Archive for January, 2015

India is the largest importer of defence equipment in the world. It imports 70% of its weapons and technology, and this has its own costs, the kickbacks and corruption being only one of them.

India is the largest importer of defence equipment in the world. It imports 70% of its weapons and technology, and this has its own costs, the kickbacks and corruption being only one of them. Between 2004-08 and 2009-13, India’s share of international arms imports increased from 7% to 14%. Russia was the largest supplier (75.7%) of India’s defence imports, the US a distant second (6.8%).

This import dependence needs to change with a focus on ‘Make in India’, so that India makes at least 50% of its defence equipment in less than a decade. It will save foreign exchange, build technological capacity for civilian manufacturing and grow new skills. If we export defence equipment, it can generate forex. Just as India’s space missions and nuclear R&D have dual civil-military use, so does defence manufacturing.

India has purchased weapons worth around $10 billion over the last five years from the US, but without any transfer-of-technology (ToT) clauses. Future acquisitions should include ToT clause. The aim should be to make India a design, development, manufacturing and export hub for defence equipment, just as China succeeded in doing so between 2000 and 2010. Experts report that China was at the stage India is in now in the late 1990s, a situation it transformed within a decade.

The Defence Technology and Trade Initiative (DTTI) signed on January 22, an earlier agreement with India the US extended during the Obama visit, is to pursue co-development and co-production in four projects (two involving US government and two with US companies) to advance the DTTI. They will explore aircraft carrier technology-sharing and design, and possible cooperation on development of jet engine technology.

For some 50 years after Independence, no private sector participated in the manufacture of Indian-made defence equipment. Indian defence production was confined to Defence Public Sector Units (DPSUs) till 2001. Decades of defence ties with the Soviet Union/Russia did not result in an Indian domestic defence industry. However, like the emergence of an automobile industry in India in the last two decades, this can be changed through growing private sector participation.

But the defence industry, unlike the automobile sector, operates in a monopsonist (single demand) market with government as the only buyer, leading to greater business unpredictability for private players in defence, both foreign and domestic. India needs to encourage exports to reduce this unpredictability. With the added constraint of an FDI cap of 26% till now (raised to 49%), India received only $5 million in defence FDI over the past decade.

In 2013, the US offered 10 joint production projects to India, including a maritime helicopter, a naval gun, a surface-to-air missile system, a scatterable anti-tank system and a mindset change in favour of TOT to India in defence. New Delhi had decided recently on a defence equipment policy regime. Indigenous content, eg. 30%, is to be achieved on an overall cost basis, as well as in core components i.e. the basic equipment, manufacturer’s recommended spares, special tools and test equipment taken together.

Not surprisingly, large Indian companies (Tata, Mahindra, and Larsen & Toubro), have entered into joint ventures with leading foreign defence companies. Thirty licensed private companies commenced commercial production and about 23 joint ventures, involving public and private companies, had been established till 2012.

For Make in India in defence, FDI will be needed for heavy capital and technology requirements, to build global supply chains involving multiple vendors in India, to rapidly implement projects to avoid obsolescence. We will have to wait to see if the operationalisation of the DTII yields results, now that the US has agreed also to an Advance Pricing Agreement (APA). Washington backing the APAs could well reduce a potential tax-related hurdle in securing US investment generally, including in defence.

But above all, to become a major defence manufacturer, India needs to reexamine its structure of governing defence production, as the Chinese did in 2000. Earlier, the Chinese defence industry was separated, Soviet-style, between R&D and manufacturing units.

The Chinese leadership allowed the military a central role in overseeing the defence industry. With end-users involved, the result was a surge in innovation. In 1998, the Chinese defence industry filed for 313 patents; in 2010, 15,000.

India’s defence industry today mirrors its Chinese counterpart in 1998. The R&D element (the DRDO) functions separately from the manufacturing segment (the defence PSUs). That has to change.

Source : Defence NEws
Advertisements
As part of Prime Minister Narendra Modi’s plan to bolster the nation’s military posture, India is to acquire 22 Boeing AH-64E Apache attack helicopters and 15 CH-47F Chinook heavy lift helicopters for the Indian Air Force (IAF), valued at $2.5 billion.

