The recent talks between Vladimir Putin and Narendra Modi took place amid much bonhomie. But there was a limit to how much either side could achieve.
Vladimir Putin visited India on Oct 4 and 5. This was the third meeting between Narendra Modi and the Russian President this year. Relations between the two leaders are good — however, despite the apparent bonhomie, there have been some hits and many misses in accordance with the geopolitical realities faced by both countries.
Even though it was proclaimed as a two-day visit, Putin came to India in the evening of the October 4. There was no pomp and show during the visit. The President came for a day, and the agenda was set so that most of the day was spent in talks. There was no visit to Rajghat or laying a wreath on the tomb of the Unknown Soldier.
The President was greeted by External Affairs Minister Sushma Swaraj at the airport, which was followed by a private dinner with the Prime Minister. The official engagement started on Oct 5 with Modi meeting Putin at Hyderabad House. This was followed by delegation-level talks. The meet with the business was one of the last meetings of the day. The emphasis was clear – geopolitics ruled the day; business and media were confined to the sidelines.
The highlight of the visit (and much of the press focus) was on the much anticipated S-400 Triumf deal which was signed. The S-400 deal was one of the most watched items in the defence bucket due to the US CAATSA act and the threat of US sanctions on India. Despite this, there was a lot of speculation on the negotiations behind the deal.
There have been articles that made the argument that the NSA Ajit Doval was not in favor of the deal, but was overridden by Modi. On the other hand, there is also commentary from different media, such as The Wire, suggesting that the NSA and the government walked a tightrope, and cleared it with the US during talks between the NSA and the US just before the Putin visit. The Washington Post in an editorial reproduced by NDTV also mentioned that India was caught in the crossfire between the US and Russia, and it needed to be seen if Donald Trump would grant a waiver to India.
Some other defence deals were on the agenda, notably the purchase of four Krivak class frigates by the Indian navy, and the purchase of Mi-17 and Kamov helicopters by the Indian army. An op-ed in Deccan Herald mentioned that in-principle agreements had been reached for on the frigate deals. It looks like the final contracts have not yet been signed.
However, while all of these discussions was happening, from Oct 1 to Oct 6, the chief of the Indian army General Bipin Rawat was in Russia. Upon his return from Moscow, he spoke of the Indian need to buy Kamov helicopters and “other space based technologies.” It has been widely speculated that he has been evaluating the T-14 Armata tanks for the Indian army. There has been no reaction from the US yet to the above.
In addition, there has been talk of Russia and India signing a logistics agreement. According to a report in the Hindu, there was a draft agreement on logistics being worked on between the two countries. This would be similar to the Logistics Exchange Memorandum of Understanding (LEMOA) signed between India and the US. India has since concluded several such agreements with France, Oman, Singapore and Philippines, and is looking to sign one with Australia. However, it does not look like there was any conclusion. The list of agreements signed between the two countries certainly does not include this.
To offset the primarily defence-centric relations between the two countries, there have been efforts to increase bilateral trade. The current volume of Indo Russia bilateral trade is a measly US$10 billion. In contrast, bilateral trade with China as of 2017 stood at around US$80 billion, while trade with the US stands at about US$ 126 billion. Modi was the chief guest at the St Petersburg trade summit, and Putin addressed a business delegation after his talks on Oct 5. The stated aim has been to increase trade to around US$30 billion by 2025. Both leaders expressed satisfaction that trade was going in the right direction.
Key to this has been the push to the rupee-ruble trade. Russia has been pushing for an agreement on the rupee ruble trade while reportedly India has been dragging its heels on the same. The Indian objection is on the premise that Russia would end up with a huge surplus of Indian rupees based on the volume of trade between the two countries. This could lead to complications in trade and currency valuations. However, the joint press release talks about “support to promoting bilateral trade in national currencies.” This is also in line with the 4th BRICS summit to encourage trade in national currencies.
This is a significant line that the Russians are taking. In seeking to totally remove dependence on the dollar, they are seeking to reduce the share of the dollar in international trade. This could have an impact on India as well.
The India-Russia strategic economic dialogue was supposed to be held in July after the Sochi informal meeting. From the Indian side, the NITI AAYOG and the Russian Ministry of Economic Development will be engaged in an annual strategic economic dialogue. The Indo-Russian strategic economic dialogue has far reaching objectives – to seek to put in place a mechanism for partnership between resource rich Russian regions and Indian states. The Strategic Economic Dialogue aims to focus on macro picture of the economic partnership will also explore partnership and joint ventures in services and IT sectors. However, the dialogue has been postponed. The joint press release talks about the possibility of the dialogue later this year.
A second strategic objective of Russo-India trade has been to tap the potential of the CAR regions and use the Iran route for trade. The North-South corridor was envisaged with just this in mind. It was also projected by India as an alternative to the BRI (Belt and Road initiative) by China. In an address to the ORF in Mumbai, a couple of weeks before the visit, the Consul General of the Russian Federation in Mumbai Andrei Zhiltsov urged both the countries to infuse life into the corridor. This found a mention in the press release as well. Both the sides “underscored the vital importance of increasing connectivity between them. They called for the development of the International North-South Transport Corridor (INSTC) through intensified efforts.” However, despite the interests on both sides, the joint press release only talks of “efforts to convene the INSTC Ministerial and Coordination meeting on priority.”
Energy has probably been the one area where there has been a complete convergence of Indian and Russian interests. India signed an agreement with Russia for the building of 6 more nuclear reactors in India. However, key to the make in India program is the sourcing of components locally. The joint press release lauds the “efforts being made in the components manufacturing for localization.” A suitable location has not been proposed yet. The key again is in the language. The agreement is not a contract to build 6 reactors. The name of the document says “Action Plan for Prioritization and Implementation of Cooperation Areas in the Nuclear Field.” A Rosatom official mentioned that it is not a contract but an agreement to work towards a contract.
The complete convergence of Russian and Indian interests comes in the oil and gas sector. ONGC Videsh is a major investor in the Sakhalin oil fields, while GAIL has contracts with Gazprom on importing gas from Russia. The first shipment of gas from the Yamal region was hailed as one of the first shipments of natural gas from the Arctic region to India. ONGC Videsh taking an additional 15% stake in the Vankorneft in Siberia from Rosneft has been hailed as a huge success. In return, Rosneft has made a huge investment in Essar oil. The two leaders hailed the success in cooperation in the oil and gas sector. More importantly, they also agreed to open a 2017 discussion on laying of gas pipelines from Russia to India.
As Alexei Zakharov writes in his opinion piece in the Quint , the two sides need to realize that “good-words-and-no-deeds” kind of events will neither boost bilateral trade not bring about interconnection among the two economies. India and Russia have a history of close relations but now have different geopolitical objectives. Russia is more aligned/dependent on China – something India is wary about. Relations with Pakistan have started warming up. Similarly, Russians are wary of the perceived Indian “tilt” towards the US. Perhaps, the state of negotiations reflects this reality.