The economic deals that will reshape relations between India and Russia

The economic deals that will reshape relations between India and Russia

Emilio Fabio Torsello
New Delhi and Moscow have agreed to cooperate in energy, infrastructure and defense. At play is also a €12.9 billion deal between Rosneft and Essar Oil

From infrastructure and defense to energy and supplies, Russia-India relations in recent months have intensified. The two nations have signed a series of agreements to make them major geopolitical and economic partners. Starting with the energy sector, for example, a group of companies led by Rosneft is reportedly considering a €12.9 billion deal to acquire various shares, properties and facilities of India’s Essar Oil.

Billions of dollars in oil

New joint venture between Rosneft and Essar Oil: $12,9 billion value

The Essar deal represents one of the largest investments ever for either India or Russia. It has been reached at a time when Russia is beset by a stagnant domestic economy and low oil prices. The consortium led by Rosneft will acquire 98% of Essar Oil, along with a 400,000 bpd refinery and the port of Vadinar.
This will be followed by a joint recapitalization of the Essar Group by VTB Bank and Rosneft. Rosneft will add to this $3.5 billion, as will each of its partners, including oil trader Trafigura and investment group UCP.
This investment arrives on the heels of another series of agreements for India to invest $5.5 billion in Russia’s upstream sector and possibly for Gazprom to make new investments in Indian LNG.

Indian prime minister Narendra Modi, speaking with the press after talks with Putin in Goa, stated, "The one with Russia is a truly unique and privileged relationship".

A return to deals already seen during the Cold War

In defense, New Delhi has announced its intention to buy S-400 surface-to-air missiles and two stealth frigates from Russia, along with at least 200 Kamov 226T helicopters. The partners in this plan will be Hindustan Aeronautics Ltd, Russian Helicopters and Rosoboronexport, Russia’s main state arms exporter.
The new arms deals mark a change in relations between the two countries. During the Cold War, India was totally dependent on Russia for arming and training its soldiers. When the Berlin Wall came down, the United States gradually became the country’s top arms supplier.

Intersecting but parallel statements

The official statements of the two countries’ heads of state emphasize that this change in relations constitutes a new path for both. Indian prime minister Narendra Modi, speaking with the press after talks with Putin in Goa, stated, "Ours is a truly unique and privileged relationship," benefiting from a common vision on issues like fighting terrorism, the conflicts in Afghanistan and the Middle East, and especially Syria, where Russia is engaged in a power play against the West. The Russian president echoed this talk of common vision, stating "We are conducting a comprehensive dialog on a wide scale of international issues, in which Indian and Russian approaches are close to each other or coincide."
Some of the agreements look beyond immediate concerns and decades into the future. Putin has said that Russia may build a dozen nuclear power plants in India over the next twenty years.
These new close relations between two economic and demographic giants reflects an evolving geopolitical scenario, one in which Moscow is attempting to wrest influence from the United States in the Middle East, partly through the use of new partnerships.