New Delhi: Defence ties between India and the USare widely expected to figure prominently during US President Barack Obama’s three-day visit to India beginning 6 November.
But officials in the defence ministry and analysts say announcements on big-ticket defence contracts and any significant progress in contentious deals are unlikely.
“Presidential visits don’t necessarily mean that deals have to be signed,” said a senior defence ministry official on condition of anonymity.
Big-ticket deal: A file photo of a Lockheed Martin C-130J Hercules in Marietta, Georgia, US. India signed a $1 billion deal in August 2009 to buy six such planes for the Indian Air Force. Photo: Bloomberg
Here’s a lowdown on defence contracts and policy agreements either already finalized or being discussed between India and the US:
In August 2009, India signed a $1 billion (around Rs4,400 crore today) deal to buy six Lockheed Martin C-130J Hercules transport aircraft for the Indian Air Force (IAF). It followed this up with a $2.1 billion deal to acquire eight P-8I Poseidon aircraft for the Indian Navy. India has indicated that it needs another four P-8Is.
In April, the US Congress was notified on a deal to sell 10 Boeing C-17 Globemaster III transport aircraft to India for an estimated $5.8 billion—a government-to-government deal via the foreign military sales (FMS) route.
“This will be the single largest defence deal between the two countries till date. It is, however, unclear if it will actually be signed during the Obama visit,” said Anit Mukherjee, an analyst with the Institute for Defence Studies and Analyses, New Delhi.
On 30 September, the Defence Research and Development Organisation (DRDO) said it had selected US-based General Electric Co.’s F-414 engine for the Mark-II version of the light combat aircraft (LCA) being developed by Hindustan Aeronautics Ltd (HAL).
DRDO plans to acquire 99 such engines for an estimated $660 million. The other contender for the contract was Eurojet’s EJ200 engine.
In July, IAF submitted to the defence ministry field trial reports on a deal for 126 medium multi-role combat aircraft (MMRCA).
Two American companies, Lockheed Martin Corp. and Boeing Co., along with Dassault Aviation SA, Saab AB, European Aeronautic Defence and Space Co. (EADS) and RSK MiG, are in contention for the deal, which analysts say could be worth $11 billion and would rank as India’s single-biggest defence purchase ever.
Senior IAF officials and analysts say the bids are unlikely to be opened before the end of 2011 and the final deal may not be signed before 2013.
US companies are also in contention for deals for 197 light utility helicopters (LUH), 22 attack helicopters, and towed guns, field trials for which are currently on.
US and European trade lobbies have been pushing India to raise the cap on foreign direct investment (FDI) in the defence sector from 26% to 49%. The defence ministry, though, is opposed to this, and any change is unlikely, say analysts.
“The Americans obviously sense an opportunity in the Indian defence market. The Indian defence ministry, under pressure from the defence public sector units, is, however, opposed to such a proposal,” said a defence analyst who did not want to be identified. “So, no movement on this will happen, at least in the foreseeable future.”
India and the US are bound by two long-term defence agreements. In 2005, they signed a 10-year defence cooperation agreement, which calls for a general intent to strengthen defence cooperation between the two nations.
This was followed in 2009 by the end-use monitoring agreement (Euma) amid much political opposition in India.
The agreement allows the US to periodically inspect all military hardware it has transferred to India. It also prohibits India from modifying any equipment of US origin or having such equipment serviced by another country without a nod from the US.
The US has been pushing for three defence deals—communications interoperability and security memorandum of agreement (CISMOA), Logistical Support Agreement (LSA), and the Basic Exchange and Cooperation Agreement for geospatial cooperation (BECA).
But political compulsions and a “sense of insecurity” on the part of India’s defence establishment might prevent the country from moving forward on these, say analysts.
“The US has made it clear that if India does not sign the CISMOA, it will not be able to transfer critical defence technologies. If, however, India does sign the agreement, the US has indicated it might take some of our defence and space entities off the restrictive ’entity list,” said retired brigadier Rumel Dhaiya.
The US had placed 14 installations including DRDO and the Indian Space Research Organisation (Isro) on an entity list following the 1998 nuclear tests conducted by India. The US does not engage in high-end technical cooperation with installations on the entity list.
While CISMOA would make the military equipment of both countries interoperable, allowing them to jointly operate the same, the LSA deal would allow for military aircraft and naval ships of either country to be refuelled in the other.
“In the US administration, there is a feeling that the Indians are unduly suspicious about these agreements. For the US department of defence, these agreements are standard operating procedures, which it must follow when it enters into a long-term defence co-operation with any country,” said Lisa Curtis, senior research fellow at the Heritage Foundation.
Some analysts echo this view. “Frankly, there’s no big deal in signing any of the three, but the general perception is that by agreeing to interoperability of military hardware and by allowing the Americans the right to refuel in India, we will give too much away to the US,” said Mukherjee.