Arms Trade Divorce
By Pavel Luzin, Visiting Scholar at the Fletcher Russia and Eurasia Program
Russia-India Arms Cooperation since February 2022
Russia has a long history of supplying arms to India through both technology transfer and standard arms sales. From licensed manufacturing of Su-30MKI fighter jets, aircraft engines, and T-90 battle tanks, to BrahMos and BrahMos-2 missiles, Russia’s arms sales are vast and diverse. But despite the fact that India is the main buyer of Russian weapons, the Russian-Indian partnership is in decline. The downturn began before Russia’s invasion of Ukraine in 2022, but Russian aggression has exacerbated the decline, and made it seemingly irreversible. Moreover, the ongoing decline in Russian-Indian arms exchanges indicates a turbulent future for the Russian military-industrial complex.
The Golden Age of Russia’s Arms Trade
During the post-Soviet era, arms exports were a significant source of income for the Russian military- industrial complex. Since the 2010s, India has been a major recipient of Russian arms, alongside the People’s Republic of China (PRC), Algeria, Egypt, and Vietnam.
Table 1: Russia’s arms procurements and arms exports from 2000 through 2022 in millions USD, current prices (SIPRI data are nominated in SIPRI Trade Nominated Values (TIVs), expressed in millions). Merged cells indicate totals for all years within the connected range.
As shown in Table 1, it is evident that arms exports were a significant source of revenue for the Russian military-industrial complex during the first two decades of the twenty-first century, and that the industry rapidly lost this source from 2022 to 2023. This process continues in 2024. Moreover, this loss can hardly be compensated for by increased domestic arms procurements, and there is no chance that Russia will restore its position in the global arms trade before the end of the ongoing war.
India was a major importer of Russian arms during the 2010s, and in contrast with China, it preferred to manufacture Russian arms locally instead of relying on reverse engineering them. Therefore, Russian arms companies could further focus on playing the role of a long-term supplier of components, parts, and technologies for the Indian defense factories, and on investing in an extended industrial partnership with them.
Overall, despite the discrepancy between data from Russian-affiliated sources and data from independent sources, it is clear that the “golden age” of the Russia-India arms trade occurred from 2010 to 2013.
Russia Cannot Find a New Major Arms Importer to Replace India
In the early 1990s, Russia’s strategy was simple: the state used its arms trade to fund the privatization and technological development of the Soviet-era defense industry. India played a critical role in this by purchasing Russian arms and licenses for Indian manufacturing, research, and development. For example, India developed its Su-30MKI/MKK/MKA/SM fighters from the Soviet-era Su-27. In turn, major Russian Military-industrial companies and even individual factories gained long-term and guaranteed contracts.
By the end of the 2000s, Russia was determined to bring India in as a key investor in developing a new generation of fighter jets, transport aircrafts, and hypersonic missiles. At that time, the Russian leadership realized that, despite hundreds of billions of petrodollars, it lacked the necessary resources for crucial technological and military projects. As a result, Russian dependence on the arms trade and industrial cooperation with India was growing, but the Kremlin was willing to pay this price in order to advance its military technologies.
However, Russia’s political economy and foreign policy destroyed this strategy. First, increasingly authoritarian governance and growing interventionism caused the defense industry to lose flexibility and economic efficiency because of restoring non-market environment and deterioration of cooperation ties with companies from the United States and Europe. As a result, the Western partners of Russian defense corporations started to withdraw from Russia, slowing down development. Secondly, Russia’s regional aggression, its growing radicalism and revanchist behavior in international relations, and its annexation of Crimea, made Russia an increasingly-troubling partner for companies from any other country, including India.
India remained optimistic despite the evident negative trends in its partnership with Russia. Similarly, the Kremlin was going to keep India onboard for as long as possible because New Delhi only invested slightly more than USD 200 million in the early stages of development of a common fifth-generation fighter jet from 2010 to 2013, while the Russian authorities were hoping for a much bigger Indian contribution to the potentially multi-billion-dollar project. Nevertheless, the fighter jet project was frozen in 2018 and finally canceled in 2021 by India. Then, in April 2023, Indian officials announced that India would develop the fighter jet alone.
