India, US likely to sign $3 billion defense deal during Trump’s visit

Ritu Jha-

India would benefit greatly from a defense deal with the US, according to a Stanford fellow.

“What India needs to do here is partner with a country like US to build a domestic defense industry, and then there is no reason that hundreds of millions and billons going outside of India. It makes the country very vulnerable,” said Dinsha Mistree, research fellow and lecturer, Rule of Law, program, Stanford Law School, said of  President Donald Trump’s two-day visit to India.

Dinsha Mistree
Dinsha Mistree

Trump, during his speech to more than 100,000 people at Ahmedabad‘s Motera Stadium, on the first day of his visit, Feb. 24,  spoke about the relations between the two nations and hinted at the $3 billion defense deal in the works between US and India.

“The Prime Minister and I will also continue our important discussions about how to deepen the relationship between our two great countries.  Both of us understand that when leaders put the interests of their own citizens first, we can forge strong and fair partnerships to build a safer and more prosperous world.” Trump said. “Just months ago, this critical partnership took a major step forward when the U.S. military and your brave Indian Armed Forces conducted the first-ever air, land, and sea military exercises between our two countries.  It was something to behold.  We called it “Tiger Triumph.”

Ahead of Trump’s visit, India cleared the procurement of 24 Seahawk helicopters, and the U.S. energy company Westinghouse is expected to sign a new agreement with Nuclear Power Corp. of India for six nuclear reactors.

Mistree said India buying Apache anti-tank helicopters and Seahawks from the US can help, along with navel technology, from Russia.

“But I think if they partner with US for technology, the US is willing to help build sustainability, especially with navy,” Mistree said, adding that “it’s just a matter of easy fit and both the countries can work on it together.”

“Again but India has always been very reluctant to work with the US defense industry. It just needs to materialize,” said Mistree.

Mistree added that India should take advantage the “special trade status for high-end defense technology” bestowed by the Trump administration and play that strategically. “US is willing to work with them (India) in helping their own defense and trade industry more than other countries.”

“There is definitely a scope for cooperation and India hasn’t taken up on it,” he said. “They (India) have the brains and have the talent and Defence Research and Development Organisation (DRDO) will significantly benefit.”

Mistree believes defense manufacturing is more important than trade given the growing relationship between the two countries.

Amid concerns regarding trade tensions between India and the US, Trump said that he is hopeful that the two countries can reach a good trade deal.

“Prime Minister Modi and I will be making some very big trade deal to boost our countries economy. I am sure that we can reach a good trade. But Modi is a tough negotiator. A booming America is great for India and the world. Modi has made some significant reforms in India. The world wants to see more reforms,” Trump said.

The US is India’s second-largest trade partner after China, and bilateral goods and services trade climbed to a record $142.6 billion in 2018, reported Reuters. The US had a $23.2 billion goods trade deficit in 2019 with India, its 9th largest trading partner in goods. To make the trade -deals smoother and in hopes to get back the ‘special trade status’, India has offered to allow imports of U.S. chicken legs, turkey and produce such as blueberries and cherries, Indian government sources said, and has offered to cut tariffs on chicken legs from 100% to 25%. U.S. negotiators want that tariff cut to 10 percent.

Mistree said India has already agreed on Milk and chicken import from the US and not to worry on high tariff on Harley Davidson. And milk companies are filing bankruptcy in the US.  Dairy milk consumption has fallen more than 25 percent from 2000 to 2018, according to data from the U.S. Department of Agriculture, since people are switching to Almond milk etc.

“I think there are other stuff like cultural, visa issue and tax and bureaucracy,” Mistree said. “The two countries are close, but the economic insecurity relations haven’t kept up with the amity from both sides.”

Referring to H1B visas, high-end technology and immigration policy, Mistree said he just doesn’t know it is going to happen on this trip.

He said it’s not clear the Modi government is going to push on those issues too hard. There’s a lot of nitty-gritty that needs to be addressed and resolved.

Mistree believes that the Indian government is thinking more about CAA, Kashmir, and so not much is expected on the US-India economy side.

“The unemployment is 40 years low, and the GDP is below 6 percent. So, with Trump in India he hopes the socio-economy would be again on the forefront, that had off from Modi radar and has been neglected in the last several months,” he said.

“I think everybody would agree he (Modi) has focus on economy policy. So hopefully this trip will help Modi to come back to his agenda and think how to nationalize the economy in a meaningful way,” said Mistree.

In his speech, Trump mentioned future endeavors into space by the two countries together, saying, “You are making impressive strides with your exciting Chandrayaan Lunar Program. It is moving along rapidly, far ahead of schedule, and America looks forward to expanding our space cooperation with India as you push even further.  You are pushing the limits — and that’s a great thing — including in realm of human spaceflight. The United States and India will be friends and partners on our voyage into the stars and into space.”


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