Introduction

The relationship between the United States (US) and India in the defence sector has proven to be one of their most resilient and high-value. Testament to this are three broad trends that have taken shape in the past two decades. The first relates to their bilateral defence trade; the second deals with the cooperation in related sectors, which directly or indirectly bolsters their defence cooperation; and the third is their strategic cooperation in the Indo-Pacific region.

An important step that paved the way for defence cooperation was the signing of the ‘Agreed Minute on Defence Relations between the United States and India’ in 1995.^[1] Some years later, the ‘Next Step in Strategic Partnership’ (NSSP) released in January 2004 was critical to establishing a bilateral defence relationship. The agreement was not related to core elements of bilateral defence trade, but intended to augment cooperation in areas such as civil nuclear, civilian space programmes, high-technology trade, and missile defence. It led to expanded collaboration and eventually to the June 2005 ten-year defence framework agreement. Some of the steps that followed the NSSP helped create the right environment for high-technology trade, because such trade is guided by national and international rules and standards. The NSSP also provided the two countries the opportunity to work on the sensitive issues of export controls and licensing in civil nuclear cooperation, boosting bilateral confidence for further cooperation.^[2]

The signing of ‘New Framework for India-US Defence Relations’ in June 2005 marked the full-scale start of defence cooperation between India and the US. It intensified defence trade, joint exercises, personnel exchanges, collaboration and cooperation in maritime security and counter-piracy, and cooperative exchanges between the armies, navies and air forces of the two countries.^[3] Another important agreement was the Joint Declaration on Defence Cooperation^[4] of September 2013, which elevated the defence relationship to the level of that of ‘closest partners’. India and the US pledged to cooperate in areas such as defence technology transfer, licensing, trade, research, co-production and co-development. The agreement also paved the way for cooperation in advanced and sophisticated technology in the defence sector.

The renewal of the 2005 Framework Agreement in January 2015 opened more pathways of cooperation through dialogue mechanisms, military-to-military exchanges and partnerships. In particular, there have been regular service-specific joint and combined exercises and exchanges; multinational exercises in pursuit of common interests; enhanced exchanges between militaries in training; leveraging of defence cooperation to promote security and fight terrorism; cooperation to prevent proliferation; and increased intelligence sharing. The 2015 agreement pledged to increase defence trade, as well as to develop an ecosystem around defence cooperation, as opposed to cooperation activities being routine transactions and ends in themselves. It included cooperation in missile defence, and increased capacity building for disaster response, peacekeeping operations, and enhancing maritime security. In 2019, along with Bangladesh and Sri Lanka, India became eligible for funding under the US Department of Defence’s (DoD) Maritime Security Initiative, which conducts partner capacity-building in the Indo-Pacific.^[5] Strategic engagements between the US’s DoD and India’s Ministry of Defence have ensured a sustained momentum in the bilateral defence relationship.

Military exercises between India and the US, starting with the Malabar exercises in 1992, have also expanded the scope of bilateral cooperation. Some of the key bilateral and multilateral exercises^[6] in which India and the US have participated are listed in Table 1.

Table 1. Military Exercises With India and the US

Strategic Rationales

The link between a strong defence partnership between India and the US and a joint regional vision for the Indo-Pacific is obvious. Indeed, as outlined by then Indian Defence Minister Nirmala Sitharaman in 2018, defence cooperation has emerged “as the most significant dimension” of the India-US strategic partnership and “a key driver” of the bilateral relationship.^[7] The sentiment was echoed in US Defence Secretary Lloyd J. Austin’s statement in March 2021.^[a]

Beyond the statistics, too, the India-US defence partnership has a strategic dimension, with its most prominent implications for the Indo-Pacific region. The strategic persuasions of a ‘free, open and secure’ Indo-Pacific stem from the strong bilateral defence ties between the two countries. The bilateral framework lays out four strands of defence cooperation in the Indo-Pacific: maintaining peace and security; defeating terrorism and violent extremism; preventing the proliferation of weapons of mass destruction and associated materials, data, and technology; and supporting a rules-based order that protects the free flow of commerce in the region.

