INDIAN DEFENSE MINISTER CHIDES RUSSIANS ON ARMS

C O N F I D E N T I A L SECTION 01 OF 03 NEW DELHI 004761

SIPDIS

SIPDIS

E.O. 12958: DECL: 10/26/2017
TAGS: PGOV PREL MASS MARR KOMC KSTC IN RS
SUBJECT: INDIAN DEFENSE MINISTER CHIDES RUSSIANS ON ARMS
SALES

REF: A. NEW DELHI 02315

B. NEW DELHI 04597

C. NEW DELHI 00440

Classified By: Acting PolCouns Atul Keshap, for reasons 1.4 (a, b, d)


1. (U) SUMMARY: While meeting with his Russian counterparts
for high-level military discussions in Moscow October 16 )
20, Indian Defense Minister Antony signed an agreement with
Russia to co-develop a fifth generation fighter jet intended
to rival the F/A-22 Raptor and the F-35 Joint Strike Fighter.
During his visit Antony publicly criticized Russia for
delaying the delivery of the Gorshkov aircraft carrier, and
served notice to the Russians that honesty and transparency
would henceforth be obligatory in defense sales. Prime
Minister Singh will visit Moscow November 11 ) 13 in a new
era where Russia remains a trusted supplier and friend, but
the effect of improved relations with the U.S. are keenly
felt in Moscow and Delhi. END SUMMARY.

-- India, Russia to jointly produce Fifth Generation Fighter
)-


2. (C) Sujan Dutta (Embassy contact and Senior Assistant
Editor, The Telegraph) accompanied the Indian delegation to
Moscow and confirmed to Poloff October 23 that India and
Russia have signed an Inter-Governmental Agreement (IGA) to
co-produce a Fifth Generation Fighter Aircraft (FGFA). The
Sukhoi aircraft design bureau began developing the FGFA
(which it has dubbed the T-50) in 2005 and had invited India
to share joint production from the beginning. India has
decided to come onboard at a relatively late stage in the
conceptual design process after two years' hesitation,
remarked Rajat Pandit (Assistant Editor, Times of India).
Pandit indicated that the Indian Air Force wants the FGFA to
straddle the performance capabilities of the F/A-22 Raptor
and the F-35 Joint Strike Fighter, and posited that its
distinguishing features will include thrust-vectoring,
stealth features, advanced radars and sensors, and the
ability to achieve supersonic speeds without using an
afterburner ("supercruising"). Dutta disclosed that the
Russians will send a working group to Hindustan Aeronautics
Limited ((HAL) - the Indian aerospace entity responsible for
Indian military aircraft production) in Bangalore in November
to work out technical details of joint production, but as
Vishnu Makhijani (Embassy contact and Senior Correspondent
with the Indo-Asian News Service) admits, "there's not much
India can really add to this project in the way of technology
) basically we can just front half the money," adding that
India could contribute some software. Russian officials have
related to media that the cost of developing the FGFA is
expected to reach USD 10 billion, and that it will take a
decade to begin full-scale production of the planes. Russia
expects India to provide half of the cost of development.

-- New Delhi Publicly Chastises Russia )-


3. (C) While in Moscow, Defense Minister A.K. Antony
co-chaired the seventh session of the Indo-Russian
Inter-Governmental Commission on Military Technical
Cooperation (IRIGC-MTC). On the opening day of talks, Antony
used a media event to take his Russian counterparts publicly
to task for bumbling the delivery of the Gorshkov aircraft
carrier (ref A). Makhijani was present at the press
conference and told Poloff on October 23 that Russian Defense
Minister Anatoly Serdyukov scribbled a note after hearing
Antony's criticism and passed it grimly to the
recently-appointed head of the Sevmash shipyard, who is
responsible for the Gorshkov refurbishment project.


4. (C) Dutta was also present at the press conference and
described to PolOff that apart from the Gorshkov complaint,
Antony also served notice to the Russians that honesty and
transparency would henceforth be obligatory in defense sales.
Antony reminded them that India now requires an "integrity
pact" for every defense sales contract worth more than one

NEW DELHI 00004761 002 OF 003


billion rupees (USD 24.6 million). Makhijani described the
Russian faces present as chastened and humbled, and that
Serdyukov quietly replied to Antony's demand by stating
"Russia is improving its 'best practices' and working on
solving this issue." According to Dutta, India's renewed
interest in greater transparency is due to increased exposure
to Western-style business transactions, which are markedly
open and transparent in contrast to the murky, grey-market
world of Russian arms deals.


