NEW DELHI: India and Russia have signed an agreement to ensure unimpeded supply of essential military equipment and spares to the Indian Armed Forces for the next two years.

Under the agreement finalized during Defence Minister Sharad Pawarss September visit to Moscow and signed shortly thereafter Russia has extended to India a credit of $830 million (Rs 2550 crore) to be used exclusively or defence related purchases over the next two years or so. Repayment of this credit will be in terms of goods and services over a period of seven to eight years.

By designating the credit in dollar terms the two sides have sidestepped the contentious rupee-trouble exchange rate issue which has soured relations and slowed trade between the two countries since December 1991 when Russia became the successor state of the Soviet Union.

This is the first and only weapons related credit given by Russia to any country in the past year and it is being interpreted as Russia’s desire to continue its special defence relationship with its biggest customer.

The credit carries an interest of five per cent double that of previous Soviet credits but reportedly cheaper than anything offered by western countries for military supplies.

Since this credit of 2,550 crore is to be used over a two-year period in effect it means an addition of Rs 1,275 crores a year to the Defence Ministry’s budget allocation. This has come as welcome news to the cash strapped Defence Ministry specially since there will be no outgo of foreign exchange as repayment is to be made through counter trade (goods and services).

When Pawar was in Moscow the Russian government also handed him a draft agreement on overall military cooperation between the two countries. It is believed that this draft which is being examined and discussed in New Delhi sets out the parameters for long term cooperation in military matters between the two countries including training equipment Supply payment terms and delivery schedules.

The Russians have expressed the desire to finalize and sign the agreement on military cooperation within the next two months either before the arrival of Russian President Boris Yeltsin in the third week of January 1993 or during his visit. The Indian side has not committed itself to this deadline as yet.

New Delhi has also been offered the option of co-producing Russia’s top-of-the-line military aircraft the MiG 31 and the Su27.

Though the Indian Air Force is Salivating at the prospect of operating these aircraft the government is skeptical whether it can afford to invest the large sums required to set up manufacturing facilities or whether it can justify these heavy outlays to the international financial institutions to which it is indebted.

What the Defence Ministry is more interested in is the Russian offer of cooperation in the up-gradation of the MiG 21.

The Indian Air Force wants to upgrade about 100 of its 400-odd MiG 21s and the project is expected to cost around Rs 600 crores The Russians have proposed co-production of MiG spares to support the various MiG variants in the IAF fleet as well as several thousand MiG’s being flown by Air Forces around the world MiG 21s alone add up to an estimated 6800 around the world and they all need spares.

Co-production of MiG spares was one of the subjects which came up for discussion during the goodwill visit of the IAF chief Air Chief Marshal N.C.Suri to Moscow early this month.

ACM Suni is believed to have signed a memorandum with his Russian counterpart and the Russian Air Force is believed to have agreed to divert some MiG spares from its own inventory to tide over the LAFs impending spares crunch.

The IAF requires spares for its entire MiG fleet which includes the MiG 21 MiG 23 MiG 25 MiG 27 and MiG 29. The offer of help by the Russian Air Force explains the optimism expressed by ACM Suri who told newsmen on his return that the spares supplies would start flowing in two months. That time-frame fits in with the Russian plan of getting the agreement on military cooperation signed before Yeltsin’s mid-January visit to Delhi.

Article extracted from this publication >> November 27, 1992