New Delhi: India’s long-time strategic partner Russia has finalised a deal with Pakistan to revive a defunct Soviet-era steel plant. The move has raised eyebrows in New Delhi. This cooperation could reshape economic ties in the region and spark new diplomatic friction between India and Russia.
Confirmed by Russian envoy Denis Nazruyev and Pakistani officials, the agreement aims at reconstructing and modernizing the once-operational Pakistan Steel Mills (PSM) – which had shut down in 2015 due to outdated machinery and mismanagement.
The new steel facility will occupy a 700-acre section of the 19,000-acre PSM site near Karachi and will utilise Pakistan’s estimated 1.4 billion tons of iron ore reserves. Built originally in 1973 with Soviet support, PSM once produced 1.1 million tons of steel per year.
However, years of corruption and poor maintenance drove it into a staggering $2.14 billion loss.
Powered by advanced Russian steel manufacturing technology, the revival project is expected to cut Pakistan’s annual steel import bill by 30% and slash $2.6 billion in foreign expenditures.
Pakistan spent $324 million on imported scrap and semi-finished products – a cost the new plant aims to drastically reduce – alone in March.
A joint working group will oversee the project’s financing and execution The decision signals deepening economic cooperation between Moscow and Islamabad.
Russia’s unexpected hand of friendship to India’s rival Pakistan may strain its traditionally warm ties with New Delhi – especially at a time when geopolitical alliances are shifting fast. The development comes at a time when India-Russia relations are already being tested by Moscow’s growing closeness with Beijing and its evolving energy and defense ties in Asia.
Although Russia says the deal is pursuing purely an economic cooperation with Pakistan, experts warn that industrial and technological partnership can often pave the way for deeper strategic engagement.
For India, which has long counted on Russia as a reliable defense and energy partner, the move raises concerns about a gradual shift in Moscow’s regional priorities.
While the project may seem purely economic, the strategic implications could be far-reaching. It may be just the start of a broader rebalancing in South Asia’s power dynamics.