Indian officials, especially of the middle level belonging to both the External Affairs Ministry and the Commerce Ministry, have a feeling that the Russian Prime Minister has been able to push his agenda for selling defence goods to the Indian side and India has reciprocated by agreeing to conclude agreements at the intervention of the Prime Minister's Office, even though at the Defence Ministry level, there were doubts about the pricing of the goods.

Prime Minister Manmohan Singh and the PMO have seen to it this time that Prime Minister Putin goes back with the impression that India has a fully independent approach on the strategic issues and its decision on defence purchases is not clouded by any consideration of US interests. US pressure was certainly there in the earlier years on the defence industry purchases but things at the Indian Government level have changed in the last two years and Dr. Singh has gone out of his way to facilitate the agreement on defence purchases with the Russian side taking into account the growing importance of the India- Russian political and economic ties in the present geopolitical environment. Defence and space partnership, nuclear power generation and hydrocarbons are the main focus areas of India-Russia collaboration. In all three areas, India has agreed to a substantial extent to the Russian position without getting reciprocal benefits in the other areas where Dr. Singh was looking for consideration from the Russian side.

The discussions have really not facilitated more Indian investment in the Russian Federation. The problem regarding visa regulations imposed by the Russian authorities still remains. And in the pharma sector, despite Russian interests, business expansion of the Indian companies is being made extremely difficult by some stringent laws which favour the European companies. Hydrocarbons is a major area of interest to both Russia and India but the talks have not indicated any major push by both sides on Indian investments in the Russian oil fields. Russia has offered ONGC stake in the gas fields in the Arctic Peninsula of Yamai instead of the Sakhalin-3 and Vankor oilfields in East Siberia in which ONGC is interested.

As regards defence cooperation, India and Russia have extended their “Long-term military and technical agreement” for the period from 2011-2020. Indian defence purchases have long been, and still remain, an important driver of Russian defence R&D and defence manufacture. While the MEA has stated that Russian equipment, which used to constitute 70 per cent of India's military hardware, is now climbing down to 60 per cent, it still is 35-40 per cent of Russia's annual defence exports.

Russia's readiness to supply India strategic platforms and technology that no other country will part with — such as a nuclear submarine on lease and assistance in designing an Indian nuclear submarine and underwater-launched missiles — maintains for that country a niche in a lucrative strategic sphere.

In the emerging field of joint aircraft development, the progress is slower than anticipated. It had been hoped that a $600 million joint venture would be set up, during Putin's visit, between India's Hindustan Aeronautics Limited (HAL) and Russia's United Aircraft Corporation (UAC), to develop a Medium Transport Aircraft (MTA) for the Russian and Indian Air Forces to transport 18.5 tonne payloads over 2500 kilometres. This expectation was belied, and Business Standard has learnt that both sides continue to bargain hard in ongoing negotiations.

Also mired in negotiations is the proposed HAL-UAC joint venture to develop and manufacture 250 fifth-generation fighters each for the Russian and Indian Air Forces. This even after the prototype fighter, named the Sukhoi T-50 or the PAK FA, has already taken to the skies in January 2010.

These disappointments notwithstanding, Russia drew satisfaction from the culmination of two years of negotiations over the price of the aircraft carrier, Admiral Gorshkov (INS Vikramaditya, once it joins the Indian Navy in 2013). In supplementary agreements to the original contract, India undertook to pay US $2.33 billion for the Gorshkov, instead of the US $974 million that had been agreed upon in 2004. India also signed a US $1.6 billion deal to buy 29 MiG-29K and MiG-29KUB fighters, over and above the 16 already purchased for operating from the aircraft carrier INS Vikramaditya. The additional fighters, India's most technologically advanced, will operate from the Indigenous Aircraft Carrier (IAC) that is being built in Cochin Shipyard.

Russia's multi-billion dollar defence signings were echoed in the realm of nuclear power production (NPP) equipment. The NSG waiver on nuclear trade with India has triggered a Russian campaign to sell reactors in India, co-opting Indian engineering companies in order to bring down costs. With India's current generating capacity of 4000 MW slated to reach 20,000 MW by 2020, the coming decade could see the procurement of at least 12 nuclear power reactors from foreign suppliers. According to Alexander Kadakin, Russia's ambassador to India, Moscow hopes to bag orders for at least 6 of those reactors.

Energy-hungry India is keen on sourcing one million barrels per day of oil and oil-equivalent gas from Russia, and has identified Sakhalin-3 in Far East, Vankor in East Siberia, and Terbs and Titov oilfields in the Timan Pechora region.

Official sources said talks during Russian Prime Minister Vladimir Putin's visit focused on these but the Kremlin did not appear inclined to oblige New Delhi's request.

Instead, it said Indian companies were welcome to join Russian gas monopoly Gazprom in the Yamal Peninsula. Yamal Peninsula is ranked low in ONGC's priority as fields in northwest Siberia require huge investment and these are gas-rich fields that need conversion into LNG and have to be shipped to the Pacific.

Due to its location, LNG from Yamal cannot reach India and ONGC was more keen on oilfields, the produce from which can be shipped back home, sources said.

ONGC Videsh Ltd (OVL) already has 20 per cent stake in Sakhalin-1 oil and gas field in Far East Russia and in 2008 acquired Imperial Energy, which has fields in Siberia.

Sources said Russia did not show inclination to oblige India by exempting Imperial Energy from high taxes. Currently, most of the price above $25 a barrel of crude oil is taken away by Russia as taxes. India wanted 10-20 per cent stake for OVL, the overseas investment arm of ONGC, in the giant Sakhalin-2 oil and gas field in Far East Russia. Besides, a case was made for OVL joining hands with Russian firm Rosneft for exploration and development of some fields in East Siberia. Joint bidding for Trebs and Titov oilfields in Timan Pechora region and Vankor oilfield were also raised. Thus in the area of hydrocarbons, actual collaboration did not fructify. (IPA Service)