Why India chose to disappoint the US

India's procurement of 126 multi-role combat aircraft has been one of the most eagerly anticipated defense deals in years, and not just because of its US$11 billion value.

The selection was always going to be interpreted as an expression of New Delhi's evolving strategic outlook, and to some in Washington, which has built an increasingly close alliance with India driven by a mutual wariness of China, a win for either Boeing or Lockheed Martin, the two US contractors competing for the contract, seemed assured.

But the Americans were wrong to think that friendship alone would unlock the door to India's defense dollars. At the end of April, the Indian government announced that neither US firm had even made it onto the final short list, with Dassault of France and the European EADS consortium winning through at their expense.

Having made plain that the US was "deeply disappointed" by the outcome, the US ambassador to India promptly resigned, citing personal reasons that seemed barely to mask his frustration that American lobbying had failed in spite of President Barack Obama's personal appearance in New Delhi last November.

Lockheed Martin's F-16 was perhaps always an outsider to fulfill India's requirement: Pakistan already operates the aircraft, and this counted against it right from the start. But the Americans thought, not unreasonably, that Boeing's versatile F/A-18 Super Hornet, backed up by industrial offsets from General Electric as well as Boeing itself, was a strong claimant. Unfortunately, the Indian Air Force's technical evaluators didn't see it that way. They felt that the newer French and European fighters performed better in India's often challenging operating environments. The Europeans also went further on technology transfer, while the US's end user agreements struck India as needlessly prohibitive.

"The Air Force was focusing on getting an aircraft that would be superior, and the American aircraft on offer just didn't cut it," says Rahul Roy-Chaudhury, the senior fellow for South Asia at the International Institute of Strategic Studies. "There was surprise in India at the extent of the US disappointment ... The Indian mindset was that this deal wasn't about cementing relationships, it was about getting the best deal. The Indian view is that the Americans should have offered better aircraft."

Both sides are left with the sense that the other might have attached more value to their alliance in order to make the fighter deal happen. For the US, that the Indians were unduly blase in ejecting both US aircraft from the competition; from the Indian perspective, the Americans should have dug deeper and demonstrated their commitment to the Indian relationship by putting together a much stronger package.


"I hope [the Americans] learn from this," says aviation analyst Richard Aboulafia, vice president at the Teal Group. While maintaining that the Super Hornet was as strong technically as the other competitors, Aboulafia suggests that the Americans' complacency lost them the deal. "If the US had really reformed its processes and said to the Indians, 'You're our partners, you're our equals,' then the F-18 would have had a very strong chance. That's the approach the Europeans took - they came and said, 'We need you'. I hope this is a rude awakening for them."

Aboulafia points out that the US also failed to overcome the "unfortunate legacy" of its refusal to export critical aircraft components to India during the 1999 Kargil conflict with Pakistan. India needed cast-iron guarantees that nothing like this would ever happen again, and these were not forthcoming.

Much has been read into India's refusal to do the US any special favors in this case, with some commentators applauding what they see as a return to India's traditional non-aligned roots and a rejection of a US-India strategic bloc. But by opting for a European aircraft, India is not seeking to avoid aligning itself with the US. India clearly is aligning itself with the US, but as a partner rather than a client; it also sees the US as one of several key strategic partners, rather than the only ally that counts.

India's strategy, above all, is to spread the risk. It has already signed significant contracts with the US for military surveillance and transport aircraft, as well as civil nuclear development. Russia, once India's principal arms supplier, also missed out of the multi-role fighter deal, but is jointly developing a fifth-generation fighter with India.

France recently secured a $20 billion contract to build civil nuclear reactors in India - an agreement which may count against Dassault in the final round of the fighter contest if New Delhi truly is determined to spread its largesse. Partnership with France is already secured, whereas the selection of EADS' Eurofighter would give four more countries - Germany, Italy, Spain and the United Kingdom - a vested interest in the modernization of India's military-industrial base.

Political considerations will now dictate which of the two finalists secures the contract, and also when a deal is announced. The government's corruption woes are such that it would be far too sensitive to announce a major contact award in the next few months, perhaps pushing back a final decision until 2012.

The stakes for EADS and Dassault could hardly be greater. A Eurofighter win could potentially propel the aircraft to further success in other Asian markets which have shown an interest in acquiring it - such as Japan, Indonesia and Malaysia - while the fortunes of Dassault's Rafale, which has only Brazil as a significant export customer so far, would be similarly transformed.
For the US, there is everything reason to be optimistic about the defense relationship with India, despite this setback. The Indian Air Force has already ordered six C-130J transport aircraft from Lockheed Martin, and eight P-8 multi-mission aircraft and 10 C-17 transport planes from Boeing; it will probably come back for more of all three types within the next few years.

But the biggest opportunity could be in encouraging India to buy Lockheed Martin's F-35 Lightning II, a fifth-generation fighter that would be a capability leap beyond any of the aircraft under consideration this time around. Such a deal would be fraught with difficulties - not least how to involve Indian industry (as offset rules demand) in the construction of an aircraft that is far beyond its current technical capability - but the US has perhaps a decade to figure out how to get around them. India will certainly require a fifth-generation fighter as China makes progress towards acquiring one, and its prospects of successfully developing a fifth-generation fighter with Russia are mixed at best. The US certainly has a big incentive to learn the lessons of its recent setback.

After absorbing the initial disappointment, the US will put India's rebuff behind it and refocus on making the strategic relationship with India a cornerstone of its foreign policy in the Asian region. In this, it will find a willing partner, though India's assertiveness in rejecting the US aircraft will do it no harm as it strives to make that partnership an equal one.



By Trefor Moss(AsiaTimesOnline)