Modi’s honeymooning with Russia : Druzhba-Dosti to promote Make-in-India

By ASHOK B SHARMA

India’s time-tested friend Russia has come forward to be a partner in the ambitious Make-in-India initiative in sectors like defence manufacturing, nuclear power, solar energy, heavy engineering and railways. Defence is a critical sector for cooperation between the two countries. Moscow still remains as a major supplier of defence platforms and equipment even though India has made a conscious effort to diversify its import basket for new technology transfer and has inched towards US. Druzhba-Dosti has placed the relationship between the two countries on a firm footing, particularly in matters relating to defence and security despite resentments in the country on account of Russia supplying fighter jet engines to Pakistan.

Over the years it was a seller-buyer relationship. Now with the launch of the Make-in-India initiative in September 2014, greater emphasis is given to the manufacture of products in the country with adequate transfer of technology. To facilitate the implementation of the initiative the norms for attracting foreign direct investments (FDIs) in various sectors have been liberalized and ceilings have been raised. In defence sector the cap on FDI has been raised from 26% to 49% and for allowing FDIs above 49%, it would be considered on case-by-case basis keeping in view the need for technology transfer.

During his recent visit to Russia towards the end of the last year, Prime Minister Narendrabhai Damodardass Modi made a deliberate push for his Make-in-India initiative in the defence sector. An agreement was signed for manufacture of Kamov 226 helicopter in India which according to him would be “the first project for a major defence platform under the Make-in-India mission.”

“We have made progress on a number of other defence proposals. These would boost defence manufacturing in India and India’s defence readiness with next generation equipment,” he said.

Under the strategic relationship between the two countries that was elevated to Special and Privileged Strategic Partnership during the visit of President Vladimir Putin to India in December 2014, the India-Russia Inter-Governmental Commission on Military-Technical Cooperation, thereafter met twice in 2015 – in January in New Delhi and in November in Moscow – prior to Modi’s recent visit to Russia. In the fourteenth and the fifteenth meetings of IRIGC-MTC both sides reaffirmed their intention to expand the scope of cooperation and to avail of the opportunities provided by the Make-in-India initiative. IRIGC-MTC is co-chaired by the defence ministers of both the countries.

According to the joint statement signed during Modi’s recent visit to Moscow under the caption – “Shared Trust, New Horizons” – both sides reviewed the achievements in the field of joint design, development and production of high-technology military equipment. They directed the concerned agencies to finalize such projects between relevant entities and enterprises of the two countries at the earliest.

In the 14th IRIGC-MTC held in New Delhi in January 2015, it was agreed to speed up the work on co-development of the fifth generation fighter jet. According to a Russian-Indian joint venture in charge of the project the engineers of both the countries had then completed a preliminary design for the Sukhoi/HAL Fifth Generation Fighter Aircraft (FGFA).

The Indian Defense Minister Manohar Parrikar invited Russian companies to come over to India for other joint projects, specifically the production of spare parts for Russia-made military equipment on the Indian soil. Indian army had a “substantial” amount of Russian and erstwhile Soviet Union military equipment in service, including heavy artillery and armoured vehicles.

In the 15th IRIGC-MTC held in Moscow prior to Modi’s visit to the city in December 24, 2015, Parrikar and his Sergei Shoigu counterpart signed a new protocol aimed at developing bilateral Russian-Indian relations in the military-technical field. Recently India’s Defence Acquisition Council has approved the purchase of Russian S-400 Triumf air missile defence system. The 10-year lease of a nuclear submarine is under consideration.

The Druzhba-Dosti joint statement signed during President Putin’s visit to India in December 2014 has begun fructifying. The Make-in-India initiative is not only limited to the defence sector, but will be extended to nuclear power plants being built with Russian assistance. During Modi’s Russia visit an agreement was signed between the Department of Atomic Energy of India and the Russian State Energy Corporation “Rosatom” for localization of manufacturing in India for Russian-designed nuclear reactor units in the country. Three new joint working groups, namely on nuclear fuel, science and technology and nuclear power have been set following President Putin’s visit to India in 2014. Already there is a roadmap for setting up of 12 nuclear power reactors. Kudankulam nuclear power unit 1 of 1000 MW capacity is operational. It was re-started after some problems. Unit 2 is yet to be operationalised and construction works for unit 3 and 4 are scheduled to begin

The units 1, 2, 3 and 4 are part of “strategic vision” between India and Russia under which 12 nuclear power plants, each of 1000MW, would be built in batches of two and made operational over the next 20 years in Kudankulam in Tamil Nadu. Russia has also supportive of India’s early accession to export control regimes – Missile Technology Control Regime, Nuclear Suppliers’ Group, Wassenaar Arrangement.

Again in the area of renewable energy sector, a MoU has been signed between Solar Energy Corporation of India and Russian Energy Agency for construction of solar energy plants in the country. In the area of heavy engineering, a MoU has been signed with CNIITMASH of Russia for upgradation and modernization of Heavy Engineering Corporation (HEC) that was set with the help of erstwhile Soviet Union years ago. Also a Centre of Excellence for heavy engineering design would be set up at HEC. A MoU has been signed between Indian Ministry of Railways and the joint stock company – Russian Railways on technical cooperation. All these are a push for Modi’s Make-in-India initiative.

Cooperation space sector also holds out opportunities for promoting Make-in-India initiative. The first Indian satellite was launched using Soviet carrier launch vehicle about 40 years ago. A MoU has been signed between Indian Space Research Organisation (ISRO) and the Federal Space Agency of Russia in June 2015 on expanding cooperation in exploration and use of outer space for peaceful purposes. The joint statement has identified areas like rocket and engine engineering, development of spacecraft including microsatellites, earth remote sensing and space meteorology, satellite navigation and related technologies and services as well as space science.

Direct sale of rough diamonds to India initiated during President Putin’s visit to India in 2014 has helped the processing industry in India to export polished diamonds. Indian companies have signed up long-term rough diamonds supply contracts with PJSC ALROSA, bypassing the global diamond exchange. This has helped the Indian companies to source rough diamonds at cheaper prices. A Special Notified Zone has been set up at Bharat Diamond Bourse. Prime Minister Modi has remarked : “Following our last Summit, India has created a special notified zone to facilitate direct trade between the world’s largest uncut diamond exporter, Russia and India which processes 90% of the world’s uncut diamond.”

Russia is rich in hydrocarbons and recently the OVL has picked by 15% stake in the second largest oil field in Russia, Rosnett Vankorneft Oil Field and discussions are on for further stake in future. Moscow supplies LNG to India and a joint study group is considering the possibility of a hydrocarbon pipeline system between the two countries. The work on the proposed International North-South Transit Corridor (INSTC) is gathering pace with several meetings at the level of experts, stakeholders and INSTC Council. The INSTC through Iran is slated to reduce transportation time and cost and will connect Russia, Central Asia and South Asia. Custom authorities of Russia and India have planned to implement Green Corridor mechanism. India is also negotiating for a free trade agreement with the Eurasian Union. With such proposals in place New Delhi expects to increase its bilateral trade with Russia from a shade below $10 billion to $30 billion in the next 10 years and also give a boost to Make-in-India initiative at home.

(Ashok B Sharma is a senior Columnist writing on strategic and policy issues in several Indian and international newspapers and magazines. He frequently writes in The Daily Observer, Bangladesh and The Diplomatist magazine. E-mail :ashokbsharma@gmail.com Mobile phone no +91-9810902204)