The Challenges That Remain In The Burgeoning Indo-US Defence Ties

India and the United States (US), and the emerging strategic partnership between the two, is directed with shared strategic logic, which includes the rise of China, Islamic fundamentalism and extremism and mutual agreements on various international issues. The two countries have been forging closer defence cooperation, which is one of the crucial engines of the strategic partnership. The US has emerged as the largest defence supplier to India in terms of value. A number of initiatives, agreements and forums have been designed and created in order to further boost military-to-military cooperation, defence co-production and co-development as well as collaboration in R&D in defence technology. The June 2015 Defence Agreement signed between US Defence Secretary Ashton Carter and Indian Defence Minister Manohar Parrikar envisions further strengthening of the defence relationship.

There are, however, certain obstacles that have prevented full exploitation of the true potential of defence cooperation between the two strategic partners. Though the US has emerged as the largest defence supplier in terms of value, Russia continues to be India’s single-most important supplier of defence hardware as far as the number of units is concerned. Moreover, India remains wary of the reliability of the US as a defence partner because of historical suspicions. Americans, on the other hand, find it difficult to comply with India’s defence offset policy.

The progress in the joint initiatives between the two nations on various projects has hardly yielded positive results, and growth in defence cooperation is disappointing. The US government also voices concerns over the effectiveness of the Intellectual Property Rights regime in India and therefore, defence companies are hesitant to participate and invest. America’s licensing policies and its insistence on signing of foundational agreements such as CISMOA, BECA and LSA have been lingering issues which have been pending for years. The challenges, which require a critical examination, are many.

A Brief History of Indo-US Defence Relations

During the Cold War, the Indo-US bilateral relationship can be said to have had ‘uneasy beginnings’. As India was one of the leaders of the Third World nations championing the ideology of ‘non-alignment’, India was a pariah of sorts for the US. During the 1962 India-China War, India received substantial military assistance from the US, which dramatically altered perceptions. However, the bonhomie did not last long as India moved closer to the Formerly Soviet Union (FSU). Moreover, the saga of the USS Enterprise being sent into the Bay of Bengal during the East Pakistan Crisis of 1971 brought the relationship to its nadir.

India’s so-called ‘Peaceful Nuclear Explosion’ (PNE) in 1974 and the Shakti nuclear tests of 1998 are events that created further misperceptions. Sanctions were imposed on India, and critical institutions such as the Defence Research and Development Organisation (DRDO) and the Indian Space Research Organisation (ISRO) were brought under the Entity List. But as the USSR collapsed, India had to look for alternatives for its military and other needs. Moreover, as both the US and India shared common values such as democracy, the two nations saw each other as partners that could work together to address issues and challenges in the international system.

With the signing of the Next Steps for Strategic Partnership (NSSP) in 2004, which was followed by the conclusion of the Indo-US Nuclear Deal in 2008, it took the relationship to a new level. There was a shift in the overall strategic understanding between India and the US and thus, it led to certain practical steps being taken for enhancing defence cooperation, be it arms sales or troop exercises, which was necessary for an enduring strategic partnership. This has fructified over the years, yet certain challenges remain.

Strategic Logic for Defence Cooperation

India and the US seek to advance shared values such as freedom, democracy and the rule of law as also have shared security interests. As a result of the deepening of the Indo-US relations, defence cooperation between the two has expanded over the past decade. The US views India as a partner in the context of common belief and shared national interests such as defeating terrorism, prevention of proliferation of Weapons of Mass Destruction (WMD) and envisioning regional and global stability. Therefore, enhanced defence and security cooperation has emerged as a key component in the bilateral relationship. Moreover, the US views India as a ‘lynchpin’ in its ‘rebalancing’ strategy in the Asia-Pacific. Analysts view that there is substantial convergence between the two in the context of Asian balance of power, especially because of the rapid rise of China.

The US sees India as a stabilising power, and India views the US as a source of advanced technology which could help it to develop its domestic defence industry. India views the defence relationship with the US as one of the means to obtain the technology that it wants, that others cannot provide. More importantly, a common strategic vision is emerging between India and the US. India-US strategic interests are increasingly aligning and are expected to grow in the future. Defence and security ties could be the means for dispelling misperceptions that exist on certain issues and could be the fulcrum of the Indo-US bilateral relationship. The evolution of Indo-US defence ties move forward on the backdrop of broad strategic interests and is expected to progress in a positive manner.

Emerging Defence Relationship

The two democracies are taking major strides to enhance defence cooperation, which is the true hallmark of any strategic partnership. Along with military-to-military ties such as security cooperation and combined exercises, the Indo-US defence ties have undergone a sea change over the previous decade. India is likely to spend $100 billion or more over the next decade towards military modernisation. American security companies see India as a huge market for military hardware. According to analysts, increased defence trade between the two countries could help revive the stagnating relationship.

