Amid the global shutdown in response to the coronavirus pandemic, it is hard to recall that just ten weeks ago, U.S. President Donald Trump was wrapping up a state visit to India and announcing a “Comprehensive Global Strategic Partnership” with Prime Minister Modi.
The leaders focused on national security, committing to “greater maritime and space domain awareness and information sharing; joint cooperation; exchange of military liaison personnel; advanced training and expanded exercises between all services and special forces; closer collaboration on co-development and co-production of advanced defense components, equipment, and platforms; and partnership between their defense industries.” They announced $3 billion in defense deals for Apache and MH-60 Romeo helicopters which, though long expected, provided some bling.
Before the COVID shutdowns, a flurry of follow-on defense engagements had been planned: US Defense Secretary Esper was to visit Delhi in late March; the revitalized Defense Technology and Trade Initiative and the top defense policy meeting, the DPPG, were planned for late April. These meetings are key to making concrete progress on areas highlighted by leaders and to implementing several agreements concluded last year, especially on information sharing and industrial cooperation. They also provided a chance to conclude the final core agreement on geospatial information sharing agreement known as BECA.
Coronavirus delayed all that. Both governments continue to work on new initiatives and ways to grow cooperation, but there is a risk of inertia. For example, India’s latest revision to its complex defense procurement procedure (the DPP) is moving ahead without the benefit of face-to-face discussions. Written comments on the massive 746-page draft are due on May 8th.
Though there are some welcome changes, India’s Ministry of Defence will hear concern from international officials and businesses about provisions that may decrease rather than increase defense cooperation. The Ministry should consider the feedback and make some modifications.
Key concerns surround changes to India’s offsets policy (offsets are the requirement for foreign vendors to spend a percentage of a contract value locally). The new DPP apparently ends the ability to bank offset credits, which gave international companies confidence sourcing from India and gave Indian partners consistent business. The draft also removes civil aviation and homeland security as avenues for offset credits in defense, making it harder for companies to find Indian offset partners. Possibly positive steps like offset credits for investment in Indian defense firms are unattractive as currently structured (for only non-equity investments and realized only after a product is delivered, not when the investment is made).
A welcome innovation in the draft DPP is the new leasing option for the Indian armed forces. India has not generally leased military equipment (except for the Russian nuclear attack submarine INS Chakra). Given the always-strained defense capital budget – and the likelihood of defense budget cuts given the pandemic and economic crisis – leasing could become a useful avenue for India to gain critical capabilities. Another good innovation is the introduction of defense innovation program (iDEX) into the DPP as India looks to bring more new technology into defense.
Parsing the DPP, of course, is not what matters most. The question is whether the United States and India can break new ground on their most ambitious aims during the crisis. The goodwill is there. The bureaucratic and policy obstacles have been largely cleared since 2004. And the shared strategic interests, especially regarding China, align India with the US, not Russia.
Yet both countries have erected tariff barriers. Despite the bold commitments and new enabling agreements, the United States is not a viable alternative to Russia for India’s most vital systems – from nuclear submarines to aircraft carriers to missile defense. And India is moving to more of a managed market economy, something reflected not just in the DPP but also in moves regulating technology, commerce, trade, and investment.
India and the United States need one another if they are going to enjoy an Indo Pacific region hospitable to their strategic interests. The two sides continue to talk regularly through the COVID epidemic, and they have coordinated on assistance to the region. Both countries have increasing faith and confidence one another, and they continue to deep cooperation on technology and through very sophisticated military exercises. During COVID disruptions, the US and India should conclude and implement new agreements and step up to the most ambitious goals of the partnership through greater openness, sharing of sophisticated technologies, and joint military activities beyond exercises.
Vikram J Singh is the Senior Advisor for Defense at the US-India Strategic Partnership Forum. The article appeared in Financial Express on May 8, 2020.