To Moscow, once more with love

Are the historic and consensus-based relations between India and Russia getting bogged down by disagreements? It is important to analyse each point of friction to judge what impact it has on bilateral ties and broader geopolitics.

For India, Russia's repeated delays in the delivery of the Gorshkov aircraft carrier, renamed Vikramaditya, is cause for concern. With costs having doubled to nearly $2.9 billion, there are questions about whether India will get the most advanced carrier and systems.

As India diversifies its defence budget and new competitors like the US and Israel enter the market, Russia worries about retaining its place as the biggest supplier of military hardware. In the next 10 years, India is to spend about $1,000 billion on upgrading its military. Between 2007 and 2011, Russia supplied India military equipment worth $ 10.6 billion, when the total spent by India was $12.65 billion. It would appear that the two countries are on stable ground when it comes to defence. But Russia has to keep its promises in terms of both time and money. Meanwhile, India must review its huge defence expenditure and match it with social expenditures.

Russia is also caught in the Indian debate on nuclear energy. It was the first country to commit to the supply and construction of a civil nuclear plant, at a time when India was outside the Western nuclear framework. Russia and India signed the deal for the Kudankulam Nuclear Power Project in 1989. The next phases, however, faced severe opposition and strictures from the courts on safety issues. This means that the Russians have to give additional assurances and factor in a satisfactory liability clause, which will lead to price escalations.

Russian investment in the telecom sector, through the state-owned company, Sistema, was scuppered when the Indian Supreme Court ordered that 122 licences be cancelled. Russia has complained that India changed the rules of the game midway and that this is a setback for investment. However, in a fast-changing world, foreign companies must factor in the the impact of domestic politics and laws as they engage in joint investments.

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