Panel discussion on U.S.- India: Defence Technology Transfer & Production

Speakers: Prof. Rajaram Nagappa,  Dr. Sameer lalwani, Dr. Sameer Patil. 

Discussants: Prof. Soundar Rajan P.M.  and Dr. Aditya Ramanathan

Coordinators: Dr. Deepa Ollapally & Dr. Manoharan N. 

Date: 20 March 2024

Time: 6:00-7:30 pm (IST) - 8:30-10:00 am (EST) 

Key Takeaways

The Centre for East Asian Studies (CEAS), Christ University, in collaboration with George Washington University, held the third virtual meeting of the project on “Partners in Progress: How Does the U.S.-India Strategic Partnership Matter?” on 20 March 2024.

The purpose of the third virtual meeting featured a panel discussion titled “U.S. - India defence Technology Transfer Production". The primary objective of this session was to provide a comprehensive understanding of the tangible material aspects of the bilateral relationship, particularly focusing on defense technology trade and production between the two countries. The meeting aims to explore the significance of the U.S.-India strategic partnership and facilitate cooperation on strategic affairs. The virtual meeting aimed to provide background information on dialogues and talks that lead to bilateral policies and decisions, with the goal of promoting cooperation on the ground. The meeting brought together distinguished panelists, experts and participants to discuss these issues and share insights through discussions, questions and suggestions that experts believe should be addressed.  

The session commenced with a warm welcome address from Dr. Manoharan N., Director, Centre for East Asian Studies (CEAS), Christ University, followed by Dr. Deepa Ollapally, Research Professor, GWU, chairing the panel discussion.

The first speaker, Prof. Rajaram Nagappa, a senior expert in defense, discussed the Indian perspective on the cooperation taking place in defense technology transfer and defense production with the U.S from an industrial standpoint. Prof. Nagappa acknowledged the indisputable leadership role played by the United States across various technological domains. He emphasized on the unparalleled competition faced by other nations, particularly citing China's emerging presence. In contrast, India's journey has been characterized by missed opportunities and initial technological limitations, rooted in domestic issues like finance and infrastructure. Reflecting on India's post-independence technological landscape, Prof. Nagappa recounted the nation's reliance on imported technologies, particularly from the United Kingdom. However, he highlighted the early instances of indigenous innovation, such as the adaptation of aircraft for Himalayan operations. Despite initial limitations, India demonstrated a capacity for innovation and adaptation, albeit within the confines of foreign technological frameworks.

The speaker outlined the significant challenges encountered by India in its quest for technological self-reliance. He highlighted financial constraints, domestic infrastructure issues and the historical dependence on foreign suppliers, particularly during times of geopolitical tension. Notably, India's nuclear tests in 1974 resulted in substantial sanctions and heightened the imperative for indigenous technological development.

Despite challenges, Prof. Nagappa highlighted key opportunities that propelled India's technological advancement. He highlighted instances of successful collaboration with the United States, such as space research and agricultural innovation. The establishment of the Indo-U.S. Science and Technology Forum and initiatives like the Green Revolution exemplify fruitful partnerships that addressed critical national needs.

The speaker also accentuated India's notable successes resulting from collaboration with the United States. He cited achievements in space research, agricultural productivity and nuclear energy, facilitated by bilateral cooperation. Moreover, initiatives like the India-U.S. nuclear deal marked a significant breakthrough, ending decades of nuclear isolation and fostering strategic alignment between the two nations.

Prof. Nagappa concluded by assessing current progress and future prospects in India-U.S. technological cooperation. He highlighted ongoing initiatives in critical sectors like semiconductors, aerospace, and defense. The establishment of joint innovation challenges and the India-U.S. Defense Technology and Trade Initiative signify a deepening partnership aimed at addressing contemporary security challenges and fostering technological innovation.

The second speaker, Dr. Aditya Ramanathan, delved deeper into the challenges, potential opportunities, and solutions concerning cooperation in defense technology transfer and defense production with the U.S from the Indian perspective. Dr. Ramanathan commenced his discourse by delineating challenges stemming from both American and Indian perspectives. He elucidated that one of the foremost issues from the American standpoint revolves around export controls, notably the International Traffic in Arms Regulations (ITAR), along with designations such as "no foreign" classification. These regulations, although not exclusively targeted at India, hinder bilateral cooperation and incur significant compliance costs for Indian entities, particularly startups and MSMEs.

The speaker elucidated the repercussions of export controls, including their adverse impact on research and development (R&D) investments and production expenditures, thereby impeding technological advancements and innovation. He astutely highlighted the inherent inefficiencies of ITAR, which while filtering out undesired entities, also obstructs potentially lucrative deals, constituting an opportunity cost difficult to quantify.

Transitioning to potential solutions, Dr. Ramanathan proposed the adoption of high-level written commitments from the Indian side regarding export controls, circumventing the protracted formal implementation process. He underscored the necessity for expeditious action, emphasizing the urgency of initiating negotiations promptly to mitigate regulatory impediments and foster collaborative endeavors.

