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US Defence Firms Want Control Over Technology in PM Narendra Modi's Make-in-India

Discussion in 'Indian Defence Industry' started by sangos, Sep 19, 2017.

  1. sangos

    sangos Lt. Colonel ELITE MEMBER

    Apr 25, 2013
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    Lockheed Martin and Boeing are both bidding to supply combat jets to India's military, which is running short of hundreds of aircraft as it retires Soviet-era MiG planes, and its own three-decade long effort to produce a domestic jet is hobbled by delays.

    New Delhi: U.S. defence firms offering to set up production lines in India to win deals worth billions of dollars want stronger assurances they won't have to part with proprietary technology, according to a business lobby group's letter to India's defence minister.

    These companies are also saying they shouldn't be held liable for defects in products manufactured in collaboration with local partners under Prime Minister Narendra Modi's Make-in-India's drive to build a military industrial base.


    A U.S. naval F/A-18 Super Hornet aircraft takes off from the USS Kitty Hawk aircraft carrier during wargames between navies of India, Japan, Australia and Singapore in the Bay of Bengal September 7, 2007. (REUTERS/Adnan Abidi/File Photo)
    Lockheed Martin and Boeing are both bidding to supply combat jets to India's military, which is running short of hundreds of aircraft as it retires Soviet-era MiG planes, and its own three-decade long effort to produce a domestic jet is hobbled by delays.

    Lockheed has offered to shift its F-16 production line to India from Fort Worth, Texas, and make it the sole factory worldwide if India orders at least 100 single-engine fighters.

    The U.S. firm has picked Tata Advanced Systems as its local partner under the defense ministry's new Strategic Partnership model under which foreign original equipment manufacturers (OEMs) can hold up to a 49 percent stake in a joint venture with an Indian private firm which will hold the majority of shares.

    The U.S.-India Business Council (USIBC) wrote to India's defence minister last month seeking a guarantee that U.S. firms would retain control over sensitive technology - even as joint venture junior partners.

    "Control of proprietary technologies is a major consideration for all companies exploring public and private defence partnerships," the business lobby, which represents 400 firms, said in the Aug. 3 letter, reviewed by Reuters and previously unreported.

    "To allow foreign OEMs to provide the most advanced technologies, the partnership arrangement between an Indian owned 'strategic partner' company and a foreign OEM needs to provide an opportunity for the foreign OEM to retain control over its proprietary technology," it said, noting this wasn't explicit in the policy document.


    Technology transfer is at the heart of Modi's drive to build a domestic industrial base and cut a reliance on imports that has made India the world's biggest arms importer in recent years.

    Without full tech transfer in previous arms deals, India's mainly state-run defence factories have largely been left to assemble knock-down kits even for tanks and aircraft produced under license from the foreign maker.

    Modi's advisers have vowed to change that, insisting on transfer of technology so that critical military equipment are designed and manufactured in India.

    Benjamin Schwartz, USIBC's director for defense and aerospace, said the new Indian policy offered a roadmap for establishing partnerships between U.S. and Indian companies, but it raised some questions for the firms.

    He said he was not in a position to name those companies concerned by the Indian policy, but there was a "general desire to see increased clarity" on several aspects, including the control of proprietary technologies.


    The USIBC also opposed a clause in the new rules that held foreign firms jointly responsible for the quality of the platforms provided to the military, saying legal liability is a significant factor in business decisions.

    "We recommend the MoD (Ministry of Defence) affirm that foreign OEMs will not be liable for defects outside their company's control," the USIBC said.

    Lockheed did not respond to a request for comment. Boeing, which is bidding for a separate contract to sell its F/A-18 Super Hornets for India's aircraft carrier fleet, declined to comment on the USIBC letter. But the company's India president, Pratyush Kumar, told a conference this month there were concerns about Indian private firms' lack of experience in the aerospace sector.

    Only state-run Hindustan Aeronautics Ltd had made planes under license, while some private players were starting from scratch, having never built even an aircraft component. Kumar said he could not find a single example worldwide of a private enterprise with limited experience building out a plane under transfer of technology.

    "Look at Turkey, look at Japan, look at Brazil - look at multiple countries. In all cases there is a fine balancing act of co-opting the capabilities of both public and private enterprise," Kumar said at a conference organised by the Centre for Air Power Studies, a think-tank of the Indian air force.

    India's defence ministry offered no response to the concerns expressed by the trade lobbying group on the strategic partnership model, which will also apply to building submarines and helicopters as part of a $150 billion modernisation drive.

    But an official, referring to sensitive technology, said the government has made clear in the past that foreign firms can be allowed to increase their stake beyond 49 percent if the technology they bring in is state-of-the art.

    "It can be done on a case-to-case basis," the official said.

    Mukesh Aghi, president of the U.S.-India Strategic Partnership Forum, said that despite the starting problems, defence manufacturing looked set to be a breakthrough area in ties between India and the United States.

    "It's the next big thing. There is strong support from the (U.S. President Donald) Trump administration to take this forward."


  2. randomradio

    randomradio Colonel REGISTERED

    Nov 22, 2013
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    They will have to give up the minimum necessary to get the contract.
  3. sunstersun

    sunstersun Lieutenant IDF NewBie

    May 12, 2017
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    meh, negotiations.
  4. Picdelamirand-oil

    Picdelamirand-oil Lt. Colonel MILITARY STRATEGIST

    Jun 20, 2012
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    This kind of negotiation took 4 years with Dassault.
  5. Satendra kumar

    Satendra kumar FULL MEMBER

    Apr 18, 2017
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    The Soveit and Indian companies had many partnership,engaging in designing,testing,trial,co-production,unit production,found mostly cost effective,efficiency,high performance and longer lasting.As India is mordernising it's defence force,making make in India for defence products,I think India and it's partners should make submission and supportive decision within the system of it's governance.
  6. ghostwhowalks

    ghostwhowalks FULL MEMBER

    Jun 12, 2013
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    LOL! with conditions such as these, US firms may as well hand the SE deal to Saab on a platter.
  7. Som Thomas

    Som Thomas 2nd Lieutant FULL MEMBER

    Nov 16, 2016
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    I don't think GoI will go for either F sola or the gripen. Getting a Single engine fighter is not right now as it will the LCA program plus we are presently improving the performance characteristics of LCA mk1A( hope ADA/HAL do better this time). GoI will go for more Rafael's and present upgraded super sukhoi's. They will force LCA mk1/2 down the IAF throats.
    Angel Eyes likes this.
  8. Scotlander

    Scotlander Lieutenant FULL MEMBER

    Feb 6, 2017
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    If Modi goes with F- 16 with Screw Driving Job. It is going to be treacherous on his Part.

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