“Congratulations to CII on your successes.You play a crucial role in India’s trade and foreign engagement. You help the world get to know and work with India, and vice versa. I became familiar with CII through my association with the Aspen Strategy Group’s U.S.-India Dialogue over the last 14 years, working with the great Tarun Das and Kiran Pasricha, who’ve done such exceptional things for CII and for the U.S.-India relationship.I was an early and strong supporter of the relationship also. So this is a long, long-awaited engagement, which makes it doubly wonderful to be here. I am familiar with India’s charms and culture, and the Indian people are very close to my heart.”
While addressing a session orgainsed by the CII,the U.S. Deputy Secretary of Defense Ashton B. Carter talked about the strategic setting and said that the U.S.-India relationship is global in scope, like the reach and influence of each of our countries.
Carter said that Indo_US security interests converge across the Indian Ocean region; in Afghanistan, where India has done much for economic development and the ANSF; and on broader regional issues, where we share long-term interests, if not always common approaches, like Syria and Iran.
“I like to think of India and the United States as kindred souls. We share common values as well as common interests, and we share strong bonds in trade and technology, as well as security. President Obama has called the U.S.-India bilateral relationship one of the defining partnerships of the 21st century. And our defense cooperation, the topic of my talk, is a central part of our partnership”,said Carter.
His thought assumes significance not just because he spoke on the Indo-US relationship,but said that practical steps are need of the
hour to improve the two countries’ defense cooperation.”We want to develop a joint vision for U.S.-India defense cooperation. That’s why I’m here, at Secretary Panetta’s request. We want to get to a place where we continuously discover new opportunities to make innovative investments that benefit both countries for generations. The only limit to our cooperation should be our independent strategic decisions – as any two states may differ – not bureaucratic red tape.
The relationship has come a long way in the past decade. Our goal is to make it even stronger. We need to define where we want to go, and then make it possible to get there. We on the U.S. side have no preconceived model for this relationship or for India’s role in this region or in the world. We respect that you will follow your strategic interests. Our relationship will be a unique one, based on trust, sharing, and reliability. It will be shaped by our own strategic decisions and, I hope, by a deep strategic dialogue such as that which Secretary Panetta engaged in, when he was here in June”,Carter said. His address to the CII members and office bearers was welcomed widely as he talked about a rebalance to the Asia-Pacific Region.”Before turning to the specifics of our cooperation, I’d like to start with some strategic context – the backdrop for our cooperation”,he said.
Carter said:“The last ten years have had a profound impact on world affairs, affecting the United States but also countries across the
Asia-Pacific region and around the world. We now find ourselves at a strategic inflection point in the United States, with two forces
impinging upon us.
After a decade of conflict, one war has ended, in Iraq; the other, in Afghanistan, has not, but will transition soon to Afghan lead, thanks
to the superb efforts of the men and women in U.S. and coalition forces. We have done exceptionally well there.
But while we have been fighting insurgency and terrorism in the Middle East, the world has not stood still, our friends and enemies have not stood still, and technology has not stood still. The successes we’ve had in Afghanistan, and in counter-terrorism, mean that we can now focus our attention on other opportunities and challenges.
The time has come for us in the United States to look up, and look out, to what the world needs next, and to the security challenges that
will define our future.
We would need to make this transition no matter what, but a second force rises as well. That is the need to keep the United States’
fiscal house in order, as outlined under the Budget Control Act, passed last year by the U.S. Congress. While the U.S. base defense
budget itself will not go down under this plan, neither will it continue to rise as we had planned.
These two forces – of strategic history and fiscal responsibility – led us to design a new defense strategy for the 21st century in a
remarkable process this past winter steered by President Obama and Secretary Panetta. We are building a force for the future, what
Chairman Dempsey calls the Joint Force of 2020. As Secretary Panetta said, it will be an agile, lean, ready, technologically advanced
force, able to conduct full-spectrum operations and defeat any adversary, anywhere, anytime.
A central tenet of our new strategy is our rebalance to the Asia-Pacific region. The rebalance is reflected in force structure
decisions we make (that is, what we keep and what we cut), in our posture and presence (that is, where we put things), in new
investments we are making in technology and weapons systems, in innovative operational plans and tactics, and in alliances and
partnerships in the region. Importantly, here in India, our rebalance extends to Southeast Asia and South Asia.