5. (C) Dutta related that Antony also urged Moscow to
guarantee lifecycle support for military equipment, prompted
primarily by Indian Air Force concerns about late supplies of
spare parts for its aging 1970's era Russian-built aircraft.
Lastly, Antony asked Russia to press for the "economic
viability of certain products" that are being negotiated or
have been contracted. Dutta interpreted this comment as a
challenge to Russia keep up its side of the bargain in
Indo-Russian joint defense ventures, such as the Brahmos
cruise missile project. Dutta underlined that such joint
ventures will not be economically viable unless both
countries place orders in sufficient numbers and find third
country markets to export to. (Comment: this would also apply
to the FGFA. End Comment.)

-- Mukherjee snubbed, but not Antony )-


6. (C) Antony's visit was directly preceded by Foreign
Minister Pranab Mukherjee's visit to Moscow October 11 - 13
to attend the 13th annual Indo-Russian Inter-Governmental
Commission (IRIGC) (ref B). Indian media published several
contradictory, speculative articles in the week following
Mukherjee's visit, reporting alleged mistreatment and
snubbing he received from Russian officials during his visit,
making much of the fact that neither President Putin nor
Foreign Minister Lavrov met with him during his stay. Both
men were meeting with Secretary of State Rice and Secretary
of Defense Gates in Yekaterinaburg at the time. Pandit
conjectured that the scheduling snafu was not intentional as
much as the result of miscommunication on both sides;
according to him the Indian side had changed Mukherjee's
visit dates at the last minute, causing a collision with the
U.S. visit. However, our contacts are unanimous that there
was some intentional cold-shoulder shown to Mukherjee. Dutta
noted that Lavrov did not even do him the courtesy of calling
him on the telephone from Yekaterinaburg to express regret at
not meeting him in person. Dutta divulged that Mukherjee had
come to Russia with dozens of state gifts, and returned home
with half of them. Some Indian media articles argued that
Defense Minister Antony was also snubbed because he was
neither greeted nor seen off by President Putin. Makhijani
disagreed, pointing out that Antony did meet with his
counterpart Russian Defense Minister Serdyukov. The
consensus in the press in Delhi was that Russia snubbed
Mukherjee either for India getting too close to the U.S., or
for the Congress Party's abrupt October 12 reversal on the
nuclear deal.

-- Disagreements in Defense Sales still rankle )-


7. (C) Apart from massive delays and cost overruns on the
Gorshkov aircraft carrier deal, there are several other
contentious defense deals with Russia that Antony did not
publicly touch upon during his visit. The rift causing the
biggest heartburn for India is Moscow's June demand that
India pay up to USD two billion above and beyond the contract
cost of 138 additional SU-30 jet fighters. Contacts tell us
that both sides have been haggling furiously over this price
since June, and Indian media reported on the eve of Antony's
visit that India had caved to Russia's demands. Makhijani
noted that HAL Chairman A.K. Baweja has recently admitted in
public that the cost of specialized steel had increased
dramatically since the contract was written, and that the
cost increase demanded by the Russians was at least partly
justified. Makhijani asserted that the GOI may negotiate the
price increase down a percentage point or two but that the

NEW DELHI 00004761 003 OF 003


SU-30 deal will be settled mostly in Russia's favor, as they
have correctly calculated how far they can squeeze India
without killing the deal. Pandit listed a few other
unsatisfactory Russian military defense sales that have
lately irritated India's Ministry of Defense:

a) Krivak-class frigates ) delivery of the first one was
long past schedule, and missile systems onboard did not
perform to expectations.

b) Ilyushin 38 maritime recon aircraft ) the first one
delivered did not meet Indian performance standards.

-- Singh to Moscow in November )-


8. (C) Prime Minister Singh will make his planned trip to
Moscow November 11 ) 13. Singh is expected to use this
visit to sign an Inter-Governmental Agreement for joint
development and production of the Multi Role Transport
Aircraft (MRTA),a medium-sized 100-seat aircraft, to replace
the aging Indian AN-32 aircraft fleet. Dutta explained that
an IGA is a legal contract, more binding than the "Protocol
of Intent" signed during Putin's visit to India in January
for this project (ref C). Dutta added that Singh may also
sign an IGA for purchase of 340 additional T-90 tanks.

-- India adopting Western business style, at Russia's Expense
--


9. (C) COMMENT: The fact that the GOI is publicly
criticizing its oldest and most trusted defense sales partner
on the issues of increased transparency and honesty in
business dealings suggests that while Indo-Russian relations
remain firm, the door is opening for greater cooperation with
other partners, including the U.S. It is especially
heartening to hear top Indian officials talk up the necessity
of anti-corruption measures, as this dovetails with Post's
efforts to promote the integrity of U.S. business and the
congruity of regulations such as the Foreign Corrupt
Practices Act. In India's defense sales, Russia may still be
the old friend, but the influence of new partners, such as
the U.S. is certainly being felt. END COMMENT.
MULFORD