Modi-Putin Combo Imparts Momentum to Indo-Russian Relations
Brig Vinod Anand, Senior Fellow, VIF

Prime Minister Narendra Modi visit to Russia towards the close of year 2015 remains significant in view of the complex changes that have been taking place on the international firmament and India’s endeavours to realize its policy interests. Both President Putin and PM Modi are strong leaders who have been pursuing pragmatic foreign and security policies in consonance with their national interests. Even though Russia has received plenty of flak from the US and its allies in the west regarding its policies on Ukraine President Putin has not hesitated to assert itself in going ahead with strengthening its relations with the current Syrian regime that is an anathema to the Obama and Europeans. India has supported Russia’s legitimate interests in Ukraine and has followed a balanced approach to the ongoing crisis in West Asia including Russia’s involvement in Syria. Though, lately the US and the western countries are attempting to co-opt Russia in solving the West Asian imbroglio their overall confrontationist attitude to Moscow has drawn Russia closer to China thereby weakening America’s Asia-Pacific strategy. Evidently, the evolving international strategic dynamics have implications for the emerging Indo-Russian equation.

Though both leaders have met several times during the year i.e. in BRICS and SCO summit, G20, East Asia Summit and so on the bilateral meet in December was part of the regular Annual Summit. While the last Indo-Russian Summit that took place in early December 2014 and was structured on the theme of “Druzhba-Dosti: A Vision for strengthening the Indian-Russian Partnership over the next decade” this year’s summit builds on the previous one and had the theme of “Shared Trust, New Horizons”. In pre-Putin years the Indo-Russian relationship had drifted due to dissolution of Soviet Union and a general lack of direction and effort from both sides in keeping the mutual relationship on an even keel. However, with the appearance of President Putin on the scene the Indo-Russian relations received a boost and the two nations signed an agreement on strategic partnership in 2000. The relationship since then has been enhanced to ‘privileged and strategic’ partnership between Moscow and New Delhi.

While the defence and military technical cooperation have been an enduring feature of the bilateral engagement enhancing ties in energy arena, strengthening economic relations, collaboration in high technology areas including space and cooperation in regional and global platforms where both largely share common interests and concerns have been the foundation of the expanding mutual relationship. Though Russia remains a very important partner for India in strategic sectors like defence, nuclear security and science it is in economic field that has been lagging behind.

Energy Security: On the Upward Trajectory

While PM Modi has been attempting to enhance India’s energy security through getting Japan and the US to build civil nuclear reactors these countries have presented many conditions to New Delhi especially about removal of stringent clauses in India’s civil nuclear liability law. Russia, on the other hand, has been quite accommodative and has agreed to build a number of civil nuclear reactors in India under the existing framework. Last year, Putin had offered cooperation in building Russia-designed nuclear power stations in third countries, in the joint extraction of natural uranium, production of nuclear fuel and waste elimination. Kudankulam Nuclear Power Project Unit II atomic plant in Tamil Nadu being built by Russia is expected to be commissioned shortly and negotiations for Units III and IV are in advanced stage.

Building on the understanding reached last year both sides have signed an agreement for “Localisation of Manufacturing in India for Russian-Designed Nuclear Reactor Units”. This will be in accordance with the Modi government’s initiative of ‘Make in India’ programme as this would enable Indian companies to participate in the construction of such nuclear reactors. Naturally this would lead to enhancement of Indian manufacturing content in the upcoming nuclear reactors. Apparently, a second site for another set of six civil nuclear reactors is in the advanced stage of being identified. Last year both sides in a document titled “Strategic Vision for Strengthening Cooperation in Peaceful Uses of Atomic Energy between the Republic of India and the Russian Federation” had agreed to complete the construction and commissioning of not less than 12 units in the next two decades.

With oil prices at all time low and western sanctions on Russia, appropriate conditions were created for Russian hydrocarbon companies like Rosneft to relax its reservations regarding giving equity stakes to Indian companies like ONGC Videsh (OVL). During the visit Rosneft formalized sale of 15 percent equity to OVL in its subsidiary Vankorneft that has largest on-land field developed in last 25 years. OVL had been after this contract for a long time even though OVL’s earlier experience of Imperial Energy acquisition had been somewhat negative. There is also a preliminary agreement on giving more stake to OVL later and partnership in other fields. Indian Oil and Oil India have also signed a preliminary agreement with Rosneft for receiving stake in another subsidiary Tass-Yrayukh. Overall, such deals are seen as mutually beneficial and the political leadership from both sides have acted as a catalyst to forge these agreements.