As part of Prime Minister Narendra Modi’s plan to bolster the nation’s military posture, India is to acquire 22 Boeing AH-64E Apache attack helicopters and 15 CH-47F Chinook heavy lift helicopters for the Indian Air Force (IAF), valued at $2.5 billion.

Approval stage ::
Officials in the know said the attack helicopter (Apache) and the heavy lift helicopter (Chinook) are currently in the Government approval stage.

“The Ministry of Finance and Cabinet Committee on Security needs to approve…before contracts are signed. All other steps are done,” officials said.

Sources pointed out that India’s defence acquisition process mandates that all contracts that are in excess of $50 million require 30% offsets. Way back in 2013, Boeing had signed a memorandum of understanding with Dynamatic Technologies of Bangalore, to manufacture the aft pylon and cargo ramp assemblies for the Chinook. Sources indicated that Boeing had done this in anticipation of the IAF order. When contacted, Boeing said it was deferring all questions on the Apache procurement to India’s Ministry of Defence for comment.

Offsets galore ::
“Defence spending eligible for offsets through 2017 are huge. Based on the current order pipeline, big procurement programmes ensure that offset obligations could become an opportunity worth $10-$20 billion for the domestic industry,” said sources.

Another official pointed out that offsets are expected to spur growth, as well as aid the basic intent of the offset policy, which is to build a domestic defence manufacturing base.

Force projection ::
“Multinational original equipment manufacturers with Indian defence contracts can discharge their offset obligations by sourcing military grade components from India,” the official added.

Boeing’s Apache is the most capable multi-role combat helicopter, “combining performance and lethality with more affordable and efficient maintenance.

“It will provide the Indian Air Force with enhanced dominant force projection capabilities, and will address the full spectrum of conflict to peace keeping and nation building.”

Newest member ::
India has been offered the AH-64E, the newest member of the combat proven Apache family, and is to get the latest upgraded version of the helicopter, which has been delivered only to the US Army. In the case of Boeing’s Chinook helicopter, “the tandem rotor H-47 Chinook is the most capable, advanced heavy lift helicopter, providing maximum value at the lowest risk.

The H-47 Chinook offers India heavy lift and high altitude transportation for a multitude of military, humanitarian, rescue, disaster relief, fire fighting and nation building missions in all climates and conditions and altitudes.”

Flight trials ::
The Chinook and an advanced version of the Mi-26 helicopter were put to flight trials in 2011, in desert and high altitude terrain. Boeing’s Chinook had beaten out Russia’s Mi-26, when the Indian Defence Ministry had opened bids in November 2012, said sources, adding that the Russian bid was set aside after officials failed to provide details on how they would execute their offset liabilities.

Boeing is deferring questions on the contract to India’s Ministry of Defence.

Source : Defence News
The Indian aerospace and defence (A&D) market is among the most attractive globally and the government is keen to leverage this in order to promote investments and build an indigenous manufacturing base in India.

The Indian aerospace and defence (A&D) market is among the most attractive globally and the government is keen to leverage this in order to promote investments and build an indigenous manufacturing base in India. Though the sector was opened for private, domestic and foreign investment more than 12 years ago, the level of domestic as well as foreign investment has been way below its potential: the sector has managed to attract a meagre of $4.94 million FDI out of the total $234,928 million FDI across all sectors since April 2000. Clearly, the government needs to analyse the reasons for such a poor response.

The A&D value-chain is long and complex and our manufacturing capabilities can at best be described as patchy with small pockets of excellence at many levels, but without comprehensive coverage. As India continues with a massive acquisition programme to provide its armed forces with the latest and best equipment, it is pertinent to ponder over reducing its extreme dependence on imports by building indigenous capabilities across the entire value-chain—from research, design and development to manufacturing, integration, maintenance and repair.

Moreover, this is not a free market. It is a monopsony in which the sole buyer, the government, is also the regulator. Global experience has shown that proactive government support to the private sector is critical for building a domestic defence industrial base.

The new government has clearly stated its goal to promote investment in the defence sector. The current Make-in-India campaign launched by the government is an echo of the defence ministry’s long-cherished aspiration for achieving self-reliance in defence production. Both defence and aerospace are important sectors in the Make-in-India campaign launched by the prime minister.

