The Hindu : National : Bid to resolve log-jam in India-Russia defence ties

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Saturday, Jun 23, 2007
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Bid to resolve log-jam in India-Russia defence ties

Sandeep Dikshit

Problems in Gorshkov: Antony; Russia “demanding” more for Sukhois

Indian plan to import additional T-90 tanks not subject to price escalation
Smooth ties could lead to $18-billion worth in-pipeline projects over next decade

NEW DELHI: Ahead of visits to Moscow by Prime Minister Manmohan Singh and Defence Minister A. K. Antony, Defence Secretary Shekhar Dutt is in Russia to sort out the logjam in defence ties between the two nations. At stake is the supply of major defence equipment for which Russia wants higher prices and an attempt to secure definitive announcements for two major joint projects in the military field when Mr. Antony and Dr. Singh reach Moscow towards the later half of this year, said Defence Ministry sources.

Mr. Antony has admitted to “problems” in case of the aircraft carrier Admiral Gorshkov while senior Defence Ministry officers have said Russia is demanding higher prices for the supply of Sukhoi 30 MKI fighter aircraft. The sources said the Defence Secretary, on his second visit to Moscow in as many months, is discussing various options to arrive at an amicable solution for a couple of mega deals in which a price increase by a small percentage point would mean additional outgo of millions of dollars over and above the contracted rates. However, the Indian plan to import additional T-90 tanks would not be subject to price escalation.

Prominence to Euro

India is currently weighing a Russian suggestion to shift all future military transactions from the dollar to a basket of currencies in which the Euro has prominence due to its wider implications. It is also considering a proposal to increase the price of future Sukhoi deliveries and the aircraft carrier to compensate for the change in the dollar-rouble exchange rate. In turn, Russia has offered to compress the delivery schedule so that neither side loses out.

Legal formalities

Having sorted out intellectual property rights issues in the joint development of a futuristic fighter aircraft, Mr. Dutt during his previous visit had acquainted the Russian side of the characteristics sought by the Indian Air Force. The two sides are keen to resolve some other legal and other formalities so that the project could be given the green light, preferably during Dr. Singh’s visit. Equity participation and other issues could be resolved after the project gets off the ground.

Backed by senior Hindustan Aeronautics Limited officials, Mr. Dutt during the previous visit had also discussed issues relating to the joint development of a medium-lift multi-role transport aircraft (MTA).

The project has been formally announced but several other issues remain to be resolved. The details were, however, not available but the question of a stable pricing formula would be a major factor in case of the MTA, said the sources.

According to strategic experts, a smooth military relationship between the two countries could lead to in-pipeline projects worth $ 18 billion over the next decade.

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