India and Russia on Monday concluded a much awaited deal worth ₹5,100 crore for the joint production of more than 500,000 AK-203 assault rifles at a facility in Uttar Pradesh's Amethi district, officials familiar with the development said. The deal was finalised at a bilateral meeting between defence minister Rajnath Singh and his Russian counterpart Sergey Shoigu.
The two countries also renewed their military-technical cooperation arrangement for 2021-31, the officials said.
"India deeply appreciates Russia's strong support for India. We hope that our cooperation will bring peace, prosperity and stability to the entire region. Glad that a number of agreements/contracts/protocols were signed pertaining to small arms and military cooperation," Rajnath Singh tweeted on Monday.
The development came ahead of the annual summit between Prime Minister Narendra Modi and President Vladimir Putin this evening.
Apart from the bilateral meeting between the two defence ministers, the other events scheduled before the summit include a meeting between external affairs minister S Jaishankar and his Russian counterpart Sergey Lavrov, and the inaugural 2+2 dialogue of the defence and foreign ministers.
Agreements in trade, space, technology and energy are expected to be signed during the summit.
The two sides are looking forward to intense engagement on issues ranging from bilateral cooperation in trade, connectivity and energy to regional security concerns, such as the situation in Afghanistan.
The government on Saturday approved the plan to manufacture AK-203 rifles in Uttar Pradesh under a joint venture called the Indo-Russian Rifles Private Limited that was formed by Advanced Weapons and Equipment India Limited and Munitions India Limited and Russia's Rosoboronexport and Kalashnikov.
The Cabinet Committee on Security (CCS) approved the project last week. The AK-203 rifles will replace INSAS rifles inducted more than three decades ago.
Putin's visit will have a major defence and security overhang, as previously reported. The delivery of the first squadron of S-400 air defence systems, which is part of a $5.4-billion contract with Russia for five squadron, is expected to be completed anytime. Russian officials have said that the delivery of components for the air defence systems has already begun.
Against the backdrop of US threats to impose secondary sanctions on the S-400 deal under the Countering America's Adversaries Through Sanctions Act (CAATSA), the officials said India follows a policy of strategic autonomy when it comes to defence procurements and national security interests.
At least 15 groups focused on economic cooperation between India and Russia have met virtually over the past two years amid the Covid-19 pandemic and the two sides have increased the target for two-way investments to $50 billion by 2025 as the earlier target of $30 billion had been achieved in 2018.
India is also focusing on trade and investment opportunities in Russia's Far East, including in coal and diamonds and for meeting manpower needs. As part of these efforts, 11 governors from the Far East have been invited to the Vibrant Gujarat meet of 2022.
This is Putin's second foreign visit since the Covid-19 outbreak – he travelled to Geneva in June for his first meeting with US President Joe Biden. Putin's decision to travel to New Delhi reflects the importance attached by Russia to its special and privileged strategic partnership with India.