US May Lose Position as Leading Defence Supplier to India

The US will be unable to sustain its position as India’s leading defence supplier as no new acquisitions are in the pipeline after delivery of currently contracted or in-negotiation hardware is completed.

During the past three years, India had ordered Boeing C-17 heavy lift, P-8i maritime reconnaissance aircraft and Lockheed Martin C-130J transporters worth US$8.2 billion. In addition, a potential contract for Boeing helicopters; 22 Apache and Chinook, 4 additional P-8i aircraft and 16 naval helicopters from Sikorsky altogether worth US$4.5 billion are at the negotiation stage which may materialize this year. But beyond that no new major acquisitions are in the pipeline from US defence companies.

The ejection of Boeing and Lockheed Martin from the Indian Air Force’s medium multi role fighter aircraft contract worth US$20 billion, the loss in the US$ 525 million anti-tank guided missile contract to Israel and the US$ 885 million M 777 howitzer deal from BAE Systems (US) which the Indian MoD rejected due to high price, were among the notable deals which slipped out of the hands of American companies.

Going forward, US companies are not in the reckoning as regards to any new request for proposals (RFP). Big ticket items such as submarines, armaments, missiles, fighter aircraft, army equipment such as tanks and armoured vehicles will probably be procured from Russian, European or Israeli companies as these have responded to various RFPs and in the shortlist for some of them.

The proposed Indo-US defence trade and technology agreement is yet to be spelt out but experts do not give much hope to it in terms of business for US companies. On the contrary its focus will probably be on Indian manufacture with US technology, something which is unlikely to earn as much big bucks as outright sales.

Given that the Indian MoD has time and again proved to be price sensitive, it may revert to Russia for major weapons platforms such as fighter aircraft, submarines, tanks and armoured vehicles as Moscow’s price is significantly cheaper than that of Europe or America. Buying from Russia may be more cost-effective than ever before as the recent fall in the value of the Rouble has brought almost on par with the Indian Rupee.