The change in acquisition procedures with a hierarchy of procurement processes that places the ‘buy Indian’ category at the highest level will provide opportunity for large Indian companies to transform themselves into OEMs. The new government has backed its intent with action by announcing a slew of policy decisions to include increase in FDI limit and streamlining licensing procedure—many long-pending in order to facilitate investments. It has also recently approved various programmes worth over R1 lakh crore, with almost 70% earmarked for the ‘buy’ category. This provides an attractive opportunity for domestic enterprises. Moreover, the new acquisition procedure will compel OEMs to establish partnerships with private Indian industry. These are welcome steps but not necessarily game changing.

There is a need to streamline policy contradictions for creating synergies and an ecosystem that stimulates investments in building domestic capabilities across the entire supply-chain. While the macro policies enabling private investment were mostly in place, there have been a large number of micro policies and interpretation and implementation issues that have acted as deterrent to both the domestic as well as foreign industry. For example, while the Offset policy stipulates that an Indian company is eligible to be an Offset Partner (IOP) if it satisfies the Industrial Licencing (IL) and FDI policies, the defence minstry disallows companies that have more than 26% FDI even if the product being bought by the OPEM does not require an IL and has no FDI cap. And the recent increase of FDI up to 49% in defence manufacturing might not
result in substantial inflows of either technology or investments.

Building an industrial base requires proactive support of the government in building a facilitative ecosystem: in funding R&D, creating a low-interest regime to bring down capital costs, addressing the disadvantages of exchange rate fluctuations, providing stability and assurance in policy and orders, correcting the inverted duty structure that discourages domestic value addition, and encouraging exports to achieve economies of scale and become globally competitive. The government needs to take both the small steps as well as some bold decisions like increasing the FDI cap to 74% or even 100% and should strive to make Indian industry an integral part of the global aerospace and defence supply chain.

The government also needs to create policies that will enable creation of MSME clusters to integrate dispersed MSMEs into the supply chains of major programmes right from the word go. Cluster frameworks and consortia biddings can resolve key issues faced by MSMEs. The high cost of capital and business makes MSME players risk-averse and affect their ability to build innovative technologies.

The move to liberalise this sector is clearly a step in the right direction. Laudable as government initiatives to promote investments are, it must be borne in mind that domestic capability cannot be built merely by issuing RFPs to Indian companies. Building a defence ecosystem requires a change in mind set of the government, the international OEM community, Indian industrial giants as well as the Indian MSME sector. Most important, private companies need firm orders in hand with visibility/assurance of future orders for them to make investments on the ground.

It would be worthwhile to consider developing up to two companies as OEMs (one or both private and the other DPSU) for the major platforms and give them firm purchase orders in say a 60:40 basis to the L1 and L2 on L1 rates (this is already being done by MoD for some equipment) so that they can make the investments and build their supply chains. This way there would be both price discovery and stability of orders.

There are multiple areas that need attention such as funding, R&D, taxation, protection of intellectual property, foreign investment and collaboration, the import and export regimes. There is need for a comprehensive review of all of these to create synergies rather than contradictions, and an ecosystem that stimulates investments in building domestic capabilities across the entire defence supply-chain.

Source : Defence News
China “encourages” India to take further steps to satisfy the access standards of the Nuclear Suppliers Group (NSG), a group committed to promoting non-proliferation, a Foreign Ministry spokesperson said on Monday.

China “encourages” India to take further steps to satisfy the access standards of the Nuclear Suppliers Group (NSG), a group committed to promoting non-proliferation, a Foreign Ministry spokesperson said on Monday.

Spokeswoman Hua Chunying’s remarks in the ministry’s routine press briefing came after US President Barack Obama said the United States is in favor of India joining the 48-member NSG during his India tour.

China supports the NSG carrying out discussions on opening its door to new members, Hua said. India’s membership is an important issue requiring careful deliberation by all members.

China has taken note of India’s commitment and efforts on promoting non-proliferation, Hua said.

Expansion of the NSG’s membership should be in accordance with its standards and procedures while bettering the group’s effectiveness and credibility.

