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Reliance Defence was named offset partner in S-400 deal with Russia

The deal, which was in the making for quite some time now, was underplayed by New Delhi, possibly to avoid tensions with Washington.

BusinessToday.In | Saturday, October 6, 2018 | 15:49 IST

After months of wait, India finally signed the deal to purchase S-400 Triumpf Long Range Surface to Air Missile System from Russia as the heads of states from the two countries met on Friday. With the $5.4 billion deal now official, the payment mechanism for it is expected to be initiated soon.

The deal, which was in the making for quite some time now, was underplayed by New Delhi, possibly to avoid tensions with Washington. The deal for S-400 missile system was signed by Joint Secretary (Land Systems) from Indian Defence Ministry and Director General ROE (Rosoboronexport). It did not even found a mention in the press statements released by Prime Minster Narendra Modi or President Vladimir Putin.

Another aspect of interest is that Reliance Defence was named the offset partner in the S-400 deal with Russia. The wholly-owned subsidiary of Anil Ambani-led Reliance Infrastructure signed a manufacturing and maintenance deal worth around $6 billion with AlmanzAntey ahead of PM Modi's visit Moscow in 2015, the company had mentioned in a statement. AlmanzAntey is a subsidiary of Rosoboronexport and key manufacturer of S-400 missile systems.

"Our proposed partnership will constitute an important milestone in the strategic relationship between the two countries," Reliance Group Chairman Anil Ambani had said about the deal.

"Working with Reliance Defence will help us develop new directions for both Companies to address future requirements of the Indian Armed Forces," AlmanzAntey Vice Chairman VF Medovnikov had said.

Reliance Defence has been recently receiving flak from main Opposition party Congress for alleged foul play in its appointment as the offset partner in the acquisition of 36 Rafale fighter jets from France's Dassault Aviation. Tensions in the matter spiked two weeks ago after former French President Francois Hollande said that the Indian government pressed for naming Reliance Defence as the offset partner in the Rafale deal.

The S-400 deal with Russia is also drawing fire from Washington. This is the first deal between India and Russia since the United States' Countering America's Adversaries Through Sanctions Act (CAATSA) came into effect in August last year. New Delhi is arguing that the deal was in the pipeline long before the CAATSA was conceptualised and classified as a legacy item, making it eligible for a waiver.

"The Administration has indicated that a focus area for the implementation of CAATSA Section 231 is new or qualitative upgrades in capability - including the S-400 air and missile defense system," a US States Department spokesperson said after the S-400 deal was finalised between New Delhi and Moscow.