- India, Russia sign oil, gas, nuclear cooperation agreements
- Putin hails `strategic partnership' with No. 1 arms importer
Indian Prime Minister Narendra Modi met President Vladimir Putin in Moscow with the goal of securing what would be his nation’s biggest weapons deal with Russia since 2001, strengthening military ties dating back to the Soviet era against newer suppliers like the U.S.
Modi and Putin hailed what they termed a “strategic partnership” at their Kremlin meeting on Thursday and pledged to boost business ties, with the Indian leader signaling progress on defense projects to ensure his country upgrades its weapons capability.
“As I look to the future, I see Russia as a significant partner in India’s economic transformation and in shaping a balanced, inclusive and a multi-polar world,” Modi told reporters.
Winning a significant slice of the $150 billion that Modi plans to spend to upgrade his military could be a welcome diversion for Putin, who’s bracing for a second year of recession amid Western sanctions and low oil prices. The S-400 air defense missile systems India plans to buy are among the “crown jewels” of Moscow’s defense capability, according to Jon Grevatt, Asia-Pacific defense-industry analyst for IHS Jane’s.
The Indian prime minister, who arrived in the Russian capital on Wednesday for a private dinner with Putin, presided over the signing of several agreements, including for the manufacture of Russian helicopters in India and joint oil and gas exploration and production in Russia.
Modi also took part in an event at the Kremlin with Russian and Indian chief executive officers on Thursday.
“Russia and India have a very strong partnership that the U.S. can only aspire to,” said Grevatt. “Sales from America may ebb and flow, but the sales from Russia will remain strong because there are so many ongoing programs between the two countries.”
Putin hosted Modi in Moscow for the annual bilateral summit after visiting New Delhi last year. The leaders have displayed a friendly rapport: Putin, who holds a black belt in judo, promised Modi he’d try yoga at a meeting earlier this year.
“The best thing is that he knows how to maintain relations,” Modi said of Putin in an interview with Russia’s state-run TASS news service ahead of his trip. “He has a special strength to sacrifice for the relations. It is rarely found,” he said, describing Putin as a “strong” and “decisive leader.”
Among the agreements on Thursday, state-run OAO Rosneft and India’s Oil & Natural Gas Corp. signed a memorandum of understanding on joint exploration and production at oil and gas fields in Russia, including offshore projects. They also agreed that ONGC may increase its stake in the Rosneft subsidiary Vankorneft after already buying 15 percent.
Russia’s biggest oil producer will also cooperate with Indian Oil Corp. and Oil India Ltd. for exploration and production at onshore assets in Russia. The three companies will first explore possible collaboration at Taas-Yuryakh Neftegazodobycha LLC asset in East Siberia, Indian Oil said in an e-mailed statement. In a separate agreement, Tata Power Co., India’s second-largest private electricity producer, will explore investment opportunities in the energy sector in Russia’s Far East, the company said in an exchange filing.
OAO Rosatom, the state-run nuclear power operator, agreed on assembling Russia-designed products for nuclear power plants in India, and Modi said Russian helicopters are to be made in India. Russia’s Kamov OAO is to name an Indian partner to build 200 Ka-226T light military cargo helicopters in India. The deal may be valued at $1 billion, India TV reported earlier.
“Our talks were very substantive and constructive, and I hope they will advance the further development of the special strategic partnership,” Putin said.
India’s defense acquisition panel last week approved the purchase of five S-400 systems. While the price is still to be negotiated, it’s likely to cost about $4.5 billion, a defense ministry official said, asking not to be identified because the detail isn’t public yet.
That would make it the biggest deal by value since 2001, when India agreed to buy 140 Su-30MK Sukhoi fighter jets, which the Stockholm International Peace Research Institute estimates to be worth as much as $5.4 billion.
Other potential deals that could follow from Modi’s trip include:
- The lease of a second nuclear-powered attack submarine from Russia. First submarine was leased in 2012 for $1 billion over 10 years
- Indian navy order for three Russian frigate warships. India paid about $1 billion for three Talwar-class frigates in 1997
- Agreement to re-start joint development of a fifth-generation fighter aircraft, stalled for two years over cost differences. Estimated project value: $10 billion
About $7 billion worth of deals were likely to be agreed to during the visit, according to Konstantin Makienko, deputy director of the Center for Analysis of Strategies and Technologies, which advises Russia’s defense ministry.
The U.S. surpassed Russia as India’s top supplier of defense equipment in the three years to March 2014, followed by France and Israel, according to the Indian government, which hasn’t provided more recent figures. However, this doesn’t capture Russian components that India imports to use under license, according to Siemon Wezeman, a senior researcher at the Stockholm International Peace Research Institute.