Speaking on Obama’s visit to India, Hua said China hopes the development of the US-India ties will be conducive to mutual trust and cooperation between regional countries and regional peace, stability and prosperity.

Source: Defence News
China today said it is ready to make concerted efforts with India to lift their bilateral strategic cooperative partnership to a higher level as they pursue a great dream of national rejuvenation.

China today said it is ready to make concerted efforts with India to lift their bilateral strategic cooperative partnership to a higher level as they pursue a great dream of national rejuvenation.

Greeting India on its 66th Republic Day, Chinese President Xi Jinping, in a message to President Pranab Mukherjee, said China is delighted with India’s achievements in its development.

Both China and India, as two ancient civilisations, are pursuing a great dream of national rejuvenation, he said.

Xi said China is willing to make concerted efforts with India to lift their strategic cooperative partnership oriented to peace and prosperity to a higher level this year which marks the 65th anniversary of the establishment of diplomatic ties between the two countries, state-run Xinhua news agency reported.

In his message to Prime Minister Narendra Modi, Chinese Premier Li Keqiang said in recent years, China and India have kept a stronger momentum in joining hands for cooperation and seeking common development.

China is ready to work with India to deepen their mutually beneficial cooperation in various fields and build a closer partnership of development, he said.

Source : Defence News

By: Stephen P. Cohen and Michael O’Hanlon

Great powers are often characterised by a worldview that is widely shared from generation to generation — a strategic culture, and a good deal of consistency in vision and strategic priorities. The present visions of US and Indian elites go back to roughly World War II. The US sought — in that war and in the subsequent Cold War — to create a world order in which its economic and ideological interests would be protected; this vision was implemented through a strategy of alliance, institution-building and democracy promotion. India — which became the world’s largest democracy when it became a republic in 1950 — saw a desirable world order as one in which colonialism was rooted out and replaced by a non-aligned block that would be free of Cold War pressures, allowing it to take its proper place as one of the great civilisational powers, even if its economic and military power measured in traditional terms might not immediately rival some of the other great powers. These visions were, in their historical context, like ships that pass in the night.

A new period of strategic engagement began after the Soviet invasion of Afghanistan and there were discussions, albeit futile, of American technology sales to India, especially the development of a light combat aircraft. Americans had serious doubts about India’s technical capabilities; India had doubts about America as a reliable source of technology (in the end both were correct). However, India’s nascent nuclear weapon programme intruded and both Indian and Pakistani nuclear and space programmes fell under US sanctions.

The US-India nuclear agreement of 2005 was a positive milestone. But more recently, the joint statement of September 30, 2014 by US President Barack Obama and Indian Prime Minister Narendra Modi announced another new beginning. Like earlier statements, it placed defence cooperation — embodied in the Defence Trade and Technology Initiative (DTTI) — at or near the core of the relationship. This time, however, three developments may make the promise of a transformed defence relationship more likely to be realised.

The first is the arrival of a new defence leadership in both Washington and New Delhi. India’s new minister of defence, Manohar Parrikar — a former chief minister — was trained as a metallurgical engineer at IIT, Mumbai. His future counterpart, Ashton Carter, has considerable defence expertise, including on matters related to South Asia. A few years ago, Carter was the lead department of defence official who pushed to develop defence ties between Washington and Delhi through the DTTI. As for Parrikar, although there have been discussions about privatising the defence sector for decades, he is the first defence minister to actually meet with private Indian firms trying to produce and sell weapons.

