All types of Western media gimmicks being tried to discourage Indo Russian arms trade, India not at all afraid of any stupid Western Sanctions
Russian deliveries of military supplies to India have slowed down due to a number of reasons. However a section of Indian media has immediately jumped to the conclusion that this has happened due to the fact that India is now afraid of USA sanctions!!
Can USA even dream of imposing any kind of its toothless sanctions on India ? In case such a thing happens then the USA will be the bigger loser because now India too is in a position to reciprocate in equal measures.
The slowdown in arms trade has happened primarily to find a payment mechanism that is acceptable to both Russia and India. The overall trade between Russia and India has jumped many folds primarily due to heavy import of oil by India. Therefore the trade balance has got skewed in the favour of the Russians.
Now seeing the current exchange rate between US Dollar and Russian Rouble on one hand and Indian Rupee and Russian Rouble on the other , the fair exchange rate between Rouble and Rupee should be in 1:1 ratio. However this is not acceptable to the Russians.
Therefore Indian payments for weapons amounting to more than INR 17000 Crores have been stuck for about a year, and Russia has stopped supplying credit for a pipeline of about INR 85000 Crores worth of spare parts as well. Two S-400 missile-defence system batteries are also yet to be delivered basically due to some manufacturing delays transportation problem.
India has decided not to settle the bill in US dollars due to problems banking methodologies. Russia remains unwilling to accept rupees due to exchange-rate parity /volatility. New Delhi also doesn’t want to complete the deal in Russian Rubles, as it may not be available for purchase in enough quantity on the open market at a fair rate.
Indian government has therefore proposed Moscow use the rupees from weapons sales to invest in Indian debt and capital markets to avoid stockpiling rupees, they added, but Vladimir Putin’s government doesn’t find that appealing.
One possible solution would be to use euros and dirhams, the currencies used to pay for Indian imports of discounted Russian crude, a senior Indian government official said. However, using these currencies to pay for weapons could be pushing up costs due to unfavourable exchange rates for India.
Another option under discussion is a mechanism for Russia to offset purchases of Indian imports against the price of the weapons, one of the officials said. But this isn’t easy because Russia had INR 305000 Crores trade surplus last year with India.
The issue of payments for weapons was discussed when National Security Adviser Ajit Doval visited Moscow in January, the people said. It also featured heavily in talks in Delhi this week between Russian Deputy Prime Minister Denis Manturov and India’s External Affairs Minister Subrahmanyam Jaishankar, who said this week that the rupee settlement needed more work.
Both India and Russia have already reached the trade target set for year 2025. Now the aim is to double it to INR 425000 Crores in next two years. Thus as brought out by our EA minister “There is also understandable concern about the trade imbalance. We need to work together with our Russian friends on a very urgent basis on how to address that imbalance.”
India currently operates more than 250 Su-30 MKi about a third of which are Russian-made fighter jets and rest made in India. Then there are seven Kilo-class submarines and more than 1,200 Russian-made T-90 tanks — all of which are operational for another decade and need spare parts. Three of five S-400 missile defence systems have already been delivered. Then there are Mi 17 helicopters and Russian made transport aircrafts. Therefore the Indian Air Force, does depend on spare parts etc for its Russian fleet of fighters and helicopters. Ways and means have been worked out by both sides to ensure that disruption if any is at minimal.
The India-Russia relationship has been tested overtime and it was the erstwhile USSR which has halted Nixon in his tracks in Dec1971. So no matter what antics the G7 members try when Prime Minister Narendra Modi hosts Group of 20 leaders in September, they will not be able to make any dent in the unshakable Indo Russian friendship. So it should be clear to all and sundry that G7 nations are in no position to hold India back from ironing out the payment mechanism for weapons with Russia.
Even in 2022-23 , India remains the largest importer of Arms with a share of 11% of worlds total arms exports by value. Though compared to period 2013-17 , for the period 2017-22 there has been a overall decline of 11% in the import of arms by India by value.
The estimated annual export value of World Arms trade was roughly 112 BILLION US $ in 2020-21. It means , India imported nearly INR 100800 crores (12.3 billion US$ ) worth arms in that year. Of this nearly INR 45000 crores was bought from Russia or 45% of total value.
Russia still remains India’s largest supplier of military hardware, though purchases have comedian by 19% in the last five years due to India’s manufacturing of indigenous advanced weapons. Then France and Israel too have become dependent suppliers for certain niche items. Finally India has made certain selective purchases like P8Is , Appache and Chinook helicopters etc from the USA too. For period 2021- 2022, India has even exported weapons etc for over INR14000 Crores , a major achievement.
Modi will be meeting in the next few weeks with counterparts from the US and other industrialized nations. These countries see India as a bulwark to China’s growing military and economic assertiveness, and have offered to provide defense equipment. However India does not need much from these countries. As it is we should not tolerate vendors who try to dictate terms. We do not take weapons as alms but pay in hard cash. We are already self sufficient in most of the things except the Jet engine for our fighters and certain naval weapon systems. In the foreseeable future even these should be fully indigenized.
So the dream of Western nations to get India off Russian weaponry and get hooked on things Western will never materialize. Though even after attaining self sufficiency we should be collaborating with Russia on projects similar to BRAHMOS which has proved to be world class.
While President Joe Biden’s administration has largely refrained from directly attacking India for its dealings with Russia, many are pushing him to sanction India for S-400 air defence system, Well that will be the end of QUAD and even Indo UK FTA.
Though last September, a Mumbai-based petrochemical firm Tibalaji Petrochem was added to the sanctions list by the US Department of Treasury for buying petroleum products from Iran. India should be taking reciprocal action soon on a few American firms and start purchasing petroleum products from Iran.
