Russia to push for military, nuclear deals with India

AFP, Tuesday 21 Dec 2010

A traditional defence supplier for India, Russia's president is on a lobbying trip as the country faces more competition from the US and Europe

Russian President Dmitry Medvedev(L) and Indian Prime Minister Manmohan Singh shakes hands before talks in New Delhi, India, Tuesday 21 December 2010. (AP)

Russian President Dmitry Medvedev arrived in India Tuesday, the latest in a long line of global leaders seeking military and trade deals with the world's second-fastest-growing major economy.

Traditionally India's default defence supplier, Russia now faces stiff competition from Europe and the United States as India diversifies its sources of military hardware and becomes more demanding over pricing and quality.

"The Russians are uncomfortable with the changing scenario and Medvedev needs to convince India why Moscow should remain our regular defence provider," said retired Indian Army general and military scholar Afsir Karim.

Medvedev's lobbying trip comes hard on the heels of similar visits by French President Nicolas Sarkozy and Chinese Premier Wen Jiabao, as well as US President Barack Obama.

All three announced deals and framework agreements worth billions of dollars, and the Russian president will also be looking to seal key accords on the supply of military fighter jets and the construction of nuclear power stations.

In an interview published in the Times of India on Monday, Medvedev said he viewed the growing competition for India's booming defence market with "serenity and pragmatism".

"We are ready to compete, the main point being that the fight for contracts is fair," he said.

The president will hold talks with Prime Minister Manmohan Singh on Tuesday and then travel the next day to India's financial capital, Mumbai.

Wary of China's military modernisation drive, India is embarking on what global consultancy firm KPMG has described as "one of the largest procurement cycles in the world".

Between now and 2016, India's defence sector is expected to spend 112 billion dollars on capital defence acquisitions, KPMG said in a recent report.

Among the deals on offer is a 12-billion-dollar contract for 126 fighter jets and Medvedev will be pushing hard for India to select the Russian-made MiG-35.

But European and US aeronautical giants including Dassault Aviation, Boeing Co. and Lockheed Martin Corp. are also bidding for the tender.

The president will seek to finalise an agreement for the joint production of a fifth-generation fighter with stealth capabilities that could be worth up to 30 billion dollars, with India planning to take as many as 300 of the aircraft.

New Delhi and Moscow enjoy close ties that date back to the 1950s and analysts say Russia retains a competitive edge as a tried and tested ally even as India looks to build new strategic partnerships.

"India needs to keep in mind the fact that, in this changing and complex global order, preserving the trust of a consistent supporter is very important to meet the challenges that may arise in the future," said Pallavi Pal, a researcher at the Institute for Defence Studies and Analyses in New Delhi.

On the nuclear front, Russia is already building two reactors in the southern Indian state of Tamil Nadu and Medvedev is hoping to seal deals for two more during his visit.

Energy-hungry India is one of the world's biggest markets for nuclear technology with ambitious plans to reach a nuclear power capacity of 63,000 megawatts by 2032, from the current level of 4,560 megawatts.

Medvedev is leading a 100-member business delegation as Moscow seeks to double bilateral trade with India to 20 billion dollars by 2015 -- still far short of the ambitious target of 100 billion dollars set by China and India during Premier Wen's visit last week.

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