US defence and nuclear deals could touch $15 bn

November 5th, 2010 - 6:57 pm ICT by IANS  

Barack Obama By Gulshan Luthra
New Delhi, Nov 5 (IANS) India is likely to indicate or announce defence and other deals with the US worth around $15 billion during President Barack Obama’s visit.

While India is yet to decide the winner for the 126-plus Medium Multi Role Combat Aircraft (M-MRCA) contract from among the six US and European competitors, Washington is already set to win orders for six more Boeing C-17 Globemaster III strategic airlifters in addition to the 10 already being negotiated, six more Lockheed Martin C-130J Super Hercules aircraft in addition to the six already purchased, and possibly new combat and heavy lift helicopters depending upon the trial results.

The deal for four more Boeing P8-I Multimission Maritime Aircraft (MMA), or long-range anti-submarine aircraft, which the Navy recently announced, could also be firmed up.

Bean for bean, the 10 C-17s, with their full package including training and spares cleared by the US Congress, cost $5.58 billion, but the negotiated price is likely to be around $4.5 billion and that of six more around $2.5 billion, or an estimated total of $7 billion for 16 aircraft.

The already purchased eight P8-I cost $2.2 billion and the six C-130Js $1.1 billion. If the newer machines are added, the US companies secure additional orders worth $1.6 or $1.7 billion. These defence deals exceed $10 billion in value.

Although there is no single “signature item” from the defence list, the removal of nuclear technology restrictions from the US entities or banned list, should lead to major nuclear power projects to be awarded to US companies, and these could be worth around $5 billion.

Notably, Commerce Secretary Gary Locke, whose Department of Commerce is responsible for imposing or removing the restrictions on transfer of dual use technology, has strongly indicated the removal of nuclear technology restrictions, which are formally to be announced during the Obama visit.

Under Secretary of Defense for Policy Michele Frournoy, who was recently in India to prepare for the presidential visit, also announced that the US had lifted more than 90 per cent of the restrictions on defence equipment for India.

While no specific details are available, the flurry of activities in both Washington and New Delhi on the eve of the visit, India’s signing of the Convention on Supplementary Compensation (CSC) recently at the International Atomic Energy Agency (IAEA), and a meeting of the Cabinet Committee on Security (CCS), chaired by Prime Minister Manmohan Singh, Nov 4 ahead of Obama’s arrival, indicate some substantial deals are in the offing.

These could mean award of civil nuclear projects, for which former president George Bush and now Obama have been keen.

Certain Indian institutions like the Defence Research and Development Organisation (DRDO), the Indian Space Research Organisation (ISRO) and Defence Public Sector Undertakings (DPSUs), as well as civil nuclear bodies are likely to be removed from the so-called entities list.

How far the restrictions are really removed, will be known only in course of time, but there would be a step by step approach by Washington, and reciprocally of course, by New Delhi.

There are and there will be hiccups, as India has declined to sign some defence agreements with the US, particularly the Logistics Support Agreement and Communications Interoperability and Security Memorandum of Agreement or CISMOA. The US says that it does not want more from India than what for instance Japan and Britain do, but then India is not militarily tied with the US like those of its allies.

But India recently signed the End User Monitoring (EUM) and Enhanced End User Monitoring (EEUM) agreements for purchasing 24 Boeing Harpoon Block-II missiles for the Indian Air Force (IAF) worth a declared value of $170 million. These agreements are largely aimed at safe storage and preventing unauthorised access.

The US leads the world because of its technological dominance. And India is hungry for technology for economic growth. The question is: how much will the US release? The results of IAF’s MMRCA competition, and more defence cooperation with the US, will also depend upon that.

(Gulshan Luthra is a defence analyst. He can be contacted at gulshan.luthra@indiastrategic.in )

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