Putin to focus on economic ties on trip to India

NEW DELHI (AP) ? India and Russia held talks Monday intended to help cement Russia's position in the growing Indian market and reinvigorate political ties.

Russian President Vladimir Putin and Indian Prime Minister Manmohan Singh kicked off the talks at the end of which Moscow and New Delhi are expected to sign agreements on trade, science, education and law enforcement.

While the volume of Russian-Indian trade has risen sixfold since 2000 and is expected to reach $10 billion this year, the growth has slowed in recent years. And even though India remains the No. 1 customer for Russia's arms industries, Moscow has recently lost several multibillion-dollar contracts to Western weapons makers.

Russia and India have shared close ties since the Cold War, when Moscow was a key ally and the principal arms supplier to New Delhi.

The ties slackened after the collapse of the Soviet Union, but grew stronger again after Putin came to power in 2000, seeking to revive Moscow's global clout and restore ties with old allies.

Russia has maintained its strong positions in the Indian market with $30 billion worth of arms contracts with India signed in 2000-2010 that envisaged supplies of hundreds of fighter jets, missiles, tanks and other weapons, a large part of which were license-produced in India. The countries have cooperated on building an advanced fighter plane and a new transport aircraft and have jointly developed a supersonic cruise missile for the Indian Navy.

But the military cooperation has hit snags in recent years, as New Delhi shops increasingly for Western weapons. The Indians also haven't been always happy with the quality of Russian weapons and their rising prices.

In one notable example, in 2004 Russia signed a $1 billion contract to refurbish a Soviet-built aircraft carrier for the Indian Navy. While the deal called for the ship to be commissioned in 2008, it is still in a Russian shipyard and the contract price has reportedly soared to $2.3 billion. The target date for the carrier's completion was moved back again this year after it suffered major engine problems in sea trials. Russian officials now promise to hand it over to India in the end of 2013.

India has also demanded that Russia pay fines for failing to meet terms under a 2006 contract for building three frigates for its navy, the third of which is yet to be commissioned.

Russia recently has suffered major defeats in competition with Western rivals in the Indian arms market.

Last year, Russia lost a tender to supply the Indian Air Force with 126 new fighter jets worth nearly $11 billion to France's Dassault Rafale. And last month, Boeing won India's order for a batch of heavy-lift helicopters worth $1.4 billion.

"Russian arms traders must draw lessons from those failures and polish their skills in information support and marketing," said Igor Korotchenko, a retired colonel and now editor of National Defense magazine. "Competition in the Indian market is intensifying."

Konstantin Makiyenko, the deputy head of the Center for Analysis of Strategies and Technologies, an independent Moscow-based think-tank specializing in weapons trade, said that the Russian failures were partly rooted in India's desire to balance Russian gear with U.S. and other Western weapons. "They welcome the Americans, and it's impossible to prevent the strengthening of India-US ties," he said.

Russia has sought to downplay recent defeats of its arms traders, saying that other weapons deals with India are under preparation.

Putin's foreign affairs adviser, Yuri Ushakov, who briefed reporters ahead of the visit, said military cooperation with India will "expand and deepen," adding that concerns about Russia losing its dominance in the Indian arms market were exaggerated.

As part of its cooperation with India, Russia also has built the first reactor at the Kudankulam nuclear power plant and is building a second unit there. The project has been delayed by protests by anti-nuclear groups and local residents.

Putin's visit was scheduled for late October, but was delayed as the Russian leader suspended foreign travel for about two months. The Kremlin acknowledged that he was suffering from a muscle pulled during judo training. Putin resumed active travel earlier this month, making several foreign trips.

Source: http://news.yahoo.com/putin-focus-economic-ties-trip-india-064327549--finance.html

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