India, Russia to hold talks on arms deals

With deliveries of frontline Sukhoi fighter planes and aircraft carrier Gorshkov in a fresh price-related logjam, a high-level Russian defence delegation is arriving in New Delhi in a bid to sort out the differences.

The delegation comprising top officials from Russian land forces, Navy, Air Force, Ministry of Defence and armament
export agencies headed by General of Army Alexi Fedroovich Maslov would be arriving on June 3 on a five-day visit.

The visit is significant in the wake of reports that Russian manufacturers have sought a review of defence contracts with India demanding millions of dollars more in sale of the carrier and SU-30 fighter aircraft claiming drop in the value of dollar.

The Russians are also keen to tie up new defence deals, which include sale of 350 more upgraded T-90 tanks and clear the decks for signing of an agreement for the joint development of a multi-role transport aircraft. The tank deal is expected to be readied in the next two months.

The tri-service delegation headed by Maslov, who is the Commander-in-Chief of the Russian land forces would hold  talks with Defence Secretary Shekhar Dutt, three service chiefs Gen JJ Singh, Admiral Sureesh Mehta and Air Chief Marshal Fali Homi Major.

He will also call on the Defence Minister AK Antony. 

The visit of the Russian delegation comes on the heels of an airdash to Moscow by the Defence Secretary Dutt and
Secretary, Defence (Finance) V K Misra during which the Russians proposed a hefty price escalation for the additional
Sukhois.

Moscow has indicated it would foreclose the SU-30MKI deal after the delivery of first 100 fighters to New Delhi  claiming cost escalation.

Under the USD 8.5 billion deal, said to be the single largest export contract for Russia's Irkutsk Corporation, which also involves technology transfer, Moscow has so far supplied 60 Sukhoi fighters and said it was willing to deliver 40 more at the current cost escalation of 2.55 per cent.

According to reports from Moscow, Irkutsk now wants to double the cost escalation rate to five per cent a year for
supplying kits for another 138 SU-30MKI to be assembled by Hindustan Aeronautics Limited.

And if India agrees to Russia's demands, which leading defence experts have termed as "financial arm twisting", the
cost of Sukhoi deal will go up by another half-a-billion dollars.

It is not only the Sukhois, Russians have also demanded cost escalation for carrier Gorshkov and also revision of a
number of smaller deals.

While seeking cost escalation for Sukhois and the carrier Gorshkov, Russians are also proposing sale of fresh batch of T-90 tanks to Indian army, which will enable it to have two armoured divisions equipped with the frontline tanks. 

"The deal for purchase of another 350 T-90 tanks was to be signed during the visit of Maslov. But it would now be initialled in the next two months," Defence Ministry officials said.

The tanks are to be delivered within the next three to four years, they said.

According to officials in the Defence Production department, the deal for joint production of the multi-role transport aircraft would be split on fifty-fifty basis.

The project would be between Hindustan Aeronautics Limited and Russia's Irkutsk, Illyushin and Rosboron export to develop a hi-tech transport plane for the armed forces of the two countries with an eye on capturing a chunk of international market.

The aircraft would be developed simultaneously in India and Russia and would make its maiden flight in 2012 and enter
commercial production by 2014.

The 20-tonner medium-range transport aircraft would be based on Illyushin IL-214 project powered by PS-90A-76
engines to be subsequently replaced by more advanced PS-12 engine, currently under development.