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Business News/ Politics / Policy/  India, Russia expand engagement
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India, Russia expand engagement

Modi says Russia remains India's most important defence partner even if options have increased

Prime Minister Narendra Modi with Russian President Vladimir Putin in New Delhi on Thursday. Photo: PTIPremium
Prime Minister Narendra Modi with Russian President Vladimir Putin in New Delhi on Thursday. Photo: PTI

New Delhi: India and Russia signed several agreements, some worth billions of dollars, in areas spanning civil nuclear cooperation, defence, energy and diamonds as the two nations strengthened their ties during Russian President Vladimir Putin’s one-day visit to the country.

New Delhi and Moscow also pledged to increase the bilateral trade between them.

The visit, and the deals, come against the backdrop of Western sanctions on Moscow for its support of pro-separatist Ukranian rebels and a little over a month before US president Barack Obama will visit India to be the chief guest at the Republic Day Parade on 26 January.

Russia also expressed support for Prime Minister Narendra Modi’s “Make In India" programme aimed at reviving the manufacturing sector—agreeing to build helicopters in India for exports, locate manufacturing facilities in India for spares and parts used in Russian defence equipment that were part of the Indian inventory, and source components from the country for the construction of at least 10 nuclear plants in India.

The two countries will also “explore opportunities for sourcing materials, equipment and services from Indian industry for the construction of the Russian-designed nuclear power plants in third countries," an Indian government statement said.

Key deals signed on Thursday included those between Russian energy major OAO Rosneft with India’s Essar Oil Ltd for importing crude oil over a 10-year period and Russia’s diamond mining group Alrosa signing a pact worth $2.1 billion for the direct sale of rough diamonds to Indian companies. Currently, these diamonds come to India, where 90% of the world’s stones are cut and polished, through Belgium and Dubai.

Modi described his guest as a “leader of a great nation with which we have a friendship of unmatched mutual confidence, trust and goodwill".

“We have a strategic partnership that is incomparable in content... The character of global politics and international relations is changing. However, the importance of this relationship and its unique place in India’s foreign policy will not change," he added.

Referring to India diversifying its sources of procurement of defence hardware in recent years, Modi said: “Even if India’s options have increased, Russia remains our most important defence partner."

Modi’s words of support drew appreciation from Putin, who welcomed “the friendship, trust and mutual understanding with Indian partners".

The comments come against the backdrop of Putin being cold-shouldered by the US and European nations over Moscow’s support to Ukranian separatists and Russia’s annexation of the Russian-speaking region of Ukraine, Crimea, earlier this year. Falling oil prices and a weak economy have deepened the impact of Western sanctions on the Russian economy.

“This is an opportune moment for India and Russia. Putin is looking for international legitimacy and the relationship with India is critical," said Anuradha Chenoy, a professor of Russian and Central Asian studies at New Delhi-based Jawaharlal Nehru University.

“With Western sanctions in place, Russia is looking at Asia to mitigate them. India does not support the sanctions imposed on Russia by the US and European countries. Russia on its part has banned imports of some commodities from Europe. So this is the opportune moment for India to step in and fill the gap," she said.

The other pacts signed between the two sides on Thursday included one between Acron of Russia and India’s NMDC Ltd to acquire stake in a potash mine in Russia, another between Tata Power Co. Ltd and Russia’s sovereign wealth fund, the Russian Direct Investment Fund (RDIF), to explore investment opportunities in the Russian energy sector, and a third between India’s IDFC Ltd and RDIF on a co-investment opportunity of as much as $1 billion.

Both countries also signed a “Strategic Vision for Strengthening Cooperation in Peaceful Uses of Atomic Energy" and a “programme of cooperation under Framework of Inter-governmental Agreement for Enhancement of Cooperation in Oil and Gas", according to the ministry of external affairs.

A joint statement issued by both sides encouraged Indian companies to “strongly participate in projects related to new oil and gas fields in the territory of the Russian Federation".

On defence, the two sides will seek to move ahead with long-delayed projects to develop a joint fifth-generation fighter jet and a multi-role transport aircraft, in addition to the advanced helicopter.

“What the outcomes show is that there is no cooling of ardour in the India-Russia relationship; it is as strong as before," said a government official who asked not to be identified. “There is a definite economic content and outcome" to the visit, the person added. Bilateral trade between the two countries has stagnated at $10 billion for the past two years and Indian officials are hoping that Putin’s visit would act as a catalyst in that area.

Former Indian ambassador to Turkey and Russia specialist M.K. Bhadrakumar said that Putin’s visit had resulted in “specific projects" being identified for action between the two countries. “Russia is going to calibrate its projects in India in such a way that it fits in with the Make In India campaign. This is the major difference in this visit. The relationship has become more business-like, that is good. It puts India in a stronger position so that when President Obama comes visiting in January, India will be in a better position to bargain and wrest a better deal."

In effect, Putin’s visit is an indication that India’s foreign policy isn’t becoming US-centric.

Chenoy said that India’s reiteration of support for Russia and the pacts signed on Thursday “asserts India’s independence in foreign policy and shows that India is capable of developing independent bilateral relations with the US and Russia".

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Published: 12 Dec 2014, 12:31 AM IST
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