NEWS
On December 24, 2012, India signed defence deals worth around $4 billion with Russia. The deals include purchase of 42 new Su-30MKI combat aircraft and 71 Mi-17V5 medium-lift helicopters. The agreements were signed after Prime Minister Manmohan Singh and Russian President Vladimir Putin held wide-ranging discussions on areas of cooperation and the evolving Asian order. In all, the two countries signed ten agreements on promoting bilateral investments in diverse areas, as the two sides reaffirmed their commitment to the strategic partnerships at the thirteenth India-Russia Annual Summit in New Delhi. “Russia is a key partner in our efforts to modernise our armed forces,” the Prime Minister said.

VIEWS
Close ties between Russia and India began to develop in the mid-1960s in the days of the Soviet Union. Although India attempted to steer clear of the Cold War rivalry between the superpowers, on account of its proximity to the Soviet Union and the growing dependence on Moscow for military hardware, its policy of non-alignment carried doubtful credibility. The US placed India squarely in the Soviet camp. Traumatised by the defeat in the Sino-Indian conflict of 1962, India needed to upgrade military capability quickly; but the US was not prepared to oblige. Military hardware available from British and European sources was not topof-the-line and was expensive as these were available against hard currency. The USSR, on the other hand, was prepared to provide the latest generation platforms and weapon systems for the three services on attractive financial terms based on a favourable rupee-rouble exchange rate with option for licensed production and full transfer of technology. Understandably, India turned to the Soviet Union. As procurements were through direct transaction between the two governments, there was no requirement for the open tender system and consequently no delay.

Although procurement costs of Soviet military hardware were lower compared with western equipment, the level of sophistication was not as high and life cycle costs were higher. But most importantly, there were no political strings attached. In two decades, over 70 per cent of the weapon systems on the inventory of the Indian armed forces were of Soviet origin.

A period of uncertainty followed in the wake of the disintegration of the Soviet Union in the early 1990s. Consequently, the well-established system of procurement of military hardware from the Soviet Union also lay in disarray till Vladimir Putin ascended to power in 2000 when it was revived. However, with the end of the superpower rivalry, the emerging world order was witness to profound changes in the geopolitical and geostrategic situation. India was no longer tethered to the Russian source for military hardware as the global market now lay open for procurement of weapon systems on purely commercial terms. As the Russian economy by now was integrated with the global economy, the special equation based on rupee-rouble exchange rate was no longer of relevance. The Indian armed forces were also somewhat disappointed with the quality of product support by Russian companies and somewhat unreasonable price escalation. As the global market was now open to India, the procurement procedure was reoriented to select the best equipment available at the lowest cost through an open tender system. Option for direct transaction with foreign governments was also available.