Friday, May 29, 2015

Russia eyes massive nuke submarine deal with India

Initial pact would be worth $15.67 billion.

Zachary Keck/The National Interest
29 May 2015
Russia may help India build nuclear submarines and stealth warships, according to Indian media reports.
Last week India’s Economic Times  reported that the Indian conglomerate Reliance Infrastructure—which owns stakes in numerous Indian defense companies—is seeking Russian assistance for programs to locally produce nuclear submarines and other stealth warships.
According to the report, top Reliance executives were in Moscow last week to meet with Russian defense officials about finding a partner for a joint venture between a Russian defense company and Pipavav Defence & Offshore Engineering, India’s largest defense shipyard, which Reliance has an 18 percent stake in. Specifically, Reliance is looking for a Russian partner with the “requisite technology expertise for manufacturing warships in India.”
As the Economic Times points out, the meetings come on the heels of India’s Cabinet Committee on Security (CCS) approving a plan for an Indian company to locally manufacture six nuclear submarines and seven stealth warships. The initial investment outlay for the project was set at Rs 1 trillion ($15.67 billion.)
Although the Russian government refused to specifically confirm the report, it did sound receptive to such a possibility.
"The Russian side is open to negotiations with Indian partners on various projects, including cooperation and JV [joint ventures] to manufacture modern defense equipment," a Russian official at the embassy in Delhi told ET in response to a query.
For its part, a Reliance official told the Indian newspaper, “We are deeply committed to investments in the defence sector and the PM's Make In India program,” referring to Indian Prime Minister Modi.
Besides the Make in India program, the prospective joint venture would likely take advantage of the amendments Modi approved in the Foreign Direct Investment (FDI) laws last year. FDI is now allowed to make up 49 percent of defense sector projects, up from 26 percent before Modi approved the changes.
Russia would arguably be the most sensible foreign partner for India as the two countries have an extensive defense technology relationship that dates back to the Soviet Union days. This has most certainly included submarines. In the 1960s and 1970s, for example, the Soviet Union sold India eight Foxtrot-class submarines, which India operated as Vela-class submarines.
India also currently operates a number of Kilo-class submarines, which are designated as Sindhughosh-class submarines by the Indian Navy.
Near the end of the Cold War, India also briefly leased a nuclear-powered submarine from the Soviet Union. More recently, in 2011 India began operating an Akula II nuclear attack submarine under a ten-year lease from Russia. That lease was valued at $970 million.
Despite Modi’s Make in India program, as well as the plan to build six indigenous nuclear-powered submarines, there have been indications that India may lease a second nuclear-powered submarine from Russia. During a trip to Delhi in December of last year, Russian President Vladimir Putin said that Russia would gladly supply India with more nuclear-powered submarines.
“If India decides to have more contracts to lease nuclear submarines, we are ready to supply,” Putin said at the time.
Later, Indian news outlets reported that negotiations are underway for a second Akula II SSN, which would enter into service with the Indian Navy in 2018.
Besides the nuclear submarines, India is also looking for foreign partners to help it build at least six stealth diesel-electric submarines. Competition for that contract is stiff.
As The National Interest  noted back in January, Japan has expressed interest in helping India build Air-Independent Propulsion-equipped submarines. Just this week, the German Defense Minister was in Delhi lobbying for a German company to get the contract.
Other countries reportedly in the mix for that contract include France, Sweden Spain and, of course, Russia.

No comments: