Russia-India Summit 2012: Challenges and Opportunities

Tuesday, 22 January 2013 06:03

Diplomatist, Jan 2013: Our Cover Story evaluates the dynamics of the Indo-Russian partnership in the aftermath of Prime Minister Dr Manmohan Singh welcoming Russian President Vladimir Putin as “a valued friend of India and the original architect of the India-Russia strategic partnership”

2012 marks the sixty-fifth anniversary of establishment of diplomatic relations between India and Russia in what is India’s most enduring relationship in its post-Independence history. Against this backdrop, the annual India Russia summit 2012, which concluded on Christmas Eve in New Delhi on appeared more of a ritual. Given that India and Russia have put into place institutions and processes to further their strategic partnership, and a deep understanding between Indian and Russian leadership has developed in the past decade or so, the smooth conduct of the event was a foregone conclusion. The media statement of Indian Prime Minister, Dr Manmohan Singh on the Summit outlined the personal contribution of President Vladimir Putin to India Russia relations thus, “President Putin is a valued friend of India and the original architect of the India-Russia strategic partnership. I conveyed to President Putin our deep appreciation of his long-standing and personal commitment to this partnership”. Reading between the lines, however, there are evidently a number of contentious issues.Hence, a brief review of the Russia India Summit 2012 may be in order.

Understanding the multi-faceted relationship

India Russia relations are multi-facetted and include defence, space, energy, trade and investment, science and technology, education, culture and tourism in an order of importance. The annual apex summit between India and Russia has been one of the key forums when issues of mutual interest that have emerged over the past one year are resolved amicably. While the visit of Russian President was short in time, there were substantive issues on the table that were discussed. The operational focus of these issuescurrently being debated include mainly the activation of Unit 1 of the Kudankulam Nuclear Power Project, followed by Unit 2 expected in 2013, and negotiations for construction of Units 3 and 4 at the same site. It is well established that there are concerns on the nuclear liability law passed by India, which has led to apprehensions not just in Russia, but with other suppliers as well. This issue remains unresolved and may take some time in the future.

President Putin is a valued friend of India and the original architect of the India-Russia strategic partnership. I conveyed to President Putin our deep appreciation of his long-standing and personal commitment to this partnership – Dr Manmohan Singh   

Despite hiccups over starting the first two reactors at Kudankulam,prospects for civil nuclear energy in Indiaare bright. Under the new deal, Russia is committed to building one new nuclear power plant capable of generating 1,000 MW, every year, for the next 18 years. At roughly $2.5 billion per plant, the deal works out to a staggering $45 billion and will take India’s nuclear energy capacity to over 20,000 MW. There are other positives as well: India’s largest bank, SBI, has tied up with Russian Direct Investment Fund (RDIF), the country’s sovereign wealth fund, to invest around $2 billion jointly in both countries.

In the defence field, there are a number of joint projects that are on-going. India-Russia defence relations have expanded beyond buyer and supplier to co-development and co-production in select fields such as missile development (BrahMos), Fifth Generation Fighter Aircraft (FGFA) and Multi Role Transport Aircraft (MTA).Russia has delayed the delivery of the trouble-plagued aircraft carrier Admiral Gorshkov, to be renamed INS Vikramaditya, by at least a year to the fourth quarter of 2013, which is a blow to India’s efforts to build up its navy as China expands its maritime reach. India is also building two aircraft carriers of its own with Russian technical assistance. The first is expected to be taken into service in 2017. India has about 15 submarines in service, of which 11 are of Soviet/Russian origin, including an Akula class nuclear-powered submarine. It also operates a large number of Soviet-era warships. It is currently procuring a new batch of Talwar Class stealth frigatesfrom Russia.

