Indo-Russia ties: Making the cut
by Sandhya Jain on 16 Dec 2014 9 Comments

Russian President Vladimir Putin’s brief visit to India last week was a rewarding climax to Prime Minister Narendra Modi’s international outreach this year, deepening ties forged at the BRICS and other summits, satisfying some national security needs, and aligning with Mr Modi’s signature project, Make in India.


The visit was closely monitored in Washington, which expressed disapproval at Crimea Prime Minister Sergey Aksyonov’s ‘unofficial’ arrival with the Russian delegation. India understands Ukraine’s critical importance to Russia, including the takeover of Crimea. Mr Aksyonov could not have signed a memorandum with the Indian-Crimean Partnership group, to boost trade with the Black Sea region, without a nod from Mr Modi. As for the new nuclear and defence deals with Moscow, an American spokesperson said this was “not time for business as usual with Russia”.


Washington’s unhappiness at India’s indifference to America’s game-plan in Ukraine while dealing with Russia seems counter-intuitive given the first Obama administration’s bias towards Pakistan. In 2010, President Barack Obama visited India after appointing Kashmiri separatist Farooq Kathwari as member of the President’s Advisory Commission on Asian Americans and Pacific Islanders. Unconfirmed reports say Kathwari accompanied Mr Obama to India; he was spotted in Srinagar. Kathwari founded the Kashmir Study Group in 1996 to promote an independent Kashmir. He supports Islamist groups and in 2004, spoke at the annual conference of the Islamic Society of North America, listed as an ‘unindicted conspirator’ in the successful prosecution of the Holy Land Foundation in America’s largest terror funding trial.


Mr Putin arrived in India soon after France, under US pressure, “indefinitely suspended” the delivery of two fully-paid-for Mistral helicopter-carriers to Russia. Given the strong US-Pakistan and China-Pakistan axis, India cannot neglect a country whose veto power in the Security Council has protected her interests. New Delhi will always be wary that Washington can restrict access to civil-military technologies in pursuit of its political goals. Moscow, in contrast, has given India access to technologies no other country was willing to supply, most notably help in building the nuclear-powered submarine, Arihant.


Moscow is unlikely to levy sanctions against India that could result in choking supplies of spare parts at critical moments. New Delhi remembers the Western sanctions after the nuclear tests of 1998, and has resisted the US-led sanctions against Russia. As the joint statement noted, “India and Russia oppose economic sanctions that do not have the approval of the United Nations Security Council”. Russia has reiterated support for India’s candidature for permanent membership of the Security Council and full membership of the Shanghai Cooperation Organisation. Both sides favour a security architecture in the Asia-Pacific that respects the legitimate interests of all states of the region.


Both nations have similar views on Iran, Libya and Syria; both have stakes in the stability of a non-Taliban regime in Kabul. While New Delhi is anxious that Afghanistan does not house terrorists, Moscow wants to crush the drug trade. Expressing grief over lives lost in recent terror acts in Jammu & Kashmir and Chechnya, both called for global resolve to deal with international terrorism “without double standards or selectivity”; urging an end to all safe havens for terrorists, and adoption of the Comprehensive Convention on International Terrorism by the 70th Anniversary Summit of the UN. The on-going hostage crisis in Australia underlines the urgency for an international protocol.


Both nations would cooperate with Iran and China to strengthen Afghanistan, which is vital for the development of trade and energy in Central Asia. India is sourcing weapons from Moscow to supply to Kabul. In pursuit of larger goals, India has ignored Russia’s decision to sell helicopters to Pakistan, on account of Moscow’s need to counter Western attempts to throttle its economy. Russia’s two gigantic energy deals with China, and one with Turkey after cancelling the South Stream pipeline, circumvent the Western pincer and eventually affect Europe.


As Mr Modi’s economic priorities harmonized with Mr Putin’s ‘pivot to Asia’, the visit yielded 20 high profile deals worth US$ 100 billion, including $40 billion in nuclear energy, $50 billion in crude oil and gas, and $10 billion in various sectors, including defence, fertilisers, and outer space. In a major coup for the diamond processing industry, Russia’s Alrosa, the world’s largest diamond mining company, will sell rough diamonds directly to India.


Under the nuclear pact, Russia will build 12 new nuclear reactors over the next 20 years at Kudankulam, Tamil Nadu, and at another yet-to-be-identified site. Russia is the first nation to accept India’s tough nuclear liability law, though this has also led to cost escalation, from $1 billion per unit for the two units constructed at Kudankulam, to $3 billion each for the new reactors. Besides the highest safety standards in the world, the deal includes manufacture of equipment and components in India. Russia also reiterated support for India’s efforts to secure full membership in the Nuclear Suppliers Group, the MTCR and Wassenaar Arrangement.


The decision to produce state-of-the-art multi-role helicopters in Indian factories to cut costs and time overruns is another triumph for the Make in India programme. Besides kick-starting India’s moribund defence manufacturing, the deal (to be finalised soon) gives India the right to export the helicopters to third countries. Russia may also accept India’s request for manufacturing spares and components for Russian defence equipment in India.


Several projects are expected to roll out in the oil and natural gas sector, including exploration and production in new oil and gas fields in the Russian Federation, and third countries. India will get liquefied natural gas (LNG) from Russia, while the feasibility of a gas pipeline to India is being seriously explored. Other areas of cooperation include Smart Cities and Freight Corridors; the Customs Union of Belarus, Kazakhstan and the Russian Federation for trade in goods and services; and enhancement of bilateral trade through the International North South Corridor Project which will sharply curtail transit time and freight costs. Russia may invest in the ambitious Delhi-Mumbai Industrial Corridor and telecom, power and roads.


Bilateral trade will be in national currencies, with an ambitious target of $30 billion by 2025. While lacking the high drama associated with Mr Modi’s visits to America, Japan and Australia, President Putin’s visit has been the most fruitful of the new regime’s international engagements, garnering deals that will generate direct employment as the projects come up and stimulating the rise of ancillary industries and self-employment prospects.

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