The ‘New Framework for India-US Defence Relationship’ that was signed in June 2005 replaced the Agreed Minutes of Defence Relations of January 1995. The defence agreement of 2005 was an attempt to expand the scope of Indo-US defence relations and to remove mutual suspicion between the two that had dominated the relations in the past, especially after India’s Pokhran II tests. The agreement identified a number of shared political objectives and charted a new course for the defence ties.

The trust between India and the US has grown over the years, and upward trends in defence trade are indicators of the growing defence cooperation between the two. Over the past eight years, the US has bagged deals worth approximately $10 billion and is now set to emerge as the largest defence supplier to India. A number of deals and joint projects were finalised with the signing of the ten-year Framework for India-US Defence Relationship in June 2015 and prospects for further cooperation has grown. The latest defence framework envisages joint development and manufacture of defence equipment, aircraft carrier design and construction. The framework builds upon the previous agreement of 2005 and successes to guide the bilateral defence and strategic partnership for the next decade.

Challenges to the Defence Relationship

The challenges that could hinder the true fostering of the defence relationship between India and the US need mention. The challenges are identified in the following sections.

Foundational Agreements

The defence trade between the world’s largest exporter of arms, i.e., the US, and one of the largest arms importers, i.e., India, has immense business potential, but are complicated by legal, political, strategic, historical and bureaucratic impediments. The US insists on improving military-to-military relations by enhancing “interoperability” through common defence platforms. The US has been insisting on two major “interoperability” agreements, namely Communication Interoperability and Security Memorandum of Agreement (CISMOA) and the Basic Exchange and Cooperation Agreement (BECA) for Geospatial Cooperation. India, however, believes that such agreements would have consequential effects on its practice of strategic autonomy and it might “impinge on its sovereignty”.

In short, CISMOA and BECA allow the US to transfer advanced communication technology to signatory states. The technologies include satellite navigation, secure communications equipment and synchronised laser guidance systems. CISMOA requires the purchasers to make sure that the defence equipment being purchased are compatible with American systems. The BECA deals with mutual logistical support that enables exchanges of communications and other equipment.

However, India remains wary of such foundational agreements, and the US believes that it is one of the major obstacles in enhancing defence cooperation. The US believes that non-signing of such agreements could hamper India’s prospects of getting cutting-edge defence technology.

Another pending issue between India and the US is the signing of the Logistics Support Agreement (LSA), which aims at providing the armed forces with the opportunity to exchange logistics support, supplies and services on a reciprocal basis. After the signing of the framework for defence cooperation in 2005, the US has been insisting on coming to an agreement on LSA at the earliest. The US believes that LSA would reduce barriers that could limit defence and strategic cooperation between the two countries. The latest Joint Statement on Defence between India and the US (tailored for India) signed in June 2016 is the Logistics Exchange Memorandum of Agreement (LEMOA), which is another name for LSA that the US has signed with most of its allies.

Moreover, New Delhi earlier showed no signs of cooperation on End-Use Monitoring Agreement (EUMA) and Enhanced End-User Monitoring Agreement (EEUMA), which the US believed had limited its ability to share advanced technology. The EEUA and EEUMA are mandated by the Arms Export Control Act 22 U.S.C. 2785, which enables the US to supply and sell defence equipment and services. From time to time, the signing of these agreements had been major obstacles during negotiations. The EUMA was signed in 2009 after its customisation when India insisted that certain provisions of the agreements were to be changed so that timing and location of inspections of operating positions were predetermined, which was one of the key Indian concerns. The signing of EUMA was an important step for enhancing defence trade between the two countries. A little bit of flexibility from both the sides is expected for the signing of EEUMA, which could further boost defence trade.

Licensing Issues

India has been voicing concerns over licensing issues and argues that there is a need to further streamline the US export control system, especially with regards to “dual-use” items and munitions. “Dual-use” exports involve items that have both civilian or commercial and military application. Export of “dual-use” items is managed by the Department of Commerce with inputs from the State Department, Department of Defense, Department of Energy and the intelligence agencies. As these items are generally sophisticated and can be used for military purposes, dual-use exports become an essential element in the bilateral defence trade.

Since the lifting of sanctions in 2001 and the removal of institutions such as DRDO and ISRO from the Entity List, the number of dual-use exports to India requiring licenses has dropped significantly. Only a few items require US licensing. India’s requirement is that most of the organisations under the Entity List be removed and India should be treated on par with allies of the US, such as Japan and South Korea. As the relationship deepens, chances of further improvement in this regard will be critical.

The munitions export is administered by the State Department with inputs from the Department of Defense and the intelligence agencies. This is, however, less transparent as compared to dual-use technology licensing because of paucity of statistics in the public domain. India has been able to make significant defence deals with the US, and some recent imports include C-130J, C-17 Globemaster III and the P-8I Poseidon.