Russia has also been able to adjust to the newly evolving competitive procurement processes in defence procurement in India by providing the country options for co-development and production in government to government contracts, thereby overcoming the challenge of competitive bidding in which the Russians have not succeeded in winning any contracts so far. With the 197 helicopter bid continuing to be in limbo, it remains to be seen if the Russian helicopter Kamov wins the commercial stage. It would then be the first time that Russia would have won a competitive defence bid in the country. India, on the other hand, is also wary over signing major contracts given the experience of time and cost overruns of Gorshkov. A thorough analysis of Russian competencies would therefore determine the way ahead for both the countries. India’s only Russian-origin nuclear submarine INS Chakra is facing problems with its critical components affecting its operational readiness. Russia has been asked to provide the parts for the 8,000-tonne submarine.

At the 12th meeting of the India-Russia Inter-Governmental Commission on Military Technical Cooperation held on October 10, 2012 in New Delhi, both sides expressed satisfaction at regular bilateral interactions, on-going military-technical cooperation and ‘INDRA’ exercise between the defence forces of the two countries held in August and December 2012. Both sides also noted that the frigates INS Teg and INS Tarkash were commissioned and delivered by Russia to India in 2012.

With new deals worth nearly $3 billion being signed during the summit in Delhi, Russia’s weapons sales to India will continue. Though India’s defence portfolio is getting more diverse, there is no threat to defence trade between the two nations.

Cooperation in satellite technology, through a tie-up between MTNL and GLONASS will also be a booster for both nations. The GLONASS satellite navigation system should provide the Indian civil and military establishment assured navigation signals from the Russian system, thereby reduction of dependence on the GPS.

It is clear that trade and investment in defence, energy and infrastructure are the ties that bind the two nations. It is time to diversify the trade basket to include technology, pharmaceuticals, processed food and other manufactures.

On the trade front, Russia’s entry into the World Trade Organisation should provide impetus to bilateral trade with potential particularly in the field of pharmaceuticals, information technology and civil aviation.

Both nations expressed satisfaction at the substantial increase in bilateral trade during 2011 and 2012, and agreed to enhance efforts to achieve the trade target of $20 billion by 2015. Discussions are underway between India and the Eurasian Economic Commission on a Comprehensive Economic Cooperation Agreement between India and the Customs Union of Belarus, Kazakhstan and the Russian Federation.

Sistema Telecommunications Investments

The safety and security of Russian investments in India is a major concern for the Putin administration.Russia has linked the grant of a 10 year tax holiday on Videsh Ltd.’s (OVL’s) sputtering acquisition, Imperial Energy, to the restoration of the licenses of Sistema, which operates telecom services under the brand MTS in India. In February, Sistema’s licenses were among the 122 scrapped by a court ruling. These two issues are now interlocked and there is no quick fix solution. Sistema is appealing the court decision, and did not participate in the recent spectrum auction. The glacial pace of the legal process could mean a prolonged courtroom battle, implying no relief for OVL for months. It was expected that India would have to make strong assurances during the summit about the resolution of issues, especially since the legal aspects of the same have been resolved in conjunction with the Indian judiciary.

The successful conduct of the 11th Russia-India-China trilateral ministerial meeting on April 13, 2012 in Moscow enabled the advancement of practical cooperation in trilateral format in areas such as emergency response, health care, energy, agriculture, business, innovation and high technology. The Indian side conveyed that it would host the next ministerial meeting in 2013. For both India and Russia, the Shanghai Cooperation Organisation (SCO) has emerged as an important factor for regional security, stability and cooperation in the Eurasian region. The Russian side reiterated its support to India’s intention to join the SCO as a full-fledged member and stood for joint efforts with other SCO members to accelerate the process of India’s entry into the organisation.Russian Federation has reiterated its strong support to India for a permanent seat in a reformed UN Security Council, in addition to the positive consideration of India’s interest in full membership in MTCR and Wassenar Arrangement. The Russian side has reiterated readiness to assist and promote a discussion and positive decision in the Nuclear Suppliers’ Group on India’s full membership in the NSG, and welcomed India’s intention to seek full membership. India has underscored its determination to actively contribute to international efforts aimed at strengthening nuclear non-proliferation regime.

