FOREIGN AFFAIRS

India, Russia Partnership Rebooted in Goa

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Notwithstanding the anti-Russian hysteria whipped up by the Indian media over Russia-Pak military exercise and despite skeptics’ warnings and utterings by doomsayers, no other summit in recent years proved to be as successful as the 17th Indo-Russian Summit that took place alongside the BRICS summit in Goa, October 15. It may be recalled that the Russia-Pak military exercise – sticking to the schedule – was held almost immediately after the Pak-aided terrorist attack on the Uri military base in which 19 Indian soldiers lost their lives. It was then hoped that Moscow, in a bid to show solidarity with its special and privileged partner India, would at least postpone if not altogether cancel its first ever military exercise with Pakistan – India’s avowed adversary since its very inception. But, the exercise went ahead casting serious doubt over the success of the Summit that was to follow soon after. Nonetheless, it goes to the statesmanship of both the leaders that ensured Goa Summit became one of the most successful summits in terms of its outcome.

Formalised in October 2000 – during President Putin’s first ever official visit to India, the Indo-Russian ‘Strategic Partnership’ stands on four major pillars of bilateral cooperation viz., defence, energy, nuclear and science & technology. It is noteworthy, that all these areas were comprehensively addressed with the signing of as many as 16 documents worth billions of dollars that will also make Russia virtually the first country to provide a much needed boost to ‘Make in India’ programme, especially in the area of defence.

Extolling Russia’s contribution to India’s industrial development and defence preparedness in the last six decades, Prime Minister Modi reiterated that Russia would remain India’s major defence and strategic partner and their time-tested partnership would remain an anchor of global security and stability. Invoking a Russian proverb that one old friend is better than two new ones; Prime Minister Modi reaffirmed Delhi’s special ties with Moscow even while it proactively engages with the US and other global power centres in furthering its foreign relations in a multi-polar world.

Among the 16 agreements that covered a variety of projects in the fields of energy – both hydrocarbon and nuclear, infrastructure etc, it was the defence sector which stood out at the Goa Summit, with three major agreements covering the S-400 Triumf air defence system, stealth frigates and the Kamov KA-226T helicopters.
Russia had been offering to build the air defence system for India for a long time with little response from the Indian side. However, in light of the tremendous success achieved by the Russian forces with the deployment of S-400 air defence systems in Syria and the fact that China is purchasing a similar version from Russia awakened India’s keenness to acquire this state-of-the-art systems from Russia. Given the strategic nature of their relationship, Russia has agreed to sell the latest version of the S-400 systems to India. Capable of tackling all types of airborne threats at ranges up to 400 km with a mix of short-medium and long range missiles, S-400 is considered to be the most advanced air defence system in the world. India would perhaps be the first country outside Russia to operate this system which it expects to start receiving by 2020.

Of the four Admiral Grigorovich-class stealth frigates, two would be an outright purchase from Russia while the remaining two would be built in one of the still to be identified Indian shipyards.

Notably, Hindustan Aeronautics Limited (HAL) has been designated to set up a joint venture with Russia’s Rostec State Corporation for the manufacture of Kamov KA-226T helicopters in India. The first 60 of the 200 Kamovs to be acquired by the Indian armed forces will be built in Russia while the remaining 140 or so would be manufactured in India. These helicopters would subsequently be also available for sales to the global customers.

Two other decisions which could have far-reaching impact on India-Russia defence cooperation related to the holding of a ministerial-level Military Industrial Conference later in 2016 to identify new projects and resolve pending issues – especially related to the maintenance and spares support of the equipment already supplied – and, establishment of a Science and Technology Commission to facilitate development and sharing of cutting-edge technologies. The bilateral Commission would focus on matters relating not only to the defence R&D but also in such high-tech areas as IT, Communications, Cyber Security, Medical Engineering, Outer Space Cooperation and Remote Sensing, etc.

These agreements would surely consolidate Russia’s position as India’s principal military hardware supplier, a position that Russia has retained for decades meeting 70 per cent of India’s defence requirements. Interestingly, Mr Sergei Chemezov, Chairman Rostec State Corporation was the leading delegate in Russian President Vladimir Putin’s entourage who spoke candidly with a select group of Indian journalists during the Goa Summit on practically all matters, predominantly about India-Russia defence cooperation, but, also covering other grounds of mutual interest. India Strategic was able to get full transcript of his interview, major excerpts of which are reproduced (see box)

To sum up, even with the ever deepening strategic partnership and strengthening defence cooperation between the two countries what took the US to achieve in a decade was almost equaled in the course of just one day in Goa by Mr Putin’s Russia. Even though these are only estimates at this juncture, the flurry of defence deals signed – S-400 ($5.5 billion), Stealth Frigates ($3.5 billion), Kamov Ka-226T ($1.0 billion) – totaled up to $10 billion which is close to what the USA has achieved in combined deals for the acquisition of C-17 Globemaster III ($4.1 billion), C-130J Super Hercules($ 1+1billion for follow on order), P-8I Poseidon ($2.1 billion), C-47F Chinook & AH-64Apache Longbow ($3 billion) plus the recently inked deal for M777 light howitzer ($750 million), stretching into many years. If one was to add the ongoing Su-30 MKI indigenous production programme and the forthcoming FGFA programmes, the amount could increase to tens of billions of dollars.

