Background

The momentum for the forthcoming State visit of PM Modi to the US, scheduled to commence June 21, 2023, is building up progressively. In the run-up to the visit, US Secretary of Defence Lloyd Austin was in Delhi on June 04-05; followed by Jake Sullivan, the US NSA, on 13 -14 June. From the Indian side, Defence Secretary Giridhar Aramane led an Indian Ministry Of Defence (MoD) delegation to Washington for a meeting of the India-US Defence Policy Group (DPG), with the US Under Secretary of Defence for Policy Dr Colin Kahl on May 17, 2023.^[1] Foreign SecretaryVinay Mohan Kwatra also visited Washington for the inaugural Strategic Trade Dialogue, with State Department’s Undersecretary for Political Affairs Victoria Nuland and Commerce Department’s Undersecretary for Industry and Security Alan Estevez. This new dialogue was initiated during the visit of Commerce Secretary Gina Raimondo to New Delhi in March 2023. These visits have set the stage for the PM’s visit, during which substantial outcomes are expected.

Alongside the preparatory visits, the euphoria and the expectations are building up in the media and among the industry circles.^[2] The visit is being perceived as the beginning of the `next phase of India-US Partnership;’ marked by cooperation in advanced fields of technology and defence industrial cooperation, a road map for which was discussed during the recent visit of Secretary Austin.

The current visit comes 14 years after the last state visit of the then-Indian PM, Manmohan Singh, in November 2009. That was on the heels of the launch of the India-US Civil Nuclear Cooperation Initiative on July 18, 2005, and its approval by the Board of Governors of IAEA, on August 1, 2008.^[3] That visit marked the beginning of a new phase in the India – US strategic relations, till then, mired in differences for over three decades.

In a decade and a half since then, the global geopolitical environment has changed, necessitating a closer partnership of mutual dependence between India and the US. The building blocks of bilateral relationship, put in place, by assiduous efforts on both sides, over these years, have brought us to a level where we are now prepared to extend this partnership to newer domains and raise it to a higher pedestal of cooperation. This is the expectation from the current state visit.

This optimism however, is blended with the `realists’ questioning the rationale for this landmark visit taking place now. While the prevailing official narrative is of the India- US partnership being the cornerstone of a free and open Indo-Pacific and central to peace and stability in the region; the narrative emerging from the US strategic community suggests some weakening of its underpinnings. Differences persist over India's approach to the war in Ukraine and India’s relationship with Russia, particularly in the field of defence and energy. Doubts are also raised over expectations of India’s support to the US and its allies, in collective defence against Chinese aggression unless India’s own security interests are directly threatened.^[4]

On the Indian side, questions are raised over the motivation for enhanced India-US defence industrial and technology cooperation, in the field of Critical and Emerging Technologies (CET), when similar endeavours made little headway, under the Defence Technology and Trade Initiative (DTTI), and when some on the US side still tend to suggest that it can make or break the initiative as it controls the release of the licenses that many joint ventures will require.^[5]

Scope

This analysis briefly recapitulates the contemporary drivers of the India-US relationship; the level of defence and technology cooperation achieved since the normalisation of relations; and the factors that have set the stage for taking the relationship to the next level. It highlights some challenges that need to be addressed to make this initiative a win –win for both sides and suggests moderating expectations, particularly the timelines, over which the results are expected to be achieved.

Contemporary Drivers of India-US Cooperation

The primary drivers of this relationship, from the US side are:-

• Supporting India (the world's largest democracy) as a key counterweight to China's dominance in the Indian Ocean region and incorporating it in the network of alliances and partnerships in the region.
• Harnessing India’s large pool of technically qualified and talented human resources to revolutionise advancements in the field of CET, and include India in the architecture of resilient supply chains.
• Explore the immense potential of Indian markets - commercial and defence, with huge overlaps due to the application of emerging technologies in non-conventional military domains. Optimists see the potential for bilateral trade, in goods and services, going up to US $500 billion,^[6] from the existing $ 191 billion (2022).^[7]

From the Indian perspective, India and the US cooperate on a wide range of diplomatic, economic and security issues, including, regional cooperation, defence, mil to mil cooperation, counter-terrorism, cyber, space, science and technology, energy, education, health, agriculture, environment, climate change etc. The focus is on bringing about strategic and economic convergence, to enable India to build its own capacities and capabilities across domains, including strengthening its deterrence and war-fighting capabilities for a lead role in the region.