The US, however, has always been insistent that India signs the above-mentioned foundational agreements which India sees as a threat to its sovereignty. Some US companies have failed to conclude Technical Assistance Agreements and Manufacturing Licensing Agreements with the Indian government agencies. This is again a result of India citing sovereignty-related concerns and various other legal reservations. The US considers signing of such agreements essential so that India gets its benefits by acquiring advanced technology. In this regard, there is no sign of consensus between India and the US and this could be one of the major challenges in the defence relationship.

Procurement and Offset Policies

According to experts, another hurdle in the defence relationship is India’s procurement system, which is considered to be non-transparent. The system goes through many levels and channels with checks and balances at every step, with the final approval by the Cabinet Committee on Security, chaired by the Prime Minister. The whole process becomes complex from top to bottom, which delays acceptance of procurement tenders. Though the Defence Procurement Procedure (DPP) has been revised several times and the latest document was released in March 2016, it has seen little improvement. The complexities associated with the procurement system and the procedural arrangements sometimes create difficulties rendering defence procurement difficult.

Another problem is India’s offset policy, which requires foreign suppliers to invest in R&D, and source components in India without having full stake in it. Initially announced in 2005, the offset policy has major limitations. The efficacy of the offset policy remains untested and unproven. As there are multiple agencies that deal with offsets, it is not considered to be predictable, efficient and transparent. As per analysts, it is also crippled with ineffective monitoring. Americans are not at ease until mutual agreements are signed and that India guarantees the protection of IPRs. India remains in the Priority Watch List in the Special 301 Report prepared by the US Trade Representative, indicating that the US is wary of the effectiveness of the enforcement of IPR regime in India. To add to that, the Foreign Direct Investment (FDI) cap in India’s defence sector on foreign investment was earlier 49 per cent (relaxed to 100 per cent recently), which was another sore point for the US. All these together constitute obstacles as far as Indian laws are concerned, which could affect the Indo-US bilateral defence relationship.

Defence Co-Development and Co-Production

As mentioned earlier, because of stringent American laws on manufacturing and technical assistance and India’s inability to arrive at a consensus on foundational agreements, joint development and co-production remains a challenge for India and the US. Moreover, lack of flexible regulatory framework has hindered the prospects of co-production and American defence companies remain uncertain regarding sharing of advanced technology because of issues such as IPR. Though a number of working groups and mechanisms have been put in place such as the Defence Policy Group (DPG) and the Joint Technical Group (JTG), legal hurdles such as procurement and offset policies have stalled progress in defence co-development and co-production.

The Defence Technology and Trade Initiative (DTTI), which was launched in 2012 championed by the US by the then Deputy Secretary of State and now Secretary of Defence Ashton Carter, focuses especially on prospects for co-development and joint production of military hardware involving both US and Indian defence industries. However, a number of obstacles and structural inadequacies exist that prevent the actual fructification of joint initiatives. To further enhance defence ties, both India and the US should take positive steps to resolve complex policy challenges so that the momentum of the burgeoning defence relations can be sustained.

Bureaucratic and Political Hurdles

Bureaucratic challenges are one of the major obstacles for the deepening of defence cooperation between India and the US. The US concerns are because of India’s slow bureaucratic decision-making and its apathy to military engagement. These raise doubts about India’s commitment to the relationship. The Indian perspective, however, is that the current level of engagement is sufficient. India also feels that the US is unwilling to transfer high-end technology, which could be crucial for India’s defence industry to achieve its objective of attaining self-reliance in the long run.

Though India has expanded its military cooperation with other countries, due to lack of administrative offices, staff and trained specialists, India is unable to handle the growing relationships. Moreover, the political and bureaucratic complexity in the organisational structure is another impediment to India’s decision-making in terms of streamlining the procurement procedures. The bureaucratic elite, as per analysts, may suffer from lack of expertise related to security issues, which could further hinder the prospects for defence cooperation in other potential areas. To add to that, there is enough scepticism and reluctance on India’s part about trusting the US as a reliable defence partner because of historical suspicions. The existing trust deficit could further impair defence relationship.

India too has frustrations with the US. India believes that the US is unwilling to transfer high-end technology and the associated know-how. Even after the signing of the Civil Nuclear Cooperation Initiative, the US denies transferring of certain technology citing its sensitive nature and the US position is that it is a result of India’s inability to sign the agreements that are prerequisites to any sale and purchase of sophisticated technology. India has higher expectations from the US in terms of transfer of technology in the domain of defence, which is simply not happening.

And India’s scepticism about the reliability of the US as a reliable defence partner is longstanding. India is concerned that in times of crisis, the US may not approve licences for spares for US-made equipment, which could impinge on India’s foreign policy freedom. The fear is evident because of the bitter experiences that India had in the past, which include instances such as the arms embargo imposed during the 1965 India-Pakistan War and the sanctions imposed after the nuclear tests of 1974 and 1998.

