Thursday, 26 July 2012

U.S. Deputy Defense Secretary Takes Part in India Defense Industry Talks

A visit here on Tuesday for talks and tours proved “very instructive,” Deputy Defense Secretary Ashton B. Carter told Indian defense industry leaders.

Carter said the daylong visit was a chance to take “practical steps” to further U.S.-India defense cooperation. In a New Delhi speech to Indian defense industry representatives earlier this week, the deputy secretary stressed the U.S. desire for closer military cooperation between the United States and India.

The main event here for Carter was a roundtable discussion in which six senior Indian defense industry leaders provided their perspectives on U.S.-India cooperation.

Defense cooperation issues between the two nations reach into the government, military and business sectors of both countries, the deputy secretary said.

“It’s not enough when arrangements -- cooperative [research and development], cooperative production arrangements -- make governmental sense,” he said. “They have to make strategic sense, then they have to be bureaucratically nonimpaired. But they also have to be economical.”

Carter said the United States, with the world’s most advanced military, and India, which has perhaps the most accelerated timeline for military modernization of any nation, must work to advance progress in all three areas if they are to realize the full potential of their possible defense cooperation.

“My own thinking about this … is that you have to work in parallel on the practical, individual project [level] and the big bureaucratic front,” the deputy secretary said. And the notion that the United States must change its acquisition system and export controls and India must change its defense procurement system before companies in the two nations launch more partnership ventures doesn’t hold water, he added.

“It’s not going to happen that way,” Carter said. The realistic view of defense cooperation, he added, is that concrete progress will encourage the two governments to make systemic changes in areas such as technology transfer and export controls.

The delegation to Hyderabad included the senior U.S. diplomat in India, Ambassador Nancy Powell, U.S. Consul General in Hyderabad Katherine S. Dhanani, and regional and industry policy experts from the departments of Defense and State.

The conversation here between the deputy secretary’s delegation and the half-dozen Indian defense industry leaders made clear how complicated the nexus of government regulations and restrictions, defense acquisition timelines and industry ramp-up processes can be. When partnered U.S.-India production efforts are involved, as they increasingly are here, six different sets of rules and regulations may apply.

Carter said he got that message “loud and clear” during his visit. The two nations’ business and security regulations, he said, include rules that are well-intended, but have unintended consequences. The United States is working to simplify and streamline bureaucratic guidelines, he noted, and he’s encouraged that India also is adjusting its regulations and restrictions to further its cooperation with the United States.

The Hyderabad discussions explored several of the topics Carter raised in his New Delhi speech, including limits to foreign direct investment in Indian companies, and offset requirements under which companies supplying military equipment to India must, in return, invest a certain amount in particular Indian industrial sectors.

Indian industry leaders here noted their government and Defense Ministry either are discussing or already are making changes in both foreign direct investment caps and offset restrictions, which will increase incentives for American companies seeking to do business in India.

The business leaders urged Carter to help loosen U.S. defense acquisition timelines and technology export regulations to better allow Indian firms to compete in the U.S. defense arena. They said Indian companies seek “clarity, stability and predictability” in their dealings with the United States.

“We have to earn progress in that area,” the deputy secretary responded. “That is, there has to be enough volume and promise and real activity that is being impeded … to make the case that it is unacceptably detrimental to us to retain those restrictions.”

Increased defense cooperation will drive regulation reform, which in turn will lead to additional partnered opportunities, Carter noted.

“The more we do together the easier it becomes to do more. … It’s something that exponentiates,” he added.

Carter also toured three facilities where Indian and U.S. companies are jointly producing and assembling parts for U.S. military and commercial aircraft that are used in India and around the world.

Carter said repeatedly during his visit that such joint efforts can and should expand further, and that U.S defense leaders want to move beyond a buyer-seller relationship and increase cooperation with India on high-value technologies.

The deputy secretary’s central message in this country, he said July 23, is that the United States considers partnership with India critical to its strategic rebalance to the Asia-Pacific region.

“We want to knock down any remaining bureaucratic barriers in our defense relationship, and strip away the impediments,” Carter said during his New Delhi speech. “And we want to set big goals to achieve.”

The insights Indian industry leaders shared with him here, Carter said, are helpful in understanding how “we can structure defense cooperation so that it is successful in business terms.”

The deputy secretary left India earlier today en route to South Korea, the final stop on a 10-day Asia-Pacific tour that has also included visits to Hawaii, Guam, Japan and Thailand.
Asian Defence News

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