Second, a new realism may be creeping into Indian thinking regarding its overall strategic situation. Modi has, from his first days in office, demonstrated a keen interest in defence and military policy— going to sea on a carrier, witnessing a missile launch and reviewing the troops. The appointment of Parrikar may indicate that he is interested in reform, not just rhetoric. The mood of “getting real” regarding defence policy may be spreading. There are now many defence correspondents, as well as a lively think-tank community. In addition, the parliamentary committee on defence has detailed the shortcomings of the military acquisition process. It pointed to substantial gaps between the defence ministry’s promises and its woeful performance. To informed opinion this comes as no surprise, but it was a rare critique of the woeful Defence Research and Development Organisation (DRDO), more notable for self-promotion than production of weapons. As if in response, Parrikar fired the DRDO’s chief. Third, India now sees its defence relationship with the US as providing the technology that it lacks, and that other countries cannot provide. India is routinely described as the world’s largest arms market. This is true, but there is an irony: massive purchases are primarily a function of the nation’s inability to produce quality weapons on its own, as well as the absence of a system to establish defence priorities. The following steps leading up to and beyond the second Obama-Modi summit can strengthen US-India defence ties, as well as the quality of defence policymaking in each state. First, Secretary-Designate Carter should, in his confirmation testimony, indicate that he would be eager to support joint India-US studies that would bring together parliamentary committees to examine concerns common to the two countries. Senator John McCain might just agree to this on the spot. Second, Carter can also announce support for the exchange of defence officials and bureaucrats, including military personnel and defence scientists, and defence contracts between private Indian and American firms. While not a formal ally, this is one area where India can be treated as such. Third, when thinking about expanding US-Indian defence trade, policymakers should consider the foreign subsidiaries of US defence firms. In some cases, the Japanese or European branch of an American company, with its own ties to local suppliers and governments, may be better placed to expand defence trade with India than via the America-based headquarters. Fourth, both India and the US should look for new defence manufacturing projects that have not been publicly discussed. Here are several of varying complexity and technological sophistication: One, both the American and Indian armies need new rifles. The technology is available to produce a reliable, modular and advanced system that would have more range and firepower than present systems but would also be simpler. Two, another medium technology project would be to sell to India the production line of the A-10 Warthog close-support aircraft, assuming the US makes good on the Pentagon’s preference to eliminate the A-10 from its inventory. India lacks a modern close-support aircraft, so this could be a win-win proposition. Improving this platform — a big-ticket item compared to the co-development of the Javelin anti-tank missile — would be a good test of how the US and India can work together on developing very good, but not necessarily cutting-edge or gold-plated, technology. Three, the US could allow private firms to sell electric-launch technology to India for a new generation of small Indian aircraft carriers and other platforms. Four, there may be areas where cooperation is possible in intelligence, homeland security, and counter-terrorism capability as well, given the two nations’ common concerns in this domain. Five, after decades of viewing the Indian navy as a virtual adjunct to the Soviet navy at times, the US now tends to see Indian naval power as a useful regional force vis-à-vis China and others; as such, cooperation on other elements of naval power may be feasible as well. More generally, the two nations can play for the long term. There need not be any rush; indeed, no rush is desirable at a time when Washington is trying to stabilise relations with Pakistan and China while also viewing India strategically as its closest great-power friend in that broader region. US and Indian strategic interests increasingly align, and can be expected to do so into the future. They can be developed slowly, so as not to get ahead of politics, nationalism, pride or historical baggage. But that baggage is gradually dropping away, and the future is increasingly bright. Cohen is a senior fellow with The India Project at the Brookings Institution. O’Hanlon is a senior fellow and acting director with the Centre for 21st Century Security and Intelligence and director of research for the Foreign Policy programme at the Brookings Institution.

Source : Indian Express

India and Russia on Wednesday agreed to speed up work and iron out hurdles that are holding up the co-production and co-designing of a 5th Generation Fighter Aircraft.

India and Russia on Wednesday agreed to speed up work and iron out hurdles that are holding up the co-production and co-designing of a 5th Generation Fighter Aircraft.

The two nations had in 2012 agreed to jointly design and produce the next generation fighters. Both countries are scheduled to spend US $5.5 billion each towards the cost of designing, infrastructure build-up, prototype development and flight testing. But the UPA Government had failed to operationalise the project.The decision to fast-track the programme was done in a bilateral meeting between Defence Minister Manohar Parrikar and his Russian counterpart, Sergei Shoigu, at the 14th Meeting of the Indian-Russian Inter-Governmental Commission on Military-Technical Cooperation, which took place in New Delhi on Wednesday.

Speaking to reporters after the meeting in New Delhi, Defence Minister Manohar Parrikar said, “We have decided to fast-track many of the issues.”

However, the 5th generation fighter being built for the Russian Air Force is already being flight tested in Russia and India has suggested that a fresh Research and Development (R&D) contract would be a waste of time and resources.

