Russian President Vladimir Putin arrived in India to rejuvenate ties hoping to win a strong share of India’s large energy and military budget and also be the Guest of Honor of the Republic Day Parade that showcases Indian military and cultural might.
During the Cold War, the erstwhile Soviet Union was the largest supplier of military equipment to India, which was the worst victim of Western technology sanctions and also India’s largest trading partner primarily because of the Soviet benign policy to allow trading in Rouble. After the end of the Cold War, Indo-Russian relations collapsed and despite many announcements of deals, preliminary discussions ended up with only USD 250 million deal for joint production of fighter jet engines which is being touted as “another historic event” and satisfaction of “one of Russia’s main foreign policy priorities.” However, both nations decided to cooperate more closely in defence research and development and in at least three cutting-edge areas.
As part of the India-Russia Working Group on Military Technical Cooperation, a joint group of specialists identified 12 projects in stealth, hypersonic and microwave technologies. Work on naval stealth technology making Indian naval vessels less prone to detection by hostile warships has begun and progressing well. Both nations cooperate on technologies to track ballistic missiles. Russia has asked Hindustan Aeronautics Limited (HAL) to become a joint partner in the manufacture of Sukhoi-30 MKI and the MiG 29 M2 series planes. A joint venture in the supersonic BrahMos missile has been a resounding success and an additional investment of USD 50 million has been earmarked to develop an Air Force version of the missile and both nations have started modifications of design and integration of components in cooperation with the Sukhoi Design Bureau. As part of its acceptance criteria, the Indian Air Force (IAF) has already listed fitment and trial of BrahMos on its Su-30MKI. Further, the fitment of BrahMos on new warships is also being considered.
Russia is yet to give clearance to hypersonic technology and India found that Russian specifications do not meet Indian requirements. Additional areas being considered for collaboration include stealth technologies for aircraft, aerodynamic technologies such as creation of plasma wing tunnel facility for air vehicle applications and development and testing of submerged air intake models for unmanned aerial aircraft.
With heavy emphasis on military cooperation, disappointingly there has been no breakthrough in natural gas and oil cooperation where both nations are anxious to partner. India is eager to get a larger portion of the Russia’s huge energy reserves and Moscow is anxious to get a good chunk of New Delhi’s energy import bill and Prime Minister Manmohan Singh observed that there is a “clear compatibility in India’s demands and Russia’s resources.” Even so, hectic lobbying based on finances, politics, international relations, and other leverages, India’s largest oil company, state owned Oil and Natural Gas Corporation (ONGC) has managed only a 20% stake in Sakhalin-I field to net 2.4 million tons of crude a year.
Bilateral trade has all but collapsed and stays rooted in military maintenance contract or an odd sale of military equipment and is nowhere near the Cold War high figures nor has the trade list diversified. With India looking more the West for arms to diversify its portfolio, the existing military relationship is also set to collapse.
A major stumbling block for Indian businesses seeking to do business in Russia
is the lack of understanding of Russian business culture and ethics. Still
another block is the lack of
land based access or alternate shipping routes to Russia and the Confederation of Indian Industry (CII) has already proposed numerous changes to the government to stimulate bilateral trade.
Putin has his work cut-out. He has to convince his Indian interlocutors that the Sukhoi jets are better bet to meet the 126 fighter jet request for proposal that India intends to float—with the BrahMos missile being targeted for fitment in the Sukhoi, the plane has a very good chance of acceptance. He will also pitch strongly for nuclear cooperation with India on the back of the Indo-US Civilian nuclear deal to include nuclear reactors and fuel supplies.
The Indian leaders will press him for greater transparency and access to energy sources and to get his government’s assent to sign the new “integrity pact” which will require his nation to guarantee that companies from his country will not bribe Indian decision makers. They would also ask for clearance on hypersonic technology and modifications to Russian specifications for microwave technology.
In terms of joint ventures, the two countries will further the plan to manufacture medium transport aircraft (to replace India’s ageing AN-32) and hopefully resolve the disagreement over Russia’s prior consent before selling to a third country. In this deal, India will invest USD 300 million in the USD 600 million project with Russia using left over monies in the Rupee-Rouble account. As of now, India will buy 40 of this aircraft and Russia 100. The two nations have also agreed to manufacture RD-33 engines used in the MIG-29K.
In the private sector, ONGC and Russian Oil major Roseneft are working on an
agreement by which
India will get a share in the Sakhalin-III project.