Russia's defence ties with India are being reconstructed on the new foundations, but not all of the load-bearing walls are government owned. A new batch of reports in the Indian press reveals that Adani Defence & Aerospace is once again in the company of India's state-owned giants Hindustan Aeronautics Limited and Bharat Dynamics Limited in a growing list of missile, fighter-upgrade and ammunition projects linked with Moscow, one of the more significant realignments in India's military-industrial complex in years.

It has come with a ₹1,800 crore contract on the 9K333 Verba, a shoulder-fired, man-portable air-defence missile that is believed to be an advanced variant of the Indian service Igla series. Adani Defence was nominated last month and since India's requirement is massive, with qualified vendors left with only a handful, the tender is being treated as a single vendor procurement and is not being put out to competitive bidding. That detail matters. The single-vendor routes are normally earmarked for situations where there is no other supplier, or where the armed forces are so pressed to act that they prefer to not abide by the normal tendering process, which would seem to be the case here as the army seeks to replace old man-portable air-defence stocks in bulk.

Hindustan Aeronautics (HAL) is also collaborating with Russian technical partners for the modernization of Sukhoi Su-30MKI, the backbone of the Indian Air Force's fighter strength, over the past two decades. The upgrade will be done by HAL with the Russian companies handling the consultancy services for avionics, radar and possibly the engine system. Bharat Dynamics meanwhile is involved in a separate programme to produce long-range air-to-air missiles for the Su-30MKI and the MiG-29 fleets; as part of the agreement, it also has technology transfer. It would be a rare case of a Russian-origin air-to-air missile being manufactured on Indian soil as opposed to coming in as a finished product rather than being built here, which is of little consequence for a country that wants to cut its import bill and develop its own export capability.

The subtext of the economy is not lost on anyone. By some estimates, India's military equipment continues to be sourced from Russia in large numbers, and it was during the Cold War era that it was procured. New Delhi has been attempting to scale down its reliance on Russian arms over the past 11 years as part of its Aatmanirbhar Bharat, or self-reliance, drive. Now everything changes is the mechanism.

What is now happening is not direct government-to-government imports, but rather co-production, government licensed manufacturing and joint ventures through Indian firms, both public and private sector. The expansion of Adani's presence is quite in line with that. The group already sells small ammunition to Indo-Russian Rifles Private Limited, which is a joint venture between Indian and Russian shareholders that manufactures the AK-203 assault rifle at its Uttar Pradesh-based Korwa facility, under a five-year supply deal that it signed at the end of this month.

It is also integrated into the Prachand light combat helicopter fuselage programme of ₹62,700 crore with BEML, which is the first private industry to be inked into such a production line, and has also got separate partnerships with French firm Thales and the Indian UAE-based EDGE Group on rockets, unmanned and electronic warfare systems.

This lies on top of a geopolitical layer that cannot be ignored. In December, Reuters had reported at least six visits to Moscow by executives from leading Indian arms makers including Adani Defence and Bharat Forge this year, as the first such trip made by Indian defence business leaders since Russia's invasion of Ukraine in 2022. There are no doubts about the government's message in New Delhi, which seems to be that it wants its Russia relationship to move from the buying-seller phase to one of co-development, a move timed to President Vladimir Putin's visit to India in December.

The dependency has been pointed out before by Western governments which said India's continued dependence on Russian platforms is one of the impediments for greater transfer of sensitive Western technology especially in the field of jet engines and fifth-generation systems. It's a situation that is not settling. Each time India invests a rupee in boosting production lines that are Russian, it is a rupee that increases the difficulty of Washington and Europe's efforts to see India as an fully allied defence-technology partner, as New Delhi strives to keep both of them happy.

Adani's calculations are crystal clear, commercial. Compared with the group's ports, power and infrastructure operations, which see more cyclical revenue, defence manufacturing promises longterm, government-backed streams of revenue, with a presence in missiles, ammunition, and helicopter parts providing a diversified base to eventually tap export orders, as the company has indicated with Israeli, French and Emirati partnerships. The inclusion of a well-capitalised private company is as much as it is about capacity as it is about competition: The pressure on delivery schedules on legacy programmes has always been a problem at BDL and HAL, and more manufacturing power, even from a private conglomerate, mitigates that.

The common denominator behind it all is a simple economic fact. India's defence spending for this year is in lakhs of crores of rupees and even if the reallocation is at the modest level of domestic co-production, then contracts worth ten thousands of crores of rupees are flowing through Indian balance sheets rather than straight out as payments for imports.