In­dia Clears Way for $2.2-b Frigates Deal With Rus­sia

AF­TER COMCASA WITH UNITED STATES To get new war­ships for Navy; pact to be inked dur­ing Modi-Putin Oct sum­mit in New Delhi

The Economic Times - - Pure Politics -

New Delhi: Two weeks af­ter In­dia sig­nif­i­cantly up­graded its de­fence ties with the United States through the Comcasa (Com­mu­ni­ca­tions C o mpat i bi l i t y a n d S e c u r i t y Agree­ment), the Modi gov­ern­ment has cleared the way for one of the big­gest pur­chases from Rus­sia — $2.2-bil­lion frigates deal.

The agree­ment, which will al­low In­dia to pro­cure from Rus­sia four new war­ships for the Navy, will be signed dur­ing a sum­mit be­tween Pres­i­dent Vladimir Putin and Prime Min­is­ter Naren­dra Modi in the Cap­i­tal in Oc­to­ber. Ef­forts are on to add the fin­ish­ing touches to the con­tours of the deal. The long-pend­ing deal,topro­curePro­ject 113 5 6 or ad­vanced Talwar-class frigates, will in­volve build­ing two of the ships at the Goa Ship­yard, while the rest will be bought directly from Rus­sia’s Ya nt a r ship­yard. Sources have told ET that the clear­ance pro­ce­dure be­fore the sign­ing is in the fi­nal stage and that In­dia could make pay­ments through the ru­pee-rou­ble route.

As re­ported by ET, fi­nan­cial sanc­tions by the US have com­pli­cated pur­chase of weapons from Moscow as Indian banks are un­able to trans­fer money to de­fence com­pa­nies in Rus­sia. An al­ter­na­tive ar­range­ment, to pay in Indian ru­pee in­stead of the stan­dard US dol­lar, is be­ing worked out to partly deal with the mat­ter.

The deal is be­ing pro­cessed as a ‘2+2’ scheme where tech­nol­ogy will be trans­ferred to Goa Ship­yard to con­struct two of the frigates from scratch. The other two will be de­liv­ered faster — pos­si­bly within two years — as the hulls of the ships have al­ready been fab­ri­cated for a Rus­sian Navy or­der that got stalled fol­low­ing the Ukrainian cri­sis. The ship has been de­signed to work with Ukraine-made gas tur­bines.

While there were ini­tial dis­cus­sions to in­volve the Indian pri­vate

Clear­ance pro­ce­dure is in fi­nal stage and In­dia could make pay­ments via ru­peer­ou­ble route

sec­tor to build two of the ships do­mes­ti­cally, the gov­ern­ment took a de­ci­sion to nom­i­nate the sta­te­owned Goa Ship­yard as it had spare ca­pac­ity at hand. The Indian-made war­ships are ex­pected to cost 30-50% more than the di­rect Rus­sian im­port due to the cost of build­ing in­fra­struc­ture and trans­fer of tech­nol­ogy. In­dia and Rus­sia had signed an in­ter­gov­ern­men­tal agree­ment to pro­ceed with the deal in Oc­to­ber 2016, but price ne­go­ti­a­tions and tech­ni­cal con­sul­ta­tions, which also in­volved the Indian ship­yard, de­layed the fi­nal clear­ance, which could be one of the big takeaways from the Modi-Putin sum­mit that is sched­uled to take place in Delhi on Oc­to­ber 5.

In­dia al­ready op­er­ates six of the Talwar-class frigates, but th­ese four to be or­dered will be more ad­vanced ver­sions. The war­ships are to be fit­ted with the Brah­mos mis­sile sys­tem and will have sig­nif­i­cant changes from the older ships as the Navy will have sev­eral Indian-made equip­ment on­board, in­clud­ing sen­sors and com­mu­ni­ca­tions. They will add to In­dia’s mus­cle in the Indian Ocean re­gion. Among the im­me­di­ate pri­or­i­ties for the Navy are minesweep­ers and multi-role he­li­copters that can be de­ployed on war­ships.

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