- Feb 16, 2009
http://www.themoscowtimes.com/business/article/putin-to-push-arms-energy-in-india/401283.htmlPrime Minister Vladimir Putin will push India to double its payment for renovations on a long-delayed aircraft carrier, while also trying to conclude other deals for arms, nuclear energy and communications during a two-day visit beginning Thursday.
New Delhi is the largest foreign buyer of Russian defense equipment, particularly aircraft, and Putin will be looking to shore up that cooperation in talks with Prime Minister Manmohan Singh during his first visit to India since January 2007.
He is also slated to meet Indian President Pratibha Patil, the government press service said in a statement Tuesday.
But the biggest issue on the agenda are cost overruns and delays to refit and deliver the Vikramaditya aircraft carrier, as the Soviet-built Admiral Gorshkov is now known. Problems with the project have been a regular thorn in generally solid bilateral ties.
A source close to state arms export monopoly Rosoboronexport told The Moscow Times that Putin would push India to sign a $2.3 billion deal to finish upgrades, which were originally expected to cost just $970 million.
The initial $1.6 billion contract, signed in 2004, would have seen the renovated carrier delivered to India in 2008 along with fighter jets that are now part of a separate contract. After years of wrangling over delays, India agreed in 2008 to another $1.2 billion in work on the carrier, with delivery pushed back to 2012.
The final price of $2.3 billion is less than the $2.7 billion total for renovations that Russia had been seeking.
Work on the Vikramaditya took so long to agree on because the Russian side did not realize how long it would take or what the costs would be, the source close to Rosoboronexport said.
"The agreement was signed in a rush. It wasn't quite clear what the weapon was and in what condition it was being sold," the source said. "Then the Russian side realized it would take longer and would cost more to finish it, and it took them more than a year to explain to the Indians why exactly they should pay twice the agreed amount."
Vladimir Pastukhov, head of the state-run Sevmash shipyard doing the work, resigned in 2007 when the underestimates and possible mismanagement of funds had already become clear.
President Dmitry Medvedev visited the shipyard in July and ordered current CEO Nikolai Kalistratov to complete the project, warning that there could be "grave consequences" for further delays. Problems at Sevmash have forced "everyone to make excuses, you to me and I to our Indian partners," Medvedev said at the time.
The source close to Rosoboronexport said three other defense deals may be discussed during the visit, although he declined to speculate on whether they would be signed. The talks could include the sale of 126 MiG-35 fighters, which are being tested as part of an Indian defense tender; development of the Russian-Indian fifth generation PAK FA fighter; and modernization of Su-30 MKI fighters.
Additionally, India is expected to complete a tender to buy patrol ships for its navy later this year, and Russia could participate in their construction, the source said. "It is most likely that an Indian company would win it, but they will build vessels in cooperation with Russia because they wouldn't be able to do it on their own ."
Putin is most likely to sign deals to finish the aircraft carrier, sell 29 MiG-29 fighters that would be based on the carrier for $1.2 billion and jointly develop the MTA transport aircraft, Vedomosti reported last week, citing sources close to Rosoboronexport's management.
Rosoboronexport spokesman Vyacheslav Davydenko confirmed that the three agreements would be discussed, but he declined to comment on the terms of possible agreements.
"We never link our contracts to official visits, so I can't say which of them may be signed during the visit and which may not," he said.
The government's press office was not immediately available for comment.
In a promising prelude to Putin's trip, the Indian Defense Ministry on Tuesday said it approved Rosoboronexport as a helicopter supplier.
"In 2008, we agreed to supply 80 MI-17-V-5 helicopters to India, and we will start delivering them by the year's end. Now the Indians want to buy another 60 helicopters of the same model," the source said, without commenting on the possible terms.
Experts said India was likely to stick with Russian-made arms, despite expressing concern about the quality of some aircraft and the problems with the aircraft carrier. In 2009 alone, India lost two Su-30 MKI, three MiG-27s and three MiG-21s in noncombat crashes.
"The Indian army is equipped with Soviet arms, and switching to Western analogues takes a long time," said Alexander Pikayev, a senior research fellow at the Institute of World Economy and International Relations. "Also, Russia was the only country so far that agreed to sell India an aircraft carrier, so it looks like India has no other choice. "
Moscow and New Delhi have been expanding economic ties beyond arms exports. During Singh's visit to Moscow in December, Russia was given the green light to build nuclear plants in India and work on satellite cooperation.
The countries may sign off on a joint venture in India to produce navigation equipment that would work with both the Russian Glonass system and its U.S. equivalent, GPS, Alexander Gurko, CEO of network operator Navigation and Information Systems, said Tuesday.
India would be able to use the system's civilian signal, which offers precision within 15 meters, while the use of the more precise military signal is being negotiated, Gurko said, RIA-Novosti reported.
Putin is also expected to sign an agreement on boosting cooperation in nuclear energy. India has 4.1 gigawatts of nuclear capacity now, a figure it is trying to raise fivefold by 2020.
India will build five nuclear plants in Gujarat, Andhra-Pradesh, Maharashtra, West Bengal and Orissa states, and Russia and France are welcome to participate, Srikumar Banergi, chairman of the Indian commission on nuclear energy, said Tuesday.
Russian firms are working on the first phase of the Kudankulam plant in Tamilnad state, which will become India's most powerful. Rosatom chief Sergei Kiriyenko said last year that nuclear work in India is "not just billions [of dollars]. It's about tens of billions."
Putin is also expected to sign an agreement that would make it easier for Indian businessmen to travel to Russia, Interfax reported Tuesday, citing a high-ranking source in India.