Defence Deals: India keeps US arms industry busy

In April 2018 the Indian Air Force issued a Request for Information (RFI)for 114 jetfighters at a cost of $18 billion. The tender elicited responses from the same six contenders which had earlier bid for the tender that went to Dassault of France, plus another. The new tender calls for procurement of 18 aircrafts in flyaway condition, with the remaining 96 to be built in India under strategic partnership.

Lockheed is now offering its F-16 Fighting Falcon Block 70, while the new entrant is Sukhoi Corporation, with its Su-35.

Air Staff Quality Requirements (ASQR) have been finalised by the IAF for the fighter programme and Acceptance of Necessity (AON) is now awaited from the Ministry of Defence. An Expression of Interest (EOI) will then be floated, followed finally by the Request for Proposal (RFP), the procedures having been delayed by the Covid-induced lockdown

The outright purchase of the 36 Rafaleshad reneged on the government's “Make in India” mission launched shortly after the BJP stormed to power in May 2014, when it stipulated maximising indigenous production, especially in the defence sector, to reduce reliance on imports. But military imports have surged under the present government, foreclosing any move towards establishing a domestic defence industry.

The “Make in India” proposal is also being smothered by US President Donald Trump’s overarching “America First” policy under which the Trump administration is pushing New Delhi to purchase US arms at exorbitant prices. While the US has dragged New Delhi to the WTO on “Export Related Measures”, Trump has sought to compensate the trade deficit by escalating off-trade military sales to India.

India’s defence imports have thus surged, as the country craves the indulgence of an impulsive Trump administration to support, and validate its aspirations for great power status. Under the Modi government, the US’s arms sales to India have risen more than fivefold over the last five years, according to the Stockholm International Peace Research Institute (SIPRI).

Russia, historically India’s largest arms provider, saw its share of defence exports to India fall from 72 per cent to 56 per cent over 2015-19, according to a SIPRI report which cited India as the world’s second largest importer of major arms, after Saudi Arabia.

The White House has for long been intent on an Indian decision favouring an American fighter as reparation for the earlier contract going to Dassault. It is widely believed that the Rafale deal was tweaked and the number of planes reduced to favour Washington in follow-up contracts on jetfighters for the IAF.

It is no coincidence that both Lockheed and Boeing have positioned themselves expectantly in this regard. Lockheed signed an agreement with Tata Advanced Systems Limited (TASL) of the Tata Groupin 2017 for joint production of the F-16 Block 70 in India. A Tata statement affirmed: “F-16 production in India supports thousands of Lockheed Martin and F-16 supplier jobs in the US, creates new manufacturing jobs in India and positions the Indian industry at the centre of the most extensive fighter aircraft supply ecosystem in the world.”

TASL has a similar agreement with Boeing, signed in November 2015, to co-develop integrated systems in aerospace and defence, starting with fuselages of the AH-64 Apache, acknowledged as the world’s most lethal combat helicopter. The first fuselage was delivered in June 2018.

I ncidentally, Dr S. Jaishankar, a career diplomat who had been India’s Ambassador to both China and the US, was hand-picked by the Prime Minister as India’s External Affairs minister when the current government returned to power in May 2019, with his predecessor and veteran politician Sushma Swaraj dropped from the Cabinet.

Jaishankar had cultivated close links with Washington in his final ambassadorial posting there from 2013 to 2015. But just three days before his retirement, he was appointed Foreign Secretary by replacing Sujatha Singh, eight months before her term was to end. Later the government waived the mandatory one year cooling-off period to allow Jaishankar to join the Tata Group in April 2018, just three months after his retirement, as President of Global Corporate Affairs.

Washington not surprisingly is ecstatic. It has acclaimed India’s deepening allegiance. Hailing Modi’s re-election, the Trump administration described India as a ‘great ally’ of the US. In response to a question, State Department spokesman Morgan Ortagus told reporters, “We, of course, will work closely with Modi, as we have many times.” The Trump administration has been vastly advantaged by its carrot and stick outreach to India, which, in turn, is driven to coddle its imperious partner through costly arms deals that help sustain jobs in the US’s military industry and keep production lines there running. If India does opt for a US warplane on its $18 billion contract, Washington stands to gain even further as it looks to signing arms deals worth an additional $10 billion with New Delhi.

The US has already sold India some $18 billion worth of weaponry over the past decade. One deal worth $3 billion is for 10 Boeing P-8I long-range maritime patrol aircrafts for the Indian Navy under the US’s foreign military sales programme, even as four such aircrafts from a previous $1.1 billion deal of 2016 await delivery by 2021-22. India had additionally acquired eight P-8Is under a $2.1 billion agreement of 2009. In 2011, it had bought 10 Boeing C-17 Globemaster III heavy-lift military aircraft worth $4.1 billion.

In 2015 India signed further deals, one of $3 billion for 22 Boeing Apache Longbow attack helicopters and another of $1.1 billion for 15 Chinook heavy-lift helicopters, with an inbuilt clause for follow-on orders for 11 more Apaches and six Chinooks. The order for six of the latest version of the Chinooks, the AH-64E Apache Guardian, has been firmed up at $930 million. Boeing warded off competition from Russia, which had offered its Mi-28N Night Hunter helicopter gunship and the Mi-26 heavy-lift helicopters.

Another deal, for the Indian Navy, is of $2.6 billion with Lockheed for 24 anti-submarine warfare Sikorsky MH-60R Seahawks. India is also procuring, for $1 billion, the Raytheon/ Kongsberg National Advanced Surface to Air Missile System-II (NASAMS-II) that will provide a missile shield over the National Capital Region of Delhi by securing the airspace against aerial threats from drones to ballistic missiles.

Yet another order is for 145 M777 howitzers, worth $737 million, the BAE Systems’ M777 being a 155 mm 39 calibre towed gun. India is also purchasing 12 General Atomics MQ-9 Reaper, or Predator B drones for its Navy at a likely price of over $2 billion. The deal might be expanded to cover non-maritime versions for the Indian Army and IAF. This will make India only the third country, after the UK and Italy, and the first non-NATO state to be offered these armed drones by the US.

In 2016, the US recognised India as a Major Defence Partner (MDP) to liberalise transfers of arms and technologies to it. The US also conducts more military exercises with India than with any other country. Consolidating these links was the US Senate’s passing of the National DefenceAuthorisation Act that confers on India the status of a NATO ally. The legislation opens up more advanced weaponry and sensitive technologies for India.

A key spin-off of the inaugural India-US 2+2 Ministerial Dialogue in New Delhi in 2018 was the signing of the Communications Compatibility and Security Agreement (COMCASA) that enables the US to part with sensitive communication equipment and codes for real-time operational information. It grants India access to the big data base of American intelligence, including real-time imagery, as also to the highly coded communication systems equipping the high-end military platforms the US sells to India, such as the C-130J Super Hercules, C-17 and P-8I.

Trump’s carrot-and-stick policy is paying rich dividends. The mercantile bonds are playing out well, largely much better for one than the other.

( Sarosh Bana is Executive Editor, Business India, and Regional Editor, Asia Pacific Region, Naval Forces (Germany))