Russia still has a role

By Ajai Shukla

Business Standard, 1st Sept 15

During my visit to Russia last week (due disclosure: at the invitation of Rostec, the umbrella agency that oversees Russia’s high-technology industry), I was struck by the changes from the days of the Soviet Union, as also by important similarities. The drab, socialist Moscow of yore has been replaced by a glittering city, peopled by purposeful men in sharp suits and chic women in impossibly high heels. The double-headed eagle of Tsarist Russia (itself drawn from the Byzantine Empire) is clawing itself back into prominence, replacing the hammer and sickle at prominent places, most notably the Kremlin. Even so, Russia is discernibly stressed by rock-bottom global oil prices, compounded by western sanctions imposed after the intervention in Ukraine and the annexation of the Crimea. Nowhere is the strain more evident than in the defence industry. Moscow can no longer afford an ambitious $650 billion defence modernisation plan, particularly since --- unlike western defence industries that remain commercially viable by producing both weaponry and civilian products --- Russia’s defence industry serves only military buyers. Boeing and Airbus derive 80 per cent of their revenue from commercially successful civil airliners; in contrast, Sukhoi is struggling to sell its Superjet 100 outside Russia.

What does this mean for New Delhi, and what options does this create for India? In the decade after 1989, as Russia’s military spending plummeted to one-thirtieth the 1989 figure, three-quarters of the Soviet Union’s famed military design bureaus went kaput, putting a million Russian scientists on the streets. With Russian soldiers begging in uniform on Moscow’s streets, the bankrupt state cancelled 1,149 individual R&D projects. Beijing swooped in, hiring hundreds of scientists who catalyzed the birth of China’s now formidable defence industry. New Delhi, in contrast, provided Moscow life support, ordering a generation of weaponry including Sukhoi-30MKI and MiG-29K fighters, T-90 tanks, Talwar-class frigates and other procurements too numerous to recount.

India learnt hard lessons from those purchases, many involving transfer of technology (ToT) to build Russian weaponry in India. Technology sometimes remained undelivered (e.g. the T-90 tank), and India could not enforce flawed contracts drawn up by ill-qualified lawyers and bureaucrats. Spare parts, suddenly manufactured not in the Soviet Union but in successor countries, became New Delhi’s problem. India had bought equipment without providing for maintenance, repair and overhaul (MRO) and mid-life upgrades (MLU), even though, over the multi-decade service lifespan of a military platform, MRO and MLU tots up to four-eight times the acquisition cost. Consequently, we are still sending Kilo-class submarines to Russia for overhaul.

So should New Delhi turn away from a Russia in economic distress, or do there remain opportunities for us? Unlike in the 1990s, India has many more alternatives: the United States is today eager to bolster India as an emerging counter-balance to China. US Ambassador Richard Verma, at a recent speech in Delhi endorsed India as a “leading power” instead of a “balancing power”. Moscow’s arms prices, once well below western norms, have risen significantly, making Russian weaponry only slightly cheaper than European and American arms. This advantage, many say is negated by lower Russian serviceability rates.

Even so, the answer can only be “Stay tuned to Moscow!” Although details remain outside the public eye, Russia assists India with technologies that the western bloc is unwilling to. One example is nuclear powered submarines. From 1988 to 1991, the Soviet Union leased India the nuclear powered attack submarine, INS Chakra, and helped create the building blocks, including design assistance, that has evolved into a successful Indian nuclear submarine, INS Arihant. Since 2012, a second Russian nuclear attack submarine (SSN) has been with the Indian Navy on a ten-year lease. India hopes to develop a line of SSNs and Russian assistance could be crucial. Well-informed US scholar, Ashley Tellis, says Washington would not even consider sharing SSN technology with anyone.

In fact, the United States, the global emperor of defence technology, has opened the technology door to India only a crack. Over the last five years, over-the-counter sales to India of $10 billion worth of US defence equipment makes for happy reading in Washington. Far less impressive, though, has been progress in the Defence Trade and Technology Initiative (DTTI) that seeks to transform the “buyer-seller relationship” into a more equal one based on co-development and co-production of military platforms. A “joint working group” on aircraft carrier technology and on co-developing jet engines has reported no progress. Like French company, Snecma, earlier, US engine-makers are reluctant to share the costly technologies for materials that go into jet engines’ “combustion chamber”, which must withstand temperatures of up to 2,100 degrees. In contrast, Moscow has recently offered to co-develop with India a highly advanced engine for the “fifth generation fighter aircraft”. Russian co-development would not only provide the Defence R&D Organisation a much-needed breakthrough, but allow New Delhi to signal that it has multiple options. Cultivating Moscow has not just intrinsic benefits; it also induces Paris and Washington not to drag their feet.

Another reason to service the Moscow connection is to prevent a catastrophic Russian turn towards Beijing and Islamabad. Russia’s experience with China in the 1990s, when Beijing apparently modified the Sukhoi-27 fighter into the “indigenous” J-11B, makes Moscow extremely wary of arms sales to China. But lured by China’s massive market size and with few other options, Russia may well yield to China. It would be useful to let Moscow know New Delhi remains a buyer.

Servicing the Moscow connection would allow New Delhi to develop a structured multilateralism for defence acquisition. Such a defence procurement policy flows naturally from a multi-aligned foreign policy, in which each of India’s external relationships is leveraged by the combined weight of all the others.  

The mistakes of the 1990s and early 2000s must be guarded against. India’s aim for every acquisition must be clear and spelt out unmistakeably: first, obtaining the crucial technologies for life-cycle support, including MRO, so that India’s military is assured of service support and industry can benefit from follow-on service contracts that are worth four-eight times the purchase price. Second, a contract cannot be awarded just on the basis of L-1 (lowest price); instead, a key determinant must be the technology the vendor is willing to transfer. Such an approach to acquisition would require political courage in the ministry and the expertise to evaluate technology in various forms.

Over the years, global arms vendors, together with New Delhi, have developed a bizarre ritual in which they ceremonially stone the “buyer-seller relationship” devil, and then walk back to the table and sign some more purchase contracts. Changing this would require a new mind set within government, and as many players as possible on the board, including Moscow.