South Asia’s super power India is steadily increasing its diplomatic profile globally with Indian PM Modi being on a world tour ever since his party BJP came to power in New Delhi. The Indian premier is now in one of the country’s longest standing and most trusted ally, Russia.
With a view to further expanding its bilateral strategic partnership, Indian Prime Minister Narendra Modi has embarked on a two-day visit to Russia on December 23 and will attend the 16th annual summit talks with President Vladimir Putin.
Modi’s Moscow trip is aimed at further expanding the special and privileged strategic ties with a particular focus on nuclear energy, hydrocarbons, defense and trade. After the talks on December 24, the two “time-tested” partners are likely to ink a number of pacts in a range of sectors, including nuclear energy and defense.
The talks between the two countries at the highest level have been taking place alternately in Moscow and New Delhi since 2000. Besides bilateral issues, Modi and Putin are likely to deliberate on a number of global issues having political dimensions including the destabilizing situation in Syria and ways to tackle multifaceted terrorism.
Before leaving for Moscow, Narendra Modi said Russia and India are linked together with an unwavering friendship and strategic partnership. Setting the tone for the visit, the Prime Minister said Russia remained one of India’s “most valued” friends in the world and that he was “very optimistic” about outcomes of the annual summit talks with President Vladimir Putin.
Military goal: Backbone
Russian military hardware has been the backbone of India’s military and even after increased imports from the USA and Israel, Moscow will remain a key supplier for decades to come. India has the world’s third largest army, the fourth largest air force and the seventh largest navy. It is the world’s largest importer of military hardware and among the top 10 spenders on military. And, only 30 percent of equipment is manufactured by military establishment.
On his maiden state visit to Russia, Prime Minister Narendra Modi is expected to sign a $1-billion agreement to produce over 200 Kamov 226 helicopters in India after the outright sale of some of them. A formal pact will come in a year after Russian President Vladimir Putin promised to support the ‘Make in India’ program.
The two nations also share close nuclear ties. Russia is already constructing 12 nuclear plants in the country. Further discussion is also expected in this regard. India and Russia are likely to ink a number of pacts in a range of sectors including nuclear energy and defence. The two time-tested partners will focus on expanding economic ties. The two countries are aiming at enhancing annual bilateral trade to $30 billion (Rs 1, 98, 720 crore) over the next ten years from current $10 billion (nearly Rs 66,240 crore).
Besides bilateral issues, the two Prime Ministers are likely to deliberate on a number of global issues having political dimensions including the situation in Syria and ways to tackle terrorism. During the previous summit, the leaders of the two nations had discussed largely about expansion of economic ties.
India has been raising the defense expenditures to upgrade the military equipment. Projected spending of over $250 billion on procurement in the next 15 years makes the Indian defense sector highly attractive to all potential suppliers. Between 2009 and 2012, $40 billion was spent on procurement of equipment for the air force, navy and army. Fifty-three percent of the total defence budget is being allocated to the Indian Army, 23 percent to the Indian Air Force and 16 percent to the Indian Navy.
The defense sector is dominated by PSUs and Ordnance Factories that in turn source material from over 6,000 small and medium enterprises. A small number of private companies have been part of the sector that includes the Tata Group, Mahindras, L&T, Ashok Leyland, and Reliance Industries and Pipavav in recent years.
Now in order to ensure that there is greater reliance on domestic industries, the Ministry of Defense will, by January 2016, announce a new Defense Procurement Procedure (DPP) that will be watched with much anticipation. Under the new policy, it is expected that Indian private companies will be encouraged to tie-up with foreign companies and strike deals. The government policy now aims to achieve 70 percent indigenization in defense products by 2027. Dependence on critical imports, acceptance of sub-optimal equipment, corruption, and lack of clarity in procurement has marred India’s defense procurement.
The Modi government’s decision to hike FDI in defense to 49 percent, making more products open to the private sector are considered by the corporate bosses as good steps. They now want government to facilitate investments and tie-ups for ‘Make in India’ for “a truly indigenous program” to be kicked off.
Earlier, the Modi government had relaxed its offset policy, exempting foreign firms from obligations like the declaration of the names of Indian offset partners, the amount of FDI and value of equipment. Under the new deal, any foreign company will not have to declare the name of its Indian partner. It will be allowed to set up its factory in India under new offset rules without declaring FDI and value of machines installed there.
A report has detailed suggestions on how to improve the procurement procedure, improve processes and get active participation of private sector. The aim of the new policy is to have 40 percent of defense procurement under the ‘Make in India’ initiative from the current 30 percent, and raising it to 70 percent indigenization within the next five years. A focus on a ‘Buy Indian’ policy will clearly chart out a path to indigenization, and ensure greater Indian private sector participation with foreign partners.
Modi’s trip to Moscow is likely to take the partnership between the two countries to a higher trajectory as the trip is expected to deepen bilateral cooperation in economic, energy and security spheres.
However, that Indian Premier chose Russia for the visit only as a secondary option after the USA is not appreciated by President Putin, though both are well connected to each other through the Shanghai association, would do the rounds in Moscow. Unlike before when India depended heavily on Russian military/war goods, now it buys armaments from other regional markets, including USA, Israel and South Africa.
PM Modi is also expected to visit Kabul on his way back to New Delhi to rejoin domestic politics. Before that, PM Modi will visit the Russian Emercon facility, which is an emergency disaster facility. He will be shown how the country handles civil disasters through this. Prime Minister Modi will also meet Friends of India at the Moscow Expo Centre. He is then scheduled to address the Indian community, after which he would depart for India.
India possibly foresees a united military front by China and Pakistan becoming a formidable force to reckon with. And hence it spends too much of resources on military equipment. However, New Delhi hopes to use it Russian connection to offset any danger to Indian security arising out of China.
Since Indo-Russian ties are strong, time tested and firm, they can only grow further.