Rebooted in Goa, it is evident that Russia would continue to be in the lead as India’s biggest defence partner in the years to come.




Mr Sergei Chemezov
Chairman Rostec State Cooperation, Russia In Goa

On Rostec: Rostec State Corporation is the largest industrial corporation in Russia.

We incorporate more than 700 companies. These generally include defence industry enterprises, but there are also those, who produce goods for the civilian market.

BRICS countries are typically among our main partners, and we have been operating in these countries for many years, first and foremost India. A long-standing, friendly relationship ties Russia and India together, and of course this has an impact on economic and trading relations. For a long time we have been establishing, and continue to bring about joint manufacturing operations for equipment, including those for the needs of the military. For example, in the late 90s, an agreement transferring a manufacturing license for Sukhoi aircraft was signed. And today, these planes are successfully produced right here in India. A bit later, an agreement to manufacture T-90 tanks was also signed. And now, we have signed a contract for the creation of a joint venture to manufacture Ka-226T helicopters.

But our cooperation is not only limited to the military and defence industries. We also actively cooperate in the civil sector. Thus, for example, we founded a joint enterprise for the manufacture of trucks that unites an Indian company and our own Kamaz brand. And, today many of our Kamaz trucks are already carrying goods on Indian roads.

Today, Indian companies are actively entering foreign markets, including Russia. Currently, we enjoy cooperation with one such company, one of the largest global pharmaceutical companies, the Indian company Cipla, with which we signed an agreement on the creation of joint manufacturing, and on the creation of a full-cycle pharmaceutical production manufacturing operation in Russia.

On S-400 Triumf
An intergovernmental agreement has been signed, according to which the Russian side undertakes a commitment to deliver the S-400 system. Following this we will begin to prepare a contract, and I hope that in the first half of 2017 we would have completed and signed these contracts and started manufacturing. I think that delivery will begin in 2020.

As for the S-400, it is one of the most modern air defence systems to ensure the safety of India’s airspace; it can shoot down not only aircrafts, but also missiles, so this system is of the utmost importance for the Indian state. I hope that we can finish the negotiation process as soon as possible, and also sign the contract and start production as quickly as possible to incorporate them into India’s military systems.

On PAK-FA/FGFA
As for the contract on the multi-purpose PAK- FA fighter plane, to be correct this is not the PAK- FA, this is a fifth-generation plane to be built jointly with an Indian company. It will in certain ways resemble the PAK- FA, but nevertheless it will be a different airplane. We have already in large part completed and discussed all the negotiation issues, and we are ready to sign. There may be just a couple of formalities remaining. Hopefully, the contract will be signed by the end of this year. I would like to give an extra explanation as regards the PAK- FA name. PAK-FA is an airplane that has already been built in Russia and put into service in our Armed Forces. Therefore, we cannot create something that has already been created. Instead, along with our Indian colleagues we agreed to build a new, modern 5th generation airplane. Yes, its performance characteristics will be close to the PAK-FA, but all the same it will be something new and different from the PAK-FA.

On Kamov Ka-226T
According to the agreement, the joint venture is to be established jointly with the HAL in Russia. A total of 50.5 per cent is to belong to the Indian side, and 49.5 per cent to the Russian side. In India, we have plans to establish complete manufacturing facilities for modern helicopters, such as Ka-226T modern utility helicopters, which are to be assembled here. However, it is for HAL to decide where the manufacturing facility will be located.

On the choice of HAL as the partner for Ka-226T
As for HAL, this partner was offered to us by the Indian government, and we are fully satisfied with the arrangement. We have cooperated with them for a long time already and there was no need for any introductions. Our companies are familiar with HAL and understand the opportunities HAL offers us. HAL is fully competent in helicopter manufacturing, thus I do not think that any problems will arise during the manufacturing process.
Out of the two hundred helicopters we must deliver here to India, 40 helicopters are being produced in Russia. Their delivery will begin next year, but the subsequent 160 we need to produce here in India. Right now it is difficult to say, but I hope this will take place between 2018 to 2019; with subsequent step by step arrangements with some individual units, for production of parts and creation of services, in addition to the production of aircraft in India.

On the agreement and production schedule of frigates in India
As you are aware, an intergovernmental agreement was signed, by which the Russian side has committed itself to provide technical assistance in the establishment of Project 11356 frigate manufacturing. Two frigates will be built in Russia, and later more frigates will be built in India, in one of its shipyards. However, I still can’t say which yard will be selected. The Indian government shall make that decision on its own. Once they have, we will continue to work with that shipyard.

