The $150 billion that Narendra Modi plans to spend to upgrade his military could be a welcome diversion for Vladimir Putin, who’s bracing for a second year of recession amid Western sanctions. Photo: PTI
The $150 billion that Narendra Modi plans to spend to upgrade his military could be a welcome diversion for Vladimir Putin, who’s bracing for a second year of recession amid Western sanctions. Photo: PTI

Narendra Modi seeks Russian crown jewel in decade’s biggest defence deal

The S-400 air defence missile systems, which India plans to buy, are among the 'crown jewels' of Russia's defence capability, as per defence analysts

Prime Minister Narendra Modi heads to Moscow after approving what’s set to be his nation’s biggest weapons deal with Russia since 2001, reaffirming a military partnership that newer suppliers like the US will find difficult to dislodge.

The S-400 air defence missile systems, which India plans to buy, are among the “crown jewels" of Russia’s defence capability, according to Jon Grevatt, Asia-Pacific defence-industry analyst for IHS Jane’s. The two-day visit starting 23 December will also include a private dinner with Russian President Vladimir Putin and an event at the Kremlin with Russian and Indian chief executives.

“Russia and India have a very strong partnership that the US 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 programmes between the two countries."

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. Although the US emerged as India’s biggest defence supplier last fiscal year, the Asian nation’s links with Russia stretch back to their Soviet-era ties.

Putin hosts Modi in Moscow for the annual bilateral summit after visiting New Delhi last year. The leaders have also displayed a friendly rapport: Putin, who holds a black belt in judo, promised Modi he’d try yoga at a meeting earlier this year.

Modi arrives on Wednesday evening in time for dinner with Putin. The two leaders hold their summit the following day before meeting with business leaders. Modi is also scheduled to visit Russia’s emergencies ministry and speak at a Friends-of-India event expected to draw 3,000 people before departing Thursday evening.

Missile shield

India’s defence 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 defence 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.

“Beyond speed, it will also increase the ability of the Indian forces to engage multiple targets and at a long range," Anurag Garg, a director at PwC’s strategy consulting group, said of the S-400. “This is important to restore the strategic balance of power with China in the region and to have a credible defence against Pakistan’s fighters and ballistic missiles."

Russian ties

Modi and Putin will discuss defence and nuclear cooperation, as well as ways to work together in oil and coal, India’s foreign secretary S. Jaishankar told reporters on Tuesday. Indian Oil Corp. Ltd chairman B. Ashok and Oil India chairman U.P. Singh will accompany Modi, the companies’ spokesmen said on Tuesday. Russia is also helping build a nuclear power plant in India’s southern state of Tamil Nadu.

Other potential deals from the trip include:

-- Kamov OAO may 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.

-- 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 restart 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 will be agreed during the visit, according to Konstantin Makienko, deputy director of the Center for Analysis of Strategies and Technologies, which advises Russia’s defence ministry. India would need to purchase the S-400s directly from the Russian government if it wants delivery by 2018, he added.

The US surpassed Russia as India’s top supplier of defence 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.

“Russia was the leader in India’s market, now it is one of the leaders," Makienko said by phone. “Modi’s visit can give a significant boost for Russian exports to India, because Russia is in some way an exclusive supplier, which offers joint production."

in New Delhi at npearson7@bloomberg.net; in New Delhi at nbipindra@bloomberg.net To contact the editors responsible for this story: Unni Krishnan at ukrishnan2@bloomberg.net Jeanette Rodrigues

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