In addition Russia has been supplying LNG and more joint projects are in the offing including the possibility of LNG supply to India from JSC NOVATEK ‘project Arctic LNG’ on the resource base of the fields located on the Gydan Peninsula and partly in the Gulf of Ob. In another development first meeting of the Joint Study Group for studying the possibility of hydrocarbon pipeline system connecting Russia and India has been held. Moreover, JSC Zarubezhneft has expressed interest in cooperating with Indian partners like Oil India in upstream oil and gas projects in Russia, India and third countries, including implementation of enhanced and improved oil recovery technologies and provision of oil field services for onshore and offshore Indian oilfields.

It is not only the nuclear and hydrocarbon sector where both sides are forging mutually beneficial ties but also moves are afoot to expand cooperation in joint implementation of electric power projects, including hydro, thermal and solar power plants, as well as supply of Russia's electric power equipment to India. As a consequence an MOU between the Russian Energy Agency and the Solar Energy Corporation of India (SECI) regarding the construction of solar power plants in India was signed. It also needs to be remembered here that PM Modi has proposed an International Solar Alliance during the G20 summit and such understanding with Russia on solar energy rhymes very well with this initiative.

Thus, it is quite evident that Indo-Russian cooperation in energy areas of all varieties would be a win-win formula for both the countries. For instance, joint projects would definitely enhance the level of cooperation in the nuclear sector and give birth to a new industry in India. Both leaders have also emphasized that the two countries view nuclear energy as a clean, reliable and viable source of energy. Similarly, solar energy has become a new sun rise sector and has the advantage being a clean and green source of energy.

Economic Relationship: Lower than the Potential

Trade and commerce between Moscow and New Delhi has been lagging behind for many years. While last year western sanctions on Russia because of Ukraine issue were expected to open an opportunity to India for exporting more merchandise to Russia yet the trade statistics available for period ending June 2015 show that target set for end 2015 may not be achieved even though there is an uptick in the quarterly trade volumes. According to Embassy of India in Moscow, Indian exports to Moscow have been merely about 1 billion US dollars while imports have been about 2.2 billion for quarter ending 30 June 2015. Last year the projections for the current year India's bilateral trade with Russia were estimated to be $15 billion by 2015-end based on the initiatives taken by Indian exporters. The trade figures for last four years show somewhat of a stagnant trend. Total bilateral trade volumes in 2011 were 8.86 billion USD, in 2012 and 2013 around 10 billion and 2014 saw a contraction of trade to 9.5 billion USD. Hopefully, this trend would be reversed when trade figures for the balance of the current year are tabulated.

Earlier, during External Affairs Minister Sushma Swaraj’s visit to Russia to attend the 21st India-Russia Inter-Governmental Consultations, both sides not only discussed ways to boost their economic ties to achieve the target of $30 billion in bilateral trade in the next 10 years but also considered ways to enhance the mutual direct investment to $15 billion by 2025. Considering that Russia’s trade with Turkey is $ 32.7 billion, South Korea $ 25.1 billion, Kazakhstan $26.4 billion and Japan $ 33.2 billion the Indian ambitions seem to be very modest. Of course, India-Russia trade figures pale into insignificance when Russo-Chinese bilateral trade of 88.2 billion is taken into account. Strong economic ties in a way also reflect the nature of interdependence between the two countries and the possibilities of its positive impact on the geo-politics. While one can find many reasons like poor connectivity and Indian businessmen’s cautious attitude in doing trade with Russia or Central Asian countries there is a need to analyse the underlying causes for bilateral trade turnover and take necessary remedial measures. Further, the components of trade between Russia and India obviously need to be enlarged to ensure a balanced trade which apparently is dominated by defence trade.

Looking at the connectivity issues, International North South Transport Corridor (INSTC) has been on the drawing boards for too long and both Russia and India being its founding members are obliged to put more substance into it. Though both sides realize that the INSTC can play a key role in promoting economic integration in the region stretching from the Indian Ocean to the Baltic Sea by creating new centers of growth as well as joint industrial and infrastructure facilities the work on ground has not progressed beyond a point. With China promoting its Silk Road Economic Belt as part of its ‘One Belt One Road’ vision and India becoming a member of the SCO complementarities exist between Beijing, Moscow and New Delhi initiatives. Crafting suitable strategies to coordinate the endeavours of Russia, China and India should not be a difficult task for the political and diplomatic leadership of these nations.

