Defence deals to be signed during Putin’s visit to India

India is looking forward to the arrival in New Delhi of Russian Prime Minister Vladimir Putin on a two-day visit, beginning Thursday during which many defence deals are set to be signed.

With a pact on aircraft carrier Admiral Gorshkov likely during Putin's trip, Russian envoy Alexander Kadakin on Wednesday urged India to look at the reconstruction of the aircraft carrier with “positive eyes “and pitched for setting more nuclear reactors. The long-delayed pact on the delivery of Admiral Gorshkov, previously marred by pricing disputes, will be among defence deals worth $4 billion that are expected to be finalized during Putin's visit.

The two countries will also sign an umbrella civil nuclear agreement after Prime Minister Manmohan Singh's talks with Putin on Friday. The pact was initialled during Manmohan Singh's trip to Moscow in December last year.

A slew of defence contracts like $2.35 billion deal for refit of aircraft carrier Admiral Gorshkov, $1.2 billion deal for 29 MiG-29K maritime fighters and the joint development of the stealth fifth-generation fighter aircraft (FGFA) are also likely to be finalised during Putin's visit.

Besides defence deals, the focus of Putin's visit will be on intensifying cooperation in high-technology and in invigorating bilateral trade that has not matched the level of strategic partnership the two countries have enjoyed since the Soviet era.

'We do not turn a blind eye to difficulties that occasionally crop up in defence and technology fields. We should look at the reconstruction of Admiral Gorshkov through positive eyes,' envoy Kadakin said. Putin's visit will strengthen bilateral tries through new contracts and pacts in areas like civil nuclear energy, defence and technology. Kadakin added that Russia is ready to build more nuclear reactors for India in a serial fashion that will be more viable economically and technologically.

The delivery agreement for Admiral Gorshkov could involve New Delhi paying out an additional $2.35 billion for the upgradation of the carrier and training of Indian naval crew, sources said.

The carrier, which will be rechristened INS Vikramaditya, is scheduled to be delivered by 2013.

The Russian economy shrank by 7.9% last year after a decade of oil-fuelled boom and Putin sees the defence sector as key to reviving growth. But Moscow often needs to offer incentives to sell its usually outdated military equipment. India is one of the world's top arms importers and plans to spend tens of billions of dollars on defence in the next years in a move causing unease in long-time foe Pakistan and regional rival China.

"The United States is gradually squeezing Russia out of the regional weapons market thanks to its technological superiority and political pressure," according to Alexei Mukhin, who directs the Moscow-based Centre for Political Information. "Since it is a second big Russia-India meeting over the past year, one could assume Putin wants to change that... It is almost guaranteed that new preferential energy deals for India would be discussed," he said.

The last meeting between Putin and Indian premier Manmohan Singh in Moscow in December failed to generate big deals to emulate the landmark oil-for-arms deal signed by the two countries earlier in the decade. Under that arrangement, India's state-run explorer Oil and Natural Gas Corp became a 20% stake holder in the $15 billion Sakhalin-1 oil and gas project on Russia's Pacific island of the same name. In a separate deal, ONGC also acquired Russian mid-sized oil producer Imperial Energy for about $2 billion and has said it is looking for overseas opportunities in Russia and elsewhere in the former Soviet Union.

Pacts on setting up joint pharmaceutical ventures and visa simplification are also expected to be signed during the visit, key steps that can take scale up business ties between the two countries. Under this agreement, Indian businessmen wishing to apply for a visa to Russia will require a certificate from an industry body like Federation of Indian Chambers of Commerce and Industry (FICCI) or Confederation of Indian Industry (CII) confirming his bone fide credentials.

Russia's stringent visa regime was widely considered as a major obstacle by Indian businessmen wishing to travel to that country to explore business opportunities.

India and Russia are aiming to more than triple their bilateral trade to $20 billion by 2015. Differences, however, remain on a second visa pact due to long-standing Russian insistence on including a readmission clause that stipulates India taking back those found travelling to Russia without valid papers.

- Asian Tribune -