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Indian PM Arrives in Moscow Today - What to Expect

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  • December 23, 2015

    Prime Minister Narendra Modi is scheduled to visit Moscow December 24-25 for a Summit with President Vladimir Putin. A year ago, Indo-Russian relations were bit frosty, the Russians complaining that the US had become India’s main arms supplier, ending the arms blockade to Pakistan in return, while the Indians were frustrated by Russia’s failure to meet delivery schedules, raising costs and failure to transfer technology and spares.

    Under Manmohan Singh, nuclear and defense deals with Russia were only on paper, but Putin and Modi seem intent on getting things back on track, with big new deals on the table. Modi has inked a string of robust defence and security agreements with the US, France, Germany, Israel, UK and Japan, while Russia, though suffering Western economic sanctions and lower oil prices, is showing remarkable resilience, bombing ISIS in Syria and standing firm in disputes with Turkey, standing up to the West and rebounding on the world stage.

    Strategic Line

    The fact that Modi has not sided with the West vis a vis Russia, taking a position on Russia’s combat mission in Syria or the standoff with Turkey, signals Russia’s unique significance in its geo-strategic calculus.

    India has escaped the ramifications of its policy, however Russia’s pivot to Asia has so far only boosted China. Similarly, in the face of Western sanctions, Putin could turn to the old-trusted friend India as a fast-growing outlet for exports, benefiting from Modi’s ‘Make in India’ drive to regain market share, even as the US pushes several big-ticket items for co-production and co-development in India.

    Last year, Modi hinted that Russia had been unable to respond to the ‘Make in India’ call. Now Moscow is diversifying its economy and seeking high-value-added products markets, with more possibilities in food production, agriculture, metals, chemical and textile products.

    Fixing Strategic Holes in Defence

    Modi and Putin met during the year at several forums like the BRICS/SCO (Shanghai Cooperation Organisation), G20 and others, and now, Modi’s visit to Moscow could help plug critical strategic holes in India’s military arsenals. Sukhoi is willing to supply spares for the existing 220 Sukhoi-30MKI fighter jets and even set up a regional servicing and maintenance unit in India, while manufacturing components for the Sukhoi Superjet (SSJ) 100 with Tata.

    Soviet aircraft carrier, now INS Vikramaditya, was modernized for the Indian Navу at the Russian Sevmash nuclear submarine facility| Foto Maxim Vorkunkov

    The replacement of the vintage 129 Cheetah/Chetak helicopter was long overdue and a $1 billion project for India to manufacture 200 Kamov-226T light helicopters is ready to sign. Other manufacturers like Reliance and Mahindra are cooperating with Russian technology firms to build weapons.

    A big item would be the procurement of 5 units of Russian Triumf anti-ballistic missile system, and the leasing of a second 12,000-tonne Akula-class nuclear submarine is also under discussion.

    To bypass its nuclear restrictions, India could have Russia build six nuclear reactors of 1,200 megawatts (MW) in Andhra Pradesh. and cooperation in outer space and satellites technologies could also be significant.

    Seizing New Opportunities

    Negotiations with the West to advance his “Make in India” campaign involve delays that Modi cannot afford, while the situation in Russia is more conducive.

    Synergy between the Eurasian Economic Union (EEU) and China’s gigantic One Belt/One Road (OBOR) project to facilitate the flow of goods and investments across Eurasia is facing several roadblocks, and trade with China recently fell over 36% due mainly to recession in Russia and a Chinese slowdown. On the eve of Modi’s visit, India approved the purchase of a $1.26 billion, 15% stake in Russia's Vankorneft operation in the Vankor oilfield, the first overseas energy deal since Modi came to power.

    The challenge now is to shift from mainly defence oriented ties to a long-term economic and trade partnership. India’s trade turnover with Russia, targeted to achieve $20 billion by 2015, still hovers around a paltry $9 billion. Cooperating against terrorism aside, Modi should seek opportunities for Indian firms to enter a Russian market vacated by Turkish and other European companies. India enjoys a niche market in pharmaceuticals, fertilisers, agriculture, and leather products, and with Russia restricting imports from the West, it could boost its food, dairy and meat items.

    A joint study group (JSG) proposes a FTA (free trade agreement) between India and the Eurasian Economic Union (EEU) that could potentially revive the old India-Soviet trade pattern. With almost $3 trillion GDP, the EEU market could pick up the slack in European markets.

    The Modi government could suggest creating a joint innovation fund to attract fine Russian scientists to work in Indian scientific centres. It’s also time for India to acquire some of Russia’s colossal technological and strategic assets. Russia’s natural resources, spanning a mammoth territory, are mined by Chinese and South Korean workers instead of Indian entrepreneurs and workers. Finally, only a blockbuster energy deal and a long-distance pipeline from Russia to India can restore a sense of balance in relations.

    Moscow Needs a Style Change

    Russia offers little traction for investment, business and education, while an Indian diaspora in Russia that could push for stronger ties is tiny compared to elsewhere. Russian politicians and bureaucrats refer to the need to strengthen each other’s potentials (technology, skill, resources and market), yet Indian businessmen tell horror stories about their business experience in Russia, starting with language barriers and stiff travel regulations.

    There is also a growing gap in perceptions. Russian think tanks are poorly funded and Indologists have little influence in policy-making.

    Russia could benefit from its experience in India, from managing heavy industries, nuclear plants to producing SU-30 aircrafts, T-90 tanks and the BrahMos missiles, to step up its investments in India which currently stand at only around $3 billion, by Sistema, Rusal and a few others. Rosneft wants to invest in India’s huge potential solar energy market, promising to produce up to 20,000MW, and Russian investments are needed in areas other than diamonds, IT and pharmaceuticals.

    Strategic Trust

    Clearly, the political trust and comfort level with Russia hasn’t disappeared, despite all the rhetoric over India’s growing ties to the US, and Russia’s increasing proximity to China and Pakistan. Although the government still tends to lean toward the West, the Indian public still favours Russia, with Modi telling Putin that “When asked, even an Indian child will say that India’s best friend is Russia.”

    New Delhi can understand that Moscow’s courting of Islamabad could be linked to Afghanistan, but it needs to know Moscow’s thinking regarding talks with the Taliban and the situation in Kunduz.

    The Road Ahead

    In coming years, Russia’s pivot to India will become more urgent, while India will walk a fine line in Russia’s standoff with the-West. Modi sees India playing a far more strategic role than simply being a balancing factor in the strategic competition between Russia and the West similar to what it is doing in the Sino-US competition. In fact, a balanced Delhi-Moscow-Washington relationship could have a huge impact on the world.

    Both Modi and Putin are strong, nationalist leaders with similar approaches to domestic and foreign policy, although Modi may be more savvy in dealing with other world leaders. The Indian Prime Minister wants to transform the relationship with Russia in a big way, but he and Putin will have to build chemistry more like that between Putin and Xi Jinping.

    Modi does not need to conduct road shows in Moscow as Russians sing awara, but he does need to adapt India’s soft power to the new Russian generation. Happily, Putin also likes soft power: as Russian aircrafts bombed ISIS hideouts in Syria, he found time to visit the Russian Buddhists in Buryatia. and Modi could engage the Buddhist heritage in his Moscow diplomacy.

    This article was originally published in Russia Insider.