Doing defence with Uncle Sam

A view of the tarmac at the US Navy base, Oceana, in Norfolk, Virginia. There are 16 squadrons of F/A-18s currently located in this base alone.

by Ajai Shukla

Business Standard, 18th May 10

I spent this last week travelling in the United States at the invitation of The Boeing Company’s defence arm, Boeing Defense, Space & Security (BDS). I visited Boeing’s rotorcraft facilities in Philadelphia; a US Navy aircraft carrier (USS Harry S Truman) and naval air base (Oceana) in Norfolk, Virginia; Boeing’s space division in Florida; and its C-17 transport aircraft plant in California. With the US-India defence relationship on a high-growth trajectory, here are my perceptions on what India is dealing with.

The most striking characteristic of the US defence industry is its primarily inward focus. About 85-90% of the combined revenue of US defence corporations accrues from sales to the US army, navy, air force, marine corps and coast guard; just 10-15% of their revenue comes from overseas. In contrast, non-US defence contractors --- including those in Russia, Europe, Canada, Brazil, Korea and Singapore --- need significant overseas business to cover their development costs. But the volume of sales to the US military amortises the development costs and renders overseas buyers like India peripheral in terms of market leverage.

India’s Ministry of Defence (MoD) likes to believe that its big arms purchases place it in the driving seat while tendering and contracting. In buying from non-US companies, this is indeed true. But, in buying from the US, New Delhi’s leverage is hardly impressive.

Take, for example, India’s proposed purchase of ten C-17 transport aircraft. The Boeing plant in Long Beach, California, has already delivered 200 C-17s to the US military and more are in the pipeline. 

Or consider India’s procurement of 126 medium multi-role combat aircraft (MMRCA), a deal that has generated so much hype that South Block might believe that this is the biggest fighter purchase ever. In fact Boeing, which is offering India the F/A-18 Super Hornet, has already sold the US Navy and Marine Corps over 900 F/A-18s (Hornets and Super Hornets); another 320 have been sold abroad. A single US Navy base at Oceana is home to 170 F/A-18s.

This commercial security allows US defence companies to walk away from contracts where New Delhi lays down conditions that are difficult to meet. Texas-based Bell Helicopters has already declined to participate in India’s tender for 197 Light Utility Helicopters (LuHs), citing unreasonable offset provisions. BAE Systems refused to offer its M777 gun in the Indian tender for ultra-light howitzers, apparently because the trial requirements were unreasonable.

Nor could New Delhi have missed the withdrawal by Lockheed Martin and Boeing from the tempting Indian contracts for consultancy assistance in developing the Tejas Light Combat Aircraft (LCA). The reason for the withdrawal: the State Department bureaucracy refused to allow US participation, apparently because the contract involved passing on sensitive technologies to India.

And that is my second big impression: that India is not yet a part of the high table. When one of America’s longstanding defence partners --- the UK or Australia or Japan --- make a request, whether for high technology, or early delivery of an important weapon system --- a quick wink from Foggy Bottom (the Washington neighbourhood where the US State Department is headquartered) gets the department’s notorious bureaucracy to crank out a quick “yes”.

But Washington’s new strategic partners, like India, do not benefit from such perks. Even during the second Bush presidency, at the high-water mark of the US-India relationship, New Delhi’s requests were never accorded the priority clearances that London, Canberra and Tokyo enjoy. New Delhi complains that the ground floor in Washington doesn’t know what the top floor is doing, but the answer --- according to Beltway insiders --- is that it will take years of relationship building before the American bureaucracy reacts to India with the Pavlovian positivity that is accorded to Washington’s three key defence partners.

The third issue that strikes a visitor is the care with which Washington safeguards its technological prowess. Technology is transferred overseas only after ensuring that the US defence forces retain a technological edge. For example, the AH-64 Apache helicopter, which will undergo trials in India this July, will be by any standards a cutting-edge weapons platform. But, even if India becomes the 12th international customer of the Apache, the US Army will fly a Block III version of the attack helicopter that will be equipped with technologies that no international customer will be given. And the reality of America’s technological dominance is that even the down-rated version of the Apache that international customers will operate might well be superior to its nearest competitor.

These are aspects of the US-India defence relationship that India must evaluate unsentimentally, shedding the rhetoric that creeps into discussions relating to the US. This is difficult, given the historical complexity of the relationship and the grudge that India nurses over Washington’s relationship with Islamabad. But, with America, what you see is what you get; it is up to India to cherry-pick and take what suits it.