Like days of yore

The 2014 India-Russia summit in New Delhi yields a raft of substantive agreements between the two countries.

Published : Dec 24, 2014 12:30 IST

Russian President Vladimir Putin and Prime Minister Narendra Modi during the World Diamond Conference in New Delhi on December 11.

Russian President Vladimir Putin and Prime Minister Narendra Modi during the World Diamond Conference in New Delhi on December 11.

RUSSIAN President Vladimir Putin was in New Delhi in the second week of December to participate in the India-Russia summit. The summit, held alternatively in the Indian and Russian capitals, has become an annual event since 2000. President Putin and Prime Minister Atal Bihari Vajpayee signed the historic Declaration on Strategic Partnership that year. Though Putin was in the Indian capital for only a day, the 2014 summit has yielded a raft of substantive agreements. The Russian Ambassador to India, Alexander Kadakin, said Russia-India summits need not be preceded by protocol or long discussions as their friendship was tried and tested. He particularly welcomed India’s support for “multipolarity” in international affairs.

The summit was held against the background of rising tensions between Moscow and Washington over Ukraine and the imposition of tough sanctions on Russia by the United States and some of its Western allies. At the G20 summit in November, there was an orchestrated attempt by the West to isolate Russia. Some European leaders talked openly about the possibility of a new war with Russia. After the events in Ukraine, a new nuclear arms race seems to be on the verge of being started. Both Russia and the U.S. have increased their testing of new missiles.

In view of the open hostility exhibited by the West, Moscow has pivoted its attention to the East. In recent months, Russia has signed huge energy deals with countries such as China and Turkey. The energy deals worth around $800 billion with China will see 30 billion cubic metres of Russian gas being sold annually to that country.

During a visit to Turkey in the first week of December, Putin announced the cancellation of the “South Stream” gas pipeline project that would have supplied Russian gas to southern Europe. Instead, Russia has signed a groundbreaking deal with Turkey under which Russian gas will now be routed through Turkey to the European and Asian markets, sidestepping the European Union (E.U.). Important E.U. nations such as Germany and Italy are dependent on gas from Russia to keep their economies ticking.

“We will reroute the flow of our energy resources to other regions in the world, including through the promotion and accelerated implementation of projects for liquefied natural gas,” Putin said in a recent speech to the Russian Parliament. Turkey, like India, has rejected American and European sanctions on Russia over the Ukraine issue.

Energy sales by Russia to China and Turkey will be much below the current market prices. Southern Europe, on the other hand, will have to pay 30 per cent more to source its gas from other sources after the surprise announcement of the cancellation of the South Stream project. Turkey’s coming on board also means that the Turkish government has now started looking East for political and economic succour. Turkey is a member of the North Atlantic Treaty Organisation (NATO) and has been waiting in line for decades to become a full-fledged E.U. member.

‘Reliable partner’

Putin, from all available indications, seems to have got an assurance from the new Indian government that it will not side with the West on the Ukraine issue and its policy of imposing unilateral sanctions on countries. Prime Minister Narendra Modi assured the Russian President in New Delhi that India would continue to be a “time tested and reliable partner” of Russia. He recalled the “steadfast support of the Russian people” during the “difficult moments” of the country’s history. He reiterated India’s commitment to stand by Russia “through its own challenges”.

The joint vision document released during the Putin visit stated that both countries did not recognise the unilateral economic sanctions imposed on Russia by some countries without the approval of the United Nations. New Delhi did not object to the presence of the Crimean Prime Minister, Sergey Aksyonov, in the Russian President’s delegation. Putin has thanked the Indian government for supporting Russia’s “legitimate” claim to the Crimean peninsula.

Defence deals

To further gladden Russian hearts, Modi pledged that Russia would continue to remain the country’s most important defence partner even if “India’s options have increased”. Russia was not too happy with the huge defence orders India had placed in recent years with the U.S., France and Israel. Russian officials feel that they were not given a level playing field. America is fast closing the gap with Russia in the supply of military hardware to India. Israel and France also bagged big defence deals during the 10-year rule of the United Progressive Alliance.

Michael Kugelman, who specialises on South Asia at the Woodrow Wilson Centre in the U.S., told TheWashington Post that Modi was expected to indulge in “pro-Russian rhetoric” during the Putin visit. He, however, predicted that with President Barack Obama’s visit to New Delhi due in January, the rhetoric “will give him cover to quietly intensify relations with Washington”.

Speaking to the media just ahead of Putin’s visit, the Russian Ambassador said that Russia was the first country to implement a “make in India” policy in the field of defence production. He said that today even the SU-30s, the backbone of the Indian Air Force, were “made in India”. The Russian side has agreed to produce Mi-17 medium lift and Ka-226 light utility helicopters in India in partnership with an Indian firm.

