With India recently hiking the cap on the entry of Foreign Direct Investment (FDI) in defence sector from 26 per cent to 49 per cent, the US views it as a unique opportunity. The India-US Defence Trade and Technology Initiative (DTTI) inked two years ago when the UPA government led by Dr Manmohan Singh was in power have also come handy to further the defence engagements between the two countries.
The Initiative, which was presented by the then US Defence Secretary Leon E Panetta and subsequently shepherded by the then US Deputy Defence Secretary Ash Carter, has on its agenda the proposals for co-production and co-development. The Modi Government which is aggressive in its effort to modernise the Indian Defence Industry by liberalising its FDI policy is seeking to take the DTTI forward. The Indian Defence Minister Arun Jaitley and the US Defence Secretary Chuck Hagel, who was recently on a three-day visit to India, agreed to extend the New Framework for the US-India Defence relationship well before it expires in July 2015. Jaitley, said: “The development of our own indigenous capabilities is a major objective that guides our present policies. In this direction, we have taken steps to raise the FDI cap in the defence sector. We look forward to work closely with the US in this regard.” The FDI policy has stipulated that that the projects will have full Indian management and control.
Technology transfer is the key to modernisation and Jaitley should note the words of Ash Carter who had earlier said: We’ve adapted our system in ways that will speed our release process for India…..especially in the Department of Defence, recognising that for all partners this process is subject to case-by-case review and there will always be some technologies that we will keep to ourselves.” This means that India will not receive some key sensitive latest technologies.
There are other issues like relaxation in US export control regime, licencing agreements, licence exceptions, end-use monitoring which need to be sorted out by both sides.
However, Hagel said that DTTI now has on the table over a dozen specific cooperative proposals that would transfer significant qualitative capability, technology and production know-how. Other items on the table for co-production and co-development are maritime helicopter, naval gun, surface-to-air missile system and scatterable anti-tank system.
Hagel has reiterated that India and US would co-produce and co-develop the next generation Javelin anti-tank missile to defeat current and future threat armoured combat vehicles.
While for the Javelin project US will partner only with India, there are several other defence projects US have with other countries, particularly with Australia, a strategic country in the Indo-Pacific region and with UK.
Another aspect that draws US closer to India in defence cooperation is the growing Indian market. This makes US one of the top three defence suppliers to India after Israel and Russia. In March 2009, Obama administration cleared $2.1 billion sale of eight P-8 Poseidons aircraft to India that are patrolling the shores of the Andaman & Nicobar Islands.
During Obama’s visit to India in November 2010, US signed $5 billion agreement to supply Boeing C-17 Globemaster-III military transport aircraft and general electric F414 engines. US also agreed to supply six C-130 J Super Hercules special operations aircraft. US is also mulling sale of 22 Apache attack helicopters, 15 Chinook heavy lift helicopters, 145 ultra light howitzers, M777 guns of BAE systems. However, Hagel has spelt out that in rebalancing game in Indo-Pacific region, US would have ä constructive relationship” with China and “seek to manage competition, but avoid traps of rivalry” and at the same time India-US-Japan trilateral security cooperation should be elevated to ministerial level building upon the joint naval Malabar exercise.
India-US defence relations will take a final shape when Narendra Modi and Barack Obama will meet for a summit level meeting in Washington in September. -Ashok B Sharma?
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