US hopes to clinch major defence deals during Obama's Nov visit

By Financialexpress :  The US is eying a major chunk of the Indian defence pie and President Barack Obama will seize the opportunity during his visit to catapult his country to one of the top three arms exporting nations in the world.

The focal point of Obama's visit, besides easing of export controls on sensitive dual-use technology, would be co-operation in space and defence deals, the main ones being Patriot ground-based missile defence programme, high frequency radars for monitoring cross-border movement, coast guard equipment and highly-sensitive sensors for the home ministry, Also sought will be a contract for the purchase of C17 Globemaster III heavy transport aircraft, procurement of four more P81 maritime reconnaissance aircraft and GE engines for light combat aircraft (LCA).
Talking to FE, Michael Krepon, co-founder of Stimson Centre, Washington DC, said, " I expect a loosening of export controls for high-tech cooperation. India is making rather large defence deals with Russia. By comparison, Indo-US defense cooperation implementing agreements continue to be mired in red tape. It's the Indian bureaucracy, not the Pentagon, which appears to be the reluctant party."
Mathew Hoey, a former senior research associate at the Institute for Defense and Disarmament Studies, said, "For the US, a slot among the top arms exporters to India, would be possible if the last remaining export controls between India and the US defence industry are removed. Due to India's experiences with cost overruns and delays related to high value military exchanges with Russia, India might find itself looking to the US as an alternative to Russian military technology."
Serious competition between the US and Russian defence industries can be expected, especially with billions of dollars on the line. Interestingly, this competitiveness is noticeable in the visits that are following that of President Obama in November . These visits include those of French President Nicolas Sarkozy and the Russian Prime Minister Medvedev in December.
American defence industry players are increasingly looking at the East to establish manufacturing bases in order to take advantage of the region's growing engineering design and low-cost manufacturing capabilities.
As leading US defence contractors such as Lockheed Martin and Boeing face a decrease in missile defense spending on the part of the Pentagon, these losses can be supplemented by India. In the case of Raytheon, a senior company official overseeing the Patriot ground-based missile defence programme stated in July, "A number of exchanges have taken place between the governments of India and the US and classified information has been given to India about the Patriot missile programme."
This is indicative of the Patriot system being a focal point and it is expected that the visiting President might take steps to facilitate India's acquisition of the Patriot system during the forthcoming visit.
A recent report by AMCHAM - KPMG focuses on the improving landscape for US business and Indo-US commercial enterprise in the Indian defence sector. The report highlights the growing proximity between the defence establishments of the two countries in light of the renewed warmth in Indo-US political relations and the large exposure of US defence companies to Indian defence requirements, which is creating unique opportunities for the two countries to jointly explore growth avenues in this sector.
The increasing convergence between Indian and US defence establishments is manifested in the signing of several major procurement contracts between the two countries, including procurement contracts for 12 P-8I maritime reconnaissance aircraft worth over $ 3 billion, 145 M777 155mm Light-Weight Towed Howitzers worth $647 million, F414-GE-INS6 engines for the LCA worth $ 650 million, 24 Harpoon Block II naval surface missiles for $170 million, 6 Martin C-130J 'Super Hercules' aircraft for Indian Special Forces worth $ 1 billion and six UH-3H Sea King troop carrying helicopters for $88 million. Together, these have created offset obligations of over $1 billion, which now account for 42% of all international offset obligations created since the Defence Procurement Policy made offsets mandatory, thus creating significant opportunities for collaboration between Indian and US firms.
Lockheed Martin is exerting pressure on the Obama administration and has been in discussions with the defence ministry in New Delhi in an effort to supply the Indian armed forces with what is seen as the most advanced and successful missile defence technology in the US military's portfolio — the Aegis Combat System (ACS).
According to Boston-based Hoey, "India's desire to purchase the means to enhance their logistical capability have been attained in part by closing a deal in 2008 to purchase six C-130 Hercules military transport aircraft valued at nearly $1billion — this deal included "spare engines, related equipment, and operational and maintenance training. "
This heavy lift logistical capability will be complemented by India moving closer to adding 10 Boeing C-17 Globemaster transport aircraft in the country's largest military transaction yet. According to Vivek Lall, vice-president and country head, Boeing Defence, Space and Security, "The negotiations are going well between the two governments for the C-17 Globemaster transport aircraft." The value of the deal has been estimated to be around $5.8 billion.
Boeing's P-8I Maritime Aircraft for the Indian Navy has been designed to conduct ELINT and anti-submarine warfare and not only incorporates Indian developed design features, but also Indian built subsystems