23 June 2017

News Story: India, Russia to iron out defense projects worth $10B

Russian T-50 PAK FA, base design for India's FGFA
By: Vivek Raghuvanshi

NEW DELHI — Ahead of Indian Prime Minister Narendra Modi's visit to the U.S. for his first meeting with President Donald Trump, Arun Jaitley, India's finance minister and defense minister, is visiting Moscow to finalize weapons projects worth $10 billion that are "held up in the last stages." 

Jaitley will "iron out" weapons projects during his talks on with Russian Deputy Prime Minister Dmitry Rogozin and Defence Minister Gen. Sergey Shoygu at the 17th Intergovernmental Commission on Military-Technical Cooperation in Moscow, an Indian Ministry of Defence official said. 

The weapons projects worth over $10 billion that are in the final stages of discussions include the purchase of S-400 air defense systems, the acquisition of four Admiral Grigorovich-class frigates and the acquisition of 200 Kamov 226T light utility helicopters, or LUH, under the Make in India category. In addition, the lease of the second nuclear-powered submarine that is also in the final stages will be discussed. 

The MoD official said one of the major sticking points between India and Russia, which has been affected by U.S. sanctions against Russia pertaining to bank guarantees, has been resolved. 

The sanctions disabled Indian banks from issuing guarantees to tie up with leading Russian banks. 

According to Indian procurement law, Russia has to furnish bank guarantees from an Indian bank, which, in turn, has to tie up with a Russian bank. In addition, the bank guarantee should be made by a leading Russian bank, which are all under U.S. sanctions.

"Jaitely will tell his counterparts (in Russia) that an amendment will be made (here) so that only a sovereign guarantee would be sufficient to execute the purchase orders doing away with the necessity of bank guarantees," an MoD official noted. 

The main defense project that was affected because of the bank guarantee issue was the Oct. 2016 $5 billion deal on Indo-Russian Krivak class frigates. 

Read the full story at DefenseNews