International Business
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'More upgrades will hike the Gorshkov's price'
A consummate Russian diplomat, Vyacheslav Trubnikov is returning home this week after having served as serving as Russia’s ambassador to India for nearly five years. The period has seen several highs and lows in the bilateral relationship, including the building of the first civil nuclear power plants by Russia and nagging problems over defence spares and equipment. Edited excerpts from an interview with Jyoti Malhotra - "India cannot become a superpower" - 'It's stupid to cover a bar in flowers' - 'The right mix of big-ticket and other shows is critical' - 'Our aim is to encourage product designing, product creation' - 'We will have more Lalgarhs' - "I'm upbeat about change" In your last incarnation as ambassador of Russia to India you spent about four years, but 17 years altogether in India. I first came here in 1966 as a graduate student writing a thesis on the Tashkent Declaration. I spent six months here and was amazed by the country —it was my first trip abroad. I came back as a journalist in March 1971, working for Novosti press agency, and stayed for seven years. I witnessed many milestones in our history: The Indo-Soviet treaty of friendship, the disappearance of East Pakistan from the map of the world and the birth of Bangladesh. In December 1971, along with some other foreign journalists, I crossed the border with Indian troops. I was fortunate to also serve in Bangladesh as ambassador. Yes, I am chained to the sub-continent ! Many Indians remember the time when the American aircraft-carrier USS Enterprise entered the Bay of Bengal when India and Pakistan were at war in 1971 and the Soviets sent a warning.. Yes, and many in the international community also remembers our veto in the UN Security Council. India was assured, as an outcome of the Treaty of Friendship with the Soviet Union, that it will not be a subject to military pressure from a third country. So much has changed since then, especially in the Indo-Russian relationship… Yes, the Soviet Union no longer exists, Russia is a new country. India has changed tremendously too, today’s India is a country which claims for itself a proper place in the international community. In fact, the relationship has now become more balanced, more pragmatic and our dependence on each other has grown. What does that mean? In the 1960s, India still needed external support, especially in building its industrial foundation. Today’s progress, for example in software, wouldn’t be possible without the creation of an industrial basis, in metallurgy, machine-building, etc, where Soviet assistance was a major factor. Independent India did not have enough hard currency to pay for building its economic foundation, and you know the private sector abroad is usually never generous about giving credits. But the Soviet Union gave state credits. Today, the relationship is much more equal. For example, in the military-technical relationship, we are now in the very serious process of changing it from a seller-buyer one to one where there is joint design, joint production and even joint marketing. And an example of this would be? The Brahmos missile. Discussions to sell it are on with several countries which have long seashores in South America. In India too, the missile is being integrated into Indian ships as well as on land. Indian submarines are going to be equipped with it as well. But India is buying defence equipment from other countries, which means Russia’s share comes down. Does this worry you? Yes, the market is becoming more and more competitive as India diversifies its sources of arms and ammunition. This is normal as India cannot be dependent on one source. Even earlier, Russian MIGs flew side by side with British Jaguars and French Mirages. But what is new is that along with the licence to produce the equipment, India wants technology to be transferred as well. For example, in the deal to buy 126 fighter jets that is now on the table, Russia’s Mig 35 aircraft is competing. But alongside the licence to produce a certain number of Mig-35s in India, we have also offered to transfer technology. By and large, other countries don’t transfer technology, but as a result of our offer other countries who now want to be competitive will have to follow suit. Moreover, offsets are a very significant part of this deal, about 50 per cent (although for deals above $600 million, it is usually 30 per cent). This is not a very easy thing to do, but if India wants, the offsets could also be in the transfer of dual-use technology Do you think this 126 fighter jet deal, worth abut $12 billion, is also a political deal? Every military-technical deal has undercurrents painted in political shades. The most important point is, however, that the supplier should be 100 per cent reliable. India has had several opportunities to try the reliability of its partners. I believe Russia’s cooperation has been the most reliable. Then why is there so much bitterness, for example, in the purchase of the aircraft carrier, Admiral Gorshkov; even Russian president Dmitry Medvedev has admitted that… Yes, I accept there has been some bitterness on both sides. But at the same time both sides want to come to consensus because we understand that the Gorshkov or INS Vikramaditya is absolutely essential for India. We could have taken it back to our own Navy and returned the money to India, but we did not do it. I am absolutely sure that some people in our Navy want it back, but we understand that this is the flagship of India’s eastern fleet. We are responsible enough to understand that India must get this aircraft carrier. India understands this too. The question is tha of price and timing of delivery. So what happened over the years? The discussions between the two sides started when ‘Gorshkov’ was only a boat, without any equipment. You have to realise that the final price (of the aircraft-carrier) and the time of its completion, ultimately depend on the character and quality of the order placed by the buyer, which includes the refit, the equipment on board and its necessary upgrades. And usually the appetite changes as you eat. Are you saying the Indian side kept changing its order? Not changing, but the Indian Navy was eager to get the best, the most modern equipment. So the Navy’s appetite kept increasing, they wanted more and more.. Yes. ... But this constant back and forth, officials traveling up and down and the long delays? The major reason is that the contract was signed when the Russian side, the plant Sevmash, badly needed money and wanted to sign the contract, while the Indian side wanted to buy an absolutely modern aircraft carrier at lower than the cheapest price. After the contract was signed (in 2004), both sides began to understand exactly the enormity of the task they had undertaken to do. But the realisation came a little late. The Indians complain that the Russians are constantly changing the price. Yes, we are changing the price, but if the value of the dollar changes, should we stick to the same figure? If the price is in our favour, do you think the Indian side would pay more? I don’t think so. It is a serious commercial discussion. Reports are that it will cost around $2.2 billion? It would be irresponsible of me to comment. Price negotiations are now entering the final stage. What is important for India is also the time of delivery. But the point is that if India wants additional equipment, the carrier will cost even more. So if both sides stop and decide, okay no request from India and no increase in price from our side, then we can finalise price and delivery. What do you make of the US Navy which wants to work with the Indian Navy to keep the sea lanes open, from the Straits of Malacca to the Gulf of Hormuz? India’s Russian-built aircraft carrier will help in doing this? We are not adverse to this, we are ourselves prepared to discuss with NATO joint patrolling of sea lanes to combat against piracy. In this globalised world there are so many challenges which cannot be dealt with individual states no matter how mighty wealthy or influential they are. Everybody has to work together. What about the problem of defence spares? This has been going on for nearly two decades since the break-up of the Soviet Union in end-1991? Now this problem has almost been solved, but you have to understand why it happened in the first place. You see, when it was the Soviet Union, and India placed an order, the plant in question got an order from above and they produced whatever was ordered. The plant got everything it wanted from the Centre — money, etc. It was not their business to think about who the buyer was, what was the price, etc. But in the new market economy, things have changed totally. Now the question is, why should a plant that was producing a certain model of aircraft keep producing the spares of this aircraft when that aircraft has become outdated? Now the plant has begun producing something else and suddenly, the Indian side decides, oh we need so-and-so spares! So the Indian side writes to Rosoberonexport (Russia’s arms export agency), which writes to the plant in question, which writes back asking for guarantees that a certain number of spares will be bought. This was the major difficulty that accompanied our switching from a centralised economy after the break-up of the Soviet Union, to a market economy. In the new economy, if there is no demand, there is no supply. And when the plant doesn’t have enough money to produce the (defence) spares, they stop production. But there has to be a plan or a long-term strategy that will help both sides. Yes, now we have a long-term plan, because both of us finally understood what is going on. It took nearly 20 years to understand? Well, there’sPages: [1] 2 3