The US-India Business Council, which lobbied feverishly over the past three years for an End Use Monitoring agreement between the United States and India that lets American defence manufacturers make inroads into India's massive and burgeoning defence and security trade has expressed elation over the pact that was finalised during Secretary of State Hillary Clinton's official visit to New Delhi.
The USIBC said that this was 'a significant step that puts decades of Cold War baggage behind the world's two largest democracy', and that in achieving 'consensus' on this 'key bilateral agreement', it held out the promise 'to bolster the US and India as reliable partners for the long future in the sensitive areas of defence and security trade'.
It predicted that 'such an agreement will enable defence and security trade between the US and India as never before, and will facilitate the participation of US companies in supporting India in transforming its military and homeland security apparatus'.
Under the accord, which provides for verification of military equipment and high technology acquired by India from the US, which is aimed as preventing the transfer of such equipment to third countries, had long remained a stumbling block in paving the way of Indian procurement of highly sophisticated American defence technology and equipment, and although an agreement in this regard was not signed, American business was confident that such an accord would soon follow, because 'trust' between the two countries had now been established.
India has budgeted as much as $40 billion through 2012 to procure 'best technologies' for the upgrade of its defence establishment, and this does not include the several millions of dollars Delhi has budgeted to upgrade the country's homeland security infrastructure.
USIBC president Ron Somers said, "Agreement on EUM, besides opening the door to increase defence trade and security cooperation, indicates a high level of trust and cooperation between the United States and India."
Somers added, "Agreement on EUM language signals that both the United States and India are looking to share the latest and best American technology and systems."
The initial beneficiaries of this agreement will be the US defence manufacturing giants Lockheed Martin and Boeing, which have been in the thick of the competitive fray hoping to outbid their European rivals, particularly the French and the Russians and the Swedes for India's Medium Multi-Role Combat Aircraft tender, which has been valued at more than $10 billion.
The USIBC, which had the likes of former Defence Secretary William Cohen, a senior member of its board, making innumerable trips to India to push for Delhi to acquiesce to this agreement -- which is required under US law -- in order to give American firms a fair shot at this tender, expressing the kind of confidence that indicated the deal was already in the bag as far as the US manufacturers are concerned, said, "This procurement by India is one of the largest fighter aircraft deals on the horizon anywhere, and will upgrade the paradigm in relations between US and Indian defence companies."
Lockheed and Boeing are hoping to beat out France's Dassault Lockheed Rafale, Russia's Mig-35, Sweden's Saab Gripen and the Eurofighter Typhoon.
The ultimate victor will not only provide 126 fighter aircraft to the Indian Air Force, but will also assist the IAF in its capabilities to train, sustain and maintain this new fleet, locking-in a long-term partnership with the Indian Air Force and other Indian companies, which could spill over to many more deals worth billions.
According to the USIBC, which simply couldn't contain itself over the EUM Agreement, which at one time seemed unattainable, particularly during the previous coalition government led by the Congress, when the Left and Communist partners joined the opposition BJP in opposing entering into such an agreement with the US, said this would now 'enable other US defence companies to be more proactive in participating in India's defence and security market, providing the Indian government a range of high-end technology and defence items ranging from helicopters to reconnaissance aircraft, as well as night vision gear to border protection equipment'.
Somers argued, "In the wake of the tragic terrorist attacks in Mumbai, the United States defence industry looks forward to working closely with India to enhance its domestic security structure by providing the latest high-end equipment and services."
"A successful EUM conclusion ensures continued support and cooperation between our two countries in this sensitive, strategic sector," he added.
However, the USIBC acknowledged that while the successful completion of the EUM negotiations was 'a positive step in the right direction', it was cognizant that 'more still needs to be done in this important sector'.
Thus, it said that a top priority on its agenda continues to be raising the foreign direct investment cap in defence to 49 per cent 'and successfully refining India's defence offset requirements so American firms can provide full value to India's goal of modernising defence production and building-out India's prowess in defence manufacturing."