An old new friend is coming calling, and India has its chequebook ready to sign a $5 billion deal for badly needed air defence weaponry. An old friend, because both Russians and Indians are still sentimental about the close ties that once led both to stand up to much of the world; new because those ties are changing in character and scope. The story doing the rounds in New Delhi’s power corridors is that Moscow is acutely unhappy about the dip in relations in recent years, even while India cosies up to the US. The truth is they have no reason to be. As President Vladimir Putin arrives in New Delhi for the 19th Indo-Russia summit, it needs to be acknowledged that areas of cooperation have diversified with a certain interdependence in most areas – rather than the dependence of India in previous years – that is healthy for both.
Take a look at the summary of India-Russia relations on the Ministry of External Affairs website. As is usual for the ministry, the website hasn’t been updated for a year, but it still shows a steady rise in Russia’s importance, after its virtual demise after the end of the Soviet Union. From the Strategic Partnership of 2000 to the “Special and Privileged Strategic Partnership in 2010, and finally the Sochi informal summit, the relationship has not simply come “a long way” but trod new pathways. Consider the progress over the last decade. The official documents of 2003, for instance, are a long list of hopes, and possible cooperation. By 2017, this has translated into actuals on the ground, including energy, railways, urban infrastructure, agriculture, high technology, and a raft of cooperative mechanisms which brings Russian companies to the growing market of India.
Among these several areas of cooperation – which admittedly also includes such placebos as cultural cooperation – two areas stand out particularly. One is the Russian entry into India’s energy market. This is not just limited to the fanfare of the first ever delivery of Russian Liquefied Natural Gas (LNG) to Indian shores this June, but as a detailed article in The Diplomat points out, covers a far deeper relationship. For instance, a Russian consortium acquired a controlling stake in the Indian assets of Essar Oil for $13 billion in 2017, the largest ever overseas acquisition by a Russian consortium. The giant Vadinar refinery has thereby emerged as a captive port with a distribution network of over 3,500 filling stations and a nice foothold into the future.
Conversely, India has also bought into Russian energy sources. In 2016, reports noted that Indian Oil Corp. Ltd, Oil India Ltd and a unit of Bharat Petroleum Corp. Ltd signed an agreement to purchase a 29.9 percent stake in Tass-Yuryakh oilfield and a 23.9 percent stake in the Vankor oilfield, in deals which were reported to be valued at $3.28 billion. There is more ahead, according to petroleum and natural gas minister Dharmendra Pradhan, in addition to the existing energy investments totalling $10 billion. The icing of the cake is not the figures. It is the fact that India has finally learnt to use its status as the third largest importer of natural gas to not only diversify its sources away from OPEC but also to get the best deal for itself. The 20 year Gazprom deal, for instance, has been negotiated at a rate far less than offered by Qatar, Australia and the US.
A second area where Russia has a competitive edge is in nuclear energy. Rosatom accounts for some 67 percent of total nuclear energy projects under construction. This is an area that Putin is pushing hard and succeeding given that projects are ongoing in at least ten countries. India’s own Kudankulam is set to expand with the deals for the fifth and sixth reactor signed last year, under a 70:30 debt-equity ratio. The Russian government will lend India $4.2 billion to help cover the construction cost of the nuclear park which has a capacity of some 6,000MW. The size of this becomes apparent when it is considered that the total installed capacity of all 22 nuclear plants at present is 6,780MW. In simple words, the Indian government has wisely decided to play on Russian strengths, even while keeping feisty western countries out of this area.
The third area of significant cooperation – and a considerable trace of dependency by India — is that of defence. As experts point out, Russia still supplies about 60 percent of defence equipment by value. There is also the undeniable fact that the Indian Army, in particular, is heavily dependent on Russia for spares well into the future. To take just one segment, almost its entire artillery and armour are sourced from Russia. Since these are not expected to be phased out anytime soon, the relationship is going to be a long one. The navy is no less. Russia’s helping hand in building nuclear submarines may soon be followed by an offer of other underwater vehicles and frigates with a significant 'Make in India' content.
The air force though less 'Russia heavy’ is however still largely dependent on its Mikoyan aircraft – and apparently liking it. Alongside the expected S-400 deal, and production of Kamov helicopters is the elephant in the room and the deal of the century – a plan to buy 110 fighter aircraft. Consider that the last few major air force buys – including the C-17 Globemaster, the C-130 transport, and Apache and Chinook helicopters have also been from the US, and that’s not even counting the armed drones. The US is catching up fast. According to experts, between 2000-2009 and 2010-17, US arms deliveries to India have increased by a whopping 1,470 percent. Moscow has a cause for concern. But hope floats, as US president Donald Trump continues to vacillate from friend to foe.
All of this is very well, and certainly indicates a certain inter-dependence with the Modi government playing its cards well in extracting the best from Moscow. The trouble, of course, is the “strategic’ part of the relationship. The popular notion that Delhi seethes at Moscow’s supply of weapons to Pakistan is largely untrue. Decision makers finally agreed that Russia could hardly be expected to resist the Pakistani defence market when India itself was diversifying its sources. The problem is not even that Moscow seems to have a hand in the Taliban negotiation issue. If Russia can extricate anything reasonably stable from the Afghan mess, so be it.
The main problem is its relationship with China, and arising from that, the Belt and Road Initiative and the China Pakistan Economic Corridor. Moscow still insists –with some reason – that its better to be a part of the BRI, together with Iran and Central Asia than out of it, thus allowing China unlimited room for manoeuvre. It may also soon buy into CPEC if that suits its plans for Central Asia. Alongside, the Russia-China relationship is diversifying on the back of the US trade sanctions and rage. Russia has also become China’s 9th largest trading partner, up from 11th last year, and bilateral trade is set to reach a hundred billion in bilateral trade. Trade with India is ‘hoped’ to reach $50 billion in 2025. At present, it's $7.5 billion, a 22 percent rise over the previous year. The numbers speak volumes, even though there is room for reading between the statistics in terms of possible growth.
But reading the tea leaves it is fraught with uncertainty until one refers back to history. India and Russian friendship grew in the 1960’s against the backdrop of China relative ‘rise’. As Russian influence in Central Asia continues to fall back in the face of Beijing’s munificence, and Chinese immigration into Russia’s far east continues with all its attendant problems, the tide could turn, one wave at a time. Russia’s military is nothing if not realistic, unlike some of its politicians who are only seeing the big bucks in Beijing. New Delhi has to bide its time, even while exploiting Russia’s still considerable military industrial complex to create new joint holdings that pivot around the 'Make In India' slogan and the export market. This need not always be towards big ticket items that make the headlines. Try for the less glamorous projects that are unlikely to attract sanctions or attention. That could be anything from aircraft seats to river navigation technology. To misquote a famous shoe company, just go for it. In a turbulent international game, we need all the counters we can get.
Updated Date: Oct 03, 2018 21:06 PM