As Prime Minister Narendra Modi left for Moscow today on a two-day visit, all eyes are on the Inter Government Agreements (IGA) on defence projects being signed between India and Russia. The focus on Make in India in defence is expected to be high in the three IGAs likely to be inked during the 16th India-Russia annual summit.
Going by the list of corporate CEOs accompanying the Prime Minister for the interactive session with the Russian President Putin and Prime Minister Narendra Modi on 24 November, the Make in India component of defence deals could be directed towards the private sector. Indian private defence and aerospace sector in the 18-member CEOs delegation will be represented by Anil Ambani (Reliance Defence), Baba Kalyani (Bharat Forge) and Sukaran Singh (Tata Advanced System Limited).
The 34-member delegation of Russian CEOs is also dominated by top executives from defence, aerospace and energy sectors. It includes Yevtushenkov Vladimir Ptrovich, Chairman, AFK Sistema, Gurko Alexander Oelgovich, President, NP GLONASS, Sechin Igor Ivanovich, President, Rosneft and Chemezov Sergey Viktorovich, General Director, Rostech SC.
The three defence IGAs which will be signed between the two sides include a deal for 200 Kamov-226T helicopters, four Talwar class stealth frigates and five Russian S-400 air defence systems. Worth around $600 million, the deal for Kamov-226T helicopters was cleared by the Defence Acquisition Council (DAC) chaired by Defence Minister, Manohar Parrikar in May. Kamov-226T is a multipurpose helicopter with coaxial rotors and two Arrius 2G1 French Turbomeca engines which is operated by a crew of two and can house nine passengers.
As per the IGA, 60 helicopters will be supplied by Russia in fly-away condition while 140 of them will be produced in India under the Make in India scheme. Anil Ambani’s Reliance Defence and public sector Hindustan Aeronautics Limited are the leading contenders for the Make in India component of the deal.
The BJP government has been keen to promote the private sector in defence and is already working on the concept of strategic partners for private Indian defence manufacturers. It is likely to be unveiled in the revised defence procurement procedure which is scheduled to be announced this month.
Buoyed by this impetus, industry sources say that the Anil Ambani group has been aggressively working towards getting this deal, which would be the biggest helicopter manufacturing project undertaken in India. Ambani has already announced an investment of Rs 6,500 crore to build a greenfield aerospace equipment manufacturing centre at the multi-modal International Cargo Hub and Airport at Nagpur (MIHAN) SEZ.
The focus of Tata Advanced System Limited during this visit will be to secure the Maintenance and Repair Operations (MRO) deal for the Sukhoi-S30MKI fighter aircraft supplied by Russia to the Indian Air Force. Developed by Russia’s Sukhoi and built under licence by HAL, IAF will have 272 Sukhoi fighters in service. With the IAF spending more than Rs 3,000 crore on Sukhois every year, a maintenance, repair and spare part production contract will be very attractive for the Tata group.
The deal for four Talwar class stealth frigates is also likely to be signed during this visit. These vessels are improved variants of six Talwar class frigates already in service with the Indian Navy. While one frigate could be partly built in Russia, the other three are likely to be fully built here under Make in India. With most public shipyards in India already busy with existing orders, the Anil Ambani owned Pipavav Shipyard is seen as a leading contender for making the frigates in Make in India.
Worth around $6 billion, the deal for S-400 ‘Triumf’ systems was cleared by the DAC last week. India will be the second buyer of the missile system after China which will provide India with the capabilities to hit multiple-range air targets, including fighter jets, bombers, drones, ballistic and cruise missiles up to a range of 400 kilometres. Here, the Make in India component in this deal is rather limited.