India has at least three broad strategic objectives in promoting its defence relationship with the US. First, it seeks to modernise its military by acquiring sensitive and advanced technologies necessary for its own national ambitions and regional interests. Second, it hopes to bridge its capacity-capability deficit by developing home-grown knowhow and skill sets in both the armed forces and the defence industry through specific programmes of co-production and co-development. The Initiative on Critical and Emerging Technologies (iCET) agreement between India and the US, reached in May 2022, identifies areas of mutual interest in technological cooperation. One of its purposes is to overcome bureaucratic barriers and excessive regulations that frequently impede technological collaboration.

For instance, there has been little progress with the Defence Technology and Trade Initiative (DTTI) signed between India and the US in 2012, despite biennial meetings, which shows the mismatch between the expectations of both sides and the hurdles created by US domestic laws. Despite India being granted the status of ‘Major Defence Partner’ (MDP) by the US in December 2016 and the signing of four foundational agreements between the two countries, there remain restrictions on the transfer of sensitive technology, as the US distinguishes between technology transfers to allies and those to non-allies.^[8] Agreements like iCET can help India wean itself from dependence in defence manufacturing and services on specific countries, such as Russia, and enable more strategic autonomy in times of crises. A strong defence partnership with the US will bolster India’s regional strategic capacity to meet threats in the Indo-Pacific.

China has emerged as a counterpoint to US-India strategic cooperation in the Indo-Pacific with its growing intent, and capability, to reshape the regional balance of power in its favour. It has overtaken the US as the largest navy in the world and intends to dominate the Indian Ocean and the Indo-Pacific. This has led to a strategic play in the region to secure a favourable balance of power by creating pockets of incremental influence—often referred to as ‘grey-zone activities’.^[9] India’s defence partnership with the US makes up for its power and capability shortcomings vis-à-vis China.

Structural Frameworks

Beginning with the 2005 agreement, India and the US have institutionalised their defence ties through various bilateral mechanisms, including the Defence Policy Group (DPG). The DPG decides the structure and frequency of meetings between its members from both sides, including those of its subgroups.^[10] (See Table 2.)

Table 2. Bilateral Defence Groups and their Functions

In defence sales and procurement, processes such as Foreign Military Sales (FMS) and Direct Commercial Sales (DCS) have boosted sales and supported jobs in both countries, helping the growth of their defence industrial bases. Since 2015, the US has sold over US$ 3 billion worth of defence equipment via the DCS process to India.^[11]

It was in 2012 that India and the US realised that their defence relationship, despite the presence of guiding frameworks, was being impeded by bureaucratic structures, acquisition rules and models, and budget constraints. The DTTI was envisaged as a mechanism to overcome the impediments. Its purpose, as outlined by the US’s DoD, was to “eliminate bureaucratic obstacles, accelerate timelines, promote collaborative technology exchange, strengthen cooperative research, and enable co-production/co-development of defence systems for sustainment and modernisation of our military forces.”^[12] This has yet to happen, however.

The US declaring India an MDP in December 2016, and India in turn establishing a ‘2+2 ministerial dialogue’^[b] with the US from September 2018, have been pivotal in institutionalising the bilateral defence relationship. MDP status accords India special standing for two reasons: first, it is a US Congress-endorsed status, codified by US law; and second, it “elevates defence trade and technology cooperation between the US and India to a level commensurate with the closest allies and partners of the US.”^[13]

In August 2018, India was added^[14] to the Strategic Trade Authorisation-1 (STA-1) list of the US, which has been critical to easing export controls for high-technology product sales to India by the US. With the 2+2 bilateral dialogue mechanism,^[15] India and the US have achieved a regularisation in bilateral exchanges at the highest level, and the standardisation of a global practice in the US’s exchanges with its important partners.

