The Obama administration is considering a major reform and simplification of approval processes that will enable more arms to be exported to fast rising powers like India & Brazil as part of a strategic move to help the US defence industry recover export revenues lost through domestic and foreign cutbacks.
More overseas orders for the US industry would contribute to Obama’s target of doubling defence exports within the next three years.
Brazil this week repeated calls for more relaxed US rules for technology transfers. Congressional controls have prevented US defence suppliers from renewing contracts with Latin American countries which are increasingly turning to alternative suppliers, including Russia and European Union.
US defence suppliers are also pressing Washington to ease limits so that they can compete effectively for multi-billion dollar Indian government contracts for the supply of fighter jets and other high-tech military goods.
India faces an existential dilemma: it needs to determine how far it is prepared to go with Uncle Sam down the path into the garden where it has never been before. India has been a reliable customer for Russian weapons which lies at the heart of its relationship with Moscow. Russia still accounts for about 70% of Indian military equipment, but India is now showing a subtle shift towards US weaponry.
In January last year, the US demonstrated it was serious about doing business with India and stimulating new sales by dismantling technology restrictions that were slapped on India after it tested nuclear weapons in 1998. The US eased restrictions on “dual-use technology” or hi-tech products that can have military applications in recognition of the two countries’ stronger economic and national security ties.
The move realigned India’s standing in the US export control regime by removing it from several country groups associated with proliferation concerns. It added India instead to a more favorable category consisting of members of the Missile Technology Control Regime.
The measure removed several Indian space and defence-related organisations from the US Entity List, which imposes extra export licensing requirements on foreign groups. Bharat Dynamics Limited, four subordinates of India’s Defence Research and Development Organisation and four subordinates of the All Indian Space Research Organisation were removed from the Entity List.
Even with the reforms announced last year, there are elaborate licensing requirements on many sensitive US technologies that go to India, as there are on some technologies to all countries. Although the US remains the world’s largest defence supplier, it’s defence industry is seen losing out to competitors that have simpler processes for exports.
At issue is how much the US Congress might be willing to bend its defence priorities to encourage export trade. The move risks a backlash from some Republican officials in an election year who feel the easing of defence export controls may benefit enemies of the United States and also benefit China, which is rapidly building it’s own arms industry.
Defence experts say the arms export curbs now block China’s access to certain technologies including aircraft, avionics, lasers, propulsion systems, certain composite materials, and telecommunications equipment for space communications or air defence.
“As part of the reforms, the Obama administration wants to push for a new agency that will coordinate often competing or conflicting lists of defence equipment that can be exported. The lists are maintained in different departments, including the Departments of State and Commerce.