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. Last Updated: 07/27/2016

India Closes In on Deals With Russia

APA photographer taking pictures of Indian helicopters at an air show in Bangalore during Ivanov's official visit Tuesday.
Russia edged closer to deals with India on several fronts Tuesday, but analysts have expressed doubt about the Asian country's chances of clinching a major upstream project deal.

Arms sales and technology projects dominated the day's agenda for Deputy Prime Minister Sergei Ivanov, who has been in Bangalore since Monday leading a delegation of officials ahead of President Vladimir Putin's visit later this week.

"Contracts were being written up" on a joint venture to build a fifth-generation transport plane, said Ivanov, who is also the defense minister. He added that the venture would cost "several billion dollars," and that the plane would go into commission no later than 2009, Interfax reported.

Military technology is "fundamental to the strategic relations of our two nations," Ivanov said, the agency reported.

"I can confidently add the space industry and IT to that list," he added, singling out India as the only country whose help Russia would accept in developing its Global Navigation Satellite System.

In an interview with Indian television posted on the Kremlin web site Tuesday, Putin said Russia was aware of India's desire to participate in the Russian oil and gas sector, especially in the Sakhalin-3 fields in the Far East. He also pointed out that India holds a 20 percent stake in Sakhalin-1, but did not say whether any further deals would be struck.

Aside from Sakhalin-3, Russia has the choice of offering India two big blocks of equity in state-owned oil firms Rosneft and Gazprom Neft.

Although analysts agreed that all of these partnerships must be on India's mind as it plays host to Putin, they said Moscow might simply be baiting New Delhi to buy arms and develop IT without throwing any major oil deal into the bargain.

"Why would Russia need a foreign investor in [Sakhalin-3]? Russia already has the money," said Yevgeny Gavrilenko, chief economist at Troika Dialog. "I don't think this will be a decisive partnership."

Machine-building projects, arms trades and continued fuel supplies to India, however, should be enough to keep Indian-Russian relations strong even without a joint oil venture, Gavrilenko said.

Ivanov said Tuesday that Russia wanted to win the tender to provide 126 MiG-35 combat jets to India, Interfax reported.

Putin said in the interview that it would be possible to more than triple his country's bilateral trade with India by 2010. Trade between the two countries amounted to $2.7 billion in 2006.

Putin also told Indian television that he would support India's bid to become a permanent member of the United Nations Security Council and would push for India's debt with Russia to be used to expand Russia's investment in the Indian economy.

The Federal Indian Chamber of Commerce and Industry proposed using the rupee-ruble debt in this way in a report released Monday. A spokesman for the chamber said a $230 million project to build a titanium plant in the southern Indian state of Orissa would be funded in this manner through Russia's state-owned Vneshtorgbank. Russia's Technokhim Holding would lead the project, the spokesman said.