These mechanisms have fostered a robust defence partnership between India and the US in the form of joint bilateral and multilateral exercises, among the first of which was the Malabar naval exercise. Its expansion in 2020 to include Australia has brought more synergy to the Quadrilateral Security Group’s (Quad)^[c] regional ambitions and its joint maritime strategy in the Indo-Pacific. India’s partnership with the US in the Indo-Pacific straddles defence diplomacy and power projection in the region, making maritime domain awareness (MDA) equally important as naval cooperation. Deploying an International Liaison Officer (ILO) from the US among other nations at India’s Information Fusion Centre-Indian Ocean Region (IFC-IOR) has been an important step to “enable better correlation, compressed information cycles and timely inputs.”^[16] However, there are gaps in interoperability between India and the US in the area of maritime domain awareness, even as India seeks to transform its non-military MDA architecture. It seeks, for instance, to transition from surface-based sensors to space-based sensors in creating a more holistic MDA.^[17] As such, India’s defence and security partnership with the US, which calls for weaving its national maritime strategy with the necessities of regional geopolitics, remains a job half-done.

The India-US defence partnership is guided by a framework of constant engagement through exercises between the militaries, information and intelligence sharing, as well as military education and training programmes. For instance, India’s participation in the International Military Education and Training (IMET) programme from 2003 has opened channels for India to receive US$1 million of IMET funding annually since then. These courses “increase military professionalization, enhance interoperability with US forces, offer instruction on the law of armed conflict and human rights, (and) provide technical and operational training.”^[18]

Growth Trajectory

The US played a small part in India’s defence sector until a decade ago. In just five years, between 2015 and 2019, the US’s share in India’s total defence imports rose by 14 percent. The defence trade with India increased from near-zero in 2008 to over US$20 billion in 2020.^[19] India has spent some US$20 billion in defence acquisitions from the US since 2008, including systems like the Apache attack helicopters, Chinook heavy-lift helicopters, and M777 ultra-lightweight artillery. Some of the individual deals involve the sale to India of MH-60R Seahawk helicopters for US$2.8 billion, the Apache helicopters for US$796 million, and the Large Aircraft Infrared Countermeasure for US$189 million.^[20]  India was the first non-treaty partner to be offered a Missile Technology Control Regime Category-1 Unmanned Aerial System—the Sea Guardian UAS manufactured by General Atomics.  The Lockheed Martin F-21, Boeing’s F/A-18 Super Hornet and F-15EX Eagle are also in the pipeline for India’s future fighter aircraft acquisitions. These expectations ride on the back of successful collaborations in aircraft systems like the P-8Is which are seen as useful in boosting India’s maritime reconnaissance and domain awareness in the Indo-Pacific expanse.

Indeed, despite fluctuations over the years, the US remains one of the most important defence suppliers to India. Table 3 shows India’s yearly expenditure on military imports and the percentage of defence imports from the US for those years.

Table 3. India’s Defence Expenditures and Imports

Year	Yearly Expenditure in Arms Imports (US$ B)[21]	Defence Imports from the US[22] (%)
2010	2.91	2
2011	3.6	6
2012	4.39	3
2013	5.38	18
2014	3.35	33
2015	3.12	9
2016	3	1
2017	2.91	9
2018	1.49	2
2019	3.08	24
2020	2.8	14

Sources:  Arms Import (SIPRI Trend Indicator) -India & Statista

Recent Gains: Foundational Agreements

In recent years, the defence partnership between India and the US has been bolstered by landmark events. The decision to enter the four foundational agreements with the US potentially marks a strategic shift in India’s operational capacities in the Indo-Pacific region. The four foundational agreements are: General Security of Military Information Agreement (GSOMIA); Logistic Exchange Memorandum of Agreement (LEMOA); Communications and Information Security Memorandum of Agreement (CISMOA); and the Basic Exchange and Cooperation Agreement for Geospatial Intelligence (BECA). These agreements, along with the Industrial Security Annex (ISA) could prove critical in information sharing and spurring industrial collaboration.