Current Level of Defence Relationship (Recapitulation)

For the last 15-20 years, Defence and Security have remained the central pillar and prime driver of the India-US partnership, and the two sides have travelled a long way in this field. Transitioning from Obama to the Trump administration, India was designated as a Major Defence Partner (MDP) of the US in 2016 (formalized in NDAA 2017). This enabled maintaining continuity of defence relations across the US political aisle. Since then, all “foundational (enabling) agreements” have been concluded during the period 2016 to 2020; the Industrial Security Annex (ISA) to the General Security of Military Information Agreement (GSOMIA-2002) was signed in December 2019, enabling the private sector defence industry to share classified information and technology. In July 2018 the US placed India in the Strategic Trade Authorisation (STA–1) category, allowing access to advanced defence technologies and permitting controlled items to be exported under defined conditions without a transaction-specific license.

In the field of mil-to-mil cooperation, India and the US now conduct the maximum number of bilateral and multilateral joint military exercises, between the three Services, Special Forces, and the National Security Guard (NSG). It would be of interest to note that six joint military exercises were conducted during the eight months from August 2022 to April 2023.

In the area of defence trade, the US is now the third-largest arms supplier to India, providing approximately 11% of its weapon imports. Since 2008, the two countries have concluded more than $20 billion in defence trade, including procurement of C-130J (12), C-17 transport aircraft (11), P-8I maritime patrol aircraft (12), Harpoon missiles, Apache (28), Chinook (15), MH-60R (24) helicopters, and M777 Ultralightweight Howitzers (145). India is also procuring F404 – GE IN 20 engines for its Light Combat Aircraft (LCA) and has selected GE – F 414 INS 6 for the Mark II version. Extensive deliberations are underway, in the US, for GE Electricals to produce these engines in India. Approval has also been accorded by India’s Defence Acquisition Council (DAC) to acquire 31 MQ 9B armed drones, worth approximately $ 3 billion, from the US.^[8] Decision on these is likely during the forthcoming visit

Robust dialogue mechanisms have also been put in place between the Services, Integrated Defence Staff, Ministry of Defence, and Defence Research and Development Organisation (DRDO) to steer this multi-dimensional defence relationship. For cross-domain coordination, the ministerial level 2+2 dialogue was instituted in 2018 and the Commercial dialogue has been re-launched in March 2023.

Existing Technology Cooperation

India and the US have been cooperating in the field of science and technology (S&T) since the 50s, focussing on academic research and applications for scientific exploration and socio-economic development. In January 2004, under an arrangement referred to as the `Next Step in Strategic Partnership (NSSP)’^[9] the United States and India agreed to expand cooperation in three specific areas: civilian nuclear activities, civilian space programmes, and high-technology trade. It was also agreed to expand the dialogue on missile defence. This entailed modification to U.S. export licensing policies relevant to commercial space programmes and permission to allow certain exports to power plants at safeguarded nuclear facilities. Indian Space Research Organization (ISRO) was also removed from the Department of Commerce Entity List.
In the field of defence, the Joint Technology Group (JTG) was set up in 1995, between the DRDO on the Indian side and the (present) office of the Under Secretary of Defence for Research and Engineering (R&E). A Memorandum of Agreement on Research, Development, Test and Evaluation (RDT&E) was signed in 2006.

Robust cooperation programmes also exist in the field of defence innovation between the DRDO and the US Department of Defence (DoD). A Memorandum of Intent exists between the US Defence Innovation Unit (DIU) and Indian Defence Innovation Organisation – Innovation for Defence Excellence (DIO- iDEX), to identify avenues of cooperation.

