Overcoming Challenges To India-US Defense Cooperation – Analysis


By Sylvia Mishra*

United States Defense Secretary Ashton Carter and his Indian counterpart Manohar Parrikar signed in June a 10-year defence framework agreement renewing bilateral commitments. Defence ties are one of the brightest spots in the tapestry of cooperation between India and the U.S. and are driven by mutually symbiotic interests of strategic posturing and enhancing defence trade and commerce, as well as preventing the use of force to resolve territorial and maritime disputes. There is a growing congruence between the United States’ and India’s Asia-Pacific policies. Both have a significant stake in ensuring regional stability through retaining the status quo and establishing a rules-based multipolar Asia-Pacific, which would ensure all countries uphold the United Nations Convention on the Law of the Sea (UNCLOS), respect territorial sovereignty, and not resort to hegemonic actions. Against the backdrop of increasing Chinese territorial assertiveness, the logic of geopolitics dictates that both India and the U.S. have vital interests in strengthening defense cooperation.

Prime Minister Narendra Modi and President Barack Obama pledged in September 2014 to deepen existing ties in defense cooperation to bolster security and treat each other as their “closest partners” in defense technology trade. Though defense trade between the two countries within a decade has reached circa $9 billion, there are structural challenges in the relationship that need to be addressed to achieve equal partnership in truest terms. So far the bulk of the India-U.S. defense trade has been through Foreign Military Sales (FMS) route-a program which facilitates sales of U.S. arms to foreign governments. However, in the long run importing through the FMS route would be untenable for the Indian government as the route is not based on competitive market principles, and dependence on arms imports from the U.S. stymies the Indian government’s intent to allow domestic industries to play a greater role in defense indigenization. The FMS route is also unsustainable for long-term development as it involves a one-time purchase from American defense contractors and does not add any technological know-how to Indian partners. Transfer of technology (ToT) is important for Indian industries to kick-start the much needed defense industrial base and generate economic spin-offs.

On the other hand, the Indian government has clearly indicated its preferred route for defense capital acquisitions: the “Buy”, “Buy and Make,” and “Buy and Make (Indian)” categories envisaged in Defense Procurement Procedure (DPP) 2013. The proposed categorization of DPP 2013 highlights steps taken by the Ministry of Defense which give precedence to Indian industries by galvanizing the indigenous defense manufacturing through the “Buy and Make (Indian)” category. The relaxation of foreign direct investment limits in defense from 26 percent to 49 percent augurs well for Modi’s vision of “Make in India” where the U.S. defense companies are encouraged to leverage partnership with Indian Defense Public Sector Undertakings under the “Buy and Make” categories to meet India’s huge domestic demands under provisions of DPP 2013.

Strengthening bilateral defense ties would also require the American government and defense companies to address India’s pressing concerns regarding the lack of credible technology transfers from the U.S. It is understandable that Washington would be unwilling to part with the know-how of cutting-edge technology, which provides the U.S. defense industry with the competitive edge. However, India and the U.S. should make efforts to rise above the procedural challenges of ToT to focus on the Defense Technology & Trade Initiative under which both countries are exploring the joint production of military hardware. Despite a steady rise in licensing of U.S. defense hardware to India, stringent American laws on technical and manufacturing assistance agreements have failed to incentivize co-development on defense hardware between India and the U.S.. Stimulating the process of co-production would necessitate more flexible regulatory frameworks to allow American defense companies to share technologies with Indian partners expeditiously. As the scale of ToT interaction between India and the U.S. increases, issues of intellectual property rights would simultaneously gain significance. Hence, greater harmonization of Validated End-User agreements, which allows approved countries to receive U.S.-controlled products and technologies more easily and reliably, needs to be encouraged. As India and the U.S. are making progress towards taking defense partnership to the new level, embarking on co-development and co-production of defense technologies and synchronizing end-user agreements would help develop India’s private sector into the role of systems integrator.

However, there are concerns that India is not in a position to absorb the transfer of advanced technologies. U.S. Senators John Cornyn and Mark Warner have noted that India’s heightened expectations for ToT outpace India’s offset absorption capacity. Thus, from the Indian side, the ToT proposals need to be approached from a perspective of sensitivity with regard to what can be achieved with the technology received.

Another major roadblock has been lack of accord on signing “foundational agreements,” logistics support, CISMOA (Communications Interoperability and Security Memorandum of Agreement), and BECA (Basic Exchange and Cooperation Agreement for geo-spatial cooperation), which the U.S. insists is fundamental for transfer of military technology and weapons. While India’s former United Progressive Alliance government hesitated to sign the foundational agreements due to security concerns on matters of sensitive technology, it is possible that the Modi government may take a fresh look at them, contingent on the progress and success of co-production initiatives.

India also needs to address the structural inadequacies which prevent it from developing a vibrant defense domestic manufacturing base. India’s defense planning process has been greatly handicapped by an absence of a national security doctrine and suffers from a lack of inter-service prioritization. There exists dysfunction with technology planning, development, and coordination among R&D bodies, production agencies, and end users. It is of crucial significance that India should have a Chief of Defense Staff to provide single-point military advice to the government in order to coordinate between the different inter-service agencies.

As the power balances of the 21st century shift, Indo-U.S. defense partnership will not be solely about defense commerce; instead, this vital partnership flows from geopolitical interests. To sustain the momentum of burgeoning defense ties, India and the United States should undertake proactive measures to resolve the complex policy challenges faced by both nations towards bilateral cooperation. As the U.S. continues to bolster India’s militarily preparedness through sales of sophisticated defense hardware, intensified cooperation on counter-terrorism efforts and intelligence sharing, a militarily strong India complements America’s security goal of a stable multipolar Asia-Pacific.

*The writer is a Junior Fellow at Observer Research Foundation, Delhi

Courtesy: www.fletcherforum.org

Observer Research Foundation

ORF was established on 5 September 1990 as a private, not for profit, ’think tank’ to influence public policy formulation. The Foundation brought together, for the first time, leading Indian economists and policymakers to present An Agenda for Economic Reforms in India. The idea was to help develop a consensus in favour of economic reforms.

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