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[PAPER] Unleashing U.S.-India Defense Trade

November 3, 2010

Asia Foundation trustee and former U.S. Under Secretary of Commerce for Industry and Security and founder and co-chair of the U.S.-India High Technology Cooperation Group Kenneth I. Juster recently co-authored a working paper commissioned in conjunction with the landmark report released by the Center for a New American Security (CNAS) entitled “Natural Allies: A Blueprint for the Future of U.S.-India Relations.” Below is an excerpt from Juster’s  paper.

During the last 10 years, the United States and India have forged closer defense ties based on the recognition that they share fundamental security interests in Asia and beyond. While the two countries have increasingly undertaken joint exercises and improved military-to-military relations, bilateral defense trade has yet to fulfill its potential. The sale of defense?related goods by U.S. companies to India and collaboration on defense technology between U.S. and Indian firms remain areas of significant opportunity for the U.S. government and the U.S. defense industry. President Barack Obama’s visit to India in November of this year should serve as a catalyst for further progress on defense trade between the two countries.

Expanding defense trade with India would benefit the United States by enhancing interoperability between the U.S. and Indian militaries and opening a sizable new market for U.S. defense firms, especially at a time of contracting defense budgets in the United States. India’s total defense spending over the next six to seven years is expected to be in the range of 280 billion dollars, with a substantial portion of its procurement coming from foreign suppliers. But defense trade and defense technology collaboration continue to be sources of irritation in U.S.-India relations. Despite a steady increase in the licensing of U.S. defense items to India, members of the Indian government and Indian industry argue that the United States needs to further streamline its export control systems relating to “dual-use” and munitions items. They claim that U.S. licensing policy hampers the transfer of high technology from the United States to India and puts U.S. firms at a competitive disadvantage in the Indian market. There is certainly truth to these arguments, but there also are myths and misunderstandings. In order to suggest practical steps that each government can take to facilitate further defense trade and collaboration, we examine the publicly available facts relating to dual?use, munitions and civil nuclear exports from the United States to India. Download the full paper on the CNAS website.

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