Supported by U.S., India ups FDI in defense to 49%

Published Date : Aug 11, 2014

In what could strengthen bilateral defense ties, India has agreed to accept cooperation from the U.S., without finalizing any major arms deals. India had a non-alignment policy since 1947 and used to rely solely on the Soviet Union for defense equipment. However, it has turned towards the U.S. and recently became the largest importer of U.S. arms. Since 2008, India has spent USD 9 billion on U.S. defense equipment. 

After a meeting between U.S. defense secretary Chuck Hagel and his Indian counterpart Arun Jaitley, it was decided that India would raise its foreign direct investment in the defense sector from 26% to 49%. Based on that, it has been reported that Washington and New Delhi are close to finalizing a USD 1.4 billion deal to purchase at least 22 US Apache and 15 Chinook helicopters. Other weapon technologies suggested at the Indo-U.S. meet included the Hawk 21 surface-to-air missile, magnetic catapults, and the anti-tank Javelin missile. The bilateral ties are aimed at planning a way to co-produce and co-develop weaponry that is lighter, cheaper, and more capable. India has been looking to modernize its military and the U.S. hopes to export production and technology expertise to India.

Both, the world’s largest and oldest democracies have been trying to manage competition with China and have agreed to focus on regional stability rather than rivalry with the Asian giant. It was also suggested that both the nations consider turning to Japan to secure naval ties. 

The meet also covered the renewal of a 10-year defense cooperation agreement between the U.S. and India.