Macro Economy

US firms seek opportunities for private partnerships in India’s defence market

Amrita Nair Ghaswalla Mumbai | Updated on July 27, 2018 Published on July 27, 2018

(Clockwise from top left) Tanks display their manoeuvrability at Thiruvidandai, near Chennai, the venue of Defence Expo 2018, on Sunday. The city will host the expo from April 11 to 14; a banner of the expo; a tank on display; an armoured vehicle arriving at the venue Bijoy Ghosh Bijoy Ghosh

At AMCHAM meet, officials call for boosting ties between the two nations

As the first 2+2 dialogue involving the US and India is set to take place on September 6 with defence and foreign ministers of both countries meeting in New Delhi, the stage appears to be set for the two nations to accelerate the execution of stalled projects.

The market size for India’s aerospace and defence sector is a huge draw for American firms, point out defence experts, given that it is projected to reach $70 billion, from $1.7 billion, over the next 10-12 years. With India’s Ministry of Defence intending to spend $250 billion over the next decade on capital acquisition, American companies continue to seek opportunities for private partnerships in India’s defence market.

Last month, at the annual AMCHAM India Door Knock in Washington DC, which is an occasion for leaders of US businesses in India to meet with policy makers in Washington, participants noted a deep desire to raise the game in the US-India economic relationship. “Recognising India as a major defence partner by the US is indicative of India’s elevated status in US export considerations,” said an executive present at the briefing. Building the defence manufacturing ecosystem through strategic partnerships is a high priority, he added. Speaking about the US India Defence Technology and Partnership Act, the executive said it is expected to lead to greater industry collaboration on defence co-production and co-development and is set to facilitate the export of goods and technologies.

“There are over 5,000 tech start-ups, making India the second most attractive entrepreneurship area after Silicon Valley. Many state governments are promoting entrepreneurship, applying carefully targeted strategies. The India opportunity cannot be ignored,” added another official.

“US companies are keen to leverage the cost arbitrage in component design and manufacture in India,” said another official present at the AMCHAM meet, pointing out that the AMCHAM delegation’s visit to Washington would play an important part in moving the US-India engagement ahead.

Earlier this month, the US offered India an armed version of the Guardian drone, and approved sale of Guardian 22 drones to India. The transfer of Guardian UAV technology is aimed at furthering mutual security interests to protect the Indian Ocean. Another US-based defence player has partnered with an Indian conglomerate to jointly develop and manufacture the F-16 Block 70 in India for the Indian armed forces. It also intends to meet the export demand for the fighter.

US aerospace major Boeing has also partnered with private players in India to manufacture the F/A-18 Super Hornet, and is pursuing the joint development with two Indian firms for future technologies.

Last month, the US State Department approved a potential direct commercial sale of six additional Boeing AH-64E Apache heavy attack helicopters to India for an estimated $930 million. With rising security threats across the globe, India is keen to ramp up its arsenal.

The deal includes the sale of 180 AGM-114L-3 Hellfire Longbow missiles, 200 Stinger Block I-92H missiles, and 90 AGM-114R-3 Hellfire II missiles, apart from cannons and ammunition. The six additional AH-64Es are expected to be delivered by 2020.

Published on July 27, 2018
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