India and Russia signed the USD 5 billion S-400 air defence system deal among a total of eight pacts, in New Delhi today (Friday, October 5), after wide ranging talks between Prime Minister Narendra Modi and President Vladimir Putin who is on a two-day visit to India.

The signing of defence deal between the two countries comes amid warnings from US.

India and Russia signed eight pacts in areas ranging from space, nuclear energy, railways and space. A crucial MoU was signed between Indian Space Research Organization (ISRO) and the Federal Space Agency of Russia ‘ROSCOSMOS’ on cooperation on India’s ambitious human space mission project Gaganyaan.

The two countries have also set a target of $30 billion bilateral trade by 2025.

The deal for purchase of five S-400 missile defence systems could result in US sanctions under the Countering America’s Adversaries Through Sanctions Act (CAATSA) instituted by the US Congress on arms purchases from Russia. The US has urged its allies to forgo transactions with Russia, warning that the S-400 missile defence system that India wanted to buy would be a ‘focus area’ for it to implement punitive sanctions against a nation undertaking ‘significant’ business deals with the Russians. American lawmakers, however, have allowed the possibility of a presidential waiver.

The S-400 air defence missile system is seen as crucial for India in the case of a two-front war. India was considering buying 5 units. Indian military analysts say the S-400 surface-to-air missiles would be used to protect large cities or other strategic areas such as oilfields from aerial attacks.

A bulk of India’s military equipment is of Soviet/Russian origin — including the nuclear submarine INS Chakra, the supersonic Brahmos cruise missile, MiG and Sukhoi fighters, the Il transport aircraft, the T-72 and T-90 tanks, and the Vikramaditya aircraft carrier, reported The Indian Express.

While India has a long history of signing big ticket defence deals with Russia, this deal comes at a time of increased friction between the US and Russia and New Delhi’s own deepening defence cooperation with Washington. Just weeks ago, New Delhi and Washington signed several breakthrough security co-operation agreements that enabled transfers of sensitive US military equipment to India.

On the eve of Putin’s visit, Washington made a last-ditch attempt to discourage India from proceeding with the deal.

“We urge all allies and partners to forgo transactions with Russia that would trigger sanctions under Countering America’s Adversaries Through Sanctions Act,” said a US state department official, adding that the Trump administration’s decision to sanction the Chinese military for buying Russian fighter jets and missiles “underscores the seriousness of our resolve on this issue”.

The US has warned the deals could attract sanctions under the CAATSA law that restricts defence purchases from Russia, Iran and North Korea. US officials have stated that under CAATSA, it is payments and not signing of deals that triggers the sanctions. But as per procedure, when a deal is signed payment to the tune 10-15 per cent of the contract value is made.

“In this deal, 15 per cent advance payment would be done,” an official has confirmed adding that payments would be through rupee-rouble exchange.

Putin visit

Russian President Vladimir Putin arrived in India on Thursday for the two-day annual India-Russia bilateral summit. He held official talks with Prime Minister Narendra Modi on Friday, after which the leaders delivered a joint statement.

The Russian head of the state, who was accompanied by a high-level delegation, was received by External Affairs Minister Sushma Swaraj in New Delhi yesterday. PM Modi had hosted a private dinner for the Russian president at his official residence at 7, Lok Kalyan Marg on Thursday night, and both leaders talked about a host of issues.

Speaking on Indo-Russia ties, PM Modi said to the Russian President: “We must continue cooperation in international organisations.” He added that there will be an increase in ties between the two countries after today’s discussion, and help increase peace and stability in this world in these challenging times. “I can say with full confidence, that our friendship is unique,” he said as he concluded his speech.

“Your visit has helped our ties. Today, the decisions we have taken will give impetus to our relations. From trade, investment, technology and energy, to economic cooperation, our relations are now diversified,” PM Modi said. “We have taken ties beyond the conventional dimension. Russia has always stood by India,” he added.

Prime Minister Narendra Modi said that Russia can become our partner in the new and renewable energy sector. He said that the world has changed but the relationship between India and Russia has remained same and the trade between the two countries has risen to 20 per cent in 2017-18.

“We don’t leave a chance to meet each other. The world is changing, but the friendship between India and Russia never changed,” said PM Modi at India-Russia Business Summit. He said that over the previous years, India’s ties with Russia are at a new high.

Talks with President Putin have given new direction to the bilateral strategic partnership, Modi said in a press statement after the 19th India-Russia annual summit.

India and Russia are committed to cooperating in the fight against terrorism, Modi said.

PM Modi said the meeting in Sochi made it possible to have detailed discussions today. India gives priority to ties with Russia. In this fast-changing world, our relations are more relevant, he added.

PM Modi had met Putin in Sochi for their first informal summit after Putin’s re-election in May. During the meeting, Modi had Putin had talked defence, and cooperation between the countries. They reiterated the significance of their military, security and nuclear energy ties. They had agreed to work together through multilateral organisations such as the United Nations, SCO, BRICS and G-20. In July, the two met on the sidelines of the BRICS Summit in Johannesburg. They had held comprehensive discussions on bilateral issues of mutual interest, especially in trade, investment, energy, defence and tourism.

President Putin said the two countries have agreed to step up cooperation in combating the menace of terrorism and drug trafficking.

“Our relations go beyond military hardware and military exchanges. We paid attention to humanitarian response mechanisms,” Putin said addressing the press.

He also extended an invite to PM Modi to Vladivostok for a business summit in September 2019.

Putin said: “We will strengthen cooperation in industry and investment, agriculture, medicine, pharmaceuticals etc. A Russian railways company will help India build modern railroads, Russia will assist India in exploring outerspace, etc.  For decades, Russia and India has been cooperating in the area of defence.  Russia and India concur at international platforms on key issues, including coordination at UN, BRICS, SCO and G20. We will combat terrorism threats, drug trafficking and transborder crime.”

Russia pitched for Indian energy companies to invest in its country. Putin said he and Modi have discussed in detail Kudankulam nuclear power plant in Tamil Nadu – the fourth and fifth units of the plant are being constructed and the fourth and fifth will be constructed next. He adds that according to India’s agreement with Russia, 12 units will be built in the next 20 years.

Mutual trade grew by 21% last year exceeding USD 9 billion, and this year it has been 20%, said Putin. “If we proceed moving at this pace, we will reach our goal faster,” he said. He invited Modi to Russia as its main guest at the Vladivostok Forum in Sept 2019.

President Putin said India is where Russia finds friendship, mutual respect and sympathy. The joint statement outlines plans and prospects for a long time, he added. The documents signed today aim to develop ties between the countries.