NEW DELHI --- U.S. defence firms offering to set up production lines in India to win deals worth billions of dollars want stronger assurances they won’t have to part with proprietary technology, according to a business lobby group’s letter to India’s defence minister.
These companies are also saying they shouldn’t be held liable for defects in products manufactured in collaboration with local partners under Prime Minister Narendra Modi’s Make-in-India’s drive to build a military industrial base.
Lockheed Martin and Boeing are both bidding to supply combat jets to India’s military, which is running short of hundreds of aircraft as it retires Soviet-era MiG planes, and its own three-decade long effort to produce a domestic jet is hobbled by delays.
The US-India Business Council (USIBC) wrote to India’s defence minister last month seeking a guarantee that U.S. firms would retain control over sensitive technology – even as joint venture junior partners. “Control of proprietary technologies is a major consideration for all companies exploring public and private defence partnerships,” the business lobby, which represents 400 firms, said in the Aug. 3 letter, [viewed] by Reuters and previously unreported.
“To allow foreign OEMs to provide the most advanced technologies, the partnership arrangement between an Indian owned ‘strategic partner’ company and a foreign OEM needs to provide an opportunity for the foreign OEM to retain control over its proprietary technology,” it said, noting this wasn’t explicit in the policy document. (end of excerpt)
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(EDITOR’S NOTE: Prospective US participants in the “Make-in-India” defense procurement program are now facing the same demands that sank Dassault’s bid to sell 126 Rafales combat aircraft to India.
If the technology transfer issued can be resolved to some degree, especially as Lockheed and Boeing are offering previous-generation aircraft which have no critical technologies, the crucial stumbling block is that India wants the foreign supplier to take contractual responsibility for the completed product.
This is obviously unacceptable, as it opens unlimited liabilities over which the foreign supplier has no control and which no Western public company could accept, which is why Dassault preferred a direct sale of 36 aircraft to coproduction of 126.
The Indian government will have to admit, and accept, that unless it lifts some provisions of its “Make in India” policies it will have no alternative to buying off-the-shelf from foreign vendors.)