The foundational agreements provide the necessary ecosystem for translating the security partnership to regional influence in the Indo-Pacific. For one, these deals provide real-time maritime domain awareness in the Indian Ocean and the larger Indo-Pacific, enhancing regional capacities for both the US and India and boosting its role as a net-security provider. This is particularly true for the western Indian Ocean, which was little seen in India’s strategic radar for much of the Cold War. India remained outside Cold War alliances like the Southeast Asia Treaty Organization (SEATO) and the Central Treaty Organization. Even in the post-Cold War period, India remained outside organisations like the Combined Maritime Force (CMF).

The agreements, especially through geospatial intelligence, joint exercises and maritime domain awareness, have made the western Indian Ocean a direct operational space for New Delhi as more exchanges are likely to take place in this region between the two countries. India’s decision to become an associate member of the CMF last year could be critical in this regard.^[23] US military presence across Gulf states, including in Djibouti, will also usher new opportunities for India in interoperability and regional capacity-building.

Emerging Areas of Cooperation

Beyond the visible increase in numbers, the structural frameworks of the India-US relationship have constantly evolved, in parallel to emerging threats and regional response requirements. This is true for two vectors of US-India defence ties: cooperation with multilateral partners in the Indo-Pacific, and the space that critical and emerging technologies have carved in bilateral and multilateral defence partnerships for both countries. This is depicted through cooperation within the Quad which, absent a clearly stated defence component, straddles multilateral cooperation with the need for critical and emerging technologies; it has implications, in turn, for regional stability, security and influence. A Quad agenda for critical and emerging tech is being discussed in this regard.^[24]

The Initiative for Critical and Emerging Technology (iCET) signed in January 2023 could be key, as a continuation of the announcement made by their leaders at the third Quad Leaders’ Summit in May 2022. The iCET is a joint initiative led by the National Security Councils of both countries, designed to enhance collaboration in key and emerging technologies. The two primary goals of the iCET are to enhance strategic technology partnerships, and to foster greater cooperation between India and the US in the defence industry.^[25]

Challenges and Recommendations

The US-India defence relationship, despite its remarkable rise in the past two decades, is intermittently impeded by functions of political, bureaucratic, economic and strategic realities. Although gaps have been bridged to a significant extent, some fundamental differences exist, casting their long shadow on the strategic partnership.

A case in point is Lockheed Martin’s offer to relocate the entire F-16 assembly line to India in 2016, which came on the heels of the US announcement that it was selling eight F-16s to Pakistan.^[26] The reasons why India showed no interest in the offer could be a case study for the most critical impediments to India-US defence relations. Despite the strength of such ties, India’s assessment of its own threats will supersede compulsions of any bilateral defence relationship. For instance, the strategic threats to India from Pakistan’s operational F-16 fleet is a real and present consideration for India’s decision to decline the F-16 assembly line offer from Lockheed Martin. The second factor was concerned with the credibility of F-16s—a 4^th-generation aircraft—in a rapidly advancing fighter jet ecosystem. Both these strategic considerations had less to do with trust between India and the US as strategic partners; nevertheless, it is consequential to the slowing of growth in the two countries’ defence partnership.

Some of the persistent problems between the two countries in the defence sector include verification of Offset Credits and imposition of penalty. US companies have been filing their offset claims on time, but they have not been granted any offset credits and only a few of their claims have been verified. This puts the companies at risk of facing severe penalties until offset credits are granted, and it will have an unfavourable impact on their future business decisions. Additionally, delays in the verification of offset claims lead to penalties being imposed by the Ministry of Defence’s Defence Offset Management Wing (DOMW) in India.^[27]

The Biden administration’s decision to impose a ban on the export of critical supplies required for COVID-19 vaccines under the Defense Priorities and Allocations System Programme (DPAS) of the Defense Production Act (DPA) in 2021 directly affected India’s ability to manufacture vaccines.^[28]

A full-spectrum operationalisation of the foundational agreements between India and the US remains an area for both countries to test their potential. This is especially true in the domain of geospatial intelligence cooperation, which remains limited due to India’s reservations in sharing sensitive technologies.