During the period 2014-2015, a flagship defence cooperation programme, the Defence Technology and Trade Initiative (DTTI) was formally initiated.^[10] It is aimed at increasing the flow of technology and investments; creating capabilities and partnerships for co-development and co-production; and enhancing cooperation in research and development. Despite substantial criticism, DTTI has been a “silent enabler,” contributing substantially towards achieving the milestones listed above.

The success of DTTI has helped elevate the relationship to the pedestal where India-US `Initiative on Critical and Emerging Technology (iCET)’ could be initiated. Announced in Tokyo in May 2022, on the sidelines of the Quad summit, the initiative is now being steered by National Security Councils on both sides. It entails cooperation in 8-10 verticals, to include: semiconductor design and manufacturing, Quantum, advanced telecommunications, artificial intelligence, high-performance computing, commercial space, aerospace and defence, and information technology services.

The inaugural meeting of iCET between the two NSAs was held in Washington on January 31, 2023. The second meeting was held in New Delhi on June 13, 2023.^[11] The stakeholders in this new initiative, now extend beyond the two governments and defence establishments, to include representatives of industry, innovators and start-ups, investors, research laboratories, academia, strategic analysts and more. Both the meetings were accompanied by a track 1.5 dialogue held under the aegis of the US India Business Chamber (USIBC) in Washington in January and the Confederation of Indian Industry (CII) in New Delhi in June 2023. These included extensive interaction of the NSAs and senior government officials with other stakeholders.

A significant commonality between the DTTI and the iCET is that both are aimed at `providing senior level oversight and engagement to get beyond bureaucratic processes and legal requirements of forging closer technology cooperation’. These challenges existed then and are likely to persist even now. The DTTI, confined only to the field of defence, entailed engagement at the level of Under Secretary of Defence on the US side and Secretary to the Government of India (Secretary Defence Production) on the Indian side. The iCET, however, has an enhanced scope across the defence and commercial sectors and the level of engagement has been raised to the NSAs. Continued attention and engagement of leadership on both sides would be the key to achieving desired results.

Building on the foundation laid so far, India and the US are poised to take this relationship to the next level.

Build Up for the Next Phase of Partnership

Having learnt the lessons from the disruption of supply chains during the COVID pandemic and due to the impact of intensified US-China trade competition, the focus of discussions during the recent visit of US Secretary of Defence, Lloyd Austin, in June 2023 was on forging lasting industrial cooperation.^[12] A road map of India-US Defence Industrial Cooperation was concluded, which would guide policy direction for the next few years, on both sides. This entails fast-tracking technical cooperation; focusing on the co-development of new technologies; co-production of existing and new land, air and maritime systems; special emphasis on reviewing/removing regulatory hurdles, facilitating increased collaboration between start-up eco-system on both sides (including scheduled launching, on June 21, 2023, of INDUS-X – India-US Defence Acceleration Eco-System at the USIBC, Washington). This would build up on the existing DIO-iDEX cooperation.

Discussions have also been initiated on the Security of Supply Chain Arrangements (SOSA)^[13] and Reciprocal Defence Procurement Agreement. ^[14] These arrangements aimed at making supply chains resilient, entail creating mechanisms for assurance of timely delivery of material during peace, emergency, and conflict and an endeavour to have common equipment and platforms, acquired from each other. The relevance of these in the Indian context would need to be examined.

Preceding the visit of the Secretary of Defence, the inaugural India-US Advance Domain Defence Dialogue (AD3) was held in New Delhi.^[15] This follows the understanding arrived at during the last 2+2 dialogue (April 2022), to deepen collaboration in advanced technology domains, to include space, AI and more. This dialogue will bring focussed attention to the application of future technologies in the armed forces.

In the overall context of iCET, it has been realised by both sides that strategic and commercial technology cooperation are independent but interconnected domains. It is with this rationale that a new initiative, Strategic Trade Dialogue was initiated in Washington on June 6, 2023,^[16] to complement the Commercial Dialogue. It is aimed at addressing issues related to export controls, enhancing high-technology commerce, and facilitating technology transfer between our countries. The dialogue is led by the Foreign Secretary, Ministry of External Affairs, on the Indian side and by the Under Secretary for Industry and Security, Department of Commerce, on the U.S. side. This dialogue is likely to work as the de facto iCET Inter-Agency Task Force.

