Russia/India politics: Quick View - Russia and India keen to deepen defence industry relations

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Economist Intelligence Unit
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Russia, India


On December 7th Rostec, the Russian state-owned defence and industrial group, declared its intention to help India to set up technical service centres to support the country's arsenal of Russian-made military equipment.


The proposal is the latest in a series of developments this year indicating an increase in tempo to deepen bilateral ties. The latest announcement follows a recent visit to Russia by India's home minister, Rajnath Singh, on November 26th-29th. Both countries agreed to boost co-operation to fight cybercrime, drug-trafficking and money-counterfeiting. Mr Singh also held discussions with Nikolai Patrushev, the secretary of the Russian Security Council, following which both agreed to strengthen bilateral co-operation in the security sector and in combating terrorism. These discussions built on the 17th meeting of the Russia-India inter-governmental commission for military-technical co-operation, which took place in Russia in June.

Defence industry co-operation between the two countries faces obstacles, however, not least because of US-imposed sanctions against Russia which threaten to scupper sales of major military equipment to India. In October 2016 India entered into an agreement with Russia to purchase two frigates and build two more in India. However, the shipbuilding part of the deal requires foreign vendors to obtain bank guarantees from designated banks in India. As Russia's United Shipbuilding Corporation is a targeted entity under US sanctions, and the operation would be conducted in US dollars, US sanctions prohibit Indian banks from delivering such guarantees.

Increased co-operation with Russia in the defence industry will help India to fulfil its objective of upgrading its manufacturing capacity in order to become one of the world's largest suppliers of military equipment. In May the Indian authorities announced a new manufacturing policy that would allow private firms to enter into partnership agreements with non-Indian equipment manufacturers for certain types of military systems, including tanks, aircraft and submarines as part of the government's "Make in India" initiative.

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