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Putin Signs $2.9 Billion Arms Deals in Trip to India

(Corrects to show information came from separate report in ninth paragraph. Story was published Dec. 24.)

Russia sealed $2.9 billion of weapons contracts with India as President Vladimir Putin visited his nation’s top arms customer for the first time since returning to the Kremlin in May.

Deals include supply of kits worth $1.6 billion for Hindustan Aeronautics Ltd. (HNAL) to assemble 42 Sukhoi Su-30MKI jets, made by United Aircraft’s Irkut Corp. (IRKT), and 71 MI-17 V-5 helicopters worth $1.3 billion, according to the Kremlin.

India, the world’s largest arms importer in 2011 according to the Stockholm International Peace Research Institute, has at least doubled its defense budget over the last decade as it looks beyond a traditional rivalry with Pakistan to counter China’s rising power. Russian-Indian defense cooperation is at an “unprecedented level,” then-President Dmitry Medvedev said a year ago after Singh visited Moscow.

Russia, has dominated weapons sales to India. In the past decade, 77 percent of India’s defense imports came from Russia, while 2 percent came from the U.S., according to a June 2012 report by the Center for Strategic and International Studies, a research institution in Washington.

Then-Defense Minister Anatoly Serdyukov said Oct. 10 that Russia planned to sign a deal to ship 42 Sukhoi jets to India by the year-end, the RIA Novosti news service reported. India has already received about 150 Russian jets, according to the Moscow-based Center for the Analysis of Strategies and Technologies.

Nuclear Submarine

India also inducted a Russian-built nuclear-powered attack submarine into its navy in April, while state-owned Rosatom Corp. is helping the Asian nation build an atomic power plant.

India has been “Russia-oriented for a long time,” Barry Watts, a senior fellow at the Center for Strategic and Budgetary Assessments, a public policy group in Washington, said in a telephone interview. New Delhi likes that Moscow is more willing to share weapons technology, even if it’s not the most advanced, Watts said.

Still, the U.S. dominates global arms sales, accounting for $66.3 billion in 2011, according to an Aug. 24 report by the Congressional Research Service. That was the highest single-year total in the history of the country’s arms export program and more than triple the $21.4 billion in deals from 2010, the report showed.

The U.S., since 2001, has sold India about $8 billion of military weapons and gear, including Lockheed’s C-130 and The Boeing Co. (BA)’s C-17 cargo planes, according to a Nov. 13 CRS report.

Apache, Chinook

India’s Defense Ministry last month selected 22 Apache attack helicopters and 15 Chinook heavy-lift choppers made by Boeing in an order valued at $2.4 billion.

India this year chose the Rafale fighter aircraft made by Paris-based Dassault Aviation SA (AM) for an $11 billion, 126-plane order instead of offerings that included Lockheed’s F-16 and Boeing’s F-18.

Russian defense-industry exports have exceeded $14 billion this year, higher than the government’s target, Putin said last week. The country has signed new contracts worth $15 billion in 2012, he added.

Russia’s arms trade with India “will develop more actively” after the visit, Yuri Ushakov, Putin’s foreign-policy aide, said Dec. 18 in an interview.

To contact the reporters on this story: Ilya Arkhipov in Moscow at iarkhipov@bloomberg.net; Brendan McGarry in Washington at bmcgarry2@bloomberg.net

To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net

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