After sanctions on Russia, what happens to Indo-Russian defence deals?

The re-look of the defence deals is not country specific but an effort towards giving a boost to “Make in India’’ initiative.

So far no decision has been taken on the future of several Russian deals which are in the pipeline for the Indian armed forces. According to sources, “No decision has been taken by the government to put on hold any defence deal with Russia in view of the ongoing war between Russia and Ukraine and the sanctions which have been imposed on Russia by Western and European nations.”

The deals with Russia which are in the pipeline include procurement of additional 21 MiG-29 for the Indian Air Force (IAF), up-gradation of existing 59 MiG-29 aircraft at an estimated cost of Rs 7, 418 crore and purchase of 12 Su-30 MKI aircraft for Rs 10,730 crore to be built at state-owned Hindustan Aeronautics Limited (HAL). The decision was taken when India and China were locked in a major faceoff along the Line of Actual Control in July 2020.

The status so far

These are considered to be the best fighter jets in the world and there is no other alternative for the IAF to get to ensure its fleet doesn’t deplete further. After several rounds of negotiations, the deals for the above mentioned projects are all firmed up to be signed by both sides. And if there are delays or pushed back then the whole process will have to restart and there could be a price escalation too. Also, there is now uncertainty of the mode of payments as all the major banks across the globe have cut off the Russian banks.

The additional 12 Su-30 from Russia which was approved by the government to buy is meant to replace the Sukhois lost in various crashes over the years.

Financial Express Online had reported earlier that the upgrade of the existing MiG-29 for the IAF will take place at HAL and the kits will come from Russia. All the technology, training of those who will work on the upgrade will be under Russian supervision. HAL has previously upgraded some MiG-29 which are now MiG 20 UPG and now have been modified to carry new weapons.

There were also plans for Ka-226T helicopters which were expected to be built in India. However, a top official who wished to remain anonymous had confirmed to Financial Express Online recently, “Due to high cost involved the Ka-226T deal with Russia may not take off and the focus will be on indigenisation.”

Review of “Buy Global”

Even before the Russia-Ukraine war had started, a couple of months ago, there was a re-look by the Ministry of Defence on several military deals and the above mentioned were some of them. The re-look of the defence deals is not country specific but an effort towards giving a boost to “Make in India’’ initiative.

And also, shoulder-fired missiles, a deal which was put on hold as both the Russian and South Korean companies had failed to pass the trials based on the specifications mentioned by the Indian forces.

Focus on local manufacturing

The government has been making efforts to ensure that the defence industry should now focus on building major platforms in India, rather than importing them. And towards this end, the government has set up a panel to review all the major deals which are to be imported from global companies.

For the Indian Army and IAF, in 2018, Rosoboronexport of Russia was identified as the L1 bidder for the USD 3 bn deal for Very Short Range Air Defence System (VSHORAD) missile system. There is a requirement of 1000 such missiles for the Indian Armed Forces, and if it does not get scrapped then it will be the second largest deal after the S-400 air defence missile system.

There were three countries that were in the race for the VSHORAD missile system – France, Sweden and Russia.

Under the government’s Missile Policy, the focus is on self reliance in the field of missiles by this year. Defence Research and Development Organisation (DRDO) has been working on developing these short range missiles that have a capability of hitting targets at 6-7 kms range.

Is there a possibility of cancelling the deals with Russia?

It is a possibility. However, “It is extremely difficult at this point to predict the outcome of the ongoing Russia-Ukraine crisis,” explained a senior officer.

Senate Foreign Relations Committee

According to reports in a section of the media, a senior US official had recently indicated to the Senate Foreign Relations Committee that because of sweeping sanctions on Russia, India could face difficulties in its defence exports. He also mentioned that in the last “few weeks’’ what was seen was the cancellation of MiG 29 orders, antitank weapon orders as well as orders for the helicopters.”

The US Assistant Secretary of State for South and Central Asian Affairs Donald Lu on the possible waiver for India from sanctions under CAATSA (Countering America’s Adversaries Through Sanctions Act) over the S-400 air defence system deal, said the Biden administration will make a determination.

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