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US Eyes Arms Deals Beyond Fighter Setback

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US arms makers are still jockeying for billions of dollars in sales to India, which plans to modernize its old, Soviet-era military equipment and technology.

Joel Johnson, an international aerospace trade expert, said India may have opted for a European fighter because of a history of US sanctions tied to its nuclear program and because of technology transfer constraints.

"US contractors may get defeated by politics, but not by quality," he said. "India is likely to turn to the US again for unique know-how and products."

US contractors are increasingly pinning their hopes on overseas markets for revenue growth to help offset a projected slowing of Pentagon demand due to US fiscal belt-tightening.

Eliminated from the multi-role fighter race were Chicago-based Boeing Co's F/A-18 SuperHornet and Bethesda, Maryland-based Lockheed Martin Corp's F-16.

They had been vying with European and Russian rivals to supply 126 fighters to India. A deal would have capped closer ties between the US and Indian militaries.

The decision shuts US companies out of one of the decade's most hotly pursued arms deals, even as Washington expands strategic ties with India, partly as a hedge against China's growing military clout.

Richard Aboulafia of the Teal Group aerospace consultancy said a US win in the Indian fighter competition "would have been the linchpin of a strategic, military and economic relationship that would have benefited a lot of US companies."

He said losing the contract was more of a strategic and political blow to the United States than an industrial one.

It was unclear why the Indian government short-listed the Eurofighter made by Britain, Germany, Italy and Spain, and France's Rafale for the $11 billion contract. Boeing said in a statement it was requesting a "debrief" from the Indian Air Force and would then decide on "possible options."

Some analysts such as Bryron Callan of Capital Alpha Partners theorized the US government had been unwilling to transfer as much sensitive electronic warfare and radar technology as India had hoped. If so, this would not be as relevant in deals that do not involve fighter planes.

A person from the US industry with first-hand knowledge of Indian weapons purchases said big Indian arms programs of this type had a history of unraveling and going back to square one.


"I wouldn't be surprised if this one were reopened for further evaluation," he said.

The US companies are hoping for explanations that will let them better understand Indian processes and procedures with an eye to future competitions.

The US Edge

The United States is widely seen as having the technological edge to win Indian military contracts. About $50 billion worth are expected to be up for grabs in the next five years.

In the past three years, India agreed to buy some $10 billion in US military hardware, including six Lockheed C-130J military transport aircraft and eight long-range Boeing P-8 maritime reconnaissance and anti-submarine warfare aircraft.

Lockheed and Boeing, the Pentagon's top suppliers, campaigned aggressively for the fighter order and vowed on Thursday to keep chasing the Indian market.

Boeing said it looked at India as "a long-term investment and a long-term partnership well beyond the fighter competition."

The company is offering its Apache and Chinook rotorcraft in competitions to supply India 22 attack and 15 heavy lift helicopters among other opportunities it is pursuing, said Damien Mills, a spokesman for Boeing's military aircraft unit.

Lockheed said it was in talks with India about supplying another six C-130Js, in addition to the first six that began to be delivered in February.

The company also has has several unspecified products beyond its F-16 fighter "suitable for India's security needs," John Giese, a Lockheed spokesman, said in an email.

(Reuters)