HAL CHIEF ASSERTS U.S. LICENSING, VISA PROCEDURES

C O N F I D E N T I A L SECTION 01 OF 02 NEW DELHI 003664 SIPDIS SIPDIS DEPT FOR SCA/RA, SCA/INS, PM/RSAT AND PM/DTCS E.O. 12958: DECL: 08/10/2022 TAGS: PREL PGOV MARR ETRD CVIS IN SUBJECT: HAL CHIEF ASSERTS U.S. LICENSING, VISA PROCEDURES HURTING U.S. BUSINESS Classified By: CDA Steven White for Reasons 1.4 (B, D) ¶1. (C) This is an action request for the Department. Please see paragraph 8. ¶2. (C) Summary. Charge agreed to meet with the Chairman of Hindustan Aeronautics Limited (HAL) at the latter's request on the margins of a visit to Bangalore to accompany U.S. Senator John Ensign. After briefing Charge on the company's operations, Baweja made three requests: -- State Department export license clearances appear non-transparent to HAL, and delays caused by those clearances often hold up future planning; HAL would like to better understand (and speed up) the process so it does not have to make its purchases from U.S. competitors or design components itself. -- Control over missile components is particularly cumbersome for HAL; Chairman Baweja provided a list of problems related to its work with Honeywell/Garrett Engine. -- HAL is troubled by visa mantis delays even when (in the Chairman's opinion) the visits to the U.S. are completely benign. End summary. Baweja: HAL's Your Pal -------------- ¶3. (C) Chairman Baweja described HAL's 67-year interaction with US companies, including Lockheed-Martin, Boeing, Honeywell, GE and many more. The company's 27 business groups and 30,000 employees are spread across India, engaged in military and civilian design and production. Baweja described the reverse-engineering process employed for licensed production of Russian-origin planes and weapons systems: the company purchases the product, then kits, then produces the same product using its own raw materials. In a half-century of production, Baweja claimed, there have been no cases of non-conformance in a contractual arrangement. No Russian/French/British or other nation's technological secrets, he emphasized, have been conveyed elsewhere. SIPDIS ¶4. (C) Baweja stated that HAL does not deal with sanctioned nations such as Iran. He stressed the company's tight security, but when the Charge pressed him on post-production inspections, he resisted, saying that once HAL obtains a production license, it does not accept inspections. Baweja characterized U.S. companies' work with HAL as "highly cooperative" during the 1983-98 period, but said that communication has been more limited since India's 1998 nuclear test. Now, Indian military acquisitions generate excitement, and U.S. defense companies are keen to promote their products. Baweja stressed that HAL respects U.S. export control laws and understands the need for export license clearances, then made the requests summarized above. Frustrated Over Speed Of License Clearances -------------- ¶5. (C) Expressing frustration over what he perceived was a pattern of slowness in HAL receiving license clearances for projects, Baweja handed the Charge two "annexures" related to the Indian Navy's procurement of Garret engines being purchased through Honeywell. (Note: The two annexures are being scanned and e-mailed to SCA/INS. End Note.) Along with listing four pending license requests which "require urgent resolution," the annexures detail several other delays to HAL's production schedule caused by licensing problems, concludes that the long licensing procedure has affected the Garret engine program "very badly," and challenges the need for the license under ITAR definitions. Baweja also cited the example of a 1.5-year delay in obtaining export licenses for a flexible fuel bush to connect two fuel hoses, stating that it is often more efficient for HAL to design the component itself, thereby depriving the U.S. company of business. Believing the USG's export licensing procedure is NEW DELHI 00003664 002 OF 002 not transparent, Baweja said relevant officials at HAL would like to better understand (and speed up) the process so it does not have to make its purchases from U.S. competitors or design components itself. Visas A Problem Too -------------- ¶6. (C) Baweja added a complaint about HAL employees having difficulty and delays in getting visas for official travel to the U.S., specifically citing the Visas Mantis procedure. Baweja cited the case of HAL officials traveling to Seattle to learn best management practices. He said HAL respects U.S. security concerns, but its executives feel that they have been unfairly targeted. Comment: Baweja Should Be Better Informed, But Still.... -------------- ¶7. (C) Comment. Baweja was in the Indian delegation for the last DPPG and Emboffs there noted he did not raise any concerns during the session devoted to commercial issues that were impacting US-Indo defense commerce. Additionally, Post does not recall anyone from HAL attending either of the two State Defense Trade Control (delegations led by Greg Suchan) briefings and discussions held in MoD. Regardless, while Baweja will likely never find satisfaction in dealing with U.S. export controls and procedures, we would like to appear responsive to his concerns, particularly given his position as head of this major MoD manufacturer in this time when defense cooperation has become a top priority for our bilateral relationship. The USG and U.S. industry need Baweja and HAL on our side as our defense cooperation grows and potentially billions of offset dollars start heading HAL's way. End Comment. Action Request - Guidance For Responding To Baweja -------------- ¶8. (C) Action request. Post requests any information the Department can share which would be beneficial in explaining the Garrett/Honeywell case to Baweja. To address Baweja's wider concern that U.S. licensing procedures are harming U.S. business in India, Post, understanding full well USG officials have been intermittently engaged with HAL in the past, recommends we increase even further our dialogue with HAL and the GOI on U.S. export procedures. Specifically, we suggest expanding the dialogue on export/licensing procedures and issues during upcoming bilateral meetings such as the Defense Policy Group, the Defense Procurement and Production Group, High Technology Cooperation Group (HTCG),the the Defense Joint Working Group, and the Pol-Mil Dialogue. For our part, we will contact the Ministry of External Affairs and Ministry of Defense and suggest they coordinate better with HAL and other stakeholders, and make better use of the Defense Trade Working Group channel to air out these kinds of issues. We will also recommend that relevant HAL visitors to the U.S., when practicable, stop in Washington and get briefed by PM/DTCS. We also feel it would be beneficial for PM/DTCS to return at some time to India to brief a wider GOI audience on U.S. export procedures, specifically targeting HAL, along the lines of the highly successful 2006 visit. We would welcome any other suggestions on how to overcome the misperception bythese key members of India's defense procurement chain that the USG is not responsive to Indian concerns on export and licensing issues. WHITE