Putin and Modi make big deals, give boost to ties

Both sign 20 agreements in defence, energy and other sectors

New Delhi: Indian Prime Minister Narendra Modi told President Vladimir Putin on Thursday that Russia will remain India’s top defence supplier, even though New Delhi’s options had improved since the end of the Cold War.

Modi spoke after a one-day summit that sought to revive a relationship that peaked in the Soviet era, while the two sides signed billions of dollars in deals covering nuclear power, oil and defence cooperation.

The two countries signed 20 agreements — including pledges to boost defence cooperation and explore joint energy projects in the Arctic — during talks that Putin said focused on “international issues”.

“Our approaches to key global and regional issues are either similar or very close,” he said.

In the most significant ones, state-owned Rosatom will build 12 nuclear reactors in India over 20 years, energy major Rosneft inked a 10-year crude supply deal with Essar Oil and Russia promised to build advanced helicopters in India.

“Even if India’s options have increased, Russia remains our most important defence partner,” Modi, 64, told reporters after the first formal summit between the leaders since Modi won election by a landslide in May.

Russia has supplied two reactors to a plant at Kudankulam in southern India under a long-delayed agreement, and has been pushing to supply more. A 1,000-megawatt reactor is operating at the Russian-built Kudankulam power station in south India, with a second due onstream in 2015.

Indian officials say a total of six reactors will be built at Kudankulam, with a further six to follow at a site that has not yet been determined.

Other strategic deals covered oil supply, infrastructure and an increase in direct diamond sales to India by Russian state monopoly Alrosa.

The strong ties between India and Russia date back to the 1950s after the death of Stalin.

But trade between the two countries was just $10 billion last year, which Putin, who is on his first visit to India since Modi was elected, said was “not enough”.

“He (Putin) wants to show the world that he isn’t isolated and to a certain extent he’s not — he still has the BRICS countries,” Russia expert Nandan Unnikrishnan said, referring to the emerging economies of Brazil, Russia, India, China, and South Africa. “India now is all about development and it’s looking to Russia to share its technology on military hardware for making here,” said Unnikrishnan, a senior fellow with Delhi-based think-tank, the Observer Research Foundation.

Moscow is seeking greater investment from Indian state-run companies in Russian oil and gas projects.

Russia, which has the world’s second-biggest natural gas reserves, cancelled a $50 billion South Stream pipeline meant to pump gas to Europe without going through Ukraine.

But Putin has poured cold water on a proposed pipeline pumping gas to India, saying it might not be cost effective, instead emphasising current arrangements to ship liquefied natural gas in tankers. During Putin’s visit, Russia agreed to produce helicopters in India, which is seeking to boost its manufacturing industry, and agreed to advance a long-delayed project to develop a joint fighter jet. Modi said Russia would remain India’s “most important partner” in defence after the United States recently overtook it as the biggest seller of arms to India. “Russia has been India’s foremost defence partner through decades,” Modi said.

“Even as India’s options have increased today, Russia will remain our most important partner.”

India, whose domestic industry struggles to manufacture high-tech arms, is in the middle of a defence spending binge in a bid to keep up with Chinese forces and a range of challenges in the volatile neighbourhood.

Putin’s visit comes as the Kremlin grapples with a sliding oil price and weak economy that have deepened the impact of Western sanctions over its annexation of Crimea last spring and support for an uprising in eastern Ukraine.

The tension over Ukraine intruded on the choreographed visit when it emerged that the Russian-backed leader of Crimea had travelled as part of Putin’s delegation for what were billed as unofficial talks to enhance trade. “We highly appreciate the friendship, trust and mutual understanding with Indian partners,” said Putin who touched on bilateral issues chiefly in his statement to journalists. No questions were allowed.