In a recently-held national seminar (14 December) on the status of defence industry in the country, which was attended by Home Minister Rajnath Singh and Defence Minister Manohar Parrikar, some panelists did point out, cursorily though, the significance of India being granted the unique status by the United States as its 'Major Defence Partner' (MDP). The partnership, if pursued both in letter and spirit, will boost Prime Minister Narendra Modi’s 'Make in India” programme in the defence sector so that India could not only become self-reliant in arms but also emerge as a major exporter of arms. However there remains the question of big “if”, upon which this analysis focuses.
The MDP status to India needs to be seen against the backdrop of the development of the US military industrial complex (MIC). Incidentally, the term “military-industrial-complex” was coined in the US by then president Dwight Eisenhower during the Cold War to welcome the emergence of what is said “the second era” of the American MIC. During the first era, which lasted from 1787 to 1941, the defence sector in the United States consisted totally of the government-owned arsenals and shipyards. However, with the US participating in the Second World War, Franklin Roosevelt established the “War Production Board” by conscripting the major private industries, particularly those in the automobile sector, into wartime service. But after the war ended, not only did these private companies, such as Boeing and General Motors stay and consolidate their involvement in the military sector, they were also joined by others like AT&T, General Electric and IBM.
One of the important features of this second era was that the Pentagon financed the private sector, which, in turn, created world class technologies that were for use by not only the military but also by ordinary citizens. One can cite in this regard the examples of drone, night vision goggles, GPS in cars, and most important, the internet.
The end of the Cold War in the 1990s saw the emergence of the “third era” (and this prevails at the moment), whose important features are as follows.
First, the industry shifted from diversified conglomerates and was managed by defence-only firms.
Secondly, the contribution of the Pentagon, both financially and technologically, has been declining, thanks to the shrinking defence budgets. As a result, and this is the third feature, the American MICs are increasingly buying commercial technologies (either buying or giving these technology providers shares) such as cloud computing, cyber security, nanotechnology and even smart phones. Just see how Google acquired Boston Dynamics that had created BigDog, a four-legged robot that can support soldiers in rough terrain.
However, these features are increasingly proving insufficient to sustain the US defence industry. Although it is courting commercial companies, it prefers the American ones. It is not globalising itself properly, shunning the option of co-producing products abroad with allies and friends the way the Japanese and Koreans are developing their technologies and manufacturing brands in foreign countries, from where they are exporting them to various parts of the world. America’s F-35 example, by distributing the burden of the development cost of the fifth generation fighter plane with some Nato allies, is said to be insufficient.
No wonder William J Lynn III, a former US deputy secretary of defence argues for starting a new fourth era in which the Pentagon must take a more active role in recruiting outside companies, “keeping in mind that their futures are inextricably intertwined”. According to him, “The United States has the opportunity to look beyond its borders to turn this fourth era to its advantage. Since the Second World War, the country’s technological advantages have protected its national security. To maintain that advantage, the United States must adapt to — and ultimately embrace — the trends that will come to define its future”.
Can India fit into this scheme of things, particularly when Modi’s much-repeated calls to 'Make in India' continue to remain in the headlines? The US thinks that India can. The MDP status is a logical conclusion of this trend. In essence, it paves the way for India to be treated at par with America’s closest allies — Nato partners and countries with security treaties — such as Australia, New Zealand, Japan and South Korea on defence-related trade and technology transfer.
In fact, the idea of the MDP was agreed upon during the summit meeting between Modi and President Barack Obama in June this year. “Noting that the US-India defense relationship can be an anchor of stability and given the increasingly strengthened cooperation in defense, the United States hereby recognises India as a Major Defence Partner,” the joint statement of the June meeting had stated.
However, this accorded status to India by Obama required the subsequent Congressional approval as per the American laws.
Although the House of Representatives endorsed the idea, the Senate sought more clarifications. It was not that the Senate was against granting the unique status to India; it was apparently not happy with “the definition of ‘major defence partner’ designation that had been left a little unclear and vague by the administration.” Accordingly, the differences were reconciled and a separate section on 'Enhancing defense and security cooperation with India' (Section 1292) was added in “The National Defense Authorisation Act (NDAA) 2017 (the US military’s budget for next year), which was passed by the House of Representatives first and then in the Senate. The NDAA, likely to be signed by Obama within a week’s time for legal enforcement, ensures the continuity of the MDP status to India under the future governments as well.
Section 1292 of the NDAA asks the secretaries of defence and state to take steps necessary to recognise India as America’s major defence partner of the U.S. and asks the administration “to designate an individual within the executive branch who has experience in defence acquisition and technology to reinforce and ensure, through inter-agency policy coordination, the success of the Framework for the US-India Defence Relationship; and to help resolve remaining issues impeding US-India defence trade, security cooperation, and co-production and co-development opportunities.”
It also calls for “approval and facilitation of transfer of advanced technology, consistent with US conventional arms transfer policy, to support combined military planning with India’s military for missions such as humanitarian assistance and disaster relief, counter-piracy, freedom of navigation, and maritime domain awareness missions, and to promote weapons systems interoperability.” Further, it seeks “collaboration with India to develop mutually agreeable mechanisms to verify the security of defence articles, defence services and related technology such as appropriate cyber security and end use monitoring arrangements consistent with US’ export control laws and policy.” In fact, it asks the secretaries of defence and state to submit within 180 days of the passage of the Act to the Congressional Defence Committees and the Committee on Foreign Relations of the Senate and the Committee on Foreign Affairs of the House of Representatives "a report on how the US is supporting its defence relationship with India".
It was against this background that US defence secretary Ashton Carter visited India last week to meet Parrikar (their seventh interaction in the past two years). They finalised India’s designation as a 'Major Defence Partner' of the US. As the joint statement issued after their meeting (8 December) said, “The designation as a ‘Major Defence Partner’ is a status unique to India and institutionalises the progress made to facilitate defense trade and technology sharing with India to a level at par with that of the United States’ closest allies and partners, and ensures enduring cooperation into the future.” In concrete terms what it means is that India now can get access to “99 percent of the US defence technologies” as the export hurdle of high-tech US military hardware and technology to India is removed. India will also receive licence-free access to a wide range of dual-use technologies in conjunction with steps that India has committed to take to advance its export control objectives. The US government will inform the review of requests to export defence articles, defence services, or related technology to India under the Arms Export Control Act, and inform any regulatory and policy adjustments that may be appropriate.
American officials say that the MDP status is in support of India’s 'Make in India' initiative towards the development of robust defence industries and their integration into the global supply chain. The United States will facilitate the export of goods and technologies for these industries through joint ventures, meaning thereby that the US is now more than willing to transform its defence cooperation with India from “simply buying and selling” to “co-production, co-development, and freer exchange of technology”.
However, one has to become a little cautious with regard to actual progress of the India-US defence industrial partnership. When one talks of US investment in the Indian defence sector, it should be realised that the ability of the American government to be a source of investment is quite limited. It simply does not have enough investible reserves. Instead, the investible resources are in the US private sector, which, in turn, make their own judgments of where to invest, depending on the recipient country’s infrastructures, legal regime, administrative machinery, and above all broad political consensus on liberalisation of the economy. There is then another limiting factor of the present inabilities of India’s arms industries to absorb the technologies that foreign companies are prepared to transfer. It may be noted in this context that if India and France were not able to fructify the original Rafale MMRCA deal, it was due to as much monetary factor as the lack of absorptive capability for the licensed production of the Rafale.
Unfortunately, the Modi government has a lot to do on all these fronts.
Updated Date: Dec 16, 2016 13:53:01 IST