Common vision for a stable Afghanistan

Both sides support the efforts made by Afghanistan to establish a peaceful dialogue with the armed opposition, provided the process goes on under the Afghan leadership and that the fighters meet the deadlines enunciated by the international community, namely recognition of the Constitution of Afghanistan, renunciation of violence and breaking away with al-Qaeda and other terrorist organisations. They consider it necessary to continue the UN Security Council sanctions regime as an essential anti-terror tool. Both India and Russia appreciate the growing global understanding of the important role played by the neighbouring states of Afghanistan, states and organisations of the region, and have constantly urged the efforts in the region to be focussed on the development and improvement of sound structures of regional cooperation, like the SCO, CSTO and SAARC, amongst others. In this regard, they have hailed the conduct of the Delhi Investment Summit on Afghanistan in June 2012 to promote investments in that country. They expect that the international community in their efforts in this regard will respect the decisions taken by countries of the region in the framework of these organisations.Both nations have agreed to work together against threats posed by extremist ideologies and drug trafficking. Clearly, India and Russia share the objective of a stable, united, democratic and prosperous Afghanistan, free from extremism, terrorism and external interference.

Indo-US relations

Russia is apprehensive of the growing proximity between India and the US, particularly in the field of defence. It is likely that some clarity on this issue will be sought at the highest level given the flourishing Indo-US bilateral relations and a number of bilateral and trilateral forums in which both democracies share a common platform.

India’s ties with Ukraine

The visit of the President of Ukraine Mr. Viktor Yanukovych has reaffirmed India Ukraine relations that were held hostage to the political ferment in that country and India’s proximity to Moscow. The visit enabled several various issues, including defence relations, to be taken forward.

With Ukraine now jumping into the arms supply fray, there is likely to be an increase in competition for exports to India. However, how much the Indian defence industry is able to take up for sustained benefit remains to be seen. There are a number of issues, however, which may further complicate the relationship between India, Ukraine and Russia. One of the main factors is likely to be the strong military cooperation between Ukraine and Pakistan. Concomitantly, Russia is also in talks with the Pakistan government after a long period of differences, which may also have some military technical component that would be viewed with concern by India. However, Ukraine and Russia have different defence industry competencies, thereby benefitting India by these by simultaneous engagement. For instance, Ukraine holds the best designing facilities for transport aircraft.

India will have to take advantage of the various competencies that Ukraine can provide to the country in the field of defence, as an alternate source or in some cases, as the primary source for procurements for the armed forces. For this, a detailed review of the overall capacity of the Ukrainian defence industry would have to be carried out to ensure that the niche areas of cooperation are identified and interaction progresses accordingly.

Russia’s relations with China and Pakistan

Growing proximity between Russia and Pakistan has been viewed with some concern by New Delhi. The development of this relationship, particularly on possible defence relations between the two countries including arms sales, may warrant India and Russia to exchange some frank views in future. The visit of Pakistan Army Chief Gen Parvez Kayani to Russia in October is particularly relevant given that he is seen as the lynchpin of policy making in the country.Russia’s expanding relations with China is one of India’s concerns, which was expected to be addressed during the summit. Russia has been seen to be continuously extending the engagement and India is once again concerned on the expansion of defence ties.

The blend of déjà vu and pragmatism was evident in the India-Russia annual summit where many contentions issues and differences seem to have received a short shrift as both countries emphasised on the congruence on various issues. The geopolitical convergence on issues like Afghanistan is well established, as there is a significant degree of understanding between India and Russia on sustaining cooperation in the important area of the region which has been wrecked by instability. While military technical cooperation is on target, trade and economic relations are faced with myriad challenges primarily as the systems in both the countries have to develop a degree of balance that does not exist at present. Thus, various issues such as taxation and legal challenges being faced in the sphere of telecom such as Sistema or India’s investments in the Russian oil and gas sector can be ironed out only if both countries harmonise their systems towards this direction.

By Brig Rahul Bhonsle*                           

*Brig Rahul Bhonsle (Retd), an army veteran, is presently Director Sasia, a South Asian risk and knowledge management consultancy.     

January 2013


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