US technology and exports control areas were being looked at so that India has the same status as the closest allies of US, for the US system to operate on a timescale consistent with the needs for the Indian side to make decisions

With over 77 per cent of defence imports, India needs serious introspection to keep pace with the modernisation that its defence forces urgently need. The hike of foreign direct investment (FDI) in defence from 26 per cent to 49 per cent with state-of-the-art technology transfer during 2013 has not attracted any worthwhile capital because of the bureaucratic red tape and defence procurement policy that is not found attractive by foreign firms due to uncertainties and the time factor.

The US Deputy Secretary of Defence Ashton B. Carter, during his visit to India last September, said that US technology and exports control areas were being looked at so that India has the same status as the closest allies of US, for the US system to operate on a timescale consistent with the needs for the Indian side to make decisions, aim being to take the Indo-US defence relationship to the next level and help India raise the indigenisation of its defence systems.

Past Indo-US experience has hardly been good in this regard. Whatever technology came from the US was decades old and in some cases like the ANTPQ-37 radar not only was it 25 years old but had been given to Pakistan 10 years earlier. Factually, India has been getting far more advanced technologies from Russia and Israel than from the US. Then is the question whether US really want a strong India? This is relevant because the track record of the US in defining ‘strong allies’ and dumping them at the drop of a hat in its perceived national interests has not been good either.

There was also the case of sabotaging India acquiring Russian cryogenic technology through a chain of events implicating senior Indian Space Research Organisation (ISRO) scientists Nambi Narayanan and Sasi Kumaran in a spying scandal that pointed to Central Intelligence Agency (CIA) involvement, US making efforts to scuttle it since 1992 with George Bush denouncing it as violation of the Missile Technology Control Regime (MTCR).

This apart, in recent years India has procured defence equipment from the United States, latest acquisitions including the C-130Js, with M77 Howitzers of BAE Systems next on the anvil. One can expect complete weapon platforms and systems to keep coming in with the attenuated cost and political factors. Carter’s statement and his dialogue with the Indian National Security Advisor naturally has caused interest in terms of future Indo-US joint ventures (JVs); sharing technology and co-production.

But while the US is examining its technology and exports control areas to facilitate Indo-US JVs for helping India indigenise defence systems, it is equally important for us to introspect – something that should have been done when we failed to attract FDI in defence despite hiking the limit from 26 to 49 per cent. For that matter, little attention has been being given to why our own private industry does not find the defence sector attractive enough or rather their participation is far less than desired.

Now take the ‘Buy and Make’ projects, which are the correct way to go about developing systems in order to leapfrog technology. We would float a request for information (RFI) giving the usual response time of three months or so. A US firm has to obtain permission from the US Government every time for exports to the concerned country. Then, if the equipment or system is itself a JV within the US (items, parts taken from different firms), then each of these firms too have to obtain US Government approval for export of specific technology or item to the concerned country. This process requires anything up to 12 months or more. Next comes the more difficult part in a US firm teaming up with the Indian firm in a ‘Buy and Make’ project. Before such a joint venture is established, the Indian firm needs to put down on paper what items and in what specific quantities would form part of the ‘Buy’ from the US firm.

More importantly, the US firm cannot export the said items directly to the Indian firm of the JV. As per current rules, these items can only be exported under the FMS route on a government-to-government basis. The implications are that first the Indian firm lists out the items specifying quantities and obtains Government of India approval, which itself is liable to numerous queries, file pushing and consequent loss of time. Thereafter, Government of India would need to take up a separate case with the US Government to obtain these items through the FMS route, import them and then provide these to the concerned Indian firm to kick off the ‘Buy and Make’ project. On balance, it can be safely assumed that unless these serious bottlenecks are removed, Indo-US JVs in any ‘Buy and Make’ project will remain a distant dream.

The views expressed herein are the personal views of the author.