Shifting focus to challenges on the Indian front, the speaker delineated the reluctance of American companies to engage in technology transfers due to perceived limitations in the Indian procurement landscape. He expounded upon constraints such as budgetary constraints, risk aversion, and protracted procurement procedures, which curtail the viability of joint ventures and technology transfers.

However, amidst these challenges, the speaker presented a nuanced perspective, foreseeing potential alleviation through anticipated increases in defense expenditure, ongoing defense sector reforms and a burgeoning willingness among Indian defense establishments to engage with private sector entities, including startups.

The speaker also advocated for the inclusion of allies and partners in the U.S. procurement plans, fostering collaboration and trust-building. He proposed innovative measures such as joint production ventures tailored for export to the Indo-Pacific region, accentuating the economic viability of such endeavors.

The speaker addressed the perceptual discrepancy regarding Indian companies R&D investments, advocating for streamlined accounting practices to accurately assess private sector R&D expenditures. He underscored the necessity for fostering trust and familiarity between the two nations, urging for honest dialogues and proactive measures to overcome inherent challenges and propel bilateral defense cooperation forward.

The final speaker, Dr. Lalwani discussed the perspective from the U.S. side regarding the opportunities and challenges in advancing the bilateral relationship. Specifically, he shed light on the perceived optimism from the U.S. and the discrepancies in the pace of progress. 

Dr. Lalwani commenced his discussion by acknowledging the constructive and pragmatic strides being made in defense technology cooperation, albeit at a pace not as swift or expansive as desired. He highlighted the optimism prevailing within the U.S. regarding these developments, shedding light on the benchmarks achieved in the process. Dr. Lalwani articulated the notion that much progress has occurred between government entities and within industry, albeit not widely recognized, particularly within strategic communities. He attributed this lack of awareness to the inherent opacity of the system and the busy nature of bureaucratic engagements. Despite these challenges, Dr. Lalwani, alongside his colleague Vikram Singh, sought to disseminate insights into the mechanisms underlying these advancements.

The discourse delved into the intricacies of the Indo-U.S. Defense Accelerator Ecosystem (INDISC), emphasizing its focus on fostering joint defense industrial cooperation and innovation, particularly in advanced technologies such as artificial intelligence, robotics, and space. Dr. Lalwani outlined the dual objectives of INDISC, aiming to establish both horizontal and vertical networks between the two nations' private sectors and integrating small and medium enterprises with larger conglomerates. The speaker elucidated on the threefold approach of INDISC, comprising addressing information disparities, fostering networks among various stakeholders, and mitigating regulatory frictions. He emphasized the importance of bridging information gaps and establishing robust networks between government, private sector, and academic institutions to facilitate smoother collaboration. Despite acknowledging challenges such as regulatory friction and bureaucratic capacity constraints, Dr. Lalwani remained optimistic, citing procedural improvements and industrial partnerships as notable successes. He highlighted joint endeavors in the maritime domain and burgeoning collaborations in space technology as indicative of the forward momentum in bilateral relations. However, Dr. Lalwani cautioned against the tendency to prioritize breadth over depth in engagements, advocating for a more focused approach to yield tangible successes that could serve as templates for future collaborations. He emphasized the need for India to enhance its bureaucratic throughput and engage more closely with U.S. regulatory entities to streamline technology sharing processes.

Prof. Soundar Rajan P.M, as the discussant, with visual presentation emphasized the recurring significance of export controls, particularly in the context of defense cooperation with friendly nations. He underscored the essential principle that while providing cooperation to another country, the donating nation should not incur losses. He elaborated on the need for a nuanced understanding of technical specifications, especially in dealings with entities like the U.S. Department of Defense (DoD) or the U.S. State Department, where numerical data regarding capabilities is crucial. The discussant also delved into the historical progression of India's aeronautics landscape, detailing significant milestones such as the landmark visit of U.S. Secretary for Defense Caspar Weinberger in the 1980s. He highlighted the process of tech transfer and the importance of assessing the recipient country's capacity to absorb technology effectively. Prof. Soundar Rajan also discussed specific collaborations and achievements resulting from Indo-U.S. cooperation, such as the development of the quadruplex digital fly-by system and successful instances like the incident involving the LCA crash, which showcased the efficacy of collaborative efforts. He stressed the necessity for India to strengthen its research and development capabilities and the importance of reducing dependence on foreign technology, particularly in the military domain. He suggested that a robust domestic industry is crucial for achieving self-reliance and fostering successful defense industrial cooperation between India and countries like the USA.

