India and Russia sign
energy, defense deals worth billions
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[October 15, 2016]
By Douglas Busvine and Denis Pinchuk
GOA, India (Reuters) - India and Russia
signed billions of dollars of defense and energy deals on Saturday at a
summit that sought to inject new life into a relationship that has been
tested by shifting global alliances and conflict in the Middle East.
Under the biggest agreement, a group led by Russian state oil major
Rosneft <ROSN.MM> said it would pay $12.9 billion for a controlling
stake in both India's Essar Oil and port facilities that it owns.
The countries, which had strong ties during the Cold War, announced
plans for a joint venture to build helicopters in India. New Delhi said
it would also buy surface-to-air missile systems and stealth frigates
"Ours is a truly unique and privileged relationship," Indian Prime
Minister Narendra Modi said after talks with Russian President Vladimir
Putin in the western seaside state of Goa.
Modi said that his views were aligned with Putin's on the unstable
situation in Afghanistan and the Middle East, where Moscow is at odds
with the West in the five-year-old civil war in Syria that has killed
hundreds of thousands.
"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," said Putin.
Modi also praised Putin's support for the fight against international
terrorism, which India accuses its neighbor and rival Pakistan of
sponsoring. "Russia's clear stand on the need to combat terrorism
mirrors our own," Modi said.
The Rosneft-Essar deal will be the biggest foreign takeover in India,
and Russia's largest outbound deal, according to Thomson Reuters data.
It comes as Russia moves to reassert its role in global affairs and at a
time when its own economy is stagnant, hit by Western sanctions and low
Under the deal, a group led by Rosneft will acquire 98 percent of Essar
Oil, and with it a 400,000 barrels-per-day refinery and port at Vadinar
for $12.9 billion, the two sides said.
Russian state bank VTB <VTBR.MM> said it would refinance $3.9 billion
owed by the Essar Group. Rosneft would pay $3.5 billion and its
partners, oil trader Trafigura and investment fund UCP the same amount
for an equal joint stake.
The refinery deal follows a string of upstream investments in Russia by
Indian companies in recent months that, Modi said, were worth $5.5
[to top of second column]
India's Prime Minister Narendra Modi (R) speaks with Russian
President Vladimir Putin during exchange of agreements event after
India-Russia Annual Summit in Benaulim, in the western state of Goa,
India, October 15, 2016. REUTERS/Danish Siddiqui
Also on display was Russia's nuclear prowess, with the second reactor of the
Russian-built Kudankulam plant in Tamil Nadu hooked up to the grid and concrete
being poured in a ceremony carried by a TV linkup to mark the start of work on
the third and fourth reactors there.
Putin said that Russia would be able to build a dozen nuclear reactors in India
over the next 20 years to back Modi's growth strategy for Asia's third-largest
economy, which continues to suffer chronic power shortages.
HELICOPTERS, MISSILES, SHIPS
The defense pacts will also deepen military ties between the two countries that
dates back to the Soviet era, when India entirely depended on Moscow to equip
its armed forces. The United States has since taken over as India's top arms
Indian military officials have said the plan is for the joint venture to build
at least 200 Kamov 226t helicopters required by the country's defense forces.
Hindustan Aeronautics Ltd will be the local partner of Russian Helicopters and
state arms exporter Rosoboronexport.
The S-400 surface-to-air missiles would strengthen India's defenses along its
borders with China and Pakistan, Indian military officials have said. Also
agreed were plans to build and supply stealth frigates for the Indian navy.
Russia's Deputy Prime Minister Dmitry Rogozin, who is in charge of space and
military industries, said two frigates could be built in India and two in
Russia, RIA news agency reported. Rogozin said the ships may later be equipped
with missiles manufactured by BrahMos Aerospace, a venture co-owned by the
Indian and Russian governments.
(Additional reporting by Rupam Jain and Sanjeev Miglani; Writing by Douglas
Busvine and Euan Rocha)
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