August 15, 2022
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India needs to conduct defence deals with Russia carefully
There is a change of geopolitical environment in the world. This will not only impact big powers but also aspiring powers who are seeking to play a greater role in coming years. India falls in the latter category. India’s heavy dependence on foreign powers for supply of defence hardware and services are growing instead of diminishing. Indeed, it will grow in future for some more time as well. There are many reasons why the country is not able to keep pace with its desire. Among others, the key reason is its leaders and the adhocdefence bureaucracy do not understand the subject. They go by technology and try to acquire through industry or sometimes individual industrialists. They do not consider economics behind the subject and strategic power play. The haves and have nots will have a gap to meet. This is a hard bargain. India is new to this game. Indian leaders focus more on domestic issues than such strategic power play. Prime Minister NarendraModi is an exception. He wants to see India as defence exporting country which can be largely self-reliant in the areas of hi-tech equipment and platforms. But not many in his cabinet understands this vision. As long as India depends on others, there will be no strategic autonomy for India to take independent decisions. The best example is when India wanted to sale Brahmos missile to some SE Asian countries who are friendly to both India and Russia, Moscow vetoed such effort under some pretext. The aim was to withhold India from taking a final decision. In the meantime, Russia negotiated with those countries to supply a similar system by quoting just few thousand dollar less. That helped Russia to clinch its own deal than Brahmos. Because Brahmos is a joint project. There is nothing to blame Russia for, nor one should try to find faults. This is a mere requirement of protecting core interests.

Since Modi government came to power, India is somewhat back at the centre stage of global politics. But it has a long way to go. When India will try to go for setting up a military industrial complex, the country will draw attention of others. All would like to win the deals and projects. But there can be only one winner, rest will be losers. The way one can see when MMRCA deal was being short listed, the then US Ambassador resigned when American companies lost the race. One must understand how much is at stake. Thus, winning or losing a defence deal can damage bilateral relations. So Far, India has traded a middle path but it may not be always feasible. Now, US, the only superpower, wants to punish the erstwhile superpower Russia over many global issues and their strategic disagreement. This will have an impact on India as well. The US has imposed sanctions against Russia over the issue of Ukraine. However, Washington wants to see Russia suffering badly economically. If Russia does badly economically then Russian people will kick out Putin from power. It is based on this assumption. But Russia is a great power. Russians are not very unfamiliar to hardships. It is difficult to say at this stage how much the Western sanctions will impact on Putin personally or Russia as a country. Russia has very few items to export and earn precious foreign exchange to keep pace with balance of payment and meet current account deficit. Russia can export hydrocarbon products, defence equipment, fertilizer, metal and few other products. On the top of the list, only hydro carbon and defence equipment constitute a large volume of Russian earnings, about 68 per cent. These two core sectors are being targeted by the West.

That is why despite a price slump in oil sector, the OPEC is not slashing down production. This is damaging Russia very badly. The US action is becoming really punishing and it can uproot Russian economy. This has led Rubble to crash every day. Just few months ago one dollar was equivalent to 23 Rouble. Now it is 54 and may touch 80 by beginning of March. If it crosses 60 then Russian economy will collapse. The second item which is being targeted by the West is defence hardware Russia supplies to some of its traditional partners and newly acquired markets. To overcome the crisis, Russia has already signed a 400 billion dollar oil and gas deal with China. Now, Moscow is pushing for new defence deals with friendly countries like India. This might give Russia some window of opportunity to survive for some more time. But the western countries may impose pressure on India whether to go with Russia for new deals. If India goes ahead with Russia, then there plan to push Russia into a corner may fail. On the other hand, Russia will not be able to deliver systems on time as inflation is going to be sky rocket high. The economy will flounder over sourcing of some services and materials. Most domestic Russian defence manufacturers are suffering badly. They now earn less due to heavy import burden as Rouble is crashing. Russian SMEs are showing signs of recession. If India goes with some new deals with Russia then project deadlines will be a challenge. Even most current upgradation jobs will not meet expectations. India should follow a realistic policy than emotions.