Large-scale technological cooperation with the Indian defense industry will not only improve Russia’s position on the Asian arms market; it will mean Russia will not have to constantly give in to Chinese pressure.
Two days before Putin’s official visit began, almost a thousand executives from Russian defense companies and officials of various kinds led by Defense Minister Sergei Ivanov descended on New Delhi. The delegation left no room for doubt: the subject of technological cooperation was clearly on the agenda for Putin’s meeting with India’s prime minister. More than half of the trade turnover between Russia and India ($3.3 billion in 2003) comes from supplying Russian arms to India. Last year, India became the biggest purchaser of Russian weaponry, forcing China into second place. Vladimir Pakhomov, the deputy general director at Rosoboronexport, notes that half of all his company’s contract obligations consist of orders from India. The Indian arms market is one of the fastest growing in the world. Sergei Ivanov himself stated that “in the next decade, India will spend several tens of billions of dollars on military hardware.” It will not be easy for Russian manufacturers to keep their hard-won position on the Indian market, however. In recent years, Indian officials have been trying to diversify defense purchases, and this means Russian companies are facing increased competition from French and Israeli corporations. “We are not afraid of competing with the West,” Ivanov announced upon arriving in New Delhi. “But we will fight for each new contract with all our might using all legal means.” Obviously, President Putin will have a central role to play in this battle.
Putin’s recent visit was first official visit after the Indian cabinet changed this May, and it will determine more than just the two countries’ international relations. It will determine the number of defense contracts Russia can expect in the medium term. At his very first meeting with the Indian prime minister and defense minister, Putin gave officials over 350 projects worth $3.5 billion. These involve more than merely supplying weapons, but entail joint development and production of military hardware. Ivanov believes that Russian-Indian cooperation would benefit both countries. Russia, unlike the United States, Israel, or France, is willing to hand over production licenses to India, thereby revealing almost all of the technological secrets involved in production. The most striking example of this trend was the successful completion of the first state of a massive contract for $5 billion that Russia and India signed eight years ago. This deal will supply and produce 180 multi-functional fighter jets in India. The contract is unique because it is the first time in world history that an Indian defense company will participate actively in developing a new fighter jet. The Indian side will create the on-board equipment for the plane. “India has already received 34 jets, and we have six more to send,” stated the president of Irkut Corporation. When Putin visited Hindustan Aeronautics Limited, he saw the first new jet that Indian specialists had assembled using Russian licenses. India, unlike China, has permission to produce jet engines as well as planes. During Putin’s visit, the Indian government agreed to buy another 10 planes and to update 10 of its Russian fighter jets. The deal’s price tag has not been announced but experts believe it could be as high as $1 billion.
And Russian companies are not just giving the Indians planes. In Bangalore, India’s equivalent of Silicon Valley, the Russian-Indian joint venture Brahmos had been developing supersonic missiles. When Putin came to visit, Ivanov and his Indian counterpart signed three agreements to increase the venture’s capital and expand its product line. According to the agreement, Russia will invest around $50 million in the company. Alexander Leonov, the deputy director of Machine Building NPO, said that this money will go toward mass production of sea-to-air missiles and new approaches to ground and air-to-air options. Brahmos missiles have done well in testing and have already been accepted by the Russian Navy and India. Now all that remains to be done is figure out how to export them to third countries. Experts believe that after its expansion, Brahmos will be able to produce and export up to 370 missiles a year.
But the real breakthrough in Russian-Indian cooperation came on the space front. General Director of the Federal Space Agency, Anatoly Perminov, signed a strategic partnership agreement with the head of the Indian Space Research Organization to build, develop, and use the Russian global positioning satellite system, GLONASS. This system is in direct competition with the U.S. GPS. This system not only determines the accuracy of nuclear attacks, but also that of early warning stations. After the collapse of the Soviet Union, GLONASS deteriorated rapidly. Instead of the 18 satellites needed for the system to function properly, only 11 are currently in orbit. This situation should change radically in the near future. Perminov stated that Indian participation in GLONASS means that by 2008 the full contingent should be up and working again. The two sides furthermore agreed to rebuild the system’s infrastructure on the ground. The agreements stipulate joint development and production of the next generation of space devices that will be launched by Indian rockets from Indian launch pads. The new generation of satellites can provide an unlimited number of users with precise information from any point on or near Earth. The Indian space agency will get the ability to determine military targets’ location in Pakistan to within one to 10 meters in return for its participation in the project.
Despite the active development of joint programs, the Indian authorities plan to continue to buy military hardware directly from Russia. Ivanov stated that the Indian air force would like to buy strategic long-range bombers from Russia. The new leadership at the Indian navy desperately needs to buy or lease several nuclear subs. If these contracts are signed, Russian defense companies stand to make at least two billion dollars. In this case, India will keep its status as the world’s largest importer of Russian weaponry for the next several years.
If this happens, Russia will have a lot more leverage in negotiations with China. Today, the PRC has been added to the list of what Russian authorities call “problem countries” that can only be sold new weapons with lower military capacity. It’s no secret that the Chinese government had demanded Russia improve the quality of the weapons supplied to China or the Chinese will stop payment on the contracts already under way. The Chinese believe that because Russia has recognized China as a strategic partner, Russia should provide China all of the weaponry allowed by the UN. The fact that China has yet to give up its claims on Russian territory has been ignored by Beijing. Apparently, the Chinese don’t seem to get that strategic partners cannot make official claims on each other’s land.
When Putin visited Beijing in October, the Chinese army refused to buy 24 fighter jests worth one billion dollars, though the deal was cut last year. Moreover, another contract to supply new jet engines has yet to be paid. Yet the Chinese defense minister hinted to Putin that Moscow could lose the Chinese arms market for good if it continues to pursue its current policy. To be fair, it should be mentioned that the Chinese are blackmailing France in exactly the same way. China concluded a deal with Airbus for four large planes costing $1.4 billion, but because France and other EU countries have yet to lift the embargo on arms supplies to China, the contract seems likely to fall through. Russia can avoid Chinese blackmail only by dramatically increasing cooperation with India. If India will buy $3-4 billion in weapons a year, most Russia defense companies will hardly notice the reduced supplies to China.