Economy

India Tweaks Norms to Boost Defence Manufacturing

New Delhi: The 2015 US-India Defence Framework to be signed during the visit of US Defense Secretary Ashton Carter is likely to trigger a new phase in maritime cooperation between the two countries with one eye firmly on rising tensions in the South China Sea and the wider ‘Indo-Pacific’ region.

Carter , who arrives in India today, will tour the Eastern Naval Command at Visakhapatnam and hold a meeting with Defence Minister Manohar Parrikar in New Delhi. Apart from the new Defence Framework, which will replace the 2005 one, the two men will also sign the Defence Trade and Technology Initiative (DTTI) framework that will guide military cooperation for the next 10 years. Apart from the Apache and Chinook choppers being high on Carter’s agenda, the US side is also focusing on the provision of Electro-Magnetic Aircraft Launch System (EMALS) technology for the Indian Navy’s Vikrant-class aircraft carrier.

In the run up to Carter’s visit, the Narendra Modi Government on Monday announced steps to boost defence manufacturing and encourage foreign players such as Boeing, Airbus and Lockheed Martin to explore business opportunities in India.

An official spokesman said that in order to provide a level-playing field to private players, the government has withdrawn excise and customs duty exemptions enjoyed by the Ordinance Factory Board and defence PSUs. “This will provide a level-playing field… by taking away the strategic advantage PSUs had [in being able to quote] lower rates in open bids … With this initiative, the government has also fulfilled a key demand of foreign Original Equipment Manufacturers (OEMs) such as Boeing, Airbus, Lockheed Martin, BAE Systems etc which are actively exploring the scope of future investments in India,” a Commerce and Industry Ministry statement read.

It said the move will also send a definitive message to foreign OEMs that India is open to business for defence manufacturing. The Indian aerospace and defence market is among the most attractive globally as the country is the highest importer of defence items in the world, it added. The government has systematically opened up the sector for private investment by increasing the FDI cap in defence  to 49 per cent and rationalising certain conditions.

Defence manufacturing is one of the key sectors among the 25 identified under the Make-in-India campaign.

Speaking at the just concluded Shangrila Dialogue at Singapore, the US Defense Secretary said the US is looking for new ways to complement India’s Act East policy and find meaningful areas of cooperation in the Asia-Pacific. “We’re leveraging America’s alliances and partnerships to pursue new forms of cooperation and that is why America’s trilateral networks are blossoming,” Carter said.

Both India and US are understood to be working on ground-breaking ideas and proposals to deepen the defence partnerships between them for decades to come. Carter’s two-day visit is likely to see forward movement on the four ‘pathfinder’ projects agreed during President Barack Obama’s January 2015 visit to New Delhi. However, it is expected that the four products are likely to be expanded to six. This could include joint production of the next-generation Raven unmanned aerial vehicles (UAVs); roll-on-roll-off intelligence gathering and reconnaissance modules for the C-130 J Super Hercules aircraft; mobile electric hybrid power sources and Uniform Integrated Protection Ensemble Increment – 2 (i.e. chemical, biological warfare protection gear for soldiers).

EMALS, manufactured by General Atomics, is also on the agenda but will not be part of the DTTI. India has already shown interest in the system which propels fighters into the sky from the decks of a carrier and allows increased payload of the aircraft while saving fuel. Besides these, a working group was also set up on the advanced aircraft carrier. The US Navy is currently using next generation technology on its new Gerald R Ford class carrier, which is under construction. Under the DTTI, the US side had proposed 17 defence products and had also requested India to hand over a wish list of projects that India would like to work on. The DTTI was originally called the Carter initiative. In fact, the Pentagon is also reported to have set up a ‘Rapid Action Task Force’ to deal with military technology co-development and co-production.

Carter will be accompanied by US Assistant Secretary of Defence Frank Kendall to continue the process started at the highest political level of the two countries. Kendall is the Pentagon’s points-person on India-related defence issues, particularly on DTTI. The DTTI proposals include the joint production of the Scorpion light attack aircraft in India, which can also be used as an intermediate jet trainer (IJT) for the IAF. The IAF is reported to be keenly interested in the Scorpion because of the failure of HAL to produce the Sitara IJT – under development since 1997.