Rajorshi Roy, http://www.idsa.in/
January 4, 2013

President Putin paid an official visit to India on 24 December 2012 as part of the 13th Annual India-Russia summit. This was his first visit to New Delhi after assuming the office of President for the third time. President Putin held detailed discussions with Prime Minister Manmohan Singh and also met President Pranab Mukherjee. Sushma Swaraj, the leader of the Opposition, and Sonia Gandhi, Chairperson of UPA, called on the Russian President. But there was no customary media briefing by the External Affairs Ministry prior to the summit nor was there any joint press conference of the two Heads of States. Putin’s official engagement itself was an extremely short one and got over in less than a day.

Historically, India has shared a multidimensional and strong partnership with the Soviet Union and then with Russia. The year 2012 marks 65 years of the establishment of diplomatic relations. It is Putin who is often referred to as the main architect of the current strategic dialogue because it was under his aegis that the “Declaration of Strategic Partnership between India and the Russian Federation” was signed in the year 2000. It is against this backdrop that one needs to analyze whether Putin’s visit added any real substance and value to the strategic partnership.

Despite the low media attention, 10 bilateral documents were signed during Putin’s visit. The Memorandum of Understanding (MoU) to establish an Indo-Russia Joint Investment Fund, worth US$ 2 billion, will encourage direct investment and acquisition of assets in critical infrastructural, manufacturing and hydrocarbon extraction sectors. The Joint Venture (JV) to set up a modern industrial facility for the manufacture of Russian helicopters in India will promote the development of a high technology based domestic aerospace industry. The joint collaboration to manufacture pharmaceuticals in Russia along with the IT agreement for developing software, systems integration and emergency response systems can help in producing niche products. The pilot project to assess the feasibility of the Global Navigation Satellite System (GLONASS) in areas such as disaster management, telephony and long distance communications can pave the way for India to have a useful alternative for the American Global Positioning System (GPS). The two contracts for the supply of 71 Mi-17 helicopters and 42 Sukhoi-30 MKI fighter jets worth US$ 3.5 to 4 billion were signed will give a boost to India-Russia defence cooperation.

While there are many areas of cooperation between the two countries, yet some irritants continue to trouble the relationship. It is important to highlight some of these, which need to be addressed in order to further cement bilateral ties.

Sistema remains a major irritant and the possibility of Russia seeking recourse to international arbitration, under the Bilateral Investment Promotion and Protection Agreement (BIPA), cannot be ruled out. The fact that Russia’s titanium Joint Venture in Orissa has also run into rough weather has not helped matters. In a way, Russia has linked Sistema to India’s request for tax concessions in the overvalued and underperforming Imperial Energy Company, which was bought by ONGC Videsh Ltd. (OVL) in one of its biggest foreign acquisitions. Moreover, the imposition of the Nuclear Liability Law on Units 3 and 4 of the Kudankulam nuclear power plant project remains a sticking point. Russia is also peeved at the suggestion that Roerich’s estate near Bangalore be converted into a waste treatment plant.

India’s weapons diversification policy also remains a matter of concern for Russia since India accounts for close to 30 per cent of Russian revenues from arms exports.1 In certain quarters in the Russian establishment, this issue is looked at through the broader framework of India’s perceived drift towards the West. From India’s perspective, the repeated delay in the delivery of the aircraft carrier Vikramaditya and reports of technical problems affecting the leased Akula nuclear submarine are issues of concern.

Bilateral trade continues to be the most unsatisfactory part of the Indo-Russian partnership, with total trade standing at less than $ 10 billion. While there has been a 30 per cent increase in trade this year as compared to the previous year,2 the true economic potential remains untapped. In terms of sheer numbers, India’s share in Russia’s total trade is a mere 1.11 per cent, while Russia as India’s trade partner in terms of exports ranks 36th and in terms of imports at 27th.3 In fact, most of the thorny issues in the bilateral partnership remain far from being resolved.

While these irritants need to be addressed, there is a positive side to India-Russia bilateral engagement. Russia’s importance for India lies in the fact that the bilateral relationship has withstood the test of time, with the two countries sharing similar views on most matters of international concern. Russia is an independent and powerful country, a member of the P5 and in many ways can be considered as a pole in international diplomacy. Moreover, it holds the key for India in different multilateral forums such as the Shanghai Cooperation Organisation (SCO) and in the effort to activate the International North South Transport Corridor (INSTC), which can solve the problems of ‘connectivity and accessibility’ with the Eurasian region.

In the defence sector, joint development of equipment not only gives India access to high technology but also modernises its armed forces. The fact that no other country is willing to provide such technology, without attaching any pre-conditions, cannot be overlooked.

At a time when there exists fundamental differences between Russia and the West (lack of missile defence guarantees from the US, EU’s Third Energy Package and NATO expansion Eastwards) and apprehensions about China’s growing assertiveness intensify, India as an emerging and powerful country remains one of Russia’s most reliable partners on the global stage.