We need to start negotiations and prepare the contract. And then in the contract the terms of delivery and all the necessary numbers that you might possibly be interested in will surface.

On possible areas of cooperation in the civilian industries between Russia and India
At the moment our cooperation is still quite narrow. In fact, we are just now starting to operate in the civil sector. In this regard, I already mentioned our joint venture with Kamaz, which is for the assembly of our trucks here in India. However, we have made quite a few proposals, and I hope that these proposals can be implemented. This is true as well for the electronics and optical production industries. We have one of the most modern optical production facilities in Russia, including medical production. Our optical holding company produces one of the most advanced couveuses, which is something like an aquarium for prematurely born children. They can grow in this apparatus until they reach an age when they can start to grow by themselves.

On the recent decline in the relationship between Russia and India in the military technical areas of industry and trade Well, as for the relations between Russia and India, I would like to say that India is one of our most important partners. It has been and will continue to remain this way in the future. Therefore, we are interested in the further development of such cooperation across all industries; not only in the military, but also in the civil sector. Of course, this cooperation may be somewhat cyclical. Sometimes in certain fields it is more active, and some years it is not so intense. There can be various reasons for this. These might be certain external influences from third countries, or perhaps there are also some changes coming from within. But first and foremost they are probably connected with some political movement. In any event, for Russia and India, such cooperation is necessary and must exist. Both our government and our president encourage achieving the full potential for the creation of joint projects and to implement these projects; not only in India, but in Russia as well. As you know now, one of the largest oil producing companies Rosneft is forming a joint venture and acquiring shares of Indian companies. We actively cooperate with them and integrate Indian companies into joint projects within Russia, particularly in Sakhalin. There, a large project is currently being implemented jointly. So, if they say that a certain decline has occurred in cooperation, I would not be able to agree with such a statement. On the contrary, recently, such cooperation has started to spread to its fullest extent across a variety of sectors.

On Relationship between Russia and Pakistan
With regard to cooperation with Pakistan, we have been working with them for a while. Perhaps it was not so actively developed, but nevertheless collaboration between us did indeed exist. With regard to joint participation in military exercises, this was connected with the need to prepare specialists to fight terrorists given the current political situation not only in the North, but also in the Arab world, and all the military operations taking place around Syria. It is clear that ISIS has now grown to a much more threatening level. This is an organisation that brings together terrorists from all over the world, including from Russia, India and Pakistan. Therefore, we must work together to be able to be ready to fight today’s instantiation of terrorism. The joint exercises with Pakistan were carried out with only the scourge of the global terrorism in view and had no other implications.

On Possibility of Russia Delivering Military Aircraft to Pakistan such as Su-35
We have not yet delivered and are not currently delivering any military aircraft to Pakistan. We have completed the delivery of helicopters that the Pakistan army requested for combating terrorists. These are specialised helicopters, and they have been delivered. Plus there was a supply of transport helicopters carried out the year before last. No additional supply of weapons has been carried out.

On how the Sanctions by the Western Countries have affected Russia
In the previous two years, beginning in June 2014 when the sanctions were announced, we experienced to a certain extent, of course, a decline in production. Why was this? Well, because many components were being purchased from abroad, including European countries, and of course we were unprepared for such an abrupt cessation in our supply lines, but nevertheless we have in fact entirely contained this issue. We have begun to produce most of the components ourselves, but what we are still unable to produce, we purchase in Asia, from China, you and another countries. As for production and supply of weapons, I can tell you that it has not slacked, but is instead growing in comparison to previous years because even to begin with we had next to no partnerships in Europe or America. The military operations being carried out in the world today are forcing states to acquire more and more modern weaponry. So it is perhaps not such a positive thing to boast about profiting from this, but unfortunately that’s how it is. That’s the reality. Generally speaking, we are expanding production.

However, our enterprises are not producing just for defence, but they have been tasked to increase their share of civilian production as well by to reach a 50:50 level by 2025 along with weapons production. Because on the one hand it’s a cyclical thing, and on the other, mono-production is always quite risky, so we have to set a target to increase our share of civilian products, and of course not just for the domestic market, but for global supply as well. Therefore, if I had to say something about the sanctions, in the end they probably just pushed us to organise our own production to be maximally efficient, which is what we are doing today.

On how Indian Companies have helped Rostec during Sanctions
We have a specific example. In June this year, we signed an agreement with Cipla in St. Petersburg to create a joint venture for the production of modern pharmaceuticals. Before, we just purchased these medications abroad, including from America and Europe, but now we strive to be independent from these countries and create manufacturing capacities for such medications in Russia itself. Through the formation of full-cycle operations together with Indian companies providing technological assistance and transfer of technologies. This is a specific example of aid from India to Russia in the midst of sanctions. I recall that there was once a period when India was under American and European sanctions. As one of just a few countries, Russia did not turn away from India, but instead gave it its full support and supplied any weapons, including the most modern that we were producing for ourselves, so that India could ensure its own security, including military security. Today we’d like to say thank you to India, who are supporting us in return.

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