India’s ties with Russia in the defence sector also remains a factor in the growth trajectory of India-US defence relationship. Particularly in the backdrop of the war between Russia and Ukraine, India’s defence ties with Russia are seen either as a liability, or a dependence that should be changed. Given the scale of dependence between Russia and India in the defence sector, the United States is perhaps the only country that can play the same role as Russia’s in the near and long term. The other option for India—that of shifting its defence reliance to homegrown industries—will take time.

At the strategic level, there is a difference of approach in how India and the US view their defence partnerships in the context of the Indo-Pacific region. The US remains guided by its doctrines to shape its approach and favourable outcomes in the region. India’s understanding is rather dispersed between its compulsions of strategy, vision and outlook. This difference is perhaps most conspicuous in the Indo-Pacific region. India looks at its defence partnership with the US as deeply complementing its economic partnerships involving trade, connectivity, and energy infrastructure, linking its security relations in the Indo-Pacific with broad-based prosperity, integrated growth of the entire region, and sustainable ocean governance. The US’s approach to the region weighs more on generating strategic advantages through these partnerships and less on regional growth.

The DTTI was envisaged as a cornerstone mechanism of US-India defence partnership by transforming the use of technology and the fundamentals of the bilateral relationship, from buyer-seller to one that is based on co-production, co-development and co-manufacturing. To be sure, some of the projects under the DTTI—such as the Air-Launched Small Unmanned Systems, lightweight small arms technology, and intelligence, surveillance, target acquisition, and reconnaissance (ISTAR) projects—are examples of successful initiatives operationalised under the DTTI. Their momentum, however, is stalled. Despite India’s elevation to the status of MDP, the US-India defence relationship continues to be marred by technology denial, resulting from the disconnect between US private companies and the government in Washington.

On the regulatory aspects of cooperation, the US needs to relax the International Traffic in Arms Regulations (ITAR) that controls the manufacture, sale, and distribution of defence and space-related articles and services as defined in the United States Munitions List (USML).^[29] For its part, India’s Production Linked Incentives (PIL) program that offers direct subsidies to Indian-based manufacturers could impact cooperation with the US in the drone industry. On the issue of India’s dependence on Moscow for defence supplies, the US should shift its view and adopt a more pro-industry position. Fair and open competition, investments and lasting partnership of US companies with Indian companies have the potential to tilt the scale in Washington’s favour in the next decade.

Conclusion

The current India-US defence relationship is important for both commercial and strategic reasons. The steps taken by both sides over the years, along with mechanisms that have institutionalised the relationship, have ensured a certain degree of momentum in the relationship. A significant yet unnoticed part of defence relationship between Indian and US defence companies is the US defence company sourcing from India. Recently added compliances in foreign companies’ ability to spend in the Indian defence sector, along with the push to make India more self-reliant through Atmanirbhar Bharat, have not pushed away investments from the US. Rather, US companies have increased their partnerships with Indian companies aimed at fostering growth in the defence sector.

Examples of such partnerships include the BAE systems partnering with Hindustan Aeronautics limited; Boeing with Tata; and Lockheed, Sikorsky and Tata working together on joint projects. The Indian government has set a target of INR 2,000 crores (approx. US$ 271 million) in aircraft component repairs and airframe maintenance. To achieve this goal, prominent engine manufacturers are expected to establish their own engine repair facilities in India in the near future. As India looks to undertake one of the largest procurement cycles estimated at a massive US$130 billion in the next decade, the US is poised to become a significant partner in India’s defence sector.

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Vivek Mishra is a Fellow with ORF’s Strategic Studies Programme.

Endnotes

^[a] On his visit to Delhi in March 2021, in a joint statement with current Indian Defence Minister Rajnath Singh, Lloyd J. Austin stated: “India in particular is an increasingly important partner among today’s rapidly shifting international dynamics. And I reaffirmed my commitment to a comprehensive and forward-looking defence partnership with India as the central pillar of our approach to the region.

