US and India Team Up for Business

The US and India have announced plans to strengthen their defence relationship, agreeing to cooperate on a number of projects, from jet engines to aircraft carrier designs and other areas, and to pursue co-development and co-production projects that will offer opportunities for American manufacturers to build partnerships with the Indian industry, including in manufacturing under a national programme geared toward making India a manufacturing hub. Simon Williams and Alex Flather take a closer look at the cooperation agreement to find out what each country stands to gain.


Mig 29

The Indian Armed Forces are in the middle of an ambitious modernisation programme. New purchases such as General Electric's F414 engines for the Tejas light fighter, as well as US technology transfer for the Vikrant class aircraft carrier programmes represent India's diversification away from Russian platforms with the helping hand of Uncle Sam.

Over the last decade, India has accumulated a significant portfolio of technology and weapons systems from Russia -- most notably the infamous Kiev class INS Vikramaditya aircraft carrier, which is turning into a disastrously expensive and outdated refitting project plagued by delays and overspending.

Not all Russian projects have turned out poorly, however. Russian aircraft manufacturers such as Sukhoi and joint-stock company (JSC) Russian Helicopters continue to have repeated success in the Indian market. Kamov Design Bureau, of JSC Russian Helicopters, is to deliver 200 Russian-made Ka-226T multipurpose helicopter variants with twin Arrius 2G1 turboshaft engines produced by France's Turbomeca for $600m. The deal also includes a potential follow-up of 400 additional Ka-226T and Mi-17 choppers per year produced indigenously by Hindustan Aeronautics Limited in India under license from JSC Russian Helicopters.

But is India reaching to the far side of the Pacific for additional American support? Or is Washington trying to muscle Moscow out of India's defence market?

Global shuffle

Geopolitical challenges over the last year have ushered in a paradigm shift across the Indian defence procurement and development arena. New opportunities have emerged which may allow the US to transfer resources, equipment and technology to India for application in ongoing large-scale defence production endeavours. Such cooperation can serve as a platform to deepen the US-India relationship at a time when international defence partnerships are once again paramount in ensuring global security.

This bi-hemispheric cooperation occurs against the backdrop of a resurgent Russia - a Russia that seeks to keep its economy afloat through remittances tied to foreign oil and defence product sales. In the defence sector, Russia's key to survival is maintaining a low profile, and not choosing sides in regional power-struggles so as to maximise access to potential customers.



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By supplying all sides in the South China Sea dispute, in Middle Eastern conflicts, and even in supplying rivals India, Bangladesh, and Pakistan alike, Russia is able to consistently maintain lucrative sales returns based solely on financial interest and, at least on the surface, unaffected by regional politics. This open supply to rivals, combined with an increasingly active, even aggressive, Chinese presence in the Indo-Pacific region, has led India to welcome seductive approaches from Washington. As this relationship matures, India can reap the benefits of partnership with the US Department of Defence and its main suppliers who have been vocal in their intention to challenge Russian companies in the defence technology marketplace around the world.

Kicking off Indo-American cooperation

With this in mind, the New Framework for Defence Cooperation between the United States and India was formally renewed in New Delhi in June with the signing of the 2015 Framework for the India-US Defence Relationship, extending a previous agreement from 2005 for an additional ten years until 2025. The vital section for further technology transfer and economic cooperation renews focus on the Defence Technology and Trade Initiative (DTTI), which is facilitating the latest joint military projects between the two nations.

American officials are keen to utilise the DTTI for ambitious co-production and co-development projects. As an example, Javelin anti-tank guided missiles were mooted as a possible first project in early 2015, but a project of that scale was rejected by US companies over disputes concerning technology sharing with India for the production of the system.

As a compromise, Israeli launchers were purchased and incorporated into the product release so as not to jeopardise the proprietary US technology. This elucidates that India and the US are taking small steps to become comfortable in their relationship, beginning with pathfinder projects managed under the auspices of the DTTI, before more advanced projects and technology transfers are considered.

Imports and co-production

Some key joint projects include moving the production site of American UAV market leader AeroVironment from the US to India for the development of its next generation Raven UAVs. India has expanded its use of UAVs in recent operations and is topping the list as the leading importer of Israeli drones.

To minimise costs and lower foreign dependency, Indian company Dynamatic Technologies will be working with AeroVironment to develop a domestic UAV production programme in Bangalore. This DTTI co-operation project focuses on lengthening the flight time and operational range of the Raven, which is a hand-launched recon model, lowering production costs, and enhancing production capability for global sales.

"Along with imports, domestic Indian co-production activities with foreign partners are now prioritised, spawning from the Make in India campaign."

