Russia, India’s long-standing strategic partner, has recently finalized a deal with Pakistan to revive a closed Soviet-era steel mill. The move has raised concerns in New Delhi. Analysts say the Russia-Pakistan alliance could redefine economic relations in the region and stoke diplomatic tensions between India and Russia.
Nikkei Asia recently reported the deal, citing Russian Ambassador Denis Nazarov and Pakistani officials. The Nikkei Asia report said the deal was signed earlier this month during a meeting between Russian Ambassador Denis Nazarov and Special Assistant to the Prime Minister of Pakistan Haroon Akhtar Khan.
The aim is to restructure and modernize the Pakistan Steel Mills (PSM), which was shut down in 2015 due to outdated equipment and management problems. The plant was built in 1973 with the help of the then Soviet Union. Once producing 1.1 million tonnes of steel a year, the plant has been losing $2.14 billion due to long-standing corruption and poor maintenance. The new facility near Karachi will be built on 700 acres of the original 19,000-acre site. It will use Pakistan’s 1.0 billion tonnes of iron ore reserves. The revitalization project, powered by advanced Russian steelmaking technology, is expected to cut Pakistan’s annual steel import bill by up to 30 percent and save it $2.6 billion in foreign exchange. Pakistan spent $324 million on scrap and semi-finished products in March. The new plant will significantly reduce this cost. A joint group from the two countries will oversee the financing and implementation of the project, a move that underscores the deepening economic cooperation between Moscow and Islamabad. Analysts say Russia’s unexpected gesture to India’s arch-rival Pakistan could have a serious impact on the traditionally warm ties between India and Russia. Especially where the relationship and trajectory of geopolitical alliances are now changing rapidly. And the news of the Moscow-Islamabad joint project comes at a time when Moscow’s closer ties with Beijing and the evolution of energy and defense ties in Asia have put India-Russia relations under test, where India is largely dependent on Russia for military and energy sectors.
Although Russia says the deal is only for economic cooperation, experts warn that industrial and technological partnerships often pave the way for deeper strategic ties.
India has long considered Russia a reliable defense and energy partner. But the move has raised concerns in Delhi about a gradual shift in Moscow’s regional priorities. While the project may appear to be purely economic, its strategic implications could be far-reaching. Many believe it could be the start of a larger realignment of power dynamics in South Asia.
