The following report, co-authored with Gopal Nadadur, was published by ORF America in February 2023.
INTRODUCTION
The inauguration of the U.S.-India initiative on Critical and Emerging Technologies (iCET) in early 2023 has created greater momentum for bilateral defense industrial cooperation. The India-U.S. defense partnership has progressed by leaps and bounds since the year 2000, when President Bill Clinton’s visit signaled a resumption of normal ties following India’s 1998 nuclear tests. In the years since, the two countries have expanded the range and sophistication of their military exercises, which now involves all services and several partner countries. They have concluded negotiations over enabling agreements covering logistics, secure communications, and other protocols. The two countries’ security cooperation has been given a political and bureaucratic structure, including through the 2+2 Dialogue, Defense Policy Group (DPG), and various bilateral and Quad working groups. Defense trade has also taken off, with the Indian armed services now using at least eight major U.S.-designed or -produced platforms. Yet defense coproduction and research and development (R&D) have not grown as significantly, despite some marginal successes. The Defense Trade & Technology Initiative (DTTI), despite some modest success with air-launched unmanned aerial systems, has not produced the results that were once envisioned.
But recent developments have created new openings. Many old impediments, including stifling export controls, insufficient enabling agreements, and lack of political engagement, have largely been addressed. On the Indian side, elements of an industrial policy that involve the private sector have begun to take shape, creating more attractive conditions for private investment and supply chain integration. Geopolitical factors are also more conducive, given the growth in India-U.S. coordination on the Indo-Pacific and the declining relevance of U.S.-Pakistan security cooperation. Meanwhile, wartime attrition, supply chain disruptions, and secondary sanctions will create challenges for Russia’s 1,300 defense companies – which account for 20% of the world’s weapons sales – resulting in a partial vacuum in the global arms market. Other actors are already seeking to fill some of that gap.
Taken together, these circumstances present an unprecedented opportunity for India-U.S. defense coproduction. But this will require translating the tremendous political progress at the government-to-government level into concrete outcomes at the business-to-business level. Priority areas discussed in iCET include jet engines and munition related technologies, but coproduction could extend to anti-tank and anti-air missile systems, fixed-wing and rotary aircraft, armored vehicles, artillery, small arms, maritime surveillance systems, drones and counter-unmanned aerial systems (C-UAS), and maintenance, repair, and overhaul (MRO) facilities and services. In addition to creating a viable commercial basis for defense coproduction, the two governments could take several discrete policy steps to facilitate and accelerate such cooperation. This would include: (a) translating political agreement into outcomes such as approvals and procurement requests, (b) ensuring a greater predictability for demand on the Indian side to accelerate investment and technology transfers, and (c) on the U.S. side, improving public-private cooperation to ensure timely responses to proposals.