India and the United States recently upgraded their defence partnership. This was announced by US Secretary of Commerce Wilbur Ross at the Indo-Pacific business forum on the 30
th of January.
According to the Department of Commerce, “India would be moved into Tier 1 of the Department of Commerce’s Strategic Trade Authorisation license exception”. Simply put this would allow India to receive sensitive technology and military items without the US exporter having to go through the commerce department for a license.
India has welcomed the move. Top diplomatic sources told CNBC-TV18 that “This would provide for good integration of Indian defence component manufacturers with the US supply chain. This is one of the most significant building blocks of our defence industrial partnership”. Officials also believe that this would give a boost to the strategic partnerships’ model recently approved by the Indian Ministry of Defence. The strategic partnerships model aims to increase private sector participation in indigenous defence production. Sources also added that in matters of defence trade US has now brought India at power with NATO allies, Japan and South Korea. “India is only the third country in Asia to be included in the list. China, Pakistan and Russia are not on the list”, the source said.
The development has definitely caused some discomfort to Pakistan. Reacting to the announcement, Pakistan’s Foreign Ministry spokesperson said, “The move has serious implications. Pakistan calls on all states to carefully review their strategic export control policies that directly impinge on national security of Pakistan and undercut stated goals of preserving strategic stability in the region”.
CNBC TV18 spoke to a range of experts to understand whether this can really help India. Richard Rossow, Senior Advisor at the Centre for Strategic and International Studies said, “STA-1 status opens India to simpler importation of a fair range of products with strategic importance including protection equipment like body armour and tear gas; materials related to nuclear power development; explosives detection and disposal. But the group of products that could be most significant are specialty materials controlled in the list. As India seeks to develop an indigenous defense manufacturing industry, being able to import equipment used in creating specialty alloys, lighter frames, minimizing radar visibility, and other such factors will be critical”
Diplomatic sources have told CNBC-TV18 that the next step that India was working on was to finalize an Industrial Security Annex with the US which would allow US companies to share sensitive technology information with Indian companies with a guarantee that it would not fall in the wrong hands.
Experts point out that be it STA Tier1 authorization or a possible Industrial Security Annex a lot will depend on India’s ability to fully utilize these agreements. Dhruva Jaishankar, Foreign Policy Fellow at Brookings India says, “For many years, the biggest constraint on India-U.S. military industrial cooperation was U.S. export control policy, which was a combination of international regimes, U.S. law, and U.S. regulation. These have gradually been amended, and India has been increasingly accommodated. However, moving forward, India will have to find ways to better absorb new technologies that are now available to it. Such steps will have to include, among other things, creating greater incentives for investment, ensuring that imported technology is secure and not leaked to third parties, and better integration into global supply chains. Until these steps take place, India may not be able to take full advantage of a number of opportunities for technology transfer that have now become available, including the new STA designation or the possibility of a suitable arrangement concerning the Industrial Security Annex”
Manoj Joshi, Distinguished Fellow at Observer Research Foundation pointed out the challenges including the poor state of Indian defence production. “The Tier1 authorisation will definitely make trade easier but we must have a certain velocity of trade to take advantage. We should have a strategy in place for this and it must be linked to our own domestic efforts”.
Recently, a parliamentary panel had expressed worry that India’s defence expenditure at 1.56% of the GDP was the lowest since 1962 when the Indo-China war took place. Not only did the panel strongly urge the government to allocate adequate resources for defence preparedness but also called for a major overhaul of the DRDO which is the premier defence research institute of the country. The panel noted that the strategic partnership model did not specify a clear role for major defence public sector undertakings. “Defence is a highly sensitive area and utmost care needs to be taken to maintain confidentiality/secrecy about our data/technology/capabilities. While taking steps to liberalize FDI and private sector partnership, the committee would like the government to take all requisite precautions to ensure our defence capabilities are not compromised at any cost”.Finally, we have to keep in mind that behind India’s inclusion into this elite list is a clear America first approach. It was announced as part of a set of measures to increase United States’ engagement with Indo-Pacific and while announcing the STA Tier1 authorization for India, Wilbur Ross said, “India’s new status will benefit US manufacturers while continuing to protect our national security”.