The Changing Dynamics of Indo Russian Defence Relations: A User’s Take
Following a time chronology in the relationship between the two nations, in so far as it relates to the Defence perspective, three distinct stages are identifiable. The first one of these, relates to the Soviet era, second relates to the time periods on both sides of the demise of the erstwhile USSR, and third is the current one, relating to the geopolitical realities of the Russian Block (implying a group of countries that earlier formed the constituents of the then USSR) and the India of today.
Stage 1: The Soviet Era
Starting with the early fifties, the signs of support and solidarity from the Soviet Union were clearly visible when it announced its support to the Indian sovereignty over the disputed territories in Kashmir and in Goa. In fact, by very judiciously declaring neutrality in the Sino-Indian war of 1962, it faced strong objections from China, but Premier Khrushchev remained firm. History has it, that in the next war thrust upon our country in 1965, it was USSR that played a major role in brokering peace between the two warring nations.
Most significantly, from fifties to late sixties, such defence technology and equipment came from USSR that actually built the spine of the Indian military. In 1962, USSR agreed to transfer the technology to co-produce its frontline fighter jet MIG 21; something it had denied even to China earlier. This supersonic fighter interceptor was a great asset to India at that point of time and thereafter this absolutely marvellous design has negated all sense of time with a tenure extending from 1961 to 2017-18 when it is slated to retire, while its updated version Bison, is still to go on till 2022, by which time, it is slated to be replaced by the HAL built Tejas.
If the above time window( fifties to late sixties) is extended and is taken up to around eighties, about 60 to 70 percent of all military hardware for the Indian defence forces came from USSR. Most of the weapon systems inducted during the said period still continue to be in the arsenal of Indian defence Forces.
What was this type of defence relationship and the pattern of acquisition of Defence equipment? Well, most of these, deals related to Government-to-Government (G2G) agreements that normally preceded or followed the visits of national leaders on either side, to each other’s country.
The trade between India and USSR in the Soviet era was also facilitated a great deal by the rupee rouble advantage . According to this arrangement, during the period 1953 to 1971 the trade payments were made on the rupee-rouble rate determined by the gold exchange standard (where the rupee had a higher value than the one determined in pure currency comparison with western currencies). This proved advantageous to India.
Also after 1971, when the gold exchange standard was discontinued and exchange mechanism was linked to a basket of 16 currencies, the defence contracts between India and Soviet Union were financed on the basis of State credits granted to India on favourable terms. The currency of credits was an artificial monetary unit called ‘credit rouble’. The credit rouble had a base value equal to INR 10 subject to adjustment proceedings from the changes in the rupee value in a special basket of 16 currencies. The credit rouble transaction was a factor greatly in favour of India and was instrumental in seeing through the financing of many a defence procurements for India during the period 1953-1971.
It is no wonder therefore that the trade between the two countries sky rocketed from around 2 Crs in 1953 to about 8000 Crs in 1990-91. Most of the above procurements were a kind of ‘what came as a packet from USSR’; main weapon system along with the spares line. There were no such encumbrances like Defence Procurement Procedure (DPP) of today has created.
It is no wonder therefore that from early sixties to late seventies/beginning eighties, Indian armed forces accumulated a huge percentage (nearly 60+%) of arsenal from Soviet Union. Another important feature in those times was, that since the equipment was comparatively new and all the production lines of the Original Equipment Manufacturers (OEM) were still open , the continuous supply of spares ( which were in any case needed in lesser quantities) came directly as spare consignments while the ZIP spares largely remained intact. These were the hey days for equipment of Soviet origin.
Another factor very characteristic between India and USSR, and later, to a large extent between India and Russia has been a comprehensive regime of treaties and agreements between the two countries that have stood the test of time as solid anchors providing the foundation on which the long lasting friendship and trade relations have flourished between the two.
The most significant of these has been the 1971 Treaty of Peace Friendship and Cooperation that was anchored on the four mutually agrees tenets, namely respect for sovereignty, respect for each other’s interests, good neighbourliness and peaceful co-existence . This treaty was not only renewed in 1993 but seven years later a much stronger and more expansive arrangement was put into place. This was named as Declaration of Strategic Partnership Agreement 2000.
In the same year was set up the IRIGC or India Russia Intergovernmental Commission. IRIGC is in two parts , the first one ( IRIGC - TEC) is related to Trade , Economic, Scientific, Technological and Cultural Cooperation. The second component of IRIGC is related to Military Technical Cooperation whose annual meetings are chaired by the respective Defence Ministers. IRIGC is the most comprehensive governmental mechanism that India has had with any country. Prior to IRIGC, India and Russia in 1997 had also signed a ten year agreement for military technical cooperation that encompassed a wide range of activities including the purchase of completed weaponry , joint development and production and joint marketing of armaments and military technologies.
