Information security pact needed for greater defence ties: USIBC official. Says India should agree to new clause on classified matters

U.S. defence companies will not be able to partner with the Indian private sector under the ambitious Strategic Partnership (SP) policy, unless New Delhi concludes an agreement for sharing classified agreement with the U.S. Government, a senior official in the US-India Business Council (USIBC) told The Hindu.

“I am concerned that if we don’t get that done, despite positive intentions it will be difficult for U.S. companies to work under the SP policy. From USIBC we have communicated to India and American Governments on the need to get this done,” said Ben Schwartz, senior director for Defence and Aerospace in USIBC.

India and the U.S. have the General Security of Military Information Agreement (GSOMIA) which was signed years ago and allows sharing of classified information from US Government and American companies with Indian Government and Defence Public Sector Undertakings (DPSU) but not with Indian private companies.

“To ensure Indian private companies are on a level playing field with the DPSU, an important Modi government policy, an annex should be established allowing information transfer to Indian private companies,” Mr. Schwartz stated. He observed that we live in an age where information is stolen and defence is a sensitive area.

This has significant implications for several upcoming big ticket defence deals under the SP policy in which foreign Original Equipment Manufacturers (OEM) have to partner with the private sector to build defence equipment domestically. This includes the soon to be initiated deal for a single engine fighter jet in which Lockheed F-16 is competing against SAAB Gripen. The two companies have already tied up with TATA and Adani groups respectively if they were to win the contest.

However, this is different from the foundational agreements for which discussions are underway. India and the U.S. concluded the Logistics Exchange Memorandum of Understanding (LEMOA) last year and discussions are on for the other two namely — Communications Compatibility And Security Agreement (COMCASA) and Basic Exchange and Cooperation Agreement for Geospatial Information and Services Cooperation (BECA).

On the U.S. industry’s view of the SP policy, Mr. Schwartz said the overall response of the was “positive.” However he flagged concerns over proprietary technology, legal liability, evaluating best value rather than just lowest cost which “can all be worked out.”

“With any new policy there are complexities… We are in conversation with different offices in the Indian Government on the new SP policy and how it will be implemented,” he observed.

In September, USIBC in a letter to then Defence Minister Arun Jaitley raised the issue of having control over proprietary technologies as also standing guarantee for products build domestically by the local partner.

“No company can offer 100% technology transfer, but American companies have unprecedented technology offers on the table,” Mr. Schwartz said and added that these technologies are developed over decades after spending billions of dollars.