in the Russian economy as well. Primarily, in science-intensive, high-technology industries, as well as in the power generating and ferrous metals sectors.

Just now at a meeting with the Indian Minister of External Affairs, who heads the Indian component of the mixed Intergovernmental Commission for the Development of Scientific-Technical and Trade Cooperation, we discussed exactly this question and it seems to me that we have approached a period in our economic relations when thought should be given to how to use the positive elements we have inherited from the past. This is, in essence, available resources which we can put into the future development of our economies. I think that the moment has come when we ought to move from simple trade operations based on the Indian debt to creating a base of economic development for the future. And, moreover, I would like it to be a base that corresponds not only to the present, but also to the future of the world economy.

A major improvement of the infrastructure of inter-bank and credit settlements between the two countries is also in order.

I want also to especially stress the importance of promoting direct business-community contacts between Russia and India, because the business communities of the countries should know each other better. There is a need for regular channels of information exchanges on mutual capabilities, new projects and initiatives. All of this is a field for joint work of the chambers of commerce, and industrial associations both at the national and at the regional level. We are ready to lend such projects all the necessary assistance.

The Russian-Indian partnership is oriented towards a concrete result. We are working together in order to create new opportunities for the business and public initiative of our citizens. This is the exact aim of the documents which will be signed today. In the first place — the Declaration on Strengthening and Developing Economic and Scientific-Technical Cooperation.

I am convinced that we now have every reason to expect a serious breakthrough in the economic sector. Russia and India have strong potentials in the economic, technological and intellectual fields. And we already see in practice that putting them together is opening up broad prospects for the development of our countries and the growth of our citizens' wellbeing.

In India you say: ”Mastering anything isn't easy.“ And you, business people, well know: you can't get a real return without consistent and persevering work. Great success comes to those who have the will and determination to take up the most ambitious projects.

I am confident that the business communities of the two countries have all these qualities. I want to wish both you and us success.

Thank you for your attention.