In all likelihood, the lack of technologies on the Russian side (for instance, Russia has been unable to develop the next generation of engines) and over regulation of Russia’s industrial sector left it incapable to make decisions without involvement at the governmental level and endless inter-agency coordination were the main causes here.
The transport aircraft project also died quietly because of the absence of Russian progress in research and development activities related to this aircraft, and India’s lack of interest in sponsoring Russia’s aircraft industry without a clear prospect for technology transfer. Therefore, India has changed partners, choosing to instead work with the Brazilian aircraft corporation Embraer on the development of the aircraft.
At the same time, the last planned project of licensed manufacturing of Russian Ka-226 helicopters on Indian Soil ended in deadlock despite several years of bilateral negotiations. The officially-published reason was the lack of compromise on the degree of local manufacturing of these helicopters in India. However, it should be noted that Russia did not have its own engine for Ka-226 (as of June 2024, the Russia-made engine was still under development) and all the helicopters of this type produced in previous years use engines supplied by the French company Safran. Since 2022, Russia has been cut off from any cooperation with Safran.
Besides the fact that Russia’s aircraft industry has hardly been capable of developing and producing new generations of aircrafts for years, there is another significant problem related to Russia’s political economy. Specifically, each step in the development process and each inevitable organizational issue related to these projects has required discussions and approvals at the ministerial level in Russia. Consequently, these projects required the permanent engagement of high-ranking government officials on India’s side as well. Notwithstanding the other issues involved, this was certainly slowing down the projects.
The Kremlin recognized that the danger of losing India as Russia’s key partner in the arms trade would be a particularly painful blow, as neither Egypt nor Algeria nor other countries it partnered with in the past could replace India. Thus, Russia proposed a USD 5.5 billion deal to India for the supply of S-400 air and missile defense systems in 2018. The contract was signed in rubles, and Moscow will start to receive payments after the final supplies were provided, which was originally scheduled from 2021 to 2024.
Point of No Return
Russia’s 2022 full-scale invasion in Ukraine became a point of no return for the Russian arms trade and its military cooperation with India. Russia’s delayed deliveries and India’s delayed payments, cancelled procurements, and plans to upgrade Russian-developed fighter jets without the participation of Russian companies, meant that Russia could not be a trusted partner, even among countries willing to tolerate Moscow’s aggression. Moreover, there is evidence that Russia is trying to buy back some military electronic components recently supplied to India and Myanmar in order to maintain arms manufacturing for the Russian army. In this way, even the recent USD 30 million contract for the supply of Russian MANPADs Igla-S to India just softened the blow and can be taken as a symbolic measure for both sides.
Despite the many issues that it faces, Russia is struggling to be among the leaders in the global arms trade. Moscow is now trying to focus on Africa and is ready to extend technology transfers and licensing manufacturing to other countries, like it had done previously with India. However, there are three main obstacles to this: the high investment threshold, Russia’s deteriorated reputation, and the risk of secondary sanctions. As a result, it would be difficult—if not impossible—for Russia to prevent its arms trade from declining further. Consequently, the Russia-India arms trade case study illustrates the Russian military industry’s unstable future.
Table Notes:
1. A) Numbers for 2000–2007 are taken from the slides of the Center for Strategic Research “North West” Foundation; B) numbers for 2008–2012 are taken from and counted relying on data provided during the years by the Centre for Analysis of World Arms Trade (CAWAT) and published by the NGO itself on February 1, 2021 and by Vz.ru on March 12, 2013, RIA Novosti on January 21, 2015 and “Natsional’nayaOborona” magazine on February 24, 2021 ; C) numbers for 2013–2014 are taken from the research report “Russia–2017” by the analytical center “Observo” at the Franco-Russian Chamber of Commerce and Industry; D) numbers for 2015 are taken from Kommersant newspaper of March 30, 2016; E) numbers for 2016 are approximately counted with use of the data mentioned above; F) numbers for 2017 are taken from the “NezavisimoeVoennoeObozrenie” newspaper of June 8, 2018; G) numbers for 2018–2022 were officially announced by Dmitry Shugaev, head of the Federal Military-Technical Cooperation Service of Russia, on February 13, 2023.
2. Source 1; Source 2; Source 3; Source 4
(This post is republished from the Fletcher Forum of World Affairs.)