From Pune to Russia: a market breakthrough

Russia offers Indian businesses a substantial market opportunity, provided they can address its complexities. Company E. (the company preferred not to disclose its name) has transformed initial setbacks into a successful enterprise, exporting 80% of its concrete pumps, air compressors, shotcrete & plastering machines, and mixers to Russia’s construction industry. This case study examines their approach, offering insights for Indian firms targeting Russia and its connections to the Commonwealth of Independent States (CIS).

Origins and entry into Russia

Headquartered in Pune, a key manufacturing centre, Company E. produces a range of equipment designed for durability and efficiency, including concrete pumps, double piston plastering pumps, gypsum plastering pumps, shotcrete pumps, air compressors, and light towers. Founded in 2022 by an experienced mechanical engineer with prior roles at Tata International and a major German firm, the company targeted Russia due to its vast market scope and advantageous rupee-rouble exchange rate parity. Within three years, it secured a RUB 200 million contract, capitalising on construction growth in Russia and opportunities arising from the departure of European competitors in 2022.

The company operates on a geographical hub principle. The Indian entity, registered in Pune, oversees operations in the Indian Subcontinent, Middle East, Africa, and Southeast Asia with a team of 12 employees plus vendor groups. A partnered entity, registered in Russia, manages activities in Russia and CIS markets, employing over 40 staff members. Both companies operate under a perpetual contract for the sale and service of equipment marketed under the same brand, ensuring seamless collaboration.

Key insights from market engagement

Achieving success in Russia required adept handling of multifaceted challenges.

Market penetration and relationship building

Russia’s construction sector, historically dominated by German and Italian suppliers, presented challenges for Indian entrants. Establishing a foothold required identifying reliable partners and leveraging digital tools. To this end, the company launched a Telegram channel targeting key decision-makers, with the company founder noting the channel’s 165+ subscribers. A Russian-language website and a Krasnodar-based partner office furthered outreach, while successful trials reinforced client confidence. The company founder advises that “seeding comes first, then you can start on expansion and gradual consolidation in the region of operation,” reflecting a measured approach reliant on strategic alliances and online presence.

Financial management

In May 2022, euro-based payments through a major private sector bank faced delays of seven weeks due to restrictions on fund transfers, adding to market uncertainties. Transitioning to another notified bank in India and using Chinese Yuan via its Hong Kong subsidiary improved transfer efficiency, though currency conversion incurred losses of 12–15%. Around mid-2023, collaboration with Sberbank enabled rouble-based payments, reducing costs and delays significantly. Sberbank India provided critical assistance, swiftly establishing accounts and ensuring seamless financial operations during market turbulence. This partnership, initiated following a Russian partner’s recommendation, supports a consistent export schedule.

Both the Indian and Russian entities hold accounts with Sberbank, facilitating seamless transactions in national currencies (rupee and rouble). The exchange rate equivalence between these currencies ensures harmony, and compliance with territorial tax laws avoids double taxation. The use of a common banker and national currencies creates accounting parity, simplifying financial operations.

Photos courtesy of Company E

Logistics coordination

Transporting equipment valued at INR 2–4 million from ports such as Nhava Sheva (Mumbai), Mundra, and Kozhikode to Russia’s diverse regions required robust logistics. The company works with a leading Russian-origin shipping line, adhering to a predefined production and stocking schedule. Equipment is shipped in containers from Nhava Sheva to Novorossiysk, Russia, with customs procedures handled by the company’s Mumbai-based logistics team.

In 2024, major carrier delays of three weeks disrupted schedules. Separately, a 1410-model pump stopped mid-operation for two days due to a broken valve, risking half a million roubles in concrete losses. The company maintains a large inventory of essential spares at its Russia office, minimising the need for air shipments. In emergencies, spares are dispatched by air from Mumbai or Delhi, aided by a Russian logistics service, with delivery taking 6–8 days. A small valve, for instance, costs approximately INR 3,500 per kilogramme via express courier, including door-to-door service and customs clearance. Air freight rates, though currently elevated due to limited Russia-bound flight schedules, are becoming more economical as conditions improve.

Regulatory compliance

Adherence to Russia’s GOST standards—spanning industries like construction, energy, oil and gas, transportation, and food processing and setting rules for safety, quality, and compatibility—necessitated certification for each machine, including tunnel-specific pumps and cold-start compressors suited to -4 °C conditions. Initially, the company consulted local agencies; now, a Krasnodar-based office manages compliance. The founder values regional support for navigating these standards efficiently.

Future prospects

The company aims to expand into Russia’s agricultural sector. With logistics refined—three vessels monthly between Mumbai and overseas—and finance optimised, it views Russia as a natural extension of India’s market. The company currently caters to the construction sector, focusing on equipment for concrete placement, gypsum plaster spraying, mortar conveying, and shotcrete for tunnel construction.

Bilateral trade between India and Russia reached $65 billion in FY24, propelled by oil imports and equipment exports. For Indian businesses, Company E.’s experience demonstrates that success in Russia hinges on adaptation, perseverance, and strategic partnerships.