However, on the brighter side, India has made defence deals for the acquisition of US transport and reconnaissance platforms such as C-130J, C-17 Globemaster III, and P-8I Poseidon. India recently made a deal worth $3 billion for two of the most advanced American helicopters, i.e., Chinook heavy-lift helicopters and Apache attack helicopters. India also hopes to procure US artillery M-777 Howitzers and various other missiles, which have lower risk in terms of licensing delays. The recent developments could be indicators of the reducing mistrust between the two sides.

One of the biggest political hurdles between the two sides is the US approach towards its relations with Pakistan, to which India has been continuously showing concerns. Though the US has stated its ‘de-hyphenation’ policy about treating New Delhi and Islamabad separately, from India’s perspective, the US is not giving sufficient attention to its concerns about Islamabad. India believes that Pakistan is taking advantage by accepting generous aid packages from the US, and instead of eliminating the terrorist groups operating inside its territory, Pakistan is engaged in sponsoring terrorism to inflict damage on India. India believes that as the aid provided by the US does not have strict conditions attached to it, this does not make Pakistan change its behaviour and instead further incentivises bad behaviour. It is observed that US-Pakistan relations have deteriorated since 2011, and the US has been pressurising Pakistan to take effective measures to dismantle terrorist networks. India sees that the US is now aware of Pakistan’s true intentions, but nevertheless, the scepticism on the degree of commitment of the US towards India is likely to continue.

Strengthening Strategic Partnership

Military relations between India and the US have made substantial progress in a short period of time. Today, the military-to-military engagement that exists between India and the US was not possible two decades ago. India’s emerging power status in the Asia-Pacific region is one of the major factors that the US sees as an important element for its insistence on developing an enduring defence relationship with India. India is seen as a major player in shaping the Asian security landscape and for the balance of power in the Asia-Pacific region. A sustained defence relationship between the two will be an important factor in determining the direction in which the emerging strategic partnership would go.

Some of the areas of strategic convergence are Afghanistan, security of the global commons, security in the Indian Ocean Region, space and the cyber domain. These are strong underpinnings for the growth of Indo-US defence partnership that could be drivers for expansion of bilateral ties between the two nations. Moreover, the linkages between exercises, increased interoperability and the creation of shared platforms are indicators of the tremendous potential that exists for defence relationship between India and the US.

Prior to the defence agreement of June 2015, India and the US released the “Joint Strategic Vision for the Asia Pacific and Indian Ocean” in January 2015, indicating strong convergences in views that have solidified over a period of time. Both India and the US share similar strategic objectives and therefore, it will be important for both the sides to improve their defence and security cooperation. The ability of the two sides to come to mutual understanding on shared strategic goals will be crucial in determining the commitment that both India and the US have on building a long-lasting defence relationship. Both the sides should focus on areas where cooperation could be achieved that would further augment defence and security collaboration. The mistrust and suspicion that exists between the two sides can be dealt with through effective dialogue between foreign and defence policy establishments, and differences over outstanding issues could be resolved to help in unfolding of the defence relationship.

Though the defence relationship has expanded exponentially over the past decade, it has yet to achieve its full potential. There are differences in operational and legal frameworks, which could be narrowed by understanding each other’s strategic priorities. Though both have differences on major international issues and have divergent approaches to deal with these, both countries do not see each other as formidable threats, which in the long run could be one of the convergences and therefore, the bilateral relationship has the potential to reach newer heights. Closer defence cooperation should not constrain each other’s freedom of action in pursuing their respective national interests, but in turn should complement each other’s mutuality in trust, aims and objectives as well as their common perceptions of threats and agreements on grand strategies.

Conclusion

India and the US have been building closer defence cooperation based on shared security interests. Both the countries have come a long way in terms of developing a solid foundation for the strategic partnership, and the momentum in the bilateral relationship is likely to reach a much higher level in the foreseeable future. India and the US have been cooperating in areas such as maritime security, joint exercises and intelligence sharing, which are some of the crucial elements of the defence ties.

Moreover, India can look forward to get advanced technology and better equipment from the US, which could further enhance its ability to deal with potential threats, especially from the increasingly capable China. There are certain long-standing issues that need to be addressed, and arriving at solutions could further expand the scope of defence cooperation. Scars of history between the two will remain a factor in India’s approach towards the US for considering it as a ‘reliable’ defence supplier.

However, there are possibilities of greater convergences on international issues, which are complemented with shared democratic values and shared interests. Defence cooperation between India and the US should be mutually beneficial and thus, should be pursued in a manner that takes the relationship to the desired direction. An encouraging progress in defence cooperation would further make the strategic relationship between the two more durable in the long term.

This piece was first published on Indian Defence Review and has been republished here with permission.