Washington DC, USA: In a "breakthrough deal," India and Russia have agreed to set up a joint venture to produce titanium dioxide, a key component for titanium, a strategic metal, extensively used in the aerospace industry.
According to Kommersant daily, the Russian deputy finance minister, Sergei Storchak, and his Indian counterparts signed a breakthrough deal in Washington to invest the rupee portion of India's debt to the Soviet Union into a titanium dioxide joint production, Kommersant daily reported.
Under the agreement, the rupee debt equivalent of $126 million would be invested in building a plant in India with an annual capacity of 40,000 tonnes of titanium dioxide. Russia will hold 55 per cent equity in the plant, which is expected to come up in the next three years.
The contours of the agreement had been arrived at in January this year during Russian president Vladimir Putin's visit to the country. According to reports at that point of time, Russia was expected to off take about 30,000 tonnes of the plant's output, about half its national requirements, once production starts in 2009.
Titanium is used to create strong, lightweight parts, ranging from armour plating to airframes and components for the aerospace, transportation and chemical processing industries.
Reinvestment of Indian debt is an initiative first unleashed by Russian prime minister, Mikhail Fradkov, back in March 2006, as a way of getting around a vexed issue that has yet to be fully resolved by the two countries. While Russia claims that India owes about $3 billion in debt, harking back to the days of the USSR, India claims that the figure is closer to $1 billion. Fradkov's initiative has received President Vladimir Putin's support, which he expressed during his visit to India this January.
During Putin's India visit, Russian Vnesheconombank, Technochim-Holding and Indian Saraf Agencies had inked the titanium JV deal to be financed through debt rupees.