Analysts say a traditional cocktail of arms and oil deals is on the agenda of Russian Premier Vladimir Putin's ongoing visit to India to persuade a Cold War ally to buy new weapons amid rising competition with the United States. The Russian economy shrank by 7.9 percent last year after a decade of oil-fuelled boom and Putin sees the defense sector as key to reviving growth. But Moscow often needs to offer incentives to sell its usually outdated military equipment. Energy-hungry India is one of the world's top arms importers and plans to spend tens of billions of dollars on defense in the next years in a move causing unease in long-time foe Pakistan and regional rival China. “The United States is gradually squeezing Russia out of the regional weapons market thanks to its technological superiority and political pressure,” said Alexei Mukhin, who directs the Moscow-based Centre for Political Information. “Since it is a second big Russia-India meeting over the past year, one could assume Putin wants to change that... It is almost guaranteed that new preferential energy deals for India would be discussed,” he said. The last meeting between Putin and Indian Premier Manmohan Singh in Moscow in December failed to generate big deals to emulate the landmark oil-for-arms deal signed by the two countries earlier in the decade. Under that arrangement, India's state-run explorer Oil and Natural Gas Corp became a 20 percent stake holder in the $15 billion Sakhalin-1 oil and gas project on Russia's Pacific island of the same name. In a separate deal, ONGC also acquired Russian mid-sized oil producer Imperial Energy for about $2 billion and has said it is looking for overseas opportunities in Russia and elsewhere in the former Soviet Union. Russia wants to boost bilateral trade with India to $20 billion by 2015 from the current $8 billion. Together with China and Brazil, Russia and India make up the BRIC group of major emerging economies, whose global influence is seen as rising. But the economic slump in Russia highlighted the differences with the rest of the group, with Moscow increasingly seen as a laggard. By contrast the economy of India, the world's second most populous country, is expected to grow by 7 percent in 2010. Last year, Russia and India began a discussion how to use more actively their national currencies, the ruble and the rupee, in bilateral trade. Military cooperation has been repeatedly soured by long delays in the delivery of a refurbished Soviet-era aircraft carrier under a $1.6 billion contract. But last year, Russia and India agreed in principle on a 10-year weapons deal worth at least $10 billion and also have plans to build a modern supersonic fighter aircraft invisible to radar like the US F-22 Raptor stealth fighter. Putin visited Russian plane maker Sukhoi's design bureau in Moscow on March 1, saying Russia still had much work to do before it starts producing the jet, which could be armed with jointly made Russia-India BrahMos cruise missiles. Putin said he will also discuss with Singh the use of the Russian-made satellite navigation system GLONASS, a potential rival to the US Global Positioning System (GPS), in India. The two countries plan to set up a joint venture to produce GLONASS-enabled navigation equipment and sign a contract for construction of two reactors at Kudankulam nuclear power plant where Russia plans to commission the first reactor this year.