The second key pathfinder project is the co-manufacture of advanced roll-on/roll-off recon and intelligence gathering modules for the C-130J Hercules, crucial for expanding the ability of the Indian Air Force to gather intelligence in support of ground forces. India bought twelve of these aircraft for its special forces in 2007 from Lockheed Martin for $2bn and a further six in 2011 for $1bn. The success of the Hercules has led India to order yet another six aircraft from Lockheed for delivery in 2016.

Along with imports, domestic Indian co-production activities with foreign partners are now prioritised, spawning from the Make in India campaign launched by Indian Prime Minister Narendra Modi in 2014. Since then, and particularly in Q1 and Q2 2015, indigenous manufacturing of defence products in India has already taken off, with the additional 400 Ka-226Ts and Mi-17s to be built domestically as part of the JSC Russian Helicopters deal along with numerous other aviation projects such as the Tejas fighter, naval projects such as the Vikrant class carriers, and small-scale projects ranging from micro UAVs to personal protection equipment for soldiers.

Over the last 15 years, there has been less than $5m of foreign direct investment (FDI) in India's defence sector, keeping the country heavily reliant on imports. The new DTTI projects are part of a potentially $120bn push over the next ten years to raise India's domestic manufacturing capability to match forecasted military spending on new hardware. In this context, DTTI and the 2015 Framework catalyse indigenous production goals while inspiring confidence in US suppliers. This type of investment and cooperation in India is feasible, particularly now that the FDI cap has been raised from 26% to 49% for the Indian defence sector.

In light of the military modernisation drive and Make in India campaign, the US is exploiting the renewed relationship with India to move into segments of the Indian defence technology sector historically dominated by Russia. Some visible examples are high-performance aircraft engines and aircraft carrier technology.

Aviation platforms and engines

The light combat aircraft Tejas, manufactured by India's Hindustan Aeronautics Limited (HAL) in line with the Make in India programme objectives, is slotted for service entry in 2017-2018 to replace the Russian-made MiG-21. Despite investing $640m in R&D for the Tejas, HAL has failed to resolve ongoing problems with the indigenously produced Kaveri engine from the Gas Turbine Research Establishment, a laboratory of the Indian Government's Defence Research and Development Organisation. As a result, HAL has selected American conglomerate General Electric (GE) to supply F414 engines for approximately $900m as a replacement.



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This can be contrasted with the $30bn Fifth Generation Fighter Aircraft / Perspective Multi-role Fighter modernisation project, which is being developed for the Indian Air Force in close cooperation with renowned Russian fighter manufacturer Sukhoi, to eventually replace the current Su-30MKI. When these two major aircraft projects are examined together, India's comfort level with component and platform acquisition from a variety of competing sources is evident, exposing a paradigm shift in the way the country strategically leverages technology transfer from multiple global partners to enhance indigenous production and augment force posture.

Thus it is pertinent to highlight that by selecting GE's F414, India did not use Russian engines in the Tejas project, perhaps marking a move away from Russian-made components in the context of the DTTI, even though around 80% of Indian Air Force's current fleet of combat aircraft are Russian-made, with the remaining 20% composed of French and British veteran platforms which are soon to be retired. This may signal an anticipated long-term relationship with GE and other American suppliers to reliably fill the upcoming aviation hardware void.

Naval systems

On the naval side diversification from Russian platforms is also evident, with US technology transfer scheduled for incorporation in large-scale domestic shipbuilding projects. As the purchase of the INS Vikramaditya Kiev class aircraft carrier from Russia in 2013 resulted in an overpriced carrier with a faulty maintenance programme and lacking air defences, a domestic programme is making waves at India's Chochin Shipyard. The two Vikrant class carrier projects, INS Vikrant and INS Vishal, will be outfitted with American-made LM2500 gas turbines also produced by GE, and possibly with electromagnetic aircraft launch systems developed by General Atomics. These US Department of Defense-approved transfers are conducted within the scope of the Indo-American DTTI framework.

India is entering a new era of not only defence technology imports, but also indigenous defence manufacturing. Russia is not yet left out in the cold, but the US is displaying its wares to India and definitely attracting significant interest.

It is hoped that the completion of both Vikrant class vessels, scheduled for 2018 and 2025 respectively, will not only be a landmark shift ushering in a period of smooth sailing for India's carrier programme, but will bring with it the next generation of US expertise and continued technology transfer, symbolising enhanced Indo-American defence cooperation via DTTI and related channels, and directly facilitating modernisation of the Indian armed forces across all battlespace domains.