For all the buzz about the U.S.’ disappointment after New Delhi ejected Washington from the Medium Multi-Role Combat Aircraft (MMRCA) tender competition, it would appear that 2012 is the year of intensified efforts by the Pentagon to deepen its defence ties with India.

This week U.S. Secretary of Defence Leon Panetta indicated that the U.S. would go the extra mile to win more defence contracts with India. He hinted at possible relaxation of export control norms, a sore point in the bilateral relationship, particularly regarding high-technology, dual-use items.

“Our on-going work in reforming our export control system is a critical part of fostering that cooperation [with India],” Mr. Panetta said during a speech at the U.S. Institute of Peace, adding, “India is one such country that would benefit from changes to our system.”

The Secretary went on to note that while he was in New Delhi earlier in June he announced that Deputy Secretary of Defence Ashton Carter would “work with Indian counterparts to streamline our respective bureaucratic processes to better enable defence trade.”

The strategic push for expanded defence trade is marked by a strong interest on the part of the U.S. to strengthen the linkages between the U.S. and Indian systems, including the issue of systems interoperability that India has regarded with some caution. Yet Andrew Shapiro, Assistant Secretary in the Bureau of Political-Military Affairs, has pushed precisely for a more intimate institutional context for India-U.S. defence trade.

On the back of several impassioned speeches touting the Foreign Military Sales (FMS) channel for trade Mr. Shapiro said earlier this month “When a country buys an advanced U.S. defence system through our FMS... programmes, they aren’t simply buying a product. They are also seeking a partnership with the U.S.”

In April he similarly sought to press home the point about FMS when he said “FMS pertains to sales between governments, while Direct Commercial Sales [DCS] involves commercial defence sales abroad. Often times, countries can view FMS more sceptically and prefer the more transactional nature of the DCS system.”

Seeking to alter that view, Mr. Shapiro said to his Indian interlocutors that the U.S. believed that “The U.S.-India defence and trade relationship would benefit by linking defence sales with broader strategic goals. That’s why we specifically articulated the technical and political advantages that FMS offers.”

Mr. Panetta echoed this sentiment and seemed keen to spell out the details about the reform of the domestic procurement system for defence sales. In his speech he emphasised that specific reforms with the U.S. bureaucracy would include “better anticipating [U.S. allies’] needs ahead of time, fast-tracking priority sales, and incorporating U.S. exportability requirements up front in the development process.”

He added that a new Special Defence Acquisition Fund would permit the Pentagon to begin procuring long-lead, high demand items in anticipation of requests by the U.S.’ partners and they had also built “Expeditionary Requirements Generation Teams” that send acquisitions experts abroad to “help allies better define and better streamline their requests.” Additionally a proposed Defence Coalition Repair Fund “will allow us to repair equipment in anticipation of partner requests,” the Secretary noted.

As top Pentagon officials have repeatedly noted, India-U.S. defence ties have deepened in recent years. India now holds more than 50 annual military exercises with the U.S., more than any other country; cumulative defence sales have grown from near-zero to more than $8 billion; and high-level exchanges on defence issues also have increased dramatically.

However, sustained momentum on this front may require not just clarity around the rules of the road and transparency about U.S. procurement reforms. It may call for a good measure of patience whenever India chooses a more cautious approach towards specific transactions.

Perhaps after the MMRCA disappointment the Pentagon and State Department are more aware of this need for cautious optimism. Mr. Shapiro said earlier this month, “Going forward, there [are] a number of tenders which we hope we’re successful on, including a tender for Apache helicopters. And we continue to advocate for them, and we’re hopeful that we’ll be successful on a number of sales over the coming year with India.”

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