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Business News/ Politics / Policy/  Chuck Hagel visits India seeking to remove barriers on weapons sales
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Chuck Hagel visits India seeking to remove barriers on weapons sales

Hagel will meet defence minister Arun Jaitley as he prepares the groundwork for the next 10-year US-India framework for defence ties

‘The US is mindful of the sensitivity of India’s independence, and it has been an independent non-aligned nation since it became a democracy’, says US defence secretary Chuck Hagel. Photo: AFPPremium
‘The US is mindful of the sensitivity of India’s independence, and it has been an independent non-aligned nation since it became a democracy’, says US defence secretary Chuck Hagel. Photo: AFP

New Delhi: US defence secretary Chuck Hagel arrived on Thursday in New Delhi seeking to remove barriers to the sale of American weaponry to India, the world’s largest arms buyer.

Boeing Co. wants to sell more helicopters in India, and Lockheed Martin Corp. is keen on exporting transport planes and providing technology for an Indian version of an anti-tank missile it makes with Raytheon Corp.

Standing in the way are Indian restrictions on foreign defence companies owning majority stakes and US curbs on exporting certain technologies. A resolution hinges on the Barack Obama administration’s ability to energize what’s long been an up-and-down relationship with India after Prime Minister Narendra Modi’s party won a May election with the country’s biggest mandate in 30 years.

“There’s a degree of disappointment and a degree of frustration" among US officials “in dealing with India, because India itself has not really resolved" what kind of relationship it wants, Sadanand Dhume, a South Asia analyst at the American Enterprise Institute, a policy organization in Washington, said in an interview. “The US is not used to dealing with this neither fish-nor-fowl kind of country."

To underscore the importance US attaches to bolstering defence trade with India, Hagel brought with him Frank Kendall, the Pentagon’s top weapons buyer, and Puneet Talwar, the assistant secretary of state for political-military affairs. Together, Kendall and Talwar, whose Indian-American heritage made headlines in India when he was named to his post, oversee US arms exports.

No ‘second cousin’

Asked about India’s reluctance to embrace US as an ally and defence partner, Hagel told reporters travelling with him en route to New Delhi, “The US is mindful of the sensitivity of India’s independence, and it has been an independent non-aligned nation since it became a democracy".

“No nation wants to be seen as a second-cousin type of arrangement to the US or any other country," he said. “That is as it should be."

Hagel plans to meet with his counterpart, defence minister Arun Jaitley, who’s also finance minister in Modi’s three-month-old government. Hagel’s visit follows one last week by US secretary of state John Kerry, who spent much of his time on long-distance phone calls seeking a cease-fire between Israel and Hamas in the Middle East.

Among Hagel’s goals will be preparing the groundwork for the next 10-year US-India framework for defence ties before the current agreement expires next year, said Richard Rossow, who holds the Wadhwani Chair in US-India policy studies at the Center for Strategic and International Studies in Washington.

Apache, Chinook

From a few contracts 10 years ago, India now has about $12 billion in defence deals with US, Rossow said.

“Both sides would like to renew the agreement and strengthen ways to cooperate on defence trade and co-production," Rossow said in a phone interview. He said US is seeking progress on weapons deals that the previous Indian government, led by Prime Minister Manmohan Singh, “was reluctant to sign on."

US is working to sell Apache and Chinook helicopters valued at about $2.5 billion from Chicago-based Boeing, as well as a follow-on order for the company’s C-17 transport planes, according to Rahul Madhavan, senior manager at the US-India Business Council, whose members include US defence contractors.

Making javelins

Lockheed, the largest US defence contractor, wants India to buy more of its C-130J transport aircraft, Madhavan said.

Of about a dozen joint development and co-production projects the Pentagon has proposed to India, emphasis is being placed on a deal that would let India co-develop and manufacture the Javelin anti-tank missile made by a joint venture of Bethesda, Maryland-based Lockheed and Waltham, Massachusetts-based Raytheon.

India also has expressed interest in joint development of a maritime version of the US Army’s Black Hawk transport helicopter and a five-inch naval gun, according to a US defence official, who asked not to be identified discussing the private talks.

India increased defence spending by 12% from a year earlier, to 2.29 trillion ($40 billion) in its latest budget as the Modi government seeks to modernize the armed forces to counter China’s rising power.

Surpassing China

India surpassed China in 2010 to become the world’s largest arms importer and relies on purchases from abroad for 70% of its weapons, according to the Stockholm International Peace Research Institute. Russia accounted for 75% of India’s arms imports since 2009, followed by the US with 7%, Sipri said in March.

Standing on the deck of India’s biggest warship in June, Modi called for the country to minimize its reliance on imports and become self-sufficient in weaponry. To do so, India is working to increase foreign investment in its defence industry.

In the last 13 years, India’s defence industry has attracted about $5 million in foreign investment, less than the amount for glue and gelatin production, government data show.

Modi’s cabinet on Wednesday raised the limit on direct investment in the industry to 49% from 26%, while retaining management control to allay security concerns. Still, US companies have said they’d be still reluctant to share sensitive defence technology if they don’t have management control.

China, Pakistan

India’s state-run defence companies have failed to produce the weapons the army needs to guard borders with neighbours China and Pakistan, leaving tanks without shells and soldiers without bullet-proof vests.

Even as India’s has bought more weapons from abroad, major deals have stalled. Two years after Paris-based Dassault Aviation SA won an $11 billion order for 126 Rafale fighter jets, a shortage of funds is holding up the deal.

Jaitley, the defence minister, approved 210 billion ($3.4 billion) in defence procurement last month, including naval ships, helicopters and transport aircraft, in an effort to expedite purchases.

India may have to improve its strategic ties with the US before it can get the technology it wants to kick-start its domestic defence industry, said Uday Bhaskar, a fellow at the Society for Policy Studies in New Delhi.

“We need access to high technology, and it’s not easy to pry that out of the Americans," Bhaskar said. “To me that is the holy grail." Bloomberg

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Published: 07 Aug 2014, 07:59 PM IST
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