^[b] The ‘2+2 ministerial dialogue’ is a joint meeting of India’s defence and foreign ministers with their counterparts of allied countries to discuss strategic and security issues. India has initiated such dialogues with the US, Japan, Australia and Russia. Held annually, the 2+2 dialogue with the US is the oldest, started in September 2018.

^[c] Quad’s members are the US, India, Australia and Japan.

^[1] Department of Defense, United States of America, “Framework for the U.S.-India Defense Relationship,” June 03, 2015, https://dod.defense.gov/Portals/1/Documents/pubs/2015-Defense-Framework.pdf

^[2] ‘Successful Completion of the Next Steps in Strategic Partnership,’ Outlook, February 3, 2022.

^[3] Ministry of external Affairs, Government of India, “Brief on India-U.S. Relations”.

^[4] Ministry of external Affairs, Government of India, “Joint Declaration on Defence Cooperation,” September 27 2013.

^[5] Fact Sheet, “U.S. Security Cooperation With India,” U.S. Department of State, January 20, 2021.

^[6] U.S. Department of Defense, Report to Congress on U.S.-India Security Cooperation, November 2011.

^[7] Jim Garamone (2018), “U.S.-India Defense Cooperation a ‘Key Driver’ of Overall Relationship,” DOD News,U.S. Department of Defense, September 6.

^[8] Vivek Mishra (2022). “iCET: Upscaling India-US partnership for a tech-centric future,” ORF, February 9 2023.

^[9] Today’s wars are fought in the ‘grey zone.’ Here’s everything you need to know about it., Atlantic Council, February 23, 2022.

^[10] Department of Defense, United States of America, “Framework for the U.S.-India Defense Relationship.”

^[11] Fact Sheet, “U.S. Security Cooperation With India”

^[12] Department of Defense, United States of America, International Cooperation, “US | India Defense Technology and Trade Initiative (DTTI)”.

^[13] Department of Defense, United States of America, International Cooperation, “US|India Defense Technology and Trade Initiative (DTTI).”

^[14] “US gives India STA-1 status: Here’s all you need to know about it,” MoneyControl, August 1, 2018.

^[15] Akshobh Giridharadas (2022), “2+2 Curtain Raiser: A look back at past India-US 2+2 dialogues,” ORF, April 11.

^[16] Information Fusion Centre – Indian Ocean Region, Indian Navy,

^[17] Himadri Das (2021), “Maritime Domain Awareness in India: Shifting Paradigms,” National Maritime Foundation, 30 September.

^[18] Fact Sheet, “U.S. Security Cooperation With India”

^[19] Fact Sheet, “U.S. Security Cooperation With India”

^[20] Fact Sheet, “U.S. Security Cooperation With India”

^[21] Arms Import (SIPRI Trend Indicator) – SIPRI Trend Indicator -India, The World Bank.

^[22] Shangliao Sun (2022), “Share of defense import to India from 2010 to 2020, by country of origin,” Statista, November 18, 2022.

^[23] Dinakar Peri (2022). “India begins cooperation with Bahrain-based Combined Maritime Forces,” The Hindu, August 8, 2022.

^[24] Trisha Ray, “A Quad 2.0 Agenda for Critical and Emerging Technologies,” ORF, September 24, 2021.

^[25] Vivek Mishra (2022). “iCET: Upscaling India-US partnership for a tech-centric future.”

^[26] C. Fair, “Why India Should Consider Lockheed Martin’s F-16 Offer,” July 27, 2016, The Diplomat.

^[27] Suhas Srinivasiah, Ajay Prasad and Deepesh (2020). “US-India Partnership in the Defence Sector Under the Atmanirbhar Bharat,” World Services Group. October, 2020.

^[28] The White House, “National Strategy for the COVID-19 Response and Pandemic Preparedness,” January 21, 2021.

^[29] The United States Munitions List, Code of Federal Regulations.

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