ID:143472
    Date:2008-02-28 13:41:00
    Origin:08NEWDELHI638
    Source:Embassy New Delhi
    Classification:CONFIDENTIAL
    Dunno:
    Destination:VZCZCXRO9775
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C O N F I D E N T I A L SECTION 01 OF 03 NEW DELHI 000638 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 02/28/2012 
TAGS: ETRD, PREL, MARR, KNNP, PGOV, IN 
SUBJECT: DEFENSE SECRETARY SINGH EMPHASIZES POSITIVE 
MILITARY RELATIONSHIP TO UNDERSECRETARY MANCUSO 
 
Classified By: Pol-Mil Officer Joel Ehrendreich for Reasons 1.4 (B, D) 
 
1. (C) Summary.  In a February 27 meeting between Under 
Secretary of Commerce, Bureau of Industry and Security, Mario 
 
SIPDIS 
Mancuso, and Defense Secretary Vijay Singh, Mancuso: 
 
-- stressed the importance of the U.S.-India relationship; 
-- expressed appreciation for Singh's contribution to 
bringing transparency to India's procurement system; 
-- noted the promise the Validated End User program could 
hold for India; 
-- pointed out that U.S. companies were prepared to submit 
bids for the Multi-Role Combat Aircraft within the original 
six-month deadline, a sign of the USG's efforts to be 
competitive in the Indian market; 
-- urged completion of the civil-nuclear deal as a mutually 
beneficial way to bring entities and related issues a greater 
level of comfort; and 
-- advocated that U.S. companies seek a level playing field, 
and feel they can be competitive in an open system. 
 
Singh: 
 
-- confirmed India has a transparent procurement system in 
place; 
-- praised the probity of the American defense trade system, 
and contrasted it with less reputable partners India had been 
doing business with in the past; 
-- said he hoped for support agreements such as End-Use 
Monitoring and CISMOA to be finalized soon; 
-- described the U.S.-India relationship as more substantive 
than any other India has, including with traditional partner 
Russia; and 
-- related that India is considering suggestions from 
industry to its offset policy, a new version of which is 
scheduled to be released in April. 
 
End Summary. 
 
Important Relationship 
------ 
 
2. (C) Under Secretary Mancuso began the meeting by stressing 
the importance of the U.S.-India relationship and expressing 
his appreciation for Secretary Singh's contribution to 
bringing transparency to India's defense procurement system. 
In a fair and open system, the Under Secretary said, U.S. 
companies believe the superiority of their products and their 
reputation for reliability will make them competitive. 
 
Transparency Paramount 
----- 
 
3. (C) Secretary Singh confirmed the Ministry of Defense has 
a transparent procurement system in place, and referred to 
assurances Defense Minister Antony had made earlier in the 
day to Secretary Gates that the system offered a level 
playing field.  Citing India's recent purchases of the USS 
Trenton and six C-130J aircraft, Singh said we are only at 
the beginning of a growing relationship.  He added that MoD 
was now in negotiations with Boeing to finalize a purchase of 
P-8 maritime patrol aircraft, which he expected would be 
completed without problems. 
 
4. (C) Singh praised America's tradition in defense 
procurement as being "amazingly transparent" and with 
stringent penalties for violators.  Contrasted with problems 
MoD had had with suppliers in the past, Singh said it was 
important for India to have reliable American companies to 
deal with now, adding that "we don't anticipate problems" 
with American companies. 
 
