By Nick Lombardo
U.S.-India defense trade has undergone a remarkable transformation over the past decade. American sales to India have grown from virtually zero just a few years ago to well over $8 billion today. In fact, it was announced in July that the U.S. will sell six C-130J cargo planes to India, in addition to the six planes India already purchased in 2008 for about $1.1 billion. And while these data points are notable in their own right, the more important aspects of our growing defense trade are the relationships and capabilities that are built because of the sales. In providing world-class defense equipment to India, the U.S. enables new training and exchange opportunities between our militaries, helping to advance “one of the defining partnerships of the twenty-first century.”
While the defense trade relationship has significantly improved, there are still challenges to achieving a more efficient, responsive, and effective defense trade relationship. As Defense Secretary Leon Panetta stated during his June trip to New Delhi, “to realize the full potential of defense trade relations, we need to cut through the bureaucratic red tape on both sides.” To that end, he appointed Deputy Secretary Ashton Carter as the U.S. point of contact to handle that very assignment.
Deputy Secretary Carter then paid his own visit to India in July. Ahead of his trip, Senators Mark Warner and John Cornyn sent a letter to him on behalf of the 36-member Senate India caucus advocating some key recommendations from a recent report on bilateral defense trade by the CSIS Wadhwani Chair in U.S.-India Policy Studies. In a related newsletter, the author of the CSIS report – Dr. Amer Latif – highlighted some key themes from the report, including:
• A call for the U.S. and India to consolidate the various defense trade working groups that are currently spread across numerous U.S. and Indian agencies and ministries;
• A recommendation for the U.S. Government to seriously examine the possibility of greater co-production and co-development projects with India through a comprehensive policy review;
• A call for India to increase the permissible level of foreign direct investment in its defense sector to an amount greater than fifty percent, and to seriously reexamine its approach to how the country’s defense offset resources are currently being spent; and
• A call for a bilateral defense industrial dialogue, greater U.S. engagement with Indian state governments, increased cooperation between the Foreign Military Sales and Defense Procurement Procedure systems.
As the United States rebalances its engagement with Asia in the coming years, the Indo-Pacific will increasingly look to Washington and New Delhi as security providers in a region that holds great economic promise, but where security challenges could threaten that promise. The United States and India now stand at a defining period of their defense trade relationship and have an opportunity to build a mutually beneficial partnership that will not only meet each side’s respective interests, but also benefit stability in Asia as a whole. To be sure, bilateral defense trade is going well, but it could be much better. In striving to overcome these challenges, both countries will advance the cause of Asian and global security through a relationship that could prove to be one of the most decisive in the coming century—if both sides so choose.
Nicholas Lombardo is Program Coordinator for the CSIS Wadhwani Chair in U.S.-India Policy Studies.