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August 30, 2014

Let’s talk transfer of technology

 India must insist on co-development and co-production of defence systems that it plans to buy from the U.S.

It is good that Prime Minister Narendra Modi and Defence Minister Arun Jaitley have made it clear to the U.S. Defence Minister, Chuck Hagel, who was in India earlier this month, that the pure sale of defence hardware by the U.S. to India is far from enough.

The way we should go with the Americans has to be on the lines of the co-development and co-production of the state-of-the-art Fifth Generation Fighter Aircraft (FGFA) with the Russians.
However, India, which agreed to buy 39 AH-64D Apache helicopters for the Army in addition to the 22 now under negotiation, is in talks again for purchase by the Indian Air Force (IAF) from the U.S. manufacturer, Boeing. This is being done without transfer of technology (TOT) to Hindustan Aeronautics Limited (HAL) for the local manufacture of all these 61 helicopters, which is bad for the country. Such a number of helicopters, senior managers and engineers of HAL’s Helicopter Division argue forcefully, is large enough for substantial local content-based production. Neither the IAF nor the Army contracts with Boeing has gone so far as to make TOT result in techno-commercially viable production here feasible and viable. The Ministry of Defence should act immediately to tie-up such TOT-based production by HAL instead of proceeding with mere import of the finished product.
Defence supplies by the U.S.

Will the U.S. government agree? If we use the multi-billion U.S. dollar value of the two contracts as leverage and exert pressure, they will have to. This would mean new jobs for HAL and its sub-contractors. It would also mean we would have a nationally controlled spares production base in the country, which would be orders of magnitude cheaper than supply of spares from the U.S. The bread and butter for the supplier come from hugely priced spares; not from the main equipment.
If one were to analyse defence supplies by U.S. companies under the U.S. government’s direction and control even to their “closest allies” such as the U.K., one would find that it is the policy of the U.S. government to severely restrict not only TOT in general, but transfer of technology relating to critical sub-assemblies, modules and components too, making us eternally dependent on them.
A specific case will illustrate the reality. The case pertains to the Sea Harrier, which is aircraft carrier-borne and uses vertical take off and landing (VTOL). The U.K. was the inventor of VTOL technology. India had bought two squadrons (around 30 aircraft) of the Sea Harrier from the British Aircraft Corporation (BAC) way back in the 1970s for its aircraft carriers. When the Atal Bihari Vajpayee-led National Democratic Alliance government was in power (1999-2004), we sent our Sea Harriers to the BAC for a thorough upgrade. At that time, the Ministry of Defence, the Navy and the BAC knew that such an upgrade would call for the BAC importing some critical sub-systems, modules and components (hereafter collectively referred to as “modules”) from the U.S. This was because those modules had been imported by the BAC even for the Sea Harriers it had produced in the U.K. and supplied to the British Navy.
That the U.S. government would prove “difficult” in clearing the supply of those modules for our Sea Harriers was recognised by both the BAC and the Defence Ministry. So they sounded out the U.S. government agencies concerned. The U.S. response was non-committal. Nevertheless, the Ministry went ahead. Why? Because we did not have an option. Over 25 years, the Indian Navy operated those aircraft, but no effort was made to successfully indigenise those modules. We just merrily went along with importing those modules from the BAC, which in turn kept importing them from the U.S. companies concerned at huge increases in prices from time to time.
It was not surprising, therefore, that the U.S. government refused the supplies to the BAC for fitment on our Sea Harriers. The BAC and the British Navy then told India that the U.S. government had done likewise, even in regard to the Harriers of the British Navy despite the U.K. being the country’s “closest ally.”
The U.S. government finally agreed to the export of the modules concerned, but only after former British Prime Minister Tony Blair flew to Washington D.C. to specifically persuade the U.S. President to release them. As far as our requirements of the modules were concerned, Mr. Vajpayee had done something similar.
This case shows how even British and European defence equipment manufacturers have to constantly face and deal with the U.S. government’s export controls on them on a wide array of modules, despite the fact that all of them are supposedly equal members of NATO.
Being circumspect in dealings

This kind of policy and practice by the U.S. government also came up with regard to the “upgraded” F-16 Falcon and the F-18 Hornet fighter-bombers which Lockheed Martin and Boeing respectively had offered India against the global tender put out by the Ministry of Defence/IAF for 126 Medium Multi-Role Combat Aircraft (MMRCA) four years ago. Of all the six bidders, the TOT and terminal local content were the smallest in the case of both the U.S. planes. Therefore we have to be extremely circumspect in dealing with the U.S. government in all high technology defence systems from the transfer of technology and local production content points of view. 

The Hindu

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