IMPROVING US-INDIA DEFENSE COOPERATION: INDUSTRY

UNCLAS SECTION 01 OF 02 NEW DELHI 001230

SIPDIS

E.O. 12958: N/A
TAGS: PREL ETTC MASS TSPA CVIS TSPL FR TH IN US NSSP
SUBJECT: IMPROVING US-INDIA DEFENSE COOPERATION: INDUSTRY
OFFERS IDEAS



1. Summary: In a February 10 meeting sponsored by the US-
India Business Council (USIBC) and the Confederation of
Indian Industries (CII),senior Indian and US defense
company representatives suggested that to expand the
bilateral defense market, the USG should reform its export
licensing process, showcase how NSSP and other progress make
the US a more reliable supplier, and consider more co-
production with Indian manufacturers. End Summary.


2. On the margins of the 2005 AERO India trade show hosted
by the GOI, the Ambassador represented the USG at the first
meeting of the US-India High-Technology Group (HTCG) sub-
group on "Indo-US Industry Cooperation in Defense
Production." He joined a panel comprised of former U/S
Thomas Pickering (representing Boeing and co-chair of the
USIBC Defense Services Mission),retired Lt. Gen SS Mehta
(representing CII),and Maj. Gen HS Sehgal (Technical
Manager, Land Systems, Ministry of Defence). US Export
Control Attache Michael Rufe (USDOC) also attended. The
audience of about 50 was equally divided between USIBC
delegates from US defense manufacturers and GOI defense
sector entities invited by CII.


3. The goal of the event was to identify possible specific
priority programs for US-India defense production. In his
opening remarks, the Ambassador invited the Indian
government to "test us" to prove the USG is a reliable
supplier as well as a strategic partner. He cited changes
in the US-India relationship such as the Next Steps in
Strategic Partnership (NSSP) and the powerful and growing
India lobby in Washington as proof of a long-term, mutually
beneficial relationship. Maj. Gen Sehgal gave an overview
of the MoD's procurement procedure.


4. Members of the audience raised the following points:

- US export licensing requirements disadvantage US industry
at each stage of defense sales transactions: talk,
negotiate, sell and transfer. Could there be a "duration of
program" license for 15+ years that might cover contacts
sufficiently to put GOI concerns at ease? Could existing
contracts be protected by higher thresholds required to
sanction them under US law? (Note: Ambassador Pickering
noted such an export license would not be useful since
Congress can always change laws and policy. End note.)

- Could any Indian end-users be pre-cleared so that only
the technology and the use need verification? In any case,
can the export license process be expedited?

- The USG has to thoroughly explain how industry will be
affected by changes made under the NSSP. Suggestions for
doing this included releasing a profile of how many dual-use
BIS and munitions list DTC licenses have been granted since
NSSP was launched, what areas NSSP has facilitated or
removed export licensing requirements for, the processing
times for licenses, and a breakdown of licenses granted by
industry.

- Could the Glenn Amendment be repealed?

- Could a DTC specialist be placed at Embassy New Delhi, or
at least come on TDY to brief the Indians on export licenses
for defense sales?

- Indian industry asked for more co-production, and joint
research and development, as a way to make US tenders more
attractive to the GOI.

- Lt. Gen Mehta asked if co-production of anti-terrorism
equipment could be a starting point for broader US-India
cooperation and increasing high-tech trade.


5. Comment: While few specific projects were identified for
US-India defense cooperation, both US and Indian industry
were upbeat about the future of their commercial
relationship. Many questions could not be substantively
addressed because there was no DTC or DoD representation at
this event. The mission strongly recommends expanding USDOC
export licensing seminars in India to include State(PM) and
Defense representatives in order to respond to queries that
inevitably cross USG agency authorities. End Comment.

MULFORD