Apparently, ‘Make in India’ campaign has also received a degree of resonance in Russia. There are moves afoot to improve business climate both in Russia and India. Russia is going to participate as partner country in India Engineering Sourcing Show 2017 which could impart added momentum to bilateral economic relations. Further, a Joint Study Group to consider the feasibility of a free trade agreement between the India and the Eurasian Economic Union has been set up and is likely to give its report soon.

Defence and Military Technical Cooperation: Key Element

For starters ‘Make in India’ seems to have made some headway in the defence sector with understanding reached between both sides for manufacture of about 200 Kamov 226T helicopters in India. Earlier, Reliance Defence and Aerospace was supposed to be part of this joint venture but now it appears that HAL would partner with the Russian firm for this utility helicopter’s production. Defence Minister Mr. Manohar Parrikar during his visit to Moscow in November had made the pitch for ‘Make in India’ initiative. Pipavav Defence shipyards, part of the Reliance Group, has been selected by Zvyozdochka Shipyard of Russia for the refit of 24 EKM 877 submarines in India that will add to local skills and capabilities in the Indian defence industry. The company has also selected by United Shipbuilding Company of Russia for the manufacture of four Talwar-class frigates.

The Defence Ministry has also made provisions for purchase of five S-400 air defence missiles systems from Russia. Such systems also have missile defence capability. S-400 ABM capability is said to be comparable or superior to that of the U.S. Patriot and thus would provide India with a quick missile defense upgrade. The smaller 250km-ranged 48N6 and 120km-range 9M96E2 missiles are also equally lethal against fighters, bombers, early warning and electronic warfare aircraft, as well as cruise and ballistic missiles.

Additionally, both sides are deliberating over Medium Transport Aircraft and some issues and concerns over the fifth-generation fighter project (which envisages IAF inducting the Sukhoi T-50 PAK-FA jets) still need to be ironed out.

The Defence Minister also seems to have expressed India’s reservations about supply by Russia to Pakistan MI-35 helicopters as also conveyed concerns regarding the possibilities of supplying Pakistan fighters like SU-35. There has also been a degree of dissonance about inordinate delays of some of the defence equipment being provided by Russia, problems of supply of spares and upping of prices after the deals have been struck.

Notwithstanding the above the Indo-Russian defence relationship could be said to be a robust one as no country would lend its nuclear submarine to another country. India is expected to get another Akula class nuclear powered submarine on lease soon. Further, there has been forward movement in the field of joint design, development and production of high-technology military equipment that would impart substance to ‘Make in India’ campaign.

Conduct of joint Russian-Indian naval exercises in December 2015 in the Bay of Bengal, and INDRA-2015 joint exercises involving ground forces in Rajasthan in November 2015 reflect strengthening of defence cooperation. The visit of the Chief of the Army Staff of India to Russia in September 2015 has imparted impetus to expand training, joint exercises and institutionalized interactions between the Armed Forces of both countries.

Cooperation on high-end space technology including other areas of space segment has been enhanced. Joint project for development of navigation receivers GLONASS/ GPS/ IRNSS for the Russian and Indian market as well as the third countries’ markets is likely to take shape soon. "GLONASS”, Glonass Union and the Centre for Development of Advance Computing (C-DAC) will be jointly working in the areas of commercial applications through integration of Russian and Indian satellite navigation systems. Cooperation in the field of outer space, exploration for mutual benefit in such fields as rocket and engine engineering, as well as development of spacecraft, including microsatellites has been emphasized in the Joint Statement issued after the bilateral summit.

Conclusion

In conclusion it can be said that PM Modi with his visit to Russia with understandings reached there has been able to bring the bilateral relationship with Russia on an even keel. While there were some apprehensions on part of Russia that India might be getting closer to the US apparently PM Modi has been able to explain to Putin that India is following pragmatic policies and considers Russia as an old and trusted friend. It is also clear and apparent that enough political will exists on the both sides to intensify the relationship. Both sides are largely on the same page on regional and global issues and have been cooperating in various multilateral platforms. They share common views on the emerging global strategic and security architecture. While defence and military technical cooperation would continue to underpin the evolving Indo-Russian relationship innovative ways need to be found to enhance and strengthen the economic relationship. Connectivity issues also need to be overcome with speed. Cooperation for mutual benefits, especially in the areas of connectivity, with players like China because of its proven competencies and other stakeholders also needs to be looked at.


Published Date: 31st December 2015, Image Source: http://www.ibtimes.co.in
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the Vivekananda International Foundation)

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