In terms of opportunities, there is a need to focus on strengthening economic ties. Russia’s entry into the World Trade Organisation (WTO) has opened up substantial economic opportunities for India to explore. Lowering of tariffs and import barriers, greater market accessibility and a general improvement in the investment climate bode well for bilateral trade and can provide an impetus to achieve the trade target of $ 20 billion by 2015. It can also facilitate the signing of the Comprehensive Economic Cooperation Agreement (CECA) between India and the Customs Union comprising of Russia, Kazakhstan and Belarus.

India and Russia can explore common synergies in co-developing more weapons platforms. Sharing of both costs and efficient practices and interaction of best scientific and research minds can augment their military capabilities. This may also be seen within the context of Russia’s own massive military modernisation programme, wherein it has earmarked close to $ 700 billion for modernising up to 70 per cent of its armed forces, involving cutting edge military technology, by 2020.4

There are a lot of opportunities in the Science and Technology (S&T) sector for the two countries to take advantage of. The need is to attempt diffusion of high technology from the military into the civilian sphere in order to build national capabilities. This is where R&D and innovation projects come into the picture. Russia still has some of the world’s best scientific minds and research facilities. The opening of an Indo-Russian Science & Technology Centre, one each in Delhi-NCR and Moscow, to tap this potential is a step in the right direction.

For energy deficient India, the opportunities of cooperation with resource rich Russia is immense. Nuclear energy is a key element of the India-Russia partnership. Moreover, with West Asia in a state of perpetual turmoil, India can look to diversify its energy imports by exploring hydrocarbon investment opportunities in Russia’s Far East, Arctic and Siberian regions. The opening up of the Arctic and advances in technology indicates that Russia’s Arctic energy reserves will be exploited in the near future. Russia’s offer of a stake in the Madagan 2 oil-field along with GAIL’s 20 year, 2.5 million annual tonnes-of LNG deal with Gazprom5 can just be the beginning of a more robust India-Russia energy cooperation. There is also a need for greater people to people interaction, especially between the younger generation who can be made aware of each other’s histories and national capabilities.

On the foreign policy front, both India and Russia share apprehensions about China’s assertiveness, despite significantly improving their bilateral ties with it. Together, they can attempt to engage China in SCO and Russia-India-China trilateral meetings. Moreover, current developments in Afghanistan remain a matter of concern for both India and Russia. They can work together to achieve the similar objective of bringing stability and prosperity to that country. This is where SCO offers a common platform for all the regional countries to work on Afghanistan in the post 2014 American withdrawal scenario. India and Russia can also explore common synergies in their endeavour to create a multi-polar world order and reforming global governance structures.

Putin’s visit to India does show some mixed results. While an effort was made to strengthen the strategic partnership, some difficult issues have proved to be a stumbling block. Nevertheless, Manmohan Singh’s statement about ‘Indo-Russian partnership having a special place in the hearts and minds of Indians’ and his ‘commitment to further strengthen ties’ do hold promise for the future. India and Russia cannot afford to dilute their bilateral relations and they both require each other. Therefore, they need to synergise cooperation in the economic and security arenas in particular. In the present context, the challenge is to reinvigorate the current state of the partnership. As Russian Ambassador Kadakin aptly put it ‘India is Russia’s closest friend’.6 The reverse also holds true.

  1. 1.“Russia and USA to fight for India’s defense billions”, Pravda, July 25, 2012,http://english.pravda.ru/world/asia/25-07-2012/121734-russia_usa_india-0/, Accessed on January 1, 2013.
  2. 2.“Prime Minister’s statement to the media at the 13th India-Russia Annual Summit”, Ministry of External Affairs, Government of India, December 24, 2012, http://www.mea.gov.in/in-focus-article.htm?20990/Prime+Ministers+stateme…, Accessed on January 1, 2013.
  3. 3.“India, Russia strengthen ties via $4 bn defence deals”, The Economic Times, December 25, 2012,http://articles.economictimes.indiatimes.com/2012-12-25/news/35999304_1_…, Accessed on December 28, 2012.
  4. 4.“Russia to prioritize modern weaponry in new arms acquisition program”, Rianovosti, March 3, 2011,http://en.rian.ru/military_news/20110311/162956743.html, Accessed on January 1, 2013.
  5. 5.“Gazprom and GAIL enter into long-term LNG purchase and sale contract”, Gazprom, October 1, 2012,http://www.gazprom.com/press/news/2012/october/article145120/, Accessed on January 1, 2013.
  6. 6.“We have no other friend closer than India: Kadakin”, Russia and India Report, December 25, 2012,http://indrus.in/articles/2012/12/25/we_have_no_other_friend_closer_than… Accessed on January 1, 2013.