Defence Industry

Indo-US Partnership in Defence Industry
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Issue Vol. 27.2 Apr-Jun 2012 | Date : 09 Jul , 2012

Boeing C-17 Globemaster-III Strategic Airlifters

While India has taken big strides in indigenising defence systems, the fact remains that achievements in all areas are not uniform. Given the stated interest in moving towards a network-centric platform for conduct of military operations in the future, it is likely that offers for partnership in C4I related areas would be welcomed by Indian defence planners. A system with wider applications would also bring in other American defence aerospace and majors into play and set up partnerships that would pay richer dividends to all.

Change in US Perception

Change in the approach of American policy makers is reflected in the fact that the Senate Armed Services Committee (SASC) recently asked the Pentagon to submit by November 01, 2011, a detailed assessment of the current state of US-India security co-operation as well as a five-year plan for enhancing bilateral cooperation. Noteworthy in this is the bipartisan belief within the Committee that, “It is in the national interest of the US, through military-to-military relations, arms sales, bilateral and multilateral joint exercises and other means to support India’s rise and build a strategic and military culture of cooperation and inter-operability between our two countries, in particular with regard to the Indo-Pacific region.” The SASC has also ordered, “A detailed assessment of the desirability and feasibility of the sale of F-35 Joint Strike Fighter to India and a potential US partnership with India to co-develop one or more military weapons systems.”

One area where the US can meet India’s needs is the indigenous Ballistic Missile Defence (BMD) programme.

There are however, some impediments to cooperative relationship. Although anti-Americanism is not as strong as it was during the Cold War, Indian policy makers still hesitate to adopt a policy that could benefit the Americans directly or indirectly. Therefore, it is suggested that both the countries need to make political concessions and adopt a policy of ‘give and take’ to get around these legal/politico-strategic constraints.

The evolving strategic partnership between India and the US has its limitations. These are issues such as lack of understanding between India and the US over Pakistan, reluctance by the US to transfer high technology due to US laws and India’s desire to preserve its strategic autonomy. There is therefore, a need to appreciate and respect each other’s sensitivities.

Transfer of Technology

The selection of the Medium Multi-Role Combat Aircraft (MMRCA) indicates problems associated with transfer of the latest technology – Airborne Electronically Scanned Array (AESA) radar. The MMRCA RFP had clearly stated that the Government of India (GOI) expects a 100 per cent technology transfer from the vendor. As Boeing was not prepared to comply with this requirement in respect of the AESA radar, it was a foregone conclusion that the F-18 would not make it.


Indian experience with US aviation companies in connection with aircraft development needs to change to a more positive one. Both New Delhi and Washington understand that, given America’s technology safeguard regimes, joint development programmes can encompass high-technology equipment but not cutting-edge technology. The limits to what the US is prepared to pass on to India were signalled when Washington held back Boeing and Lockheed Martin from a contract floated by the Aeronautical Development Agency (ADA), the developers of the Tejas Light Combat Aircraft, for development consultancy. That caused bad blood between the two countries eventually paving the way for the entry of EADS.

Experience has shown that when either the US industry or the government has procrastinated or given the thumbs down to a requirement, the loser ultimately has been the US, both commercially as well as in building a strategic relationship! India has generally received better response from European and Israeli companies. In the event of sustained lack of response, India may not even approach the US for future needs. Hence, the US needs to get its act together.

Lack of understanding between India and the US over Pakistan, US reluctance to transfer technology and India’s desire to preserve its strategic autonomy are still major impediments…

Wiki-leaks revealed that the then Ambassador Timothy Roemer, in a cable to Washington, after a visit to HAL stated, “They are two or three decades behind us in manufacturing technology.” Roehmer also felt that US companies needed to, “approach partnerships carefully to understand the management and technological experience of Indian firms.” This perception needs to be countered with the large number of deals signed by HAL, which can alter US perception of HAL’s capabilities. However, HAL cannot afford to sit on its laurels but prove to the western world by securing orders from them. US confidence in India’s capability needs to be built up as quickly as possible.

Managing US Laws

India wants most of the licensing requirements of the US on export of dual use technology to be lifted. But this can only be done when India harmonises its import of dual use technology with those of two important multi-lateral regimes, the Wassenaar Arrangement (relating to dual-use goods and technologies and conventional arms) and the Australia Group (relating to items contributing to chemical and biological weapons). Now that the US has expressed its willingness to help India gain membership to these clubs, this issue could soon be resolved. However, such issues take time for eventual fruition. One solution lies in the US co-developing technology with India as it does with Israel. Such an approach would not be subjected to restrictive US laws as the technology is yet to be developed.

India’s Defence Procurement Procedure

Another hurdle, according to some scholars, is India’s procurement system, which is reported in the US media to be non-transparent, highly volatile and lacking legitimacy. An additional problem is the offset policy which requires foreign suppliers to source components and invest in R&D in India but prevents them from establishing wholly owned or majority-owned subsidiaries in India. Although meant to ensure that foreign technology is eventually transferred to Indian companies, Americans will not agree to this till US laws on transfer of technology are amended and India guarantees the protection of IPRs.

Harpoon Anti-ship Missile

Direct defence offsets were introduced in DPP-2005 and have frequently been amended since then. DPP-2010, the latest version, has liberalised defence offsets to include areas like civil aerospace, internal security and training. The situation has changed in the recent past as evidenced by the large number of deals signed between India and the US. Together, they have created offset obligations of over $1 billion which now account for a large percentage of all international offset obligations thus creating significant opportunities for collaboration between Indian and US firms. This expands the areas to include more Indian players to further consolidate the relationship.

