Defence: Work with Uncle Sam

In a piece published in the Economic Times on 5 February 2013, author Robert Metzger, a well known defence industry expert based in Washington, D.C., argues that the Elephant and the Eagle should dance together to benefit from each other. The article raises three issues: leveraging military spending as a catalyst for military scientific and industrial growth; possibilities for co-production and development; and convergence of politico-strategic minds. However, such simplistic assumptions often get enmeshed in complex arms procurement dynamics.

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Defence: Work with Uncle Sam

Author: Robert S Metzger

India's attention is again drawn to its defence needs —and to the tension that exists between present reliance on foreign sources for key equipment and national goals to leverage military spending as a catalyst to promote additional manufacturing and other tech-driven employment in India.

Aero India 2013, starting in Bangalore on Wednesday, should serve as a useful means for foreign original equipment manufacturers — especially those under 'offset' contract with the government of India to purchase supplies or buy services — to link up with Indian offset partners. Offsets have become a big business, as India has signed 17 offset contracts worth more than $4 billion as part of its defence modernisation programmes. So far, the results of the offset programme have been disappointing. India remains largely dependent on foreign sources: not only for many defence systems, such as tactical aircraft, but also for many of the components that are incorporated in defence articles assembled or built by public sector enterprises such as HAL.

However, in August 2012, the ministry of defence (MoD) announced revisions to the Defence Offset Guidelines that expand the ways in which foreign companies can satisfy their offset obligations. The revisions encourage transfer of equipment and technology and incentivise contracting with India's micro, small and medium-sized companies.

Changes also encourage long-term commitment by giving companies more time to satisfy offset obligations. These positive steps serve India's national aims by making the offset programme more business-like, realistic and achievable. But offsets are an imperfect and indirect way of achieving national security and industrial objectives. While offset arrangements are subject to MoD guidelines, it is left to foreign sellers to choose their Indian partners and define offset projects.

In recent years, the bulk of India's procurement spending has been to acquire 'platforms' from foreign suppliers, such as transport aircraft, fighter planes or helicopters.

For the most part, India has bought equipment previously developed by foreign suppliers and well along in their service life. India has not, however, managed to use its capital spending to launch a successful joint development effort that depends on a western foreign partner to create systems specially tailored to India's needs. India has the financial and political muscle to promote a joint development project and it should use that leverage to accelerate the role of its private sector in satisfaction of current and future defence needs. Last summer, US undersecretary of defense Ashton Carter visited New Delhi. There, he announced a new initiative to support India's military modernisation. Now it is time for India to 'see the goods'.

There are several candidate projects where the US and India could collaborate to develop, produce and sustain systems that will provide long-term security benefits to India. A co-development project should serve key interests of India as well as support development of technical and industrial capabilities that enable India to self-provision and self-support. The project should be chosen to benefit India's security without posing asymmetric or other destabilising threats to India's neighbours.

Two candidate areas stand out for prospective collaborative development. One is maritime security. Simple geography shows the vast ocean areas in which India must be aware of potential threats and capable of responding, whether the challenge is one of piracy, coastal security or from a nation state.

In the area of naval systems, India's private sector has made dramatic progress in developing world-class construction capabilities. At the platform level, India and the US might cooperate to facilitate development of key systems for the planned 'second' India aircraft carrier, IAC-2, a vessel of around 65,000 tonnes displacement that likely must be constructed in private sector shipyards.

A less ambitious collaboration would focus upon the specialised radar, surveillance and command-and-control systems that the Indian Navy could use to achieve 'maritime domain awareness' within the ocean areas surrounding India. The second candidate area is tactical transport aircraft. New propulsion and structural design technologies are emerging in the US that could extend the capabilities of vertical-lift aircraft into the domain of conventional fixed-wing aircraft.

New leadership is coming to the departments of defense and state in the US. India's leadership needs to get maximum value for expenditure of national funds on military equipment. It should not be reticent in stating what it wants. This is an excellent time for India to declare its objectives and challenge the US to pursue and execute a major system co-development project.

(The author is a Washington, DC-based lawyer who advises US and international companies on security cooperation with India)

Source: http://economictimes.indiatimes.com/articleshow/18342034.cms?prtpage=1

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