Russia & India are set to sign billion-dollar contracts in which Anil Ambani’s Reliance Defence claimed stake. But now the firm may find itself eased out.
New Delhi: Russian President Vladimir Putin’s visit to New Delhi this week is likely to help the Narendra Modi government distance itself from Anil Ambani’s Reliance Defence, and regain ground in a battle for public perception shaken by the Rafale controversy.
Moscow and New Delhi are close to signing two multi-billion-dollar contracts for the S-400 missile defence shield and for the Kamov Ka-226T helicopters.
Reliance Defence had claimed a stake in both in December 2015. However, it could find itself being eased out, just like in the past when New Delhi kept it out from involvement in potential deals with Russia, India’s largest defence supplier since 1971, despite strong lobbying.
In New Delhi, there is a growing perception that government-to-government strategic relations cannot be sacrificed at the altar of private commercial ties.
“You can say we are very close to signing the contracts,” a defence source told ThePrint, referring to the S-400 and the Ka-226T. “But we cannot write the script for the meeting of two heads of government.”
The Reliance Defence connection
The two situations — the deal with France for the Rafales and the deals with Russia — bear comparison in the light of Putin’s visit.
Reliance Defence is the major offsets partner of France’s Dassault Aviation for the $8.8 billion deal for 36 Rafale jets. But the Modi government has faced a storm of criticism from opposition parties that it helped Reliance secure the offsets despite strong denials by New Delhi, Paris and Dassault.
There was no such allegation in the Russian deals, because the government said early on that the Russians had chosen public sector units as partners, despite claims by Anil Ambani.
The similarities in lobbying for the deals with both countries are striking.
In 2015, when the deals with the French and the Russians germinated, Ambani was part of delegations that accompanied Modi to Paris and Moscow.
In December 2015, when India and Russia signed protocols (not contracts) for the S-400 and the Ka-226T, Ambani was in Moscow.
Reliance Defence claimed it had signed pacts with both Almaz-Antey, maker of the S-400, and Rostec Helicopters, maker of the Ka-226T.
The pact with Almaz-Antey — one of the world’s largest defence companies, now on the list of Russian firms banned by Washington’s CAATSA (Countering America’s Adversaries through the Sanctions Act) — was for maintenance and servicing of equipment (not the S-400) that is used by Indian armed forces.
The pact with Rostec was to make the helicopters in India.
Eight months earlier, in April 2015, Ambani was also a member of the business delegation that had accompanied PM Modi to Paris. It was during this visit that India announced it would make an outright purchase of 36 Rafale fighter jets.
Reliance Defence had claimed it had sealed the Russian orders, but that came undone in a space of two weeks.
On 29 December, 2015, the Indian government said that the public sector Hindustan Aeronautics Ltd (HAL) would partner the Russians in making the Ka-226T in Tumkur, about 100 km from the HAL headquarters in Bengaluru. PM Modi laid the foundation stone for the project.
Indian government sources said the choice of HAL was made by the Russian military trading agency, Rosoboronexport. But till such time as the Indian government actually signed the $4.5 billion contract for the S-400 and an initial $1 billion contract for 100 ‘Sergei’ light utility helicopters, Reliance Defence would still be in the picture.
The possible signing of the contracts this week will mean that Reliance Defence could be blindsided out of the Russia frame.