Joint Development

One way of getting around American and Indian laws would be for India and the US to pursue joint projects for technology development. The latest attempt by the Senate Armed Services Committee efforts to enhance partnership through joint projects is thus considered a step in the right direction. India’s highly skilled personnel can make significant contribution in this effort and also enhance their knowledge in the process. Joint ventures would also reduce unpredictability in future military cooperation and sales as the US companies would have a stake in the venture. The experience with Brazil, where the US industry has a stake in the Embraer Aviation company and which has risen to be one of the major players in designing and manufacturing small and medium transport aircraft, is the way forward. Another area where US-India relations will gain the most is from co-developing advanced weapons systems and key sub-assemblies.

The Way Forward

India is renowned for its excellent base in information technology, especially in areas of computer simulation, virtual reality and robotics. As software has become an inseparable part of any military platform, the US will soon perceive that India’s capabilities and strengths can be harnessed by complimenting them with American technologies and by building the best military systems in the world with the cheapest price tag. The DRDO has shown its capability in the domain of missile development, aerospace, electronic warfare systems and command networks. One assessment is that by 2020, the Indian and US defence industry will be working together on mega defence projects and greater interaction between the two defence entities is inevitable as long as US technology denial regimes do not come in the way.

Indian experience with US aviation companies in connection with aircraft development needs to change to a more positive one.

The US and Indian governments and industry need to take a long-term view of the relationship, one that is pragmatic, realistic and focused on converging strategic interests. These include the promotion of aerospace and maritime security in the Indian Ocean, securing key energy and trade corridors, countering transnational threats such as piracy and terrorism and working together on disaster management. The Indian defence market should be viewed as one component of a joint undertaking to build India’s defence capabilities so that it can become a future partner on global security issues.

To that end, building a durable defence industry partnership with New Delhi will take persistence and hard work. India’s defence acquisition system is slow, with stringent technology transfer and co-production requirements that frequently challenge the capability of US companies to bid. Procurement tenders place considerable emphasis on technology transfer, licensed production and reinvestment through defence offsets which create more symbiotic relationships than simple purchases. This has the additional benefit of attracting co-development partners and new technology.

In the context of the tremendous opportunities, US policymakers need to keep a few things in mind as the Indo-US defence relationship moves into new and unexplored territories. India is likely to emphasise balance in its military-industrial relations, especially with the other powers of the world such as Russia, the EU, UK and Israel. This balance will be reflected in defence procurement decisions and need to be accepted by the US even if adverse to their interests as these are enduring symbols of the maturing Indo-US relationship.


  1. James Lamont, “US Doubts Over India Jet Fighter Partner”, Financial Times, London, February 17, 2011.
  2. Ajai Shukla, ‘Senate pushes Pentagon on US-India Defence Ties’, June 28, 2011, available at US-India-defence-ties/440718/.
  3. Ron Mathews, Defence Production in India (New Delhi: ABC Publishing House, 1989), pp. 13–14.
  4. Dennis Kux, India and the United States: Estranged Democracies, 1941–1991, (Washington D.C.: National Defense University Press, 1992), p.86.
  5. Rajesh Kadian, Concise Enclyopedia of United States South Asia Relations (New Delhi: Vision Books, 2009).
  6. US-India Strategic Cooperation into the 21 Century: More than Words (London: Routledge, 2006).
  7. Sunil Dasgupta and Stephen P Cohen, Arms Sales for India: How Military Trade could Energize U.S.-India Relations’, Foreign Affairs, March/April 2011.
  8. India-US Strategic Partnership And Its Limitations – Analysis Written by: Dr. Mohammad Samir Hussain October 8, 2011.
  9. Ajai Shukla: Indo-US Jet Trainer – the Indus Moment, Ajai Shukla/ New Delhi, June 28, 2011.
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The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Air Marshal Raghu Rajan

former Dy Chief of Air Staff, has flown fighter and transport aircraft as well as helicopters.

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  1. Air Marshal K. J. Mathews died on May 7 2014 at a young age just as the voting in the 2014 elections was ending. He was killed by RAW for following up my suggestion to emplace India’s nuclear warheads in Washington and New York to be exploded with the warning that additional U.S. cities will be destroyed if there is any retaliation or sign of retaliation. Indira and Rajiv Gandhi were both killed by RAW for the same reason — showing my influence. Manmohan Singh on Mathews’ death : “Over the last few years, he had worked closely with my office, and had made an exceptional contribution to numerous projects of immense national importance. I am particularly impressed by his professionalism , dedication and personal warmth. His absence will be sorely felt”, he said [UNI] . The “numerous projects of immense national importance” were the emplacement of India’s nuclear warheads in Washington, New York and other U.S. cities. I had urged the simultaneous nuclear destruction of Washingon, New York and RAW headquarters. India cannot be liberated unless RAW is destroyed. Air Marshal Mathews neglected to do that despite my urging. Will Lt. Gen. Amit Sharma destroy RAW or will he rather die like Mathews? It requires obeying my orders, not the politicians’. Once the warheads are in place in American cities — as they are right now — Washington and New York should be destroyed at the first opportunity — on a working day during working hours in Washington and New York — with a warning that additional U.S. cities will be destroyed if there is any retaliation or sign of retaliation; it will not be working hours in New Delhi where RAW headquarters are which have to be destroyed simultaneously but that is alright. There is no need to wait, otherwise you are just waiting for RAW to kill you.

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