The new US administration is likely to put pressure to move ahead with the remaining two foundational pacts, while India wants speedy implementation of the logistics pact that was signed last year.
However, the investment plans of US defence majors Lockheed Martin and Boeing in India may get derailed under President Donald Trump’s “Buy American, Hire American” policy.
“India may come under pressure from the US to sign the remaining two pacts. The new administration may like to have things in order with which it wants to do serious business. If India is serious about boosting defence ties with US, it has to follow the prescribed rules,” a top US diplomat told BusinessLine requesting anonymity.
US signs these pacts only with those countries which it considers to be their “major defence partner”.
The remaining two pacts are Communication and Information Security Memorandum of Agreement (CISMOA) and Basic Exchange and Cooperation Agreement (BECA).
Talks yet to start
Although India has agreed to sign the pacts, the negotiations have not yet started, as India needs to keep the sensitivities of Russia and China in mind, according to sources.
CISMOA allows US to supply India with its proprietary encrypted communications equipment and systems and BECA would enable setting up a framework through which the US could share sensitive data on targeting and navigation with India.
India signed a tweaked version of US’ Logistics Services Agreement (LSA) in 2016 and renamed it as Logistics Exchange Memorandum of Agreement (LEMOA). The pact stipulates exchange of logistics support and supplies.
It facilitates the provision of services and support that either party may need when in an out-of-country situation. It also ensures that the financial transactions and billing are correct and punctual.
During Trump’s phone call to Prime Minister Narendra Modi, the new US President stressed on strengthening defence and economic ties, according to a White House press statement.
Signing of the foundational pacts was also one of the main issues discussed during Harry B. Harris’s, Commander, Pacific Command, US, visit to India earlier this month just days before Trump’s inauguration.
President Trump has already made it clear that his governance will be based on “Buy American, Hire American.”
According to sources, this might derail some of the long-term investment plans of American defence firms Lockheed Martin and Boeing which are keen on setting up manufacturing plants in India to produce fighter jets.
While Lockheed Martin said it has plans to shift its production line of F-16 to India, Boeing has stressed that it will build F/A-18 Super Hornet fighter jets in India. Trump has already criticised both these firms on their investment plans and soaring cost of operations.
Both Boeing and Lockheed Martin are facing tough competition from Swedish SAAB and French Rafale on bagging the billion-dollar fighter jet programme from the Ministry of Defence.