Report of Monday Morning Meeting on Indo-US Defence Industrial Cooperation and Aatmanirbharta

Gp. Capt. (Dr.) Rajiv Kumar Narang, Senior Fellow, Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA), spoke on “Indo-US Defence Industrial Cooperation and Aatmanirbharta” at the Monday Morning Meeting held on 17 July 2023. The session was moderated by Dr. S. Samuel C. Rajiv, Associate Fellow, MP-IDSA. Ambassador Sujan R. Chinoy, the Director General of MP-IDSA, and scholars of the Institute were in attendance.

Executive Summary

The recent India-US defence industrial cooperation between Prime Minister Narendra Modi and US President Joe Biden held from 21-24 June 2023 depicted the significance of technology in strengthening bilateral relationships with strategic partner countries. The speaker advocated the need to understand the complexities, implementing agreements and challenges in reciprocal agreements. He highlighted the need for protecting Indian intellectual capital, analysing impact of procurements on indigenous programs and civil-military fusion in aeronautics technologies, He concluded by emphasising the need for creating India’s defence technology innovation roadmap,instituting structural, policy and procedural reforms for enhancing contribution of Indian defence forces, pursuing joint development, joint IP creation and procurement; and instituting measures for inter-ministerial coordination to make R&D and innovation collaborations with international partners successful and pave the way for self-reliance (Aatmanirbharta) in defence technologies.

Detailed Report

Dr. S. Samuel C. Rajiv gave a brief introduction to the subject before describing how defence industrial cooperation between India and the United States has recently benefited from the jointly agreed upon defence industrial roadmap in June 2023. He briefly mentioned the previous defence framework agreements between the two countries that provided the structure to facilitate this cooperation further.

Gp. Capt. (Dr.) Narang cited the importance of technology in strengthening the relationship between partner countries. He drew attention to the latest India-US defence industrial cooperation between Prime Minister Narendra Modi and US President Joe Biden held from 21-24 June 2023. Although the initiatives adopted during this meeting have the potential to enhance collaboration between the two states through technology-driven approaches, yet there is the need to comprehend the details of the agreement and complexities to effectively implement them rather than relying on expectations. He discussed the key initiatives and agreements signed and attempted to relate them to innovations, technology collaborations and the impact of such initiatives on achieving aatmanirbharta in the defence sector of the country. Finally, he made certain observations and gave certain recommendations.

India and the US have been close strategic partners since the signing of the 2005 framework agreement on defence relations, which was renewed in 2015. Along with the above, various other defence agreements were signed between the two countries to promote technology-sharing, co-development and co-production, such as the Defence Technology and Trade Initiative (DTTI) in 2012, and Strategic Trade Authorisation Tier-1 (STA-1) in 2016. The annual 2+2 ministerial dialogue was initiated in 2018. Since the initiation of the US-India Defence Dialogue in 2008, there has been significant growth amounting to USD 20 billion in the year 2020 from collaborations such as the C-17, C-130, Apache, Chinook, P-8i, and M-777. There were many other dialogue mechanisms like the Defence Policy Group (DPG), Defence Joint Working Group (DJWG), Joint Technical Group (JTF), Military Cooperation Group (MCG), and the Executive Steering Group (EG). However, there are still challenges to be addressed, such as the lack of reciprocal agreements between the Indian defence forces and US startups.

The speaker then spoke about several critical agreements relating to information exchange, aircraft technologies, fuel exchange and foundational agreements signed between India and US. These were the General Security of Military Information Agreement (GSOMIA) in 2002, the Logistics Exchange Memorandum of Agreement (LEMOA) in 2016, the Communications Compatibility and Security Agreement (COMCASA) in 2018 and the Basic Exchange and Cooperation Agreement (BECA) in 2020. He argues that there has been significant progress in India-US defence industrial cooperation in recent years, but that there is still more work to be done.

Before the beginning of Prime Minister Modi’s to the US, the Indian Defence Secretary Giridhar Armane and the US Under Secretary of Defence and Policy Dr. Colin Kohl co-chaired the Indo-US Defence Policy Group in Washington on 17 May 2023. They deliberated on enhancing defence industrial cooperation, partnerships, identifying opportunities for co-development of new technologies and production of existing and new systems, and R&D. This was followed by the visit of US Secretary of Defence Lloyd Austin’s visit to conclude the Roadmap for India-US Defence Industrial Cooperation on 4-5 June 2023. On 13-14 June 2023, US NSA Jake Sullivan also paid a visit to India to review the progress on the Initiative on Critical and Emerging Technologies (iCET) and signed MOU on semiconductors. Discussions also centred around areas of space, AI and security of supply agreement and regulation of critical design in defence technologies, and placement of a liaison officer in each other’s military organisations. Gp. Capt. (Dr.) Narang emphasised the significance of Reciprocal Defence Procurement (RDP) agreements and streamlining of regulatory mechanisms to promote the export of defence technologies from US start-ups for the Indian defence industry and vice-versa. The most important agreement signed during Prime Minister Modi’s US visit, was the India-US Defence Accelerator Ecosystem (INDUS-X) – Defence Innovation Collaboration between the US Defence Innovation Unit (DIU) and the Indian DIO-iDEX. It is intended to complement government-to-government collaborations between Indian companies, investors, startup accelerators and academic research institutions to co-develop and co-produce advanced technology by Indian and US start-ups. This was followed by the acquisition and manufacturing deal of the GE-414 Aero-engine, and the 31 MQ-9B Sea Guardian/ Sky Guardian UAS Acquisition Deal. Additionally, the US Department of Defense (DoD) Space Force had signed an R&D Agreement with the 114-Ai and 3rdiTech, however, there have been no reciprocal agreements by Indian defence forces or the Ministry of Defence (MoD) with US-based startups.

