Russia to bag $1.5-billion deal for air defence missiles

After major deals to sell the S-400 system as well as naval warships to India, Russia is set to bag a $1.5-billion contract for air defence missiles, even though the shadow of financial sanctions by the US for weapons purchased from Moscow still looms.

ET has learnt that the Russian Igla-S system has been confirmed as the lowest bidder for a mega deal to procure shoulder fired anti-aircraft missiles for the Indian Army in a meeting held on Monday. The Russian bid for $1.5 billion considerably undercut offers by France and Sweden and is believed to be even lower than the benchmark price of $2 billion that was estimated by the Indian side.

While the fear of US financial sanctions looms — banking institutions have been warned that they may be cut off from the dollar trade for dealing with Russian arms companies — the contract still has a hurdle to cross given strong objections raised by competitors that Igla-S did not fully meet requirements.


The process to procure Very Short Range Air Defence (Vshorad) missiles was initiated in 2010 under the previous government and went through several rounds of trails before the Igla-S qualified in January, along with two other competitors.

The Vshorad programme to replace the Russian Igla-M systems that have been used by the Army since the 1980s is considered critical for defence against incoming helicopters, UAVs and ground attack aircraft. While there were four bidders initially, the Koreans did not make it but the Swedish SAAB RBS70 NG, and MBDA’s Mistral were found compliant, besides the Russian system.

The competitors, however, raised several objections on the Russian system, alleging that it did not demonstrate low-level target hits in desert environments in summer and failed to lock into targets at long distance. The allegations were examined by independent monitors at the defence ministry, but a decision was taken to go ahead with the opening of commercial tenders in which Russia has emerged the winner.

As reported by ET, questions still remain on the Army’s ability to gather funds needed to seal the deal, given a massive crash crunch in the capital budget. The Army had told the parliamentary panel on defence in March that lack of funds will impact the Vshorad procurement. The Army has been granted Rs 17, 756 crore less than what it had expected in the annual budget.