Russia has indicated that it would like to locate other aerospace projects too in India. Russia has offered to produce civilian passenger planes. The two sides have agreed to move ahead on the long-delayed projects to jointly develop a fifth-generation fighter jet and a multi-role transport aircraft. Russian officials said that India’s “Act East” policy would open newer vistas for cooperation between the two countries. Russia considers itself a Eurasian country. Much of its land mass is in Asia.

Before Putin’s visit, the Indian side had signalled its displeasure on the Russian government’s willingness to sell military hardware to Pakistan. Russian Defence Minister Sergei Shoigu was in Islamabad in November. This was the first-ever visit by a Russian Defence Minister to the country to sign a military cooperation agreement. The Russian Ambassador to India has claimed that no firm deal has been struck with Pakistan for the sale of military helicopters.

Until recently, Russia, in deference to the wishes of its close strategic ally India, had abstained from selling arms to Pakistan. But with India sidelining Russia and going in for multibillion dollar deals with the West and Israel, there evidently has been a rethink in Moscow. The U.S. is the biggest supplier of military aid and weaponry to Pakistan, but New Delhi has no problems doing military deals with Washington. “What is wrong in selling helicopters to Pakistan which India does not want to buy?” Kadakin said. He was speaking a day before the arrival of the Russian President. The Russian Ambassador said that his country would never do anything “detrimental” to the security interests of India. “Improving relations with Pakistan is a separate issue,” he said.

Russia evidently feels that Pakistan will be playing a key role in Afghanistan in the coming years. “We have a stake in Afghanistan,” Kadakin said, indirectly emphasising the role Pakistan was likely to play in the fast-changing political and military scenario in Afghanistan. The joint statement released in Islamabad during the Russian Defence Minister’s visit stated that it had “come at a very crucial juncture when U.S.-NATO forces are drawing down from Afghanistan by the end of 2014”. The statement said that apart from “promoting bilateral defence relations, the visit will enable both countries to join hands and bring peace and stability to the region”.

From the Indian point of view, the most important takeaway from the Putin visit was the announcement that Russia would be constructing an additional 12 new nuclear reactors in the country by 2035. Russia will start by building two more nuclear reactors in Kudankulam, Tamil Nadu, by 2016. This is in addition to the two reactors that are expected to go on stream very soon.

The Russian side, in fact, was ready to build up to 24 nuclear reactors in India, but the Indian side wants to keep the lucrative contracts for nuclear reactors to be shared by some of its other “strategic partners” like the U.S., France and Japan. But unlike these three countries, Russia has not made much of a fuss about India’s “nuclear liability law” though the Russians too would like the law to be either scrapped or diluted. The Bharatiya Janata Party government seems to have sent some strong signals to nuclear-supplier countries that such a move is in the offing.

Another key agreement inked during Putin’s visit was the $2.1 billion deal to directly source raw diamonds from Russia. India is the biggest manufacturer of cut and polished diamonds. Gujarat is the centre of India’s diamond industry and the businessmen in the State will be the major gainers from the deal.

Chinese President Xi Jinping, during his visit to India, also chose Gujarat for favourable treatment. Many Chinese industries have announced that they would set up shop in the Prime Minister’s home State. India currently sources most of the diamonds from Dubai and the West.

There were no hydrocarbon deals on the scale which Russia has signed with China and Turkey during Putin’s visit. Geographical distance is, of course, a factor, though the Russians are looking at the feasibility of extending one of their gas pipelines in China to India. Before his India visit, Putin had observed that shipping liquefied natural gas (LNG) from Russia would be cheaper than constructing a pipeline to carry gas to India.

A more modest agreement between India’s Essar and Russia’s Rosneft was signed for the long-term supply of 10 million tonnes of crude oil at a concessional rate. Negotiations are on for oil and gas exploration projects by the Oil and Natural Gas Corporation (ONGC) in the Arctic region and East Siberia. More than 60 per cent of India’s oil imports are sourced from West Asia. The quantity imported from Russia is less than 1 per cent. There is a need for India to diversify its sources as the demand for energy rises domestically.

Both sides agreed on the urgency to boost bilateral trade, which languishes at a paltry $10 billion annually. To boost trade and investment, the Russian side has liberalised visa rules for Indian businessmen and professionals. To facilitate investment growth, the two countries are working out modalities for rupee-rouble trade. The BRICS (Brazil, Russia, India, China and South Africa) countries have agreed in principle to bypass the U.S. dollar and trade mainly in their own currencies.

The next important visitor to New Delhi will be the U.S. President. The Indian Prime Minister’s rhetoric will be under intense scrutiny as he tries a diplomatic balancing act between Washington and Moscow. India may be having a “special and privileged partnership” with Russia, but it also has a “broad strategic and global partnership” with the U.S. The U.S. is also “a principal partner in the realisation of India’s rise”.

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