NEW DELHI — Ahead of Indian Prime Minister Narendra Modi's visit to the U.S. for his first meeting with President Donald Trump, Arun Jaitley, India's finance minister and defense minister, is visiting Moscow to finalize weapons projects worth $10 billion that are "held up in the last stages."
Jaitley will "iron out" weapons projects during his talks on with Russian Deputy Prime Minister Dmitry Rogozin and Defence Minister Gen. Sergey Shoygu at the 17th Intergovernmental Commission on Military-Technical Cooperation in Moscow, an Indian Ministry of Defence official said.
The weapons projects worth over $10 billion that are in the final stages of discussions include the purchase of S-400 air defense systems, the acquisition of four Admiral Grigorovich-class frigates and the acquisition of 200 Kamov 226T light utility helicopters, or LUH, under the Make in India category. In addition, the lease of the second nuclear-powered submarine that is also in the final stages will be discussed.
The MoD official said one of the major sticking points between India and Russia, which has been affected by U.S. sanctions against Russia pertaining to bank guarantees, has been resolved.
The sanctions disabled Indian banks from issuing guarantees to tie up with leading Russian banks.
According to Indian procurement law, Russia has to furnish bank guarantees from an Indian bank, which, in turn, has to tie up with a Russian bank. In addition, the bank guarantee should be made by a leading Russian bank, which are all under U.S. sanctions.
"Jaitely will tell his counterparts (in Russia) that an amendment will be made (here) so that only a sovereign guarantee would be sufficient to execute the purchase orders doing away with the necessity of bank guarantees," an MoD official noted.
The main defense project that was affected because of the bank guarantee issue was the Oct. 2016 $5 billion deal on Indo-Russian Krivak class frigates.
Light utility helicopters
A memorandum of understanding, or MoU, between India and Russia was inked nearly two years ago on the joint production of Kamov 226T light utility helicopters, but progress on the ground has been slow. Early this year, India and Russia incorporated a joint venture named India-Russia Helicopters Limited Company to manufacture and assemble 140 Kamov 226T LUH. Out of total of 200 helicopters, 60 will be received in fly-away condition from Russia while 40 will be assembled in India and the remaining 100 fully built in India.
However, Russia is committing India for a larger number of helicopters to commit any transfer of technology.
An MoD source said that Jaitley will "thrash out" the helicopter issue during his Moscow visit, "even if it means less transfer of technology," according to another MoD official.
S-400 and the
India's purchase of S-400 air defence systems worth $ 6 billion is at the top of Jaitley's agenda. An intergovernmental agreement on the sale of the S-400 was signed in Oct. 2016 at the India-Russia summit in Moscow between President Vladimir Putin and Modi.
India and Russia will also finalize the lease of the second nuclear-powered submarine on lease from Russia. The Indian Navy inducted the first Akula-II submarine, christened INS Chakra, on a 10-year lease from Russia in April 2012 under a secret $900 million deal inked in Jan. 2004.
Fifth-generation fighter aircraft
Jaitley will also discuss the long-delayed joint production of a fifth-generation fighter aircraft, or FGFA, but an MoD official said no decision has been made.
The initial FGFA agreement was signed in 2010 to jointly produce the aircraft for the Indian Air Force.
The MoD source said the outcome of FGFA is now being considered by an internal committee of MoD that is going into the technical issues, work sharing arrangement between India and Russia. A final agreement, which will release over $ 6 billion toward India's share of development in the FGFA, will be cleared only after the MoD gives the go ahead for the FGFA.
India has been importing weapons and spares from Russia since the 1960s, and Russian military equipment makes up nearly 60 percent of the total equipment in the inventory of the Indian defence forces. Most of these systems are old and need replacement.