Russia and India signed defense deals worth more than $4 billion during comprehensive talks regarding the two countries’ bilateral relations held between Russian President Vladimir Putin and Indian Prime Minister Manmohan Singh.
Under the defense deals, India will buy 42 Sukhoi Su-30 fighter jets, adding to another 230 more contracted earlier, and 71 Mi-17 V5 helicopters, in addition to the 80 already inducted. These contracts reconfirm Russia’s status as the country’s main weapons’ provider.
While Russia currently accounts for 70 percent of India’s arms purchases, the Kremlin has recently started worried that its traditional position might be increasingly threatened by Western competitions, after India signed several important defense contracts with US, France and Israel, among others.
During their meeting, Putin and Singh also discussed other key issues, including space, trade and investment, science and technology, education, culture and tourism.
One of the spikiest topics addressed was India’s inability to save Russian telecom company Sistema’s $3.1 billion investment in Shyam Sistema Teleservices (SSTL). The Supreme court cancelled 21 out of 22 licenses in February due to irregularities found in their allocation. Sistema’s enormous investment, which included $700 million from government funds, should have provided Russian investors an example of successful investment, but could have the reverse effect of discouraging them.
Another thorny issue discussed by Putin and Singh was finding ways to expedite an agreement for nuclear reactor 3 and 4 at Kudankulam, after India had previously refused to waive civil liability for units III and IV of the Kudankulam Nuclear Power Plant (KNPP). Putin emphasized that the development of the nuclear energy program represents a key pillar of the Russo-Indian strategic partnership, while proudly pointing out that the Unit 1 of the Kudankulam Nuclear Power Project was complete and it will generate power shortly and that Unit 2 would be completed next year. Singh stressed that negotiations for Units 3 and 4 have progressed well and that the two countries are expected to finalize them soon and proceed to the implementation stages.
As far as trade relations are concerned, the two leaders applauded the 30 percent growth between 2011 and 2012, which makes it amount to $11 billion dollars, and expressed their commitment to enhance bilateral trade to $20 billion by 2015. Nevertheless, this is a quite low level of trade. In contrast, by 2015, the two countries’ individual trade with China will be above $100 billion.
Finally, Russia expressed support for India’s involvement in the Russian energy sector. The two countries agreed to intensify efforts to increase mutual investments in exploration and production of oil and gas in both the countries and to initiate joint ventures in the upstream and downstream oil sectors in India, Russia and third countries.
This is Putin’s first visit to India since entering his third presidential term. Putin restored the closeness of Russo-Indian relations after succeeding Boris Yeltsin, with bilateral relations steadily tightening ever since.