Analysis

Given below are some questions engaging the minds of the India-US watchers, looking at the evolving state of the relationship:-

Q- Are we entering a `new phase’ of India -US Comprehensive Global Strategic Partnership?

• Over the last two decades, both sides have worked assiduously to put basic building blocks of relationship in place, particularly in the field of defence and security (agreements; dialogue mechanisms; military exercises; defence trade; basics of industry cooperation, technology, and innovation interaction…). The time is now ripe to enter the next phase of implementing (operationalising) these.
• New initiatives are being taken in the field of industrial cooperation (including the defence industry) and `highly fenced' domains of critical technologies. The application of these extends seamlessly across military and (hitherto) non-military domains. This provides the mutual benefit of investment, trade, and resilient supply chains.
• Also, this relationship, entails the participation of private industry with substantial financial investments, making it deep-rooted (not a plug-in/plug-out), and providing ballast against possible turbulence in relations in the future.
• We are thus at the threshold of a new phase of partnership.

Q- And, why now?

• There is a greater realisation now of the need for mutual dependence, amidst geopolitical flux and intensifying major power competition.
• With Russia engaged in the war in Ukraine, the US considers this an opportune moment to wean India away from dependency on Russia for defence hardware and technologies. For India, while it presents a viable alternative option, the choice of shift would be guided by its own considerations.
• For the US, it is a, “calculated long term strategy to ensure India remains part of networked security architecture in the Indo-Pacific and maintains the confidence and capabilities to stand-up to Chinese aggression.”^[17]
• The initiative also comes now as part of the US's new industrial and innovation strategy, at home and with partners around the world to build a strong, resilient, and leading-edge techno-industrial base that the US and its partners can invest in and rely upon together.
• For India, the US offers immense opportunities for trade and investment; a source of CETs, vital for capability development in military and commercial fields. In addition, it offers opportunities for temporarily bridging the capability gap with China and concurrently, developing our own capabilities, contributing to `Atmanirbharta’ (Self-reliance).
• There is also a realisation of the immense technical talent residing in India that can contribute towards bridging the technology differential with adversaries, in a telescoped timeframe. India sees this as a shared opportunity.

Q What makes us so optimistic about the success of iCET, when previous initiatives like DTTI did not succeed, at least not to the extent expected?

• The greatest pay-off from the DTTI has been that both sides have `learnt to work together.’ The initial India-US engagement on technology and trade was characterised by unrealistic expectations (of quantum and pace) of technology expected to be transferred to India and of trade (with non-competitive access) to the US industry. Both sides have learnt that this process is evolutionary with a long gestation period.
• While DTTI did attract high-level attention, it was not high enough to overcome licensing and regulatory hurdles. The level of engagement for iCET has been raised substantially, to the level of NSAs. The scope also has further been expanded to cover the commercial domain. The iCET complemented by Strategic Trade Dialogue and the Defence Advance Domains Dialogue would help address diverse issues related to foreign policy, commerce, defence, and industry. The proof however would lie in the results achieved, towards which the lessons learnt from DTTI must be factored in.
• The most significant reason for the limited success of DTTI, however, was its inadequate strategic underpinnings and the absence of an overarching defence cooperation framework. Factoring this in the iCET would be its greatest strength. The significance of this can be gauged from what Jake Sullivan’s said on the eve of the launch of iCET, that, “iCET is about much more than technology cooperation, it’s a platform to accelerate our strategic convergence and policy alignment.”^[18] It is evident that this exercise is part of the US efforts to adapt to a new environment of geopolitical and security competition, with economic ramifications and to undo the eroded competitiveness in critical technologies. India is amongst the partners identified to complement US efforts.

Q Do we foresee impediments in carrying this intent further?