Russia has already built five-prototypes in single pilot version. The Indian version is a two-seater, which will acomodate one pilot and a co-pilot who will function as a Weapon Systems Operator (WSO).

Mr Parrikar has also told Russia that India wants the stealth fighter jet to be inducted into the Indian Air Force much before 2024-25 – the date that was fixed for delivery. India plans to build as many as 127 fighters at the Hindustan Aeronautics Limited facility in Nashik. The Fifth Generation Fighter Aircraft (FGFA) project is estimated to cost $25 billion.

Besides, the two sides have agreed that India will now exchange all information about flight safety protocols being followed on Russian platforms – fighter jets, helicopters and the transport planes – flown by the Indian Air Force.

This information exchange is crucial given the series of accidents in the Indian Air Force, including engine problems in India’s mainstay fighter, the Sukhoi Su-30 MKI. Russia had also earlier contested India’s claim that the pilot seats of the Su-30 ejected automatically during the last crash in October last year.

Source : Defence News
Prime Minister Narendra Modi has continued the United Progressive Alliance (UPA) government’s strategic policy of multi-alignment, pursuing close ties with each of the world’s major power centres; leveraging each relationship with the combined weight of the others.

Prime Minister Narendra Modi has continued the United Progressive Alliance (UPA) government’s strategic policy of multi-alignment, pursuing close ties with each of the world’s major power centres; leveraging each relationship with the combined weight of the others. Even so, New Delhi is nurturing some ties more carefully, especially those with the US and Japan – which have strategic and military components, as well as powerful economic drivers. Japanese Prime Minister Shinzo Abe was the chief guest at Republic Day last year, and US President Barack Obama will attend the parade in New Delhi this year.

The Washington-New Delhi embrace had already built up steam under the UPA, with US officials visiting India practically every week. However, former prime minister Manmohan Singh’s administration carefully underplayed the engagement – largely due to opposition from within his party, especially from his defence minister, A K Antony. Influential US thinkers like Ashley Tellis complained: “The bilateral partnership is not going forward, only sideways.”

That is in the past. Now the National Democratic Alliance (NDA) government, with a confident prime minister in the driving seat, has rebranded the US-India relationship with the vibrant symbolism of Narendra Modi’s jamboree at Madison Square Garden in New York. This would only be enhanced next week by President Obama’s two-hour appearance amid Indian throngs on January 26.

While the two governments engage across a plethora of issues, both see defence and security as holding the greatest promise for mutual benefit. So far, only intelligence cooperation has seen a real convergence, driven partly by the domain expertise of National Security Advisor Ajit Doval. Top Indian intelligence officials say there is an unprecedented level of intelligence sharing, including on topics that both sides earlier regarded as off-limits. New Delhi is especially pleased with information about India-focused groups like the Lashkar-e-Toiba.

In contrast, defence cooperation has not achieved its potential. Both sides agree privately that China constitutes a common challenge. Yet, with New Delhi unwilling to align overtly with Washington, cooperation is couched in the rubric of humanitarian aid and disaster relief (HADR) and “protection of the global commons”, through counter-piracy missions and upholding the right to navigation through international waters.

Even so, US-India bilateral army, navy and air force exercises have grown in frequency, scope and sophistication. The US now does more exercises with India than with any other country, such as the annual Exercise Malabar that involves both navies. In 2007, the scope of Malabar had been vastly expanded with the additional participation of the Australian, Japanese and Singapore navies. After China expressed concern, New Delhi hastily reverted to a bilateral Malabar. But India again invited Japan in 2014 and appears likely to expand Malabar further.

The US-India equipment relationship has so far remained a buyer-seller one. Last February, Jane’s Defence Group named the US as India’s biggest arms supplier in 2013, supplanting Russia, France and Israel. Interpreting arms sales is an inexact science but various compilations, such as one by Dinshaw Mistry of the US-based East-West Center, concludes US sales have topped $9 billion over the past decade.

India’s arms purchases of $400 million in 2001-2004 expanded during the 2005-2008 period to over $3.2 billion. This includes the USS Trenton, an amphibious ship, for $50 million, twenty General Electric F-404 engines for the Tejas fighter for $100 million, six C-130J Super Hercules special mission aircraft for almost $1 billion, and eight Boeing P-8I maritime control aircraft for $2.1 billion.

