Indo-U.S. Joint Defense Production: Trade to Partnership

By Pradeep S. Mehta & Purushendra Singh

Recently Rajnath Singh, the Defense Minister of India invited US companies to carry out joint research, manufacturing, and maintenance of defense equipment in India to achieve the ambitious aim of “Make in India, Make for the World.” He further stressed the need to move from the buyer-seller relationship to partner nations.

The India-U.S. defense relationship is driven by a mutual interest in commercial and geopolitical aspects based upon increasing trust between the two countries. It’s important to note that the 2+2 ministerial dialogue – US and Indian Foreign Ministers and Defense Ministers’ joint meetings – and the Defense Technology and Trade Initiative (DTTI) group meeting have acted as the cornerstones of this relationship.

The Indian defense industry has grown substantially over the past decade. India exported defense items and technology worth a record $ 1.63 billion in 2021-22, an impressive 54.1 percent raise over the previous year. From a nation of imports, India is now becoming a major hub for exports. It not only fulfills India’s ambitions of becoming a net arms exporter but also conveys an important message of capacity to her neighbors.

The US designated India as a “Major Defense Partner” in 2016. However, India’s policy of Atmanirbharta or self-reliance in defense does not mean eliminating all the other players entirely – there remain many gaps that could be filled by American technologies and the R&D advantage of the American universities with Indian diaspora catering for both.

The U.S. military-industrial complex is driven by the private sector. Encouraged by the new policy changes, the private sector in India, as well, has exhibited its share in defense manufacturing. With well-established private sector companies such as Kalyani, Mahindra, and Tata looking to co-produce with companies such as General Atomics, Lockheed Martin, Boeing, Raytheon, and General Electric to name a few, showcases the growing quest for joint-production and mutual growth.

Eleven Indian states now boast to have an aerospace and defense policy. Many states are taking the lead by setting up defense industrial corridors. Uttar Pradesh and Tamil Nadu have set up the largest defense corridors in the north and south of India with more states vying to join the line-up.

“The production possibilities are increasing with the trust level,” said, Subimal Bhattacharjee, Independent consultant on defense and cyber security at a workshop held under the Defense News Conclave Project being implemented by CUTS International with the support of the U.S. State Department.

Rick Rossow, Senior Adviser and Wadhwani Chair in the U.S. – India Policy Studies, Center for Strategic and International Studies, observed that the DTTI is an ambitious and unique framework between the two sides. “This needs to move faster to ensure the viability of more projects and toward the realization of co-production and co-development,” Rossow said.

Joint production: A two-way street

In October 2020, then US Secretary of Defense, Dr. Mark T. Esper noted that building the capacity and capabilities of like-minded nations will foster “interoperability with friendly militaries while creating a stronger domestic industrial base that can compete in the global marketplace.”

The U.S. supports India as a strategic partner in the Indo-Pacific, and a net provider of security in the region. With the changing nature of modern warfare and the role of artificial intelligence (AI), it is slowly being accepted that future wars will be fought in a technology-intensive environment.

The U.S. is aware of the talent and the technical abilities of Indians which may help them to be leaders in this domain. Besides this, a spillover effect of defense technology can be used for other peaceful purposes as well.

The air-launched small unmanned systems and intelligence, surveillance, target acquisition, and reconnaissance (iSTAR) project is just the start of deeper cooperation between Indian and the U.S. India is also in talks with Malaysia and Egypt to sell its lone indigenous fighter aircraft, the Light Combat Aircraft ‘Tejas’, which is powered by GE’s F404, an American engine.

The ambitious iCET – Initiative on Critical and Emerging Technologies – is another step in the direction of joint production.

As part of the Quad groupings, both countries are jointly working towards establishing ship refurbishment and maintenance, repair, and overhaul (MRO) facilities, which will benefit all Quad navies.

Roadblocks and Hurdles

The road to joint defense production possibilities may face a few legal hiccups and bureaucratic roadblocks going forward. The American defense industry is populated by private companies that own intellectual property. Thus the sensitive issue of technology transfer from the American side and cross-border data flows and data policy of both nations can delay the process. The U.S. will have to devise ways to cooperate with India on technologies, developed with government funding,

In return, India may work on easing the taxation process and make sure that Intellectual Property (IP) laws are safeguarded. Problems related to unutilized offsets can be resolved through innovative approaches rather than the rigid approach adopted so far of exclusivity of offsets only in defense sectors.

The Way Forward

India and the U.S. could explore high-powered directed energy weapons to counter aerial threats like fighter jets, drones, and weapons in cyber and space domains. Countermeasures against small drones and swarm drones that are both effective and cost-effective and hypersonic missiles are other potential systems they could collaborate on. There have been reports of a $500 million military funding package from the U.S. for India that would deepen security ties.

Backed by forward-looking policies, India has a good strategy and action plan in place that is aimed at ensuring large-scale defense production, and boosting the country’s status as a net exporter of weapons in the coming years. A hybrid Foreign Military Sales (FMS) route could be an effective way forward in the bilateral defense trade.

With stress on the need for a necessary ecosystem for innovation, training, and R&D Facilities in defense manufacturing in the states, India is definitely pushing itself as a serious player with capabilities to be explored, enriched, and cherished.

Aircraft carriers, nuclear-powered submarines, and the space sector have a huge market amidst deteriorating international security. India and the U.S. could explore opportunities for greater cooperation to tap the market in the developing and responsible nations.

Low cost is the best proposition India offers in every sector and the defense sector is no exception. India is already supplying UAE with the mortars and the shells and U.S. could also be a potential market given facilities and technologies are upgraded to their satisfaction. Increased cooperation could prove a win-win situation for both nations.

By increasing trust levels and acting as responsible defense manufacturers, both nations can enhance their presence and influence throughout the globe, to counter threats of aggression, drugs, terrorism, cybercrime, and human trafficking, among others. Such steps not only underpin global stability but also form the bedrock for continued economic growth with a peaceful and safer world.

(The authors work for CUTS International, global public policy research and advocacy group with offices in many countries including the USA.)


Disclaimer: The views expressed are not necessarily those of The South Asian Times 

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