Russia’s defense industry is looking both to compete and cooperate with its western European counterparts as it bids to expand its international customer base.

According to the Federal Service for Military-Technical Cooperation (FSVTS, in its Russian acronym), Russian companies want to work with firms from the UK, Germany, France and Italy on joint research-and-development projects aimed at integrating Western technology with Russian products for export to third parties. Part of this is driven by the need to make Russian-made equipment compatible with the NATO standards that some of Russia’s defense clients now have to meet, as well as to extend service life.

According to new research by Russian news agency ARMS-TASS, Russia will retain its position in the world market for multi-role fighters over the next few years. This will mainly be based on planned deliveries to customers in Asia and North Africa.

For instance, this year sees the completion of a $700 million contract for RAC MiG to supply 16 MiG-29K/KUB fighters to the Indian navy. According to ARMS-TASS, the Indians are set to exercise options for up to 29 more of the aircraft.

Over the next 24 months, Indonesia is set to receive three Su-27SKM combat jets in a $150 million contract. Next year, Algeria will receive the last of 10 Su-30MKAs out of a 28-aircraft order valued at $1.5 billion, and Russia wants the Algerians to buy another three before long.   

        
Meanwhile, back in India, licensed production of 140 Su-30MKI fighters is continuing. So far 42 have been assembled and 98 more are due to be built before the end of 2013, although the program may actually continue into 2015. On top of this, the Indians are due to receive another 34 Su-30MKIs direct from Russia before the end of next year.

According to the latest analysis by ARMS-TASS, Russia will achieve number-two ranking in the world market for new fighters, supplying 555 aircraft worth almost $22 billion over the period 2004 to 2013. During the past five years, the country’s industry has exported 263 aircraft worth $9.2 billion. In the next five years, the projected order book shows 292 aircraft with a value of more than $12.3 billion. The ARMS-TASS analysts have even gone so far as to suggest that Russia will outsell U.S. fighter suppliers between 2009 and 2013, even if the Americans win all currently outstanding tenders.

Overall, Russia’s defense sector has achieved strong growth over the last seven years. The total value of military hardware exported has more than doubled from $3.7 billion in 2001 to almost $8.4 billion last year, but this is viewed by experts as being a peak year as the global financial crisis eats into defense budgets. The Russian industry’s outstanding order book is currently valued at approximately $34 billion.

Arms export agency Rosoboronexport (Hall 4 Stand D104 to C104) is still the country’s main conduit for defense exports, accounting for 80 percent of all export sales.

Russia’s defense export customer base currently extends to 60 countries. In addition to its best customer India, it has also had sales success in southeast and central Asia, as well as in Africa, the Middle East and South America.

Helicopters are one aspect of the Russian defense sector that is expected to see further growth over the next few years, according to Oboronprom director general Andrei Reus. Russia’s main rotorcraft group is predicting total output of up to 210 helicopters this year, which would be an increase on the 169 produced in 2008. Reus said that output could increase by a further 20 percent in 2010. Oboronprom has set an ambitious target of increased domestic helicopter sales from the current level of around 25 to 30 percent of total production to as much as 50 percent. The current order book of all Russian helicopter makers is about 400 aircraft and Reus believes that this figure could grow to 500 this year.