From 2009 to 2013, India’s defence purchases from the US grew to $5.7 billion. These include 500 CBU-97 sensor-fuzed weapons for Jaguar aircraft for $250 million, 40 Harpoon anti-ship missiles for $370 million, six additional C-130J Hercules for about $1 billion and 10 Boeing C-17 Globemaster-III transport aircraft for $4.12 billion.

Over the coming year or two, India could buy another $8.3 billion worth of US kit. In the procurement pipeline are 145 howitzers from BAE Systems for about $700 million, 22 Apache AH-64E attack helicopters for $1.4 billion. 275 F-125 aircraft engines for Jaguars for about $2 billion, 50 F-404 aircraft engines worth $250 million, four additional P-8I aircraft for $1 billion, 15 Chinook CH-47F heavy-lift helicopters for $1 billion, and six more C-17 transport aircraft for $2 billion.

Now Modi’s Make in India campaign is reinforcing New Delhi’s longstanding preference for co-manufacturing and co-developing weaponry, rather than simply buying equipment from the US. This faces structural constraints, given America’s rigid export control regimes that condition technology transfer on close scrutiny and time-consuming permissions. To bridge this gap between New Delhi’s and Washington’s bureaucracies, and to jointly identify opportunities for defence cooperation, the two governments set up the Defence Technology and Trade Initiative (DTTI) in 2012, co-chaired by senior officials from both sides.

Though the DTTI was driven hard from Washington by the then deputy secretary of state, Ashley Carter, it achieved little due to the UPA defence ministry’s reluctance to engage on this platform. National Security Advisor Shivshankar Menon co-chaired DTTI from the Indian side, with the ministry playing almost no role.

Now, circumstances are again propitious for a rejuvenated DTTI. The India-friendly Ashley Carter has been named US Secretary of Defense, while the NDA government has named Secretary of Defence Production

G Mohan Kumar to co-chair the DTTI, alongside US Under Secretary of Defense for Acquisition, Technology and Licensing Frank Kendall.

A highlight of Obama’s visit could be the signing of a New Framework Defence Agreement between the two countries, which would be valid for a decade from mid-2015. The earlier agreement, signed in Washington in 2005, mandated 13 areas of cooperation, but the Pentagon believes New Delhi has stonewalled throughout. US negotiators are now trying to incorporate oversight and review mechanisms in the new framework agreement, so that cooperation targets can be set and monitored.

Source : Defence NEws
US President Barack Obama will be the first American to be a chief guest at the Republic Day parade. He will also be the first US President to have visited India twice in his presidency.

US President Barack Obama will be the first American to be a chief guest at the Republic Day parade. He will also be the first US President to have visited India twice in his presidency. There was a time when American presidential visits to India were few and far between. But since Bill Clinton came to India in 1999, signaling a grand reconciliation after harshly punishing India for the May 1998 nuclear tests, American presidential visits have been regular.

In just seven months, Prime Minister Narendra Modi has met Obama three times – in the US during the former’s official visit in September, at the East Asia Summit in Nay Pyi Taw and then later at the G-20 summit in Brisbane. Despite interaction in a range of areas, and providing crucial assistance to India in its times of troubles, no American leader was ever invited as the chief guest at the Republic Day parade; a Chinese marshal and even two Pakistani leaders have figured in the guest list.

The Modi strategy is visible in the pattern of his foreign visits which has seen him develop strong ties with Japan and Australia, two key US allies in East Asia. The Japan visit, the first outside the subcontinent after he became PM, was notable for the display of the good chemistry between Modi and his Japanese counterpart Shinzu Abe, besides being successful in attracting Japanese investment and laying out the basis for a strategic partnership. The Australian visit, too, clearly signalled a stepping up of the engagement between New Delhi and Canberra, an important US military ally. READING between the lines of officials’ statements and those of itinerant think tankers, it is clear what the US wants of India.

First, they seek a clear articulation of how Modi views the place of the United States in his scheme of things. The Americans, for their part, have not hesitated to indicate that they are for an alliance with India. Short of this, and perhaps more realistically, they want the closest possible partnership.