• Most certainly, there would be immense challenges on both sides that would need to be overcome. Highly ring-fenced technologies and IPRs, many of which reside in private companies would require a strong strategic or commercial rationale for these to be shared. Most technologies come tied to certain acquisitions, an aspect to be balanced with indigenisation and self-reliance. Also, the process and the pace of technology transfer would require a nuanced understanding and immense patience on both sides.
• The Arms Export Control Act (AECA), the International Traffic in Arms Regulations (ITAR), the Export Administration Regulations (EAR) on the US side and the Defence Acquisition Procedure on the Indian side, though perceived as `regulatory hurdles’ were conceived as `guard rails’. Redefining these in a changed geostrategic environment but with deep-rooted mindsets, will be a challenge; requiring constant high-level supervision and engagement.
• This process will not be altruistic, driven solely by effusive sentiments on both sides. It will be transactional and require reciprocity. The cost to be paid (commercial or strategic) would need to be ascertained and calibrated.
• A significant aspect to note is that in this new phase of the relationship, driven by technology and industrial cooperation, the desired end states of applying technologies for the nation's `capability development and/or commercial monetisation' are interrelated, but still distinct from each other. Both need to be addressed evenly.
• On the US side, besides the participation of industry and officials of the Commerce Department, some of these initiatives are driven by the Defence Threat Reduction Agency (DTRA) and the Office of Emerging Capabilities in the DoD. Likewise, on the Indian side, a balance will need to be maintained between the initiatives delegated to the industry and the core defence capability development aspects.

Q Any suggestions to make it a success?

• The relationship should be based on a convergence of a larger national vision, mindful of the fundamentals of each other’s foreign policy and interests; with a commitment to developing each other’s capability, for mutual benefit.
• Indian innovators and start-ups should be slotted at appropriate levels in the value chain so that the IPRs generated and the commercial benefits of the application of technology and capability development get shared. Slotting them permanently as mere component suppliers or lower-rung vendors would be counter to the spirit of lasting collaboration.
• The R&D, design, development, and manufacturing facilities be evenly spread across geographies and supported by non-dilutive financing. Further, these initiatives be kept insulated from threats of sanctions over other issues of discord.
• The domains of defence and technology cooperation be kept insulated from other areas of discord, to the extent possible.

Conclusion

In our journey of the last two decades from `estrangement’ to `engagement’, lessons have been learnt by India and the US about the mutual benefits of partnership. It is expected that the next phase will manifest in the emergence of a stronger India, capable of deterring and defeating aggression along its borders and contributing towards maintaining regional security, in the realisation of our shared vision for the Indo-Pacific.

Finally, If our endeavour is to `make history', both sides will need to work to shake off the `baggage of history'.