The logic of the rebalance is simple: The Asia-Pacific region has enjoyed an environment of peace and stability for more than 60 years,
allowing Japan to rise and prosper, then Korea to rise and prosper, next Southeast Asia to rise and prosper, and now China, in a very
different way than India, to rise and prosper. The wellsprings of that security have not been found within the region itself – there’s
no NATO here. In the absence of an over-arching security structure, the United States military presence has played a pivotal role in
ensuring regional stability. We intend to continue to play that role.
It is good for us, and it is good for everyone in the region. Our rebalance is not about China or the United States or India or any other single country or group of countries: It is about a peaceful Asia-Pacific region, where sovereign states can enjoy the benefits of security and continue to prosper.
In the future, our Asia-Pacific posture will increase relative to other theaters. We intend to have 60 percent of our naval assets in
the Pacific by 2020. We are developing new concepts of rotational presence, with Marines in Australia and four littoral combat ships in
Singapore as well as forward stationing in Guam. We are investing in new platforms and technologies relevant to the region, like the new bomber, new submarine-launched conventional weapons, cyber capabilities, and a host of upgrades in radars, electronic protection, space, and electronic warfare. These and other future-focused investments are another central tenet of our strategy.
To those who doubt we have the resources to accomplish all this, I would, to the contrary, point out two factors that make it eminently
possible. First, with Iraq behind us and Afghanistan slated to wind down, capacity will be released that can be allocated to the
Asia-Pacific region. Second, within our budget we can and are prioritizing investments relevant to the Asia-Pacific theater rather
than, for example, counterinsurgency where we have put so much effort over the last decade. So the rebalancing is entirely practical.
Finally, central in our new strategy, as in our decades-long historical commitment to the region, we seek to build partnerships
that leverage the unique strengths of our Allies and partners – to confront critical challenges, and meet emerging opportunities. So we
are taking a strategic and comprehensive approach to security cooperation. And as I will describe in greater detail, we are
streamlining our internal processes and security cooperation programs to share and cooperate with our partners better.
Our partnership with India is a key part of our rebalance to the Asia-Pacific region, and, we believe, to the broader security and prosperity of the 21st century. You are an economic power with an increasing military capability; and your leadership in civil discourse and democracy is critical to the political stability of South Asia.
Our military-to-military engagement has increased steadily over the years, to include a robust set of dialogues, exercises, defense trade, and research cooperation.
Our shared challenge in the next era is to find concrete areas to step up our defense cooperation, so that only our imagination and strategic logic, and not administrative barriers, set the pace. That’s why I came with a team of officials who are responsible to Secretary Panetta and me for executing this vision. We need to reinvigorate and commit to maintain a robust set of linkages and working groups that will work every day to enable our cooperation and develop mutual beneficial policies for the future.
We want to knock down any remaining bureaucratic barriers in our defense relationship, and strip away the impediments. And we want to set big goals to achieve.
Today, I want to outline some of the steps the U.S. is taking in this direction, and if I may, some areas where we hope India will improve too.
As a country committed to enduring peace and security in the Asia-Pacific region, India deserves the best military equipment
available. And we are prepared to help. Practically, we want to be India’s highest-quality and most trusted long-term supplier of
technology, in such fields as maritime domain awareness, counter-terrorism, and many others. We are committed to India’s
military modernization. India is a top priority in our export considerations. We trust India and know India is not a re-exporter or
exploiter of our technologies.
We have an export control system to prevent high-end technology from getting to states that shouldn’t have it, but our system can be
confusing, rigid, and controls too many items for the wrong reasons.
We know we need to improve it. We are improving our government’s overall export control system under President Obama’s 2010 Export Control Reform initiative.
But at the same time, Secretary Panetta and I are committed to reforming the Department of Defense’s internal processes. India has
been very frank in expressing its concerns with U.S. export controls and technology security policies. We are taking real steps to address India’s concerns.
For example, we moved DRDO and ISRO off the Commerce Department Entity List. We can conduct research and co-develop technologies together –like batteries, and micro-UAVs – good initial steps, with much more to come. And an overwhelming and increasing majority of munitions license requests have been approved quickly under direct commercial sales, and this will continue.
In addition to increasing sheer bureaucratic speed, we are being more strategic about export decisions. We are making decisions more
anticipatory, looking at what partners are likely to want in the future, and beginning our thinking earlier. In a great new
initiative, we are building exportability into our systems from the start so it doesn’t consume time and money to do it later. Next, we
are putting priority sales on a special fast track. All these steps should be felt here in New Delhi. The combination of these and other
efforts will help us respond more rapidly to India’s requests for U.S. equipment and systems – particularly for more advanced echnologies.
