New Delhi: India is looking at altering the buyer-seller bilateral defence relationship with Russia to that of joint production, but without the recurring issue of royalty.

Sources in the defence and security establishment said that while India has diversified its sourcing of military hardware from predominantly Russia to other countries, including the US, France and Israel, in the last few years, Moscow will continue to be a partner.

Russia witnessed a 53 per cent fall in arms exports to India even as Delhi’s imports from Paris increased, data from the last five years have shown.

India and Russia are looking at signing a defence logistics exchange pact later in the day when Russian President Vladimir Putin comes calling, besides signing a deal for indigenous manufacture and supply of spare parts used in Russian equipment in service with India.

The sources said that another important development during Putin’s visit will be the inking of an agreement to start production of AK-203 rifles in Uttar Pradesh’s Amethi district.

There could also be a ceremonial handing over of the S-400 Triumf air defence systems to India, sources said.

The initial deliveries of the first squadron of the S-400 missile defence system have already started and is set to be completed by the middle this month.

Focus of 2+2 Dialogue

Talking about the 2+2 dialogue, to be attended by both defence ministers and foreign ministers of the two countries, the sources said that Russia’s increasing relationship with China and the Afghanistan situation would be on the agenda.

Asked about maintaining a fine balance between Russia and the US, the sources said that India’s relations with one country cannot be at the cost of another.

They said that Russia remains an old friend whose contribution remains unmatched.

The sources also said that the strategic partnership between India and Russia will also be discussed, as India looks at leasing a fourth nuclear-powered attack submarine (SSN) besides the Chakra III, a deal for which was signed in 2019.

Joint Development, Joint Production

Talking about the overall agenda, especially in the context of defence, the sources said that India is looking at moving beyond the buyer-seller relationship.

“The road ahead is about joint development and joint production. We want Russian companies to come and set up shops here, not just for India but also for the world. This will be economically viable for Russia because this means that production capacity increases,” a source said.

Another source explained that while the focus is on joint production, it would be under Transfer of Technology (ToT) and not through royalty.

Sources said that India has always paid Moscow royalty for all India-Russia products manufactured domestically, including the BrahMos supersonic missiles.

This also meant that in future, when India sells BrahMos to a third country, a large share of the revenue will go as royalty to Russia.

The sources said that the AK-203 deal also had royalty incorporated in it, but both sides have now decided on a ToT fee, which has brought down the cost of each rifle.