In the context of the signing of the MoU for Joint production of 99 GE 414 for LCA Mk-2 and AMCA Mk-1 between HAL-GE on 22 June 2023, Gp. Capt. (Dr) Narang elaborated on the increase in the ToT from the earlier 58 per cent to 80 per cent for the GE414 engine, pending US congressional approval for the export administration regulation (EAR) and International Traffic in Arms Regulations (ITAR). He also expounded on six other such aero-engine joint development initiatives with other companies in the US, France, the UK, Russia and China. In the case of France, it is working with India for the development of an engine for the Advanced Light Helicopter (ALH) and the Intermediate Medium Range Helicopter (IMRH). Furthermore, the Master-Ship Repair Agreement (MSRA) and the iCET were two other major agreements signed to further work in the areas of science and technology such as AI, quantum, space and telecom, among others.

The speaker then offered some observations. He pointed out that although India has a sizable defence budget, much of it is spent on foreign military hardware, so the country needs to concentrate on developing its defence technology, particularly in the areas of civil-military fusion and dual-use technologies to achieve civil-military integration in areas like aviation technologies. The INDUS-X defence partnership with the US has the potential to be a major boost for India’s defence industry, but it is important to ensure that India benefits from the partnership in a meaningful way. Several challenges need to be addressed to make the INDUS-X partnership a success, including IP sharing, ownership rights, co-production between Indian and US partners, and the prevention of the migration of Indian intellectual capital. Additionally, the Indian defence forces need to be prepared to take on a more active role in the development and procurement of defence technology. Gp. Capt. Narang maintained that it is also crucial for the government to proactively work towards an inter-ministerial approach to create a more equitable space for co-development and co-production defence projects through collaborative research, identify technological gaps, formulate proper problem statements, and funding, to gainfully leverage joint deference technology and innovation collaborations for capability development and pave the path towards Aatmanirbharta in the defence sector. India’s defence ecosystem is currently fragmented, with different ministries and agencies working in silos. This makes it difficult to coordinate and implement defence technology projects effectively.

The speaker concluded by stating that it is also essential to examine how procurement of foreign equipment impacts indigenous programs as India has a history of importing foreign military equipment, which sometimes leads to the neglect of indigenous programs. The government needs to ensure that procurement of foreign equipment does not come at the expense of indigenous development. Hence a comprehensive innovation roadmap, inter-ministerial coordination, and ownership for technology development are crucial for gaining ground towards Aatmanirbharta in India’s defence manufacturing and technology development roadmap.

Questions and Comments

Dr. Rajiv thanked the speaker for his detailed presentation and opened the floor for questions and comments. During the discussion which followed, the Director General Amb. Sujan R. Chinoy enquired about the purpose and associated cost benefit analysis of fitting an afterburner version of Kaveri aero-engine onto the LCA Mark 1 prototype for technology validation. He also enquired whether working on proven designs such the GE-F404 and GE-414 would be better approach. He added that India needs to collaborate with the US owing to the highly regulated defence industrial ecosystem of the latter. He stressed India’s ability to absorb and develop advanced technologies, both in the public and private sectors and the need to develop a more robust ecosystem for technology development and acquisition.

Mr. Arvind Khare enquired whether problem statements have been identified for the INDUS-X initiative from both sides and who will be the nodal agency from the Indian side. He also wanted some clarity on whether the INDUS-X initiative will fall within the same pattern as the bilateral innovation agreement between the DRDO and the Directorate of Defence R&D of Israel.

Dr. Abhishek Mishra enquired about the ToT percentage of the GE-414 jet engine cores and the requirement of the MQ-9B for the Indian Navy. Dr. Rajiv Nayan commented upon the importance of engine development for various applications, including unmanned systems and shipbuilding, and the need for India to become more self-reliant in this regard. He stressed increasing investment in R&D in the private sector to develop expertise in critical technologies.

Cmde. Abhay Singh commented on the lack of evidence-based research in defence and security due to the paucity of information in the public domain. Dr. Om Prakash asked the speaker about the advantages gained by the defence start-ups from the particular defence cooperation with the US. Dr. Anand Kumar commented on the recent order of around 1000 commercial aircraft which was placed by Indigo and Air India reflecting on the growth potential of the Indian aviation industry. Secondly, he enquired about why India might have a problem with replicating co-development models with the US as had been previously done with Russia while working on the BrahMos. Col. Rajneesh Singh remarked that China’s success in negotiating and establishing collaborative agreements with foreign companies is due to the availability of a conducive ecosystem for technological collaboration.

Overall, the discussion revolves around India’s technological capabilities, collaboration with other countries, and the need for a strategic approach to technology development and acquisition. Gp. Capt. (Dr.) Narang then responded to the comments and questions.

The report has been prepared by Ms. Shayesta Nishat Ahmed, Research Analyst, Defence Economics and Industry Centre, MP-IDSA.