Publication: Monitor Volume: 7 Issue: 34

After some two years of sometimes difficult negotiations, and four months after President Vladimir Putin failed to finalize the sale during a groundbreaking summit visit to New Delhi, Russia and India last week signed a major arms agreement under which India is to purchase 310 Russian T-90 main battle tanks. According to news reports which followed a signing ceremony presided over by Indian Defense Minister George Fernandes and Russian First Deputy Prime Minister Ilya Klebanov, Russia will begin delivery of 124 fully assembled tanks this year. The remaining 186 are to be assembled under a licensing agreement at an Indian production plant in the town of Avadi in the southern Tamil Nadu state. The Avadi plant has long manufactured Russian T-72 tanks, also under Russian license.

With the signing of the tank agreement last week, Russia and India have now managed to conclude the two major arms deals which most observers had expected would be finalized during Putin’s October visit to New Delhi. On December 28, representatives of the two countries signed an agreement under which India will manufacture under a Russian license 140 Sukhoi-30MKI multirole fighter aircraft over the next seventeen years. That deal, estimated to be worth more than US$3 billion, has been described in Moscow as the largest yet to be negotiated by Russian arms exporters in the post-Soviet period (see the Monitor, January 5).

The long negotiations which preceded the tank and aircraft agreements, and the failure to finalize the sales during the October Russian-Indian summit, was attributed by most observers to exceptionally hard bargaining on the part of the Indian government. That policy reportedly saved the Indians tens of millions of dollars in the aircraft deal, and may have saved New Delhi even more than that in the T-90 sale. According to one Russian report, Moscow had originally hoped to get as much as US$1 billion from India for the T-90s, but that price appears to have been forced down to the US$700-800 million range by late last summer.

That Moscow may have gotten less even than that was suggested by reports out of New Delhi last week, which pegged the final agreed-upon price at between US$600 and US$650 million. Some Russian news sources, meanwhile, continued to quote a higher figure for the deal–US$800 million–but the unwillingness of the Russian state arms trading company Rosoboroneksport to provide definite information about the value of the sale suggested that the Russians may have made concessions to finalize the deal. Indeed, according to one source, domestic Russian political pressures were a factor in the negotiations. Last year Putin replaced the leadership of Russia’s arms export establishment as part of a broader move which saw the old state arms trade company Rosvooruzhenie restructured into the currently existing Rosoboroneksport. The Moscow Times last week quoted an unnamed expert who said that pressures from the government to produce higher arms sales figures may have pushed newly named Rosoboroneksport officials to finalize the tank deal even if it meant not getting as much as they thought the tanks were worth. Russian officials are nevertheless likely to present the deal as a windfall for workers at the Uralvagonzavod factory in Nizhny Tagil, and there is already talk that revenues from the sale will help to finance development of a new Russian tank–the T-95 (Moscow Times, Segodnya, The Economic Times, February 16; Times of India, ORT, AP, AVN, February 15).

Whether Moscow was satisfied with the price it got for the T-90s or not, last week’s deal appeared to be but one of a larger packet of arms agreements between Russia and India which could prove lucrative for Russian arms makers more generally. On February 7, for example, Rosoboroneksport announced that it had signed a pair of agreements–together worth US$110 million–to supply India with ten Ka-31 helicopters and to test a new jet engine for India’s Light Combat Aircraft. In addition, the two sides are said to be close to signing an agreement, after years of fruitless negotiation, under which Moscow will upgrade and sell to India the Admiral Gorshkov aircraft carrier. If finalized, and if Russia also wins the contract to provide aircraft for the carrier, that deal could be a lucrative one for Russian arms makers. Finally, the two countries are said to have finalized a deal under which Russia will ship US$50 million worth of Igla shoulder-fired anti-aircraft missile to India, and to be close to concluding an agreement under which India would lease four Russian long range maritime reconnaissance Tu-22M aircraft for its navy (AVN, February 13-14; AFP, February 15; Moscow Times, February 16).

What all of these arms deals indicate about Indian-Russian relations more generally is difficult to say. There have been some suggestions that the arms sales have raised India to the position of Russia’s number one partner in Asia–surpassing China–in terms both of military-technical cooperation and broader bilateral relations. That did not appear to be the case during Putin’s October visit to India, which, important as it was, appeared in important ways to underline India’s rising importance as a regional power and the increasing confidence it felt in dealing diplomatically with both east and west. Like Russia and China, however, the Indian government is said to be concerned about U.S. missile defense plans. It is also said to have been surprised more recently when U.S. Defense Secretary Donald Rumsfeld named India, along with North Korea and Libya, as “rogue” states benefiting from Russian defense technology transfers. More recently still, the United States criticized Russia for shipping nuclear fuel to a reactor in India. Those U.S. complaints have clearly been aimed at highlighting Russia’s role as a proliferator of important nuclear and missile technologies (AP, February 15; Times of India, Reuters, February 17). But they could also energize Russian efforts to court New Delhi. Moscow has at times in recent years sought to fashion an Asian alliance of sorts–one comprised of Russia, China and India–as a counterweight to the military and political strength of the United States and NATO. That effort has borne little fruit, but it would be no surprise if the Kremlin tried to use increased Indian-Russian defense cooperation as a platform by which to exploit potential differences between New Delhi and Washington.