To this end, they say that they want to assist India to emerge as a major global power, a view first articulated by the Bush Administration in 2005. It does not take a genius to understand why the US wants this – India is the only country of its size which has the potential to offset the enormous geopolitical pull of a rising China.

And India is also a country with which the US has no real conflict of interest, at least for the foreseeable future. Previous Indian leaders like Manmohan Singh have waxed eloquent on the need for close Indo-US ties, but they never quite spelt out their longer-term vision beyond the diplomatic niceties. Of course, India wants technology, investment, peopleto-people ties and so on. But how does it see its relationship with the US in strategic terms? After all, it is not just the US which wants to offset the Chinese pull, India, too faces the Chinese heat, even in its own South Asian region.

Second, the US is looking for a sound economic partnership with India. In today’s gloomy economic scenario, the only large economies that are managing to hold their head above water seem to be those of India, China and the US.

But for the full potential of the India-US relationship to be exploited, there is need for some homework.

India needs to ease the terms of doing business in the country. Modi and Arun Jaitley have repeatedly emphasised their intention of doing the needful, but for the moment, the investors are waiting and watching. As it is, the Americans remain unhappy with issues relating to the nuclear liability act and intellectual property rights in India.

Third, the US wants to step up its defence partnership with India. During this visit, the two sides are likely to sign up for another 10 years on their framework agreement for the US-India Defence relationship. The crown jewel of this has been the Defence Trade and Technology and Initiative through which the two sides are trying to identify high-tech items for co-development and co-production.

Fourth, the Americans want India to come on board their push for a climate change treaty when the Climate Change Conference is held in Paris later this year. After striking a deal with China, the Americans hope to pin down India in a bilateral deal. Obama is hoping to make this treaty the capstone of his administration. To this end, the US will offer India agreements in clean energy technology, as well as hold out the promise of making India eligible for US oil and natural gas exports.

This is just a quick sketch of what is, of course, a much more complex and layered relationship. Back in the year 2000, the then Prime Minister termed India and the US as “natural allies”. This formulation was reiterated by Modi in an interview during the campaign for the general elections and subsequently, as PM, he restated it in an op-ed in the Wall Street Journal where he called the US “our natural global partner”.

Through the Obama invitation, Modi has sent an important signal about the place of the US in his scheme of things. Obama is now virtually a lame-duck President of a country whose Parliament is controlled by the Opposition. So Modi is viewing the visit on a longer perspective where he seeks to leverage the US connection to attract technology and investment from the western world, as well as build ties to balance China.

Source : Defence News
Japan today pitched for stronger maritime security cooperation with India, saying both nations should “proactively” assume responsibilities to ensure “open and stable seas” in the region, comments seen as an effort to contain China’s growing assertiveness in South China Sea.

Japanese Foreign Minister Fumio Kishida said India and Japan have huge interests in the region extending from the Indian Ocean through the South China Sea to the Pacific and both the countries should work jointly under their “special partnership” to ensure maritime security.
In an address at the Indian Council of World Affairs here, Kishida took a subtle dig at China on the South China Sea dispute and recalled Prime Minister Shinzo Abe’s proposal of “three principles of the rule of law at sea” including not using “force or coercion” in trying to drive claims.

“Japan and India have been increasing cooperation in the field of maritime security, through efforts such as joint maritime exercises between defense authorities, as well as the implementation of dialogue and combined exercises between coast guards. It is important to further strengthen our cooperation,” he said.

Kishida, who called on Prime Minister Narendra Modi yesterday, is on his first overseas visit here after Abe registered a landmark victory in national election last month.

Stressing on enhancing maritime ties, the Japanese Foreign Minister said “we should even more proactively assume our responsibilities to protect ‘Open and Stable Seas’ under our special partnership.”

Japanese diplomatic sources said Japan wanted India to play a central role in the Indo-Pacific region while referring to increasing activities by China in the seas and airspace around Japan, including alleged intrusion into its territorial waters, particularly in Senkaku Islands.

Calling Japan and India as the most successful democracies and free nations in Asia, Kishida said leadership from both countries is essential for the Indo-Pacific region. “Both India and Japan are maritime countries whose interests depend on the safety of sea lanes.”

Source : Defence News