New Delhi, Oct 15: Setting the agenda for Russian President Vladimir Putin’s visit, India and Russia Monday decided to invigorate their economic ties and agreed to factor in liability concerns in the final deal for units III and IV of the Kudankulam Nuclear Power Plant (KNPP).
Russia, however, called for creating a stable investment climate and voiced unhappiness over New Delhi’s stand on investment by Russia’s Sistema, saying one should not change the rules of the game mid-way.
“We discussed the preparatory work for units III and IV. A techno-commercial agreement is being negotiated,” External Affairs Minister S.M. Krishna told reporters after talks with Russian Deputy Prime Minister Dmitry Rogozin.
“I have no doubt that we will arrive at a mutually satisfactory result. We see a growing role for Russia in the development of nuclear plants in India,” he said, to a question on the progress on KNPP’s units III and IV, embroiled in differences over perceptions over India’s civil nuclear liability.
The talks between Krishna and Rogozin helped set the agenda for Putin’s Oct 31-Nov 1 visit to India, and indicated a way forward on KNPP’s units III and IV.
Rogozin had said here Sunday that if there are issues requiring additional assurance, then it will require additional money, indicating that the price of these reactors may have to be renegotiated.
The KMPP’s unit I is ready to be launched and unit II will be operationalised during the next year, he said, while describing KNPP to be “the safest power plant in the world.”
In July, the nuclear officials of both countries had signed a protocol in Moscow for units III and IV.
Russia, which has agreed to extend export credit amounting to $3.4 billion, has contended that the Indian nuclear liability law should not apply to these units as the agreement on them predates the 2010 law, and could be seen as “grandfathered” by the original 1988 agreement.
India has indicated that it is ready for price escalation, but it will not compromise its civil nuclear liability regime.
While both sides agreed to step up trade and investment, Russia asked India to create a stable investment climate.
“We should never reconsider the rules of the game once the game has begun. And we should hold the rules till the game is over,” Rogozin said.
Terming it very important to fulfil the agreements, he stressed that if there are scandals, they will scare the business community.
Although Rogozin did not name the Russian telecom giant Sistema’s $3.1 billion investment in a joint venture in India, the reference was obvious as Russia is understood to be extremely unhappy with what it sees as New Delhi’s flip-flop over the issue.
Sistema’s $3.1 billion investment in Sistema Shyam Teleservices Ltd (SSTL) suffered a blow with the Supreme Court February cancelling all 122 licences (including that of SSTL which operates the MTS brand of mobile services in India) on allegations of bribery and corruption in the allocation of 2G spectrum.
Sistema Shyam has filed a petition before the Supreme Court, asking it to set aside the verdict cancelling its licences. The court-ordered 2G spectrum auction is expected to begin Nov 12, with Oct 19 being the last date for applications by potential bidders.
Krishna said he will not be able to comment on the project as the matter was sub-judice, but assured that India will work with Russia on a strategy to promote economic relations.
Although the Sistema issue has created some bitterness – as most of Sistema’s investment is Russian state money, the two sides spoke in unison about bringing their economic ties in line with their robust strategic and political relations.
Rogozin struck an upbeat tone, saying bilateral trade has seen significant growth of 38 percent in 2012′s first half and will reach $10 billion by the year’s end.
The two strategic partners have set an ambitious target for doubling up bilateral trade to $20 billion by 2015.