Sanctions-hit Putin visits India to boost energy, trade ties

NEW DELHI - Russia's President Vladimir Putin held talks Thursday with India's new prime minister as sanctions-hit Moscow seeks to strengthen energy, defence and strategic ties in Asia.

Putin is looking to advance nuclear power, oil and natural gas and even diamond deals with longstanding ally India, on his first visit since Prime Minister Narendra Modi swept to power in May.

The president is seeking new markets for Russia's natural resources as its economy reels under US and EU sanctions over its backing of an uprising in Ukraine and annexation of Crimea.

Putin and Modi shook hands and smiled for the cameras on the steps of a former palace in New Delhi before heading inside for talks.

"He (Putin) wants to show the world that he isn't isolated and to a certain extent he's not - he still has the BRICS countries," Russia expert Nandan Unnikrishnan said, referring to the emerging economies of Brazil, Russia, India, China, and South Africa.

"India now is all about development and it's looking to Russia to share its technology on military hardware for making here," said Unnikrishnan, a senior fellow with Delhi-based think-tank the Observer Research Foundation.

Putin is expected to focus on boosting two-way trade, which stands at just US$10 billion (S$13.1 billion) a year despite strong ties that date back to the 1950s after the death of Stalin.

Since coming to power, Modi has sought closer ties with US President Barack Obama, who has accepted an invitation to join India's Republic Day celebrations in January.

But India opposes joining Western sanctions against Russia, and is likely to disregard a caution from Washington that now is not the right time to do business with Moscow.

The acting leader of Crimea, the strategic peninsula that Russia annexed in March, was also holding unofficial talks Thursday with business leaders in Delhi, a move likely to irk Washington.

Kremlin loyalist Sergei Aksyonov was meeting the business leaders at an upscale hotel, a move aimed at "widening business contacts and deepening economic cooperation" between Crimea and India, a Russian embassy statement said.

Putin said before he arrived early Thursday that he would be seeking to strengthen their "privileged strategic partnership", singling out more Russian-built reactors for energy-hungry India's nuclear power plants.

'VERY STRONG' BOND

Modi tweeted on Thursday that the "bond between the people of Russia and India is very strong", expressing hopes Putin's visit would take the relationship to "new heights".

Moscow is seeking greater investment from Indian state-run companies in Russian oil and gas projects, including ones being explored in the Arctic.

Russia, which has the world's second-biggest natural gas reserves, cancelled a US$50 billion South Stream pipeline meant to pump gas to Europe without going through Ukraine.

But Putin has poured cold water on a proposed pipeline pumping gas to India, saying it might not be cost effective, instead emphasising current arrangements to ship liquefied natural gas in tankers.

Russia has supplied two nuclear reactors to a plant at Kudankulam in southern India under a long-delayed agreement, and will push to supply more under deals signed in 2010 and 2008.

Russia also wants advancement on long-delayed projects to develop a fighter jet and an aircraft carrier. Russia has traditionally supplied 70 per cent of India's military hardware, but figures show that the US overtook Russia this year to become the number one seller.

India, whose domestic industry struggles to manufacture high-tech arms, is in the middle of a defence spending binge in a bid to keep up with Chinese forces and a range of challenges in the volatile neighbourhood.

Putin is also meeting with Indian President Pranab Mukherjee and attending the World Diamond Conference, with both sides keen on ramping up direct exports to India.

Russia is the world's top producer of rough diamonds and the majority of them pass through India, where a cheap workforce cuts and polishes the gemstones before most are exported again for use in jewellery.

But only about a fifth of rough produce is sold directly from Russian mines to India, with the rest passing through diamond hubs such as Antwerp and Dubai.