By P. Parameswaran/AFP
The United States wants to compete in multibillion dollar deals to sell fighter jets to India in a bid to further firm up ties after their landmark nuclear pact, an official said on 13 April.
India has traditionally relied on Russia for its combat jets because of its frosty ties with Washington during the Cold War but the signing of a civilian nuclear deal recently has paved the way for multifaceted cooperation.
“The next opportunity to take the step ahead beyond the nuclear agreement is the competition in India for the multirole combat aircraft because historically, the United States has not been able to compete for Indian defence procurement,” said US Undersecretary of Commerce Franklin Lavin.
“Now it’s a new era, it’s a new relationship, the defence relationship is improving,” Lavin told a joint forum of the Woodrow Wilson International Center for Scholars and the Federation of Indian Chambers of Commerce and Industry (FICCI).
US and Indian officials had “a number of discussions” on the aircraft deals and “our major providers intend to compete for this,” he said.
Amid the warm ties, American aircraft manufacturers are hoping to penetrate the Indian defence market, especially their requirement for 126 multi-role fighter aircraft valued up to $10 billion in the next decade.
Lavin indicated that Washington might have to review its export control laws to enable Americans to bid for the Indian contracts.
“From the Indian perspective, they will have access to very fine products and from a US perceptive ... this helps our system think through this licensing and export control system because they have a specific proposal in front of them that they have to respond to, so that is a healthy development as well,” he said.
Although the United States has removed most of the sanctions imposed on India for its 1998 nuclear tests, it still has export controls on sensitive items and technologies, which may have to be reviewed if US firms want to sell fighter jets to New Delhi.
The Indian government, under a new defence procurement policy, requires suppliers to spend or invest 30% of the contract value in designing, technology development, co-production and related activities in India.
Despite improving ties, India has been wary of forging deals with U.S. weapons suppliers over fears that Washington could reimpose sanctions and choke off vital spare parts and technology.
“The challenge is that the relationship between U.S. and India is moving so rapidly ahead that sometimes the licensing approval regime doesn’t always keep up -- so you got to continually adjust that to reflect the fact that it is a very different relationship,” Lavin said.
Washington made a rare exception to U.S. law to pave the way for U.S. sales of nuclear fuel and technology to India under the civilian atomic deal, details of which are still being worked out.
On investment and trade ties, Lavin called on India to review its limits on foreign investment and ownership in businesses and lower its tariffs, which he said were still high compared with the rest of the world.
“India’s tariffs average more than 20%, and in some cases tariffs are more than 100 %. Compare India’s average tariff on industrial goods of 10% to the U.S. 4% average,” he said.
On reforms in India, Lavin said the United States was prepared to work with it in the postal sector to allow competition from express delivery companies as well as in the elimination of non-tariff barriers to trade in medical devices.
It was also willing to cooperate with India in liberalizing its financial sector in a bid to create a regional financial center in the flourishing business hub of Mumbai, and open access to foreign broadcasting and cable television, Lavin said.