The second discussant, Dr. Sameer Patil, reflected on various perspectives shared by previous speakers. He began by expressing concurrence with the viewpoints presented by Professor Rajan regarding the critical issues of technology transfer and intellectual property rights (IPR). Dr. Patil emphasized the significance of political will in facilitating tech transfer, noting that while the IP might remain with the defense original equipment manufacturer (OEM), the willingness to execute such transfers is a pivotal aspect. Dr. Patil then connected this discussion to earlier points made by Professor Nagapa about the evolving India-U.S. defense relations. He highlighted India's unique status as a major defense partner of the U.S., a designation unprecedented in U.S. foreign engagement. This uniqueness, however, presents challenges as the bureaucratic framework within the U.S. government tends to rely on traditional designations like major non-NATO ally, leading to a disparity in approach towards India. Dr. Patil then delved into the issue of interoperability, observing a clash in visions between the US and India. He referenced the DTMF (Defense Technology and Trade Initiative) and highlighted the differing interpretations of its components: trade for the U.S. and technology for India. This contrast underscores India's aspirations for self-reliance in defense, posing challenges to interoperability in the long run. Moreover, Dr. Patil noted the potential synergy in the startup ecosystem, particularly in light of American venture capital investments in Indian startups. He stressed the need for initiatives like intersex to bolster such collaborations, enabling startups to contribute meaningfully to India's defense capabilities. However, Dr. Patil raised concerns about the deployment speed of innovations from initiatives like the Defense Innovation Unit (DIU) and ITX (Innovations in Defense Excellence). He highlighted a discrepancy in deployment rates between Indian and U.S. defense systems, indicating a need for India to expedite its innovation-to-deployment process. The speaker also addressed challenges related to export controls, including ITAR and lists from various U.S. departments, underscoring bureaucratic capacity constraints within India's defense sector and broader public establishment. He emphasized the necessity for India to enhance its bureaucratic capacity to effectively navigate external engagements, beyond just expanding the size of traditional services like the Indian Foreign Service

Questions posed by participants:

• Has there been any sign of apprehension from India about potential sanctions, particularly in defense procurement? Is there any hesitation from India in adopting more US technologies in the defense sector due to the focus on sanction-proofing, potentially slowing down adoption?

Dr. Sameer Lalwani acknowledged India's concerns about potential sanctions, urging a balance between political and capacity-driven reliability. He recognized India's pursuit of self-reliance in defense but suggested focusing on operational cooperation rather than political strings attached to sensitive technologies. Dr. Lalwani highlighted the need for adaptation in a competitive global landscape with more focused political agendas.

• Regarding defense technology transfer and production, what is the desired end state that our Indian colleagues envision in five years? And for what purpose, such as increasing India's exports through co-production or gaining efficiencies in production? Similarly, from the US perspective, what is the desired end state in terms of defense technology transfer and production, and what goals should we aim to achieve in addressing this issue? 

Dr. Aditya Ramanathan outlined several key points regarding India's objectives in defense technology transfer and production. Firstly, he emphasized the importance of exports, aiming for India to become an export hub with collaboration benefiting American companies, particularly targeting countries in the Asia-Pacific region. This aligns with broader strategic interests, including the need for military tech to address strategic concerns, possibly closing the gap with China. Secondly, at the domestic level, India sees privatization of the defense sector as a source of economic growth and vitality, akin to liberalization in the space sector. This secondary motivation aims to create economic growth. In the next five years, India envisions increased involvement of private companies in collaborations with American counterparts, expanding production and supply for both domestic and foreign markets.

• Is there a problem with manufacturing capacity in India? Does this slow down defense manufacturing as well?

Prof. Rajaram Nagappa noted strengths in certain missile capabilities but highlighted deficiencies in smaller surface-to-air systems. He stressed the importance of increasing manufacturing capacity and identified collaboration with the U.S. for assessing export opportunities. He discussed challenges in acquiring technology from other countries and emphasized the need for self-reliance and private sector involvement to enhance capabilities. Lastly, he underscored the importance of capacity increase in propulsion, sensors and weapons to bolster India's defense manufacturing capabilities.

• Why has not anything moved in the domain of launch vehicles in India-U.S. space cooperation? Is there an issue holding either side back?

Prof. Rajaram Nagappa explained that due to the Missile Technology Control Regime (MTCR) and other factors, India had to develop its own launch vehicle capability. Currently, India has the Small Satellite Launch Vehicle (SSLV) in the Polar Satellite Launch Vehicle (PSLV) lineup, including the GSLV Mk 2 and GSLV Mk 3. Additionally, there are two private enterprises nearing completion of their own launch vehicle systems. This capacity enables India to launch payloads ranging from small nano satellites to medium and heavy payloads, accurately placing them into desired orbits. India has conducted numerous commercial launches for various agencies, indicating sufficient capacity without the need for further cooperation in this domain.

• What recent reforms and new U.S.-India cooperation initiatives are being implemented to fast-track certification and procurement decisions in the Indian defense industry, considering the prolonged timelines for equipment procurement and certification that have delayed critical equipment induction into the Indian military?

Prof Soundhar Rajan answered, over time, efforts have been made to address certification delays and technological dependencies across various sectors, including battle tanks. Despite improvements, agencies still face challenges in supporting multiple programs simultaneously. Reinforcing certification and quality assurance agencies is recognized as essential to prevent further delays in production rates. While subcontracting to MSMEs has eased pressure on main integrators, there remains a shortfall in manufacturing capability, as evidenced by the LCA's inability to meet requirements.