India wants fighter jets – but without American baggage

An Indian Air Force pilot dressed in a flight suit and sunglasses struts up to an F/A-18 flight simulator and a Boeing salesman engages.

“Your call sign must be Maverick,” says the Boeing agent, referencing "Top Gun," an ‘80s film probably older than this Indian jet jockey. “You look like Tom Cruise."

After a curt “no,” the Indian pilot asks to test out the machine. He lauds the F/A-18's maneuverability and touch-screen cockpit display. It's a far cry from what he currently flies: A Soviet MiG-21 that was outdated even in Maverick’s day. India is looking to buy 126 new fighter jets and Boeing is dogfighting against five international firms to land the deal this year.

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Despite some of the sales tactics on display at the recent Aero India 2011 show in Bangalore, there’s more to selling fighter jets than moving Chevys. Giving "test-drives" and offering value for money is important, but so are international politics. And on that score, US firms have hurdles that European competitors do not.

Much is at stake for the American economy, including a $10 billion-plus sale and an estimated 35,000 new US jobs. Trips by presidents Barack Obama and George W. Bush to India have increased US chances of bringing home that bacon. But America’s not-so-humble foreign policies over the years may prove costly in an era of strong European competition in the defense industry.

“The quality of European airplanes today – for that matter the Russians, too – has now reached a point where countries like India really do have choices,” says Ashley Tellis, author of a study on the jet fighter tender for the Carnegie Endowment for International Peace. “In that sense, [US] political choices are more constrained than they were before.”

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India's 'trust deficit' toward America

Retired Indian generals and industry analysts say Indian officials have two reservations about buying American.

First, New Delhi worries about relying on US parts given the sanctions Washington imposed in 1998 when India went nuclear. In case of a war with archrival Pakistan – a US strategic ally – would Washington curtail military trade again?

Second, US law requires defense agreements to be signed by any country purchasing certain high-tech military equipment. The US failed during Obama’s visit last year to get Indian sign-off on two such agreements: the Basic Exchange and Cooperation Agreement (BECA), and the Communication Interoperability and Security Memorandum of Agreement (CISMoA).

According to Mr. Tellis, the CISMoA would keep India from transferring sensitive US encryption technology to another country. The BECA, meanwhile, has been misunderstood as a deal that would plot Indian military units on a global grid visible to the US and its partners.

“The fact of the matter is that this is not true,” says Tellis, who has served on the US National Security Council.

He and other analysts doubt the defense agreements will be central to Delhi’s decision on the fighters. But the suspicion about the agreements speaks to the lingering distrust of the US.

An Indian defense industry consultant who works with international firms and the Indian military says the Indians will only buy American for systems where there is no good competitor. The trust deficit, he says, comes not just from the 1998 sanctions, but US treatment of other friends.

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Do European firms have less baggage?

It’s a point other nations bring up.

Ravit Rudoy, marketing communications manager for Israeli firm Rafael Advanced Defense Systems Ltd., argues the US will be careful to ensure a military balance between India and Pakistan, while that concern is not shared by the one Russian and three European firms also vying for the fighter jet deal.

Tellis sees Europeans as more willing to provide equipment with no questions asked because their firms need foreign sales more to stay afloat. “The European market is so small, so they cannot afford to make their commercial products playthings of geopolitics.”

Representatives of Boeing and Lockheed Martin say international politics are not a hurdle for US firms here. Rick McCrary, Boeing’s lead on the jet fighter bid, points to the “ongoing, improving relationship” between Washington and New Delhi that has now spanned three administrations, both Republican and Democratic.

Obama builds goodwill toward US firms

Much has changed since 1998, including the signing of a nuclear deal under Mr. Bush and the lifting of export restrictions on Mr. Obama’s recent visit, he adds.

Ramesh Phadke, a retired Indian Air Force officer, agrees that Indian suspicions about the US have diminished in recent years, signaled by some purchases of equipment.

“America maintaining a special relationship with Pakistan has always been a major factor in all decisions India has made with Americans, but it’s also been accepted up to a point,” says Air Commodore Phadke. “That does not mean that India likes it.”

Privately, one US executive who is not authorized to speak argues the defense agreements are a “barrier” for the American bids.

“The playing field isn’t level” with the Europeans, says the executive. “We’re perceived by the Indians as being heavy handed. If you actually read the language of the agreements they are not as intrusive as the Indians are making them out to be…. [But] they want a relationship on an equal footing.”

Obama has played to that desire by endorsing India’s bid for a permanent UN Security Council seat. And Tellis says the administration will continue to be accommodating if a US firm is a chosen as a finalist.

“I think the Obama administration will really do its utmost to make sure that whatever concerns India has both on a political and technical level are assuaged, because the US at this point for economic reasons really wants to see this deal.”

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(Editor's note: The original article misidentified the nationality of firm Rafael Advanced Defense Systems Ltd., as well as the type of Boeing fighter jet at the Aero India 2011 show.)