Stage 2: Demise and Aftermath
And then the eclipse started to set in slowly. It all commenced in one way or the other with the demise of the Soviet Union on 25 Dec 1991. Besides a host of political and diplomatic upheavals arising out of what the newly independent states inherited from the erstwhile stature and aura of the Soviet Union, in the defence domain some earth-shaking events unfolded in the years that followed. These would leave some permanent scars on the defence eco system, for years to come.
The most significant of them all was the grim reality that the erstwhile comprehensive whole of defence manufacturing base as defined by a host of big and small industries, design bureaus, production units et al, that was spread over the entire landmass of the Soviet Union and which had a capability to design, manufacture and sustain a whole hierarchy of weapon systems all on its own, now lay scattered into 15 newly born independent states each in its cradle (except Russia) and each governed by its own set of newly defined national priorities.
The effect of this ‘scattering away’ of ‘one whole’ under ‘one control’ into many independent entities had a far reaching effect. First and foremost, the umbilical chain which ensured that multiple systems and subsystems that were produced by different manufacturing units and seamlessly integrated into one end product, simply gave way, as independent countries now controlled various production bases each capable of a part but not the whole. The connect had now to be established through several independent vertical dialogues with each of the newly independent States. Also, several newly independent states barring a few (Russia, Ukraine, Uzbek, Belarus) were in poor/fractured state of economy. The funds required to restart the wheels of the defence industry were simply not there
Over the years that rolled by, many OEMs faced with a quagmire of political and economic compulsions started closing production lines, For several of them , it was kind of a vicious circle of a fait accompli chain reaction, since they produced sub systems whose serial demand in the ‘pull system’ shrunk as the final assembler and integrator was either not operating in full gear, or was in the scale down mode.
For the Indian armed forces sitting over a huge Soviet inventory and used to the seamless ease of dealing with the USSR, the ‘demise after-effects’ were major, though their total de-stabilising effect was fully felt only over the years.
The rupee-rouble arrangement based on credit rouble as described above collapsed with the demise of Soviet Union in 1991 which unfortunately coincided with the Indian financial crises around the same time. In 1993 India and Russia entered into a bilateral trade regime wherein both decided to recalculate the rouble dominated debt into Indian rupees. With the credit rouble advantage gone, the net Indian imports from Russia fell form 16% in the Soviet era (1990-91) to 0.7 % in 2006-07. The negative effect of this was also borne by defence contracts.
The emerging state of things started to show its ugly face in various dimensions in the user domain. The first unwelcome realisation started to come in the spares of main frame combat equipment. As the spare support, which first started to wane and then started drying up to a minimal sporadic trickle, the ZIP packs started to get opened up. As the show had to go on, complete with its rigour of regular training and live firing of equipment year-on-year, reserves of spares started to dip lower and lower while hardly anything fetched up from the OEMs. The scheduled overhauls (OHs) started to slip only to be replaced later by OH and Repair as Necessary (ORAN). While several Russian and its supporting conglomerate of companies being represented by one name, Rosoboron Exports (RBE) promised a lot in spare support; not much actually fetched up on ground. The user made desperate attempts for Last Time Buys (LTBs) but it fetched a near void. Several countries like Israel, Poland, Singapore etc came forward with a promise of spare support but all of it proved to be ‘too little and too late for joy’.
Another thing that was noticed by the users at this time that Russia with the state of economy that it was in, actually started sky-rocketing the spares costs by wide margins. A stage slowly emerged when the users were left with no choice but to carry out cannibalisation, to keep a portion of the fleet totally operational at the cost of losing out on some numbers. Around this time (2000-03) efforts were put in to indigenise the spares. Directorate of Indigenisation (DOI) came up under DGEME. The journey for DOI has been long and arduous with very less actual throughput till date.
Besides the spares imbroglio, the delivery schedules started to slip, especially in case of ammunition and missiles. The catastrophic beating which their economy had taken, showed up at many places. RBE started quoting unrealistic costs for mainframe equipment thus losing out on several big ticket procurements in multi-vendor scenarios (case in point, Tunguska Weapon System for Army Air Defence).
Since the time was now approaching for the periodic overhaul (OH) of mainframe equipment, the OEMs started to make astronomical time and cost estimates for setting up of facilities for OH (case in point is overhaul of guns and missile systems of Air Force and Army). Besides this, RBE stared to drag its feet in many offset negotiations or asking unbelievable costs for Transfer of Technology.
