As Modi plans US trip, defence on everyone’s mind

Joshua T. White & Michael Krepon

While big-ticket deals—such as the possible sale of Apache and Chinook helicopters—have been in the news, perhaps the most important discussions will focus on smaller cooperative projects that align with Modi’s vision for ‘defence indigenisation’.

The Apache helicopter is on India’s wishlist.

PRIME Minister Narendra Modi’s visit to Washington in September will be an occasion for glowing speeches about the future of Indo-US relations. Behind the public effusiveness, however, there will be a mutual sense of strategic reserve. New Delhi prizes its strategic autonomy and not doing Washington’s bidding. Washington now has a more realistic understanding of what kind of partnership it can expect, and that New Delhi will pursue its own interests, in its own way.

The Bush administration’s high hopes that the civil-nuclear deal would become a bilateral game-changer proved unrealistic. Soon after the deal, India’s nuclear liability legislation stymied US firms and New Delhi decided to purchase European instead of US fighter aircraft. This time around, ambitions will be tempered, but tangible gains on mutual interests, especially on defence cooperation, are within reach. The most important outcome would be a revision and extension of the 10-year ‘New Framework’ for the US-India defence relationship, which is up for renewal in 2015.

A forward-looking ‘New Framework’ agreement could, for example, outline clearer priorities to shape US-India military exercises and sales, reflect aspirations for information-sharing agreements, and pave the way for more substantive exchanges by both civilian and military leaders.

Washington expects new defence sales to be advanced during Modi’s visit. While big-ticket deals—such as the possible sale of Apache and Chinook helicopters—have been in the news, perhaps the most important discussions will focus on smaller cooperative projects that align with Modi’s vision for ‘defence indigenisation’. These talks take place under the rubric of the Defence Trade and Technology Initiative (DTTI), inaugurated by Defence Secretary Leon Panetta in 2012.

The DTTI is an effort to systematically address barriers to expanded defence trade and technology transfer in both countries. For its part, the US government and industry have proposed dozens of innovative co-development projects, which reportedly include cooperation on subjects as diverse as surface-to-air missiles, magnetic catapults, and big data exploitation.

The most likely major DTTI deliverable for September is an agreement to co-develop the next generation of the Javelin anti-tank missile—a project that would involve significant technology transfer, and would meet stated Indian Army needs. Regardless of the specific deal, however, defence cooperation will remain disappointing without a flagship co-development project. The ball is now largely in India’s court for decision.

As important as Modi’s visit may be, the real work of deepening defence ties will require leadership and follow-up by India’s new Defence Minister. Observers in the United States will be on the lookout for three developments. The first is whether the Indian bureaucracy can begin to move long-languishing deals through the procurement pipeline. Washington would like to see what Indians have also been hoping for: a decisive Ministry of Defence that can take military procurement decisions and stick to them. US industry does not expect to win every deal, but is confident that its comparative advantages in technology and transparency will solidify its place as a key defence provider over the long term.

Second, while the Modi government’s decision to raise the baseline foreign direct investment (FDI) cap in defence to 49 per cent was welcomed in the US, it is probably insufficient to drive significant foreign investment. The most pressing obstacle to high technology transfer is arguably no longer US government approvals, which on account of DTTI are more readily forthcoming, but creating compelling incentives for US industry to engage in real partnerships with Indian firms. That means raising the FDI cap to at least 51 per cent, and dealing with India’s onerous offset requirements.

Third, and perhaps most important, Washington is ready to engage in more substantive dialogue over regional security. US-India talks on Afghanistan and East Asia have already deepened dramatically over the past two years, largely without public notice. But still there is more to discuss, especially in the light of the risks of the US and NATO drawdown in Afghanistan, the heightened nuclear competition between India and Pakistan, and China’s increasingly aggressive manoeuvring with respect to maritime disputes in East Asia.

Modi’s visit to Washington can lend impetus to another new beginning in US-India relations. The last new beginning produced a historic civil-nuclear deal, followed by mutual let-down. Modi and Obama will not produce anything as dramatic as a civil-nuclear deal. Nor do they have to. The test of improved bilateral relations will now be to sustain and grow defence cooperation, to create favourable long-term incentives for the respective private sectors to partner together, and to have meaningful consultations on regional security.

The writers work on South Asia at the Stimson Centre in Washington