PM Modi-US Visit: Two Key Pacts To Open US Defence Sector For Indian Cos

The finalisation of this RDP will result in India joining a list of countries that have been accorded the status of being Defence Federal Acquisition Regulation Supplement (Dfars) compliant.

New Delhi: The first state visit of Prime Minister Narendra Modi to the United States of America is likely to bolster two key agreements that will open up the multi-billion-dollar American defence market for Indian companies; this, besides acquiring fighter jet engine technology and high-performance drones from the US.

This was decided during a meeting between Defence Minister Rajnath Singh and US Secretary of Defense Lloyd Austin in New Delhi. Austin on a two-day visit to India, earlier this month. came to New Delhi from Singapore as part of his seventh official visit to the Indo-Pacific region.

During Austin’s arrival, both India and the US started initial talks on the Security of Supply Arrangement (Sosa) and Reciprocal Defence Procurement Agreement (RDP). Once negotiated, it will drastically increase opportunities for Indian manufacturers to engage with US defence majors.

“The Secretary and Minister Singh also pledged to review regulatory hurdles impeding closer industry-to-industry cooperation and to initiate negotiations on a Security of Supply Arrangement and a Reciprocal Defense Procurement agreement, which will promote long-term supply chain stability,” said a readout by the US Department of Defense released after Austin’s visit.

Even though the negotiations are expected to take time, they have been mentioned in the Indo-US roadmap for defence industrial cooperation that will get a significant boost during the PM’s ongoing visit.

Representatives of the Indian industry have approached defence ministry and higher levels of the government for expediting the agreements as they would enable Indian entities to be qualified as suppliers and contractors for US Department of Defence orders, reported the Economic Times.

The finalisation of this RDP will result in India joining a list of countries that have been accorded the status of being Defence Federal Acquisition Regulation Supplement (Dfars) compliant. As of now, only 26 countries are qualified to supply significant components and parts for American military orders.

The Indian manufacturing sector will be greatly boosted by this agreement in terms of orders for castings and other components made of steel, copper, nickel, titanium and zirconium needed for US military orders. It will also co-align the defence manufacturing ecosystems of the two countries.

“The new defence industrial roadmap and associated agreements will see Indian companies getting the opportunity to more comprehensively plug into the US defence industrial base. There are signals from both governments that there will be significant movement on tech releasability issues, accelerating the US-India defence cooperation,” Aerospace and Defence, US-India Business Council director Pushan Das told, reported ET.

Today, India exports weapons to over 80 nations, with the US  being a prominent customer. Indian companies provide supply parts to US defence majors for the manufacture of F16, Chinook and Apache copters, among others.

India has set an ambitious target of exceeding $5 billion in defence exports annually, and getting Dfars compliant status could be a major step towards that goal.

The Indian Inc. is trying to gain complete access to US market which continues to be the largest spender in defence sector. As per defence experts quoted by ET, RDP basically provides a waiver of American laws that otherwise restrict the federal government from procuring goods from non-domestic sources.