India, Russia seal defence deals, hail partnership

President Vladimir Putin shakes hands with Prime Minister Manmohan Singh before a meeting at the Indian leader’s residence in New Delhi yesterday.

Agencies/New Delhi

India agreed to buy dozens of Russian military helicopters and kits for the assembly of Sukhoi jets at a summit in New Delhi yesterday, where the leaders of both countries reaffirmed their commitment to a strategic partnership.

India, traditionally one of Moscow’s top arms clients, said the two sides would also set up a joint venture to manufacture Russian-model helicopters and a $2bn fund to invest in trade and economic co-operation projects.

“Russia is a key partner in our efforts to modernise our armed forces,” Prime Minister Manmohan Singh said in a statement, welcoming Russian President Vladimir Putin as “a valued friend and the original architect of the India-Russia strategic partnership.”

Putin’s one-day trip, his first to India since he started a new Kremlin six-year term in May, underlines Russia’s interest in India, long a regional ally and now a partner in the BRICS group of emerging-market nations.

Writing in the Hindu daily earlier, Putin stressed that “deepening friendship and co-operation with India is among the top priorities of our foreign policy.”

“India and Russia show an example of responsible leadership and collective actions in the international arena,” he wrote, a veiled swipe at the West and in particular the US, which Putin accuses of seeking to impose its will on the world.

Russian defence industry sources had said the visit could produce deals on the sale of fighter jets and aircraft engines worth more than $7.5bn. However, the main agreements appeared to fall short of that figure.

Kremlin sources said Russia will sell India 71 MI-17 V-5 military helicopters worth $1.3bn as well as technological kits worth $1.6bn to assemble 42 Sukhoi SU-30MKI fighter jets. India’s foreign ministry said the original deal for these jets was agreed last year.

Russia Helicopters and India’s Elcom Systems Private Ltd will also set up a joint venture to manufacture helicopters.

Russia once had a virtual monopoly over India’s arms market, but New Delhi has been shopping around in recent years and Putin’s visit is seen in Moscow as a chance to regain lost ground.

Moscow has been worried recently by New Delhi’s increasing preference for Western suppliers, especially after Boeing was chosen last month over Russia’s Mil plant for a major helicopter contract.

India has been unhappy about delays to deliveries of some naval equipment, notably the aircraft carrier Admiral Gorshkov which is being refurbished for the Indian Navy in Russia.

Russia was originally to deliver the upgraded vessel in August 2008, but the date has now been pushed back to the end of 2013 while the price has more than doubled to $2.3bn.

After the meeting yesterday, Putin said the dialogue was “substantial and constructive.”

“We agreed to deepen ties in the areas of military and defence sectors,” he said.

Separately, Russian Direct Investment Fund (RDIF) - a sovereign wealth fund - and Indian lender State Bank of India will jointly invest up to $2bn to boost trade and economic co-operation projects.

RDIF said in a statement that the two firms will work together to facilitate access to long-term capital in Russia and India and promote mutual investments between the two countries.

The two leaders also discussed the construction of India’s largest nuclear power plant, in the southern state of Tamil Nadu.

First conceived in 1988, the Russian-built Kudankulam plant was expected to start operations in 2011. But protesters surrounded the compound after an earthquake and tsunami hit Japan’s Fukushima Daiichi plant in March 2011.

Singh said negotiations for the construction of Units 3 and 4 at Kudankulam had made good progress.

Bilateral trade has been growing steadily and is expected to reach around $10bn in 2012, up from $7.5bn in 2009, according to official figures.

“Our trade turnover has overcome the consequences of global crisis, and in 2012 we expect to reach record numbers, over $10bn. Our next goal is to reach $20bn already by 2015,” Putin had said before the one-day visit.

Agreements in the pharmaceutical, chemical and cultural sectors were also signed yesterday.

The venue of the talks was switched to Singh’s official residence due to violent protests in central New Delhi following the gang-rape of a student that has caused widespread public outrage.