US defence firms want tech control in India ventures

A file photo of an F-16 from the US military in action during a joint India-US air force exercise in India. Lockheed Martin has offered to move its F-16 production line to India from Texas, and make it the sole factory worldwide if New Delhi orders a
A file photo of an F-16 from the US military in action during a joint India-US air force exercise in India. Lockheed Martin has offered to move its F-16 production line to India from Texas, and make it the sole factory worldwide if New Delhi orders at least 100 single-engine fighters.PHOTO: REUTERS

Business lobby seeks stronger assurances from Delhi over strategic partnership deals

NEW DELHI • US defence firms offering to set up production lines in India to win deals worth billions of dollars want stronger assurances that they will not 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 should not be held liable for defects in products made in collaboration with local partners under Prime Minister Narendra Modi's Make in India drive to build a military industrial base.

Lockheed Martin and Boeing are 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 30-year effort to produce a domestic jet is hobbled by delays.

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

The US firm has picked Tata Advanced Systems as its local partner under the Defence Ministry's new strategic partnership model, under which foreign original equipment manufacturers can hold up to a 49 per cent stake in a joint venture with an Indian private firm, which will hold the majority of shares.

The US-India Business Council wrote to India's Defence Minister on Aug 3 seeking a guarantee that US 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," said the lobby, which represents 400 firms in the United States.

Technology transfer is at the heart of Mr Modi's drive to build a domestic industrial base and reduce 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 licence from the foreign maker.

India's Defence Ministry offered no response to the concerns expressed by the business group on the strategic partnership model, which will also apply to building submarines and helicopters as part of a US$150 billion (S$202 billion) modernisation drive.

But Mr Mukesh Aghi, president of the US-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 US. "It's the next big thing. There is strong support from the Trump administration to take this forward."

REUTERS

A version of this article appeared in the print edition of The Straits Times on September 20, 2017, with the headline 'US defence firms want tech control in India ventures'. Print Edition | Subscribe