Getting Indian and American Defense Ties Back on Track?


2013-10-06 By Gulshan Luthra

The recent Indo-US summit between Prime Minister Dr Manmohan Singh and Mr Brack Obama seems to have spurred the subdued ties between the two countries.

There is progress on two strategic aspects, nuclear as well as defense.

Washington has supported India’s desire to join four nuclear and missile denial regimes while New Delhi has promised early decisions on deals and tenders in which US defense companies are involved. 

The four points on Future Vision in the India-US Joint Declaration on Defence Cooperation also meet India’s requirement for defense technology transfer from US companies.

Earlier this year, it may be noted, Defence Minister AK Antony had said that India would not buy any major system unless there is an acceptable level of technology transfer. “The days of Buy Only are gone.” 

With the exception of Boeing, whose four aircraft – P8-I, C 17 Globemaster III, Apache and Chinook Helicopters have been selected by Indian forces since the US formally opened its defense equipment sales to India in 2005 – nearly all the US companies complain that delays lead to uncertainty, increase their costs of marketing and maintaining offices in India, and as technology moves fast, harms Indian interests as the Indian armed forces have to buy outgoing models.

From Raytheon to Boeing, Lockheed Martin, Honeywell, Sikorsky and others, representatives of every company keep saying that subject to the limitations in the official bilateral relations, they are willing to share whatever they can.

Sikorsky in fact mooted a proposal with HAL several years ago to jointly develop a futuristic helicopter for the mountains.

The problem is that the Indian side says neither Yes nor No.

Delays increase costs, which in any case are factored into at the cost of the buyer, a top US defense industry representative said on condition of anonymity. Notably though, the European industry also shares the same sentiment.

And a similar view was expressed by the Indian Parliament’s Standing Committee on Defence in one case at least, in 2000, when it said that it “was seriously concerned by the degree of seeming casualness shown by the Defence Ministry …..”

From the Indian perspective, procedures do take time but more often than not, delays are also caused by false complaints of corruption by losing companies and vested interests. The Indian Air Force has noted this in an official brief also.

It becomes difficult for the system not to investigate even an unfounded allegation, said an MOD official, pointing out that anonymous complaints in fact had become a norm and a headache.

As far as the US is concerned, the Ministry of Defence, including the Minister, seem inclined now to go in for government-to-government agreements and buying required weapons under the US Foreign Military Sales Program (FMS). The only thing which the Ministry insists on, and rightly, is that there must be a thorough evaluation of a system before the Indian Army, Navy or Air Force seek it.

The US and other players say Ok but please speed up whatever you have to do.

US defense companies, which have the best of technologies, are warm to the idea of FMS.

The two presidents meet and try to jump start the relationship. Credit Photo: Indian Strategic
The two presidents meet and try to jump start the relationship. Credit Photo: Indian Strategic

Said Pritam Bhavnani, a leading American Indian and head of Honeywell in India, the relations between the two countries are good, the US wants to sell, and it should be a better option for India to buy equipment under the official FMS program.

“The US Government will guarantee your price, technology, equipment, timelines, and whatever you want and negotiate.”

Of course there are options, and in some cases, equipment is part on Direct Commercial Sales (DCS) and part FMS, particularly where sensitive technologies are involved.

No defense deals were signed or announced during the summit Sep 27 but in a significant step forward in nuclear cooperation, President Obama himself announced “the first commercial agreement between a US company and India on civilian nuclear power” between Westinghouse Electric Company and Nuclear Power Corporation of India Ltd (NPCIL).

Westinghouse will set up six AP-1000 nuclear reactors in India’s western Gujarat state. A similar deal should be coming for GE-Hitachi for power generation nuclear technology in another state, Andhra Pradesh.

“We’ve made enormous progress on the issue of civilian nuclear power, and in fact, have been able to achieve just in the last few days,” Obama said.

A Fact Sheet issued by the White House noted that the two countries work closely on global non-proliferation and arms control, and said the US continues to support India’s full membership in the four multilateral export control regimes – Nuclear Suppliers Group, Missile Technology Control Regime, Wassenaar Arrangement, and Australia Group, in a phased manner.

India’s main concern is tech transfer, and while way back home, Dr Manmohan Singh said that India was trying to move away from “the buyer-seller relationship” to one based on co-production and co-research with the US in the defense sector. He also described the discussions as a step forward.

“Well in the area of defense cooperation we are trying to move away from the buyer-seller relationship to a relationship based on co-production, based on co-research and the outcome of the deliberations on defense cooperation is in line with our own thinking,” the Prime Minister said.

The US companies are also keen to invest in Indian partnerships but with nearly 50 percent or more participation.

Chris Chadwick, President of Boeing Military Aircraft, for instance told India Strategic recently that his company has to meet many offset obligations. “We will be happy to assume more responsibility with higher participation than 26 percent.”

But discouraged by Indian industry, MoD has so far stuck to 26 percent FDI norm, with more possible if the government clears it in specific cases at the highest level.

Dr Singh echoed the same: “We would like our own domestic industry to get involved in domestic production. We would also like FDI to extent of 26 percent to come into defense production.”

Notably, US Deputy Secretary of Defence Ashton B Carter, who had visited India before the summit, had offered to co-produce main stream defense equipment in India, including co-development of the next version of the Javelin anti-tank missile now built by Raytheon Co and Lockheed Martin Corp.

Early 2013, Washington also encouraged General Atomics to show its unarmed, export version of Predator drone and the new generation Electromagnetic Aircraft Launch System (EMALS) to the Indian forces for Indian navy’s future aircraft carriers. 

Details are not available but discussions between the concerned authorities and General Atomics are now going on. The Indian Navy plans to build at least two more 60,000-ton carriers, and according to the Vice Chief of Naval Staff Vice Admiral Robin Dhowan, while a decision would take time, every new technology is on the platter for consideration.

The next generation of US Navy’s aircraft carriers are now being designed and built with EMALS, rather than steam-powered catapults.

Sikorsky, which provides helicopters for the US Navy, Air Force, Army and Marines, says that if number are justified, it could build helicopters in India for global markets.

Distinguished aerospace expert Dr Vivek Lall, newly elected to the Board of Indo American Chamber of Commerce, observed that the future of US-India relationship would pivot upon the ability to innovate towards futuristic tech transfers and some level of industry integration with high-end work share.

First published by our partner India Strategic in October 2013