Want to Sell Fighter Jets to India? Make Them There

An Indian Arjun Mark II tank during a display at a defense exhibition in Chennai. The country is seeking to build a domestic defense industry that can meet more of its needs and reduce dependence on Russian suppliers.

CHENNAI, India — Over the last decade, India has been the world’s largest importer of aircraft, ships and other military gear, most of it from Russia.

It is a dependence that the Indian government is eager to shed — and the United States wants to help.

In fits and starts, Prime Minister Narendra Modi has been trying to build up a homegrown defense industry that can supply more of India’s needs and even export weapons to other nations. The government in New Delhi is encouraging foreign defense companies seeking contracts from India to partner with local firms and share technology with them.

The Trump administration has supported India’s efforts to get American technology, hoping to strengthen ties with a country it considers a key counterweight to China in the region, while diminishing Russia’s influence. Major American defense contractors like Boeing and Lockheed Martin are also gung-ho, seeing the chance to win billions of dollars in business from a country that has historically chosen Russian and European suppliers.

The biggest prize is India’s plan to buy up to 110 fighter aircraft, a mix of single- and dual-engine models, a deal worth an estimated $15 billion that Boeing and Lockheed are both seeking to win with Indian partners. In addition to the Russians, whose MiG planes are the mainstay of the Indian air force, the American companies will face stiff competition from French and Swedish businesses seeking portions of the contract.

The Indian government is requiring that most of the planes it buys under the new contract be assembled in India. In other defense deals, the Modi government is taking a less strict approach, encouraging — but not mandating — foreign arms manufacturers to team up with local companies to make parts, or entire products, within the country.

In essence, India wants foreign companies to transfer key technologies to their local partners so they can eventually do it all themselves.

“Today we live in an interconnected world where the efficiency of supply chain is a key factor in any manufacturing enterprise,” Mr. Modi said on Thursday in a speech at India’s defense exposition, held every two years, this time in the southeastern coastal city of Chennai. “Therefore, the strategic imperative to make in India, to make for India and to supply to the world from India is stronger than ever before.”

Throughout the show, potential bidders for the fighter aircraft contract were showing off their capabilities in hangar-size, air-conditioned tents.

Boeing, which intends to submit a bid to supply its F/A-18 Hornets, announced that it would team up with the government-owned aircraft maker Hindustan Aeronautics Limited and one of India’s largest conglomerates, Mahindra Group, to build the planes locally. At a booth at the show, it was offering visitors a chance to fly a Hornet simulator.

Lockheed, a leading Boeing rival, has teamed up with Tata Sons, another Indian conglomerate, to pitch its F-16s. As part of the bid, the American company would offer to move its sole F-16 production line, currently in Greenville, S.C., to India to make the planes at a joint factory with Tata.

Any move is several years off, but about 250 South Carolina workers would lose their jobs if it happened. Those jobs are uncertain anyway because there are currently no firm orders for the F-16, although Bahrain is expected to sign a deal and other countries have expressed interest. India’s large order would support jobs at American parts suppliers.

The Trump administration is threatening a trade war with China in part over the country’s demand that American companies transfer chip designs and other advanced technology to Chinese firms to get access to the Chinese market.

With India, the transfers are more voluntary and intensively negotiated. The United States government is directly involved because it must approve all major weapons sales.

“The U.S. is going to be very forward-leaning in technology, the transfer of technology, and indigenous production that we can offer to India,” Kenneth Juster, the United States ambassador to India, told a panel at the conference in Chennai on Wednesday.

He added that the United States planned to offer India “certain technology and platforms that we have offered to no other country in the world.” A fighter jet deal could lead to even more cooperation, he said.

Such sharing of sensitive technology is something the Russians have historically been reluctant to do, said Sameer Patil, director of the Center for International Security at Gateway House, a Mumbai think tank.

“Now the hope is that the private sector would get some technology transfer because the American partners have more confidence in the Indian ones,” he said.

The Trump administration sees weapons sales and technology transfers as part of a strategy to rely more on New Delhi to counterbalance Beijing in Asia.

At this point, India’s military is vastly outspent by China’s. Beijing unveiled a defense budget this year that was three times larger than New Delhi’s. However, India is investing in its navy, creating its own fleet of nuclear-powered submarines that American officials hope can help counter China’s navy, which has made vast inroads into the Indian Ocean.

After India gained independence in 1947, it decided to rely primarily on government-owned military suppliers for its needs. But those companies have a mixed record on quality, execution and technological innovation.

In some cases, the Indian military has not wanted to buy locally made products, the country’s defense minister, Nirmala Sitharaman, acknowledged on Wednesday. “It is their final call that I have to respect,” she said at a news conference.

So over the last few years, India has been encouraging the growth of private defense suppliers, from large industrial houses like Tata and Mahindra to hundreds of small and medium-sized companies.

The government is also requiring that foreign defense suppliers reinvest 30 percent of the value of their Indian contracts back in the country, a target that Mr. Modi said has largely been achieved during his tenure.

To help win an Indian contract for AH-64 Apache helicopters, Boeing started a joint venture with Tata to build the Apache fuselages in the central Indian city of Hyderabad. The factory will eventually be the sole supplier of that part for Boeing’s worldwide operations.

“It saved us money, gave Indians a capacity they didn’t have before, and it opened the doors for a $3.1 billion sale for us,” Pratyush Kumar, president of Boeing India, said in an interview.

Tata, a 150-year-old conglomerate with interests in everything from truck manufacture to management consulting, has a lot to learn about the defense business, according to Banmali Agrawala, its president of infrastructure, defense and aerospace. Partnerships like the ones with Boeing and Lockheed, he said, were important steps.

“We want to make sure whatever we do is globally competitive and meets global standards,” he said. “Let’s first gain some expertise by plugging ourselves into the global supply chain.”

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