Endnotes

^[1]Press Release. Defence Secretary & US Under Secretary of Defence for Policy co-chair 17th India-US Defence Policy Group meeting in Washington DC - Focus on enhancing defence industrial cooperation & co-production in India. Ministry of Defence. May 17, 2023. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1925015. Accessed June 16, 2023.
^[2]Peri Dinakar. Private Sector Collaboration is the next great phase of Indo-US ties: Atul Keshap. The Hindu. June 11, 2023. https://www.thehindu.com/news/national/private-sector-collaboration-is-next-great-phase-of-indo-us-defence-ties-atul-keshap/article66957900.ece. Accessed June 16, 2023.
^[3]U.S. - India: Civil Nuclear Cooperation, US Department of State Archive. https://2001-2009.state.gov/p/sca/c17361.htm. Accessed June 16, 2023.
^[4]Tellis Ashley. America’s Bad Bet on India. New Delhi Won’t Side with Washington Against Beijing. Foreign Affairs. May 01, 2023. https://www.foreignaffairs.com/india/americas-bad-bet-india-modi. Accessed June 16, 2023.
^[5]Ibid.
^[6]ANI. US, India to work more closely to advance mutual prosperity, says envoy Atul Keshap. August 20, 2021.
https://www.aninews.in/news/world/us/us-india-to-work-more-closely-to-advance-mutual-prosperity-says-envoy-atul-keshap20210820142633/. Accessed June 16, 2023.
^[7]Singal Nidhi. US, India partnerships in high-value industries to facilitate $500 billion in bilateral trade. Business Today. March 11, 2023. https://www.businesstoday.in/technology/news/story/us-india-partnerships-in-high-value-industries-to-facilitate-500-billion-in-bilateral-trade-372991-2023-03-11. Accessed June 16, 2023.
Raymond E. Vickery, Jr.US-India Strategic and Commercial Convergence. March 28, 2023. https://thediplomat.com/2023/03/us-india-strategic-and-commercial-convergence/. Accessed June 16, 2023.
^[8]Defence ministry approves to acquire 31 MQ-9B armed drones from US. Hindustan Times. June 16, 2023. https://www.hindustantimes.com/india-news/india-approves-3bn-acquisition-of-31-mq-9b-armed-drones-from-us-for-navy-army-and-air-force-ahead-of-modi-s-us-visit-101686855255641.html. Accessed June 16, 2023.
^[9]Joint Press Statement: Next Steps in Strategic Partnership Between India and the United States. Embassy of India, Washington D.C. September 17, 2004. https://www.indianembassyusa.gov.in/ArchivesDetails?id=469#:~:text=In%20January%202004%2C%20the%20United,our%20dialogue%20on%20missile%20defense. Accessed June 16, 2023.
^[10]Fact Sheet: US – India Defence Relationship. https://dod.defense.gov/Portals/1/Documents/pubs/US-IND-Fact-Sheet.pdf. Accessed June 16, 2023.
^[11]NSA Ajit Doval, US counterpart Sullivan address meet on critical, emerging tech. Hindustan Times, June 13, 2023. https://www.hindustantimes.com/india-news/ajit-doval-national-security-advisor-jake-sullivan-pm-modi-visit-united-states-joe-biden-101686673012869.html. Accessed June 16, 2023.
^[12]Press Release. Raksha Mantri Shri Rajnath Singh & USSecretary of Defence Mr Lloyd Austin hold talksin New Delhi. Ministry of Defence. June 05, 2023.https://pib.gov.in/PressReleasePage.aspx?PRID=1929884
Press Release. Secretary Austin Concludes India Visit. US Department of Defence. June 05, 2023. https://www.defense.gov/News/Releases/Release/Article/3416249/secretary-austin-concludes-india-visit/#:~:text=Secretary%20of%20Defense%20Lloyd%20J,official%20state%20visit%20to%20Washington.
^[13]Security of Supply. Industrial Base Policy, Office of Assistant Secretary of Defence. https://www.businessdefense.gov/security-of-supply.html
^[14]International Contracting - Reciprocal Defense Procurement and Acquisition Policy Memoranda of Understanding. Office of Assistant Secretary of Defence (Acquisition) – Defense Pricing and Contracting. https://www.acq.osd.mil/asda/dpc/cp/ic/reciprocal-procurement-mou.html
^[15]India, US hold Advanced Domains Defense Dialogue in New Delhi. ANI. May 26, 2023. https://www.aninews.in/news/world/asia/india-us-hold-advanced-domains-defense-dialogue-in-new-delhi20230526213147/. Accessed on June 16, 2023.
^[16]Launch of India-US Strategic Trade Dialogue. Embassy of India Washington. https://www.indianembassyusa.gov.in/News?id=249871. Accessed on June 16, 2023.
^[17]Curtis Lisa. Modi Goes to Washington: The Biden Administration is Playing the Long Game. Natstrat. https://natstrat.org/articledetail/publications/modi-goes-to-washington-the-biden-administration-is-playing-the-long-game-71.html. Accessed on June 16, 2023.
^[18]U.S. Chamber Urges Increased Cooperation at Executive Roundtable Ahead of the U.S.-India Initiative on Critical and Emerging Technologies. US Chamber of Commerce. January 31, 2023. https://www.uschamber.com/international/the-u-s-chamber-of-commerce-urges-increased-cooperation-at-executive-roundtable-ahead-of-the-u-s-india-initiative-on-critical-and-emerging-technologies. Accessed on June 16, 2023.

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