At the same time, we want to maintain confidence that our technologies will be protected. India is concerned about protecting technology too – we know that. We have a U.S.-India Senior Technology Security Group to address the genuine security issues that exist in our world, but it needs to be more active.
Secondly, I want to report to you that we in the U.S. are taking steps to improve our Foreign Military Sales system, or FMS, also. This is
in both of our countries’ interests. India was our second largest FMS customer in 2011, with $4.5 billion in total FMS sales. And we
delivered six C-130Js on time. We think our defense technology is the best quality on the market. Some partners choose price over value.
Buying American, whether through Direct Commercial Sales or Foreign Military Sales, will get India exceptionally high-quality technology, a high degree of transparency, and no corruption (this is mandated by our legal system).
Sometimes it appears that India favors DCS, and this is fine, but might overlook some advantages of FMS. A government-to-government agreement through Foreign Military Sales offers competitive pricing, only slightly more than DCS. These costs go to DoD, which affords protections you cannot get from industry alone and addresses sustainment needs over the long-term. As I said many times when I was acquisition executive of DoD, lifecycle costs are frequently hidden and ignored in acquisition decisions.
To sum up on FMS, we are making our Foreign Military Sales system as easy to work with as possible. But for each sale, India should choose which route is in its interests, commercial or governmental. We will continue to work to improve both. Next, and importantly, we are prepared to adapt our system to the unique needs of India and its Defence Procurement Procedure, or DPP.
We aim to clarify our acquisition system, which isn’t always easy to interpret. I used to be the Under Secretary of Defense for
Acquisition, Technology, and Logistics. There was a chart on my wall, outlining the 250 steps it takes to move a program from development to delivery. It read like hieroglyphics. One of my team decided that a wallet sized card would make it easier to read.
We are making our acquisition process more export-friendly. We have a new fund that allows us to procure long-lead, high demand items so we will have them on hand in anticipation of partner requests. We now have a cadre of acquisition experts to send to other countries to define their requests for sales and streamline our response. They should help India significantly.
Finally, and most importantly, we want to move beyond defense trade and towards cooperative research and development and co-production with India. I’m a scientist, and I know this is a critical part. I am going to Hyderabad tomorrow, where Tata Advanced Systems Limited and Lockheed will begin producing parts for the C-130J. From now on, every C-130J around the world will contain parts made in Hyderabad.
This is a great first step for co-production. It highlights what can be achieved when we unleash the potential of our private industries.
This is just the beginning. Our horizons can and should expand further. The question is: Where does India want to expand and grow?
Indian bureaucracies, like ours, are adapting for the future. Our bureaucracies, however, were built during the Cold War. More
recently, India introduced the Defense Procurement Procedure, which is designed to protect against corruption, by reducing prices and complexity reflecting this legacy. Now, however, a higher-end technology India seeks to develop a higher-end defense industry.
Likewise, in the Cold War, the U.S. bureaucracy was designed to protect a wide swath of technology. With the commercialization of the
global marketplace, we now recognize that defense technology controls should be more focused. We want to cooperate with you on high-value technologies.
To get to where we both want to be, India can make changes too, to increase U.S. investment. If India raises its Foreign Direct
Investment ceiling to international standards, it would increase commercial incentives to invest.
Second, offsets can be tremendously helpful to growing industry capabilities – if you have the right companies, and the right
absorptive capacity. If offsets are calibrated correctly, it works. But if offset requirements are too onerous or too narrow, they deter a
company’s interest. For companies to participate, our arrangements must make good economic sense as well as good strategic sense.
Those are just two points where change could be a real help to Indian-American defense cooperation.”
The point is that on both sides we need to change, reform, and push ourselves to get to a place where U.S.-India defense relations are
limited only by our thinking, not our capacity to cooperate. That’s what Secretary Panetta and National Security Advisor Menon charged when they met in June.
I’m looking forward to visiting India’s Technology Corridor tomorrow. There we will all be reminded of what is happening in the overall world of technology and industry. There, cooperation is the norm. The leaders of industry globally, such as those in this room, know it.
Sometimes, we in the security community lag behind them in our ability to cooperate and advance technology. But the wisest of our industrial leaders, including CII, also understand that without security, none of the other good things in life are possible – family, prosperity, progress, let alone business.
So in gatherings like this, and in practical ways like those I have come to India to advance, they help show us the way. For that,
Secretary Panetta and I are grateful. Thank you very much.