In keeping up with this setting in of the rot, it is pertinent to make a mention of Admiral Gorshkov here. Admiral Gorshkov is the modified Kiev class aircraft carrier which India has bought from Russia. The original deal for selling this refurbished aircraft carrier was signed in 2004. At that time Russia agreed to sell the vessel at USD 974 million including the refit and repair. Faced with all the economic woes and downturns of this period, the Russians initially made an additional demand of USD 1.2 billion which was hiked to USD 2.9 billion as additional cost of refit and repair. Taking into account this escalation, the net final cost of the vessel was escalated to USD 2.35 billion (up from 974 million) in 2010, at which cost the vessel was inducted into the Indian Navy in 2013 as INS Vikramaditya.
Getting frustrated with the emerging realities, the armed forces in general started looking elsewhere towards countries like USA, Israel, UK, Sweden, France, Singapore, Germany and Korea as things were actually looking bad and difficult for the Soviet origin equipment.
Stage 3: Move to the Present and Future
As time passed, the debilitating effects of the break up started to loosen its suffocating bind and Russia primarily, along with Ukraine, Belarus and a few others started to rise from the mess, so to say.
In the meanwhile, a complete metamorphosis, was underway in India as well. This was marked with the new found euphoria of Make-in-India, strengthening of Micro, Small and Medium Enterprises (MSMEs), shaking the Defence Public Sector Undertakings (DPSUs) from their deep slumber and states of complacencies and despondencies et al. All this and more gradually started to usher in a totally changed defence manufacturing eco system, made possible by the new found strength, and techno-capability, as also, gradual coming of age, of the private defence industry.
Russia (as also the rest of the world) slowly came to realise, that fuelled by DPP 2016, the defence eco system in India has ‘new signatures and ‘rules of survival’ for the foreign OEMs as the new Code of Conduct has many stipulations favouring India.
The above code actually sums up the current and futuristic status of our defence procurement scenario. All this thanks to the ‘slow but sure’ growth of the private industry and the opportunities for strengthening of the indigenous muscle of the defence procurement base by the DPP 2016. Every foreign OEM has come to know too well, the compulsions to follow the above mandate. Accordingly, it is not uncommon to see many OEMs aligning themselves to the tune of MAKE in INDIA. In fact one of them has adopted the punch line ‘Made in India’.
The Russian block is no exception. In fact, they have adapted themselves nicely to the changed rules of the game. Sample these developments; some old some new.
The BrahMos success story is actually the crown jewel in the Indo Russia defence co-operation that is placed on equal footing. The Project prides itself of co-design, co-development and co-production with equal rights on niche technology areas. This was prominently visible recently in the open source literature relating to the ongoing development of the miniature version of BrahMos or while developing the hypersonic velocity technologies (6 Mac+).
Contract to sell the S-400 Air defence and BMD system is another example of contemporary defence relationship. A weapon system of such a capability (range 400 Km, altitude coverage 20Km) is a totally way up induction in the capability that is currently possessed by the existing weapon inventory of GBADWS across the three services. This niche technology is poised to come to India aligned with the new DPP.
Of the 200 Kamov KA 226 T helicopters, only the first 60 are coming in a ‘fly away condition’. The balance 140 are to be made in India with complete transfer of technology. Similarly, in the co-development and co-production of the futuristic Fifth Generation Fighter, T 50 PAK FA, issues like work share, Intellectual Propriety Rights (IPR) on ToT, access to codes and roots et al, are played between India and Russia on near equal footing. In fact, an earlier one-sided imbalance in favour of Russia in the niche work share rights over technologies related to PAK FA delayed the project till a mutually acceptable balance was achieved.
And finally, a word on the age-old dictum; ‘there are no permanent friends or permanent enemies of a State, what is permanent is national interests. In difficult times post the break up of USSR, as also, in the recent past (2012-2015 period) when India started to look elsewhere for its big ticket items (futuristic multirole fighter jets, artillery mainstay guns/howitzers etc), Russia also lifted the arms embargo against Pakistan and sold to them four MI-35 attack helicopters in 2015. Again, in Dec 2016, India was excluded by Russia from the joint exercise with Afghanistan, Pakistan and China.
In essence, our historical warmth and goodwill notwithstanding, the growing Russia-China-Pak friendship is also a reality that cannot be wished away. Its dormancy/ resurgence is driven by Russian national interests at any point in time. It is also a kind of ‘tool of reciprocal behaviour’ driven by Indian moves ‘as perceived’ by our friend.
Such are the three shades of Indo-Russian defence relations, which history has unfolded in the last six to seven decades.
What the future holds for this relationship is not very far to see. India seems to have arrived with its new defence eco-system, firmly anchored in the pride of Make-in-India. The new Rules of Survival for the foreign OEMs so to say, have been firmly driven home across the international defence industry. Russia and other erstwhile Soviet block states are likely to align themselves with the same. This trend is already visible in many a negotiation with Russia and RBE either one-one-one or through the India Russia Inter Governmental Commission.