Agreements Can Be Mutually Beneficial 
----- 
 
5. (C) Noting the significant decrease in the percentage of 
exports to India requiring licenses, Under Secretary Mancuso 
 
NEW DELHI 00000638  002 OF 003 
 
 
described the promise the Validated End User program could 
hold for India.  He said VEU was just one example of how the 
U.S. is looking for mutually beneficial ways to increase 
high-tech trade.  He added that the civil-nuclear agreement 
was another example of a mutually beneficial agreement which 
could provide progress on bringing a greater level of comfort 
to entities and related issues.  Additional Secretary 
(Production) Ajoy Acharya praised the flexibility the U.S. 
has shown recently, although he admitted specific cases of 
problematic licensing issues remained.  Secretary Singh tried 
to downplay the problems, saying "I wouldn't say these are 
great obstacles.  As our relations are growing, I see these 
as issues which can be resolved."  Singh later expressed an 
understanding of the legal requirements the USG faces in 
transferring technology, particularly in the defense field. 
While this led to "rocky" moments as our relations began to 
grow, "We'll get through" he predicted.  He lamented that 
supporting agreements such an Enhanced End-Use Monitoring 
agreement and CISMOA (Communications Interoperability and 
Security Memorandum of Agreement) remained unsigned, saying 
"We would prefer to have these in place by now."  He 
explained that the holdup on the Indian side was a mixture of 
lingering suspicion of America in the Indian bureaucracy and 
concerns that the agreements could somehow breach Indian 
sovereignty. 
 
U.S. Impressive 
----- 
 
6. (C) Singh was particularly upbeat about the U.S.-India 
security relationship.  He listed several of the existing 
working groups, such as the Defense Policy Group and the 
Defense Production and Procurement Group, which he noted have 
met on schedule since their inception, and posited "I don't 
think we have this level of interaction with other 
countries."  He attributed the close relations to democracy 
and the nature of our militaries in a democratic society. 
Contrasting India's military relationship with the U.S. to 
that of India's traditional partner Russia, Singh said "We 
still don't have a true military-to-military relationship 
with Russia.  It is still equipment based.  We don't have the 
range of transactions we have with the United States.  This 
is one of the things our Prime Minister raised with Secretary 
Gates (on February 26)."  He went on to praise U.S. 
participation in DefExpo 2008, noting that the U.S. had the 
largest contingent and calling that "a good thing," adding 
that he had mentioned to Russian interlocutors in Moscow the 
week before that the U.S. pavilion had been the largest.  The 
Russians, he reported, promised him Russia would "show them" 
the next time. 
 
7. (C) The Under Secretary cited recent news that the 
deadline for bids for the Multi-Role Combat Aircraft tender 
had been extended and pointed out that U.S. companies had 
been prepared to meet the original deadline, a sign of the 
commitment the USG has made to competing in the Indian 
market.  Singh said the extension had been made at the 
request of a couple companies, which he later intimated had 
been Gripen and Airbus, but said he had also heard from 
American companies that they would prefer to have the offset 
proposal deadline pushed back, which had also been done.  The 
decision to extend the deadline had been done in the interest 
of transparency, he stated.  Continuing on the subject of 
transparency, Singh related that the recent selection of 
Boeing over EADS for the Maritime Patrol Aircraft tender had 
been made after a couple months' deliberation over what was 
the lowest price and most suitable overall bid.  The fact 
that the German government had complained that the decision 
showed an anti-European bias demonstrated that people will 
always believe that the system is not transparent whenever 
the decision goes against them, but, Singh assured the Under 
Secretary, India uses absolutely fair principles.  He related 
 
SIPDIS 
that some people believe there is an invisible political hand 
behind India's procurement decisions, but said he had not 
seen any hint of that since he came to office. 
 
Changes In Offset Policy Being Considered 
 
NEW DELHI 00000638  003 OF 003 
 
 
----- 
 
8. (C) Responding to Assistant Secretary Borman's inquiry, 
Acharya said India has already begun to implement new offset 
procedures, including the designation of private companies 
for use as offset partners.  In fact, he noted, in the 
recently concluded agreement for the first offset proposal 
under India's new (2006) offset program, one private company 
had been approved as an offset partner, and, separately, 9-10 
new private companies had just been approved as possible 
offset partners.  Singh said the GOI is listening to requests 
from industry for changes in the offset policy, and is 
considering broadening procedures to possibly include 
indirect offsets, credit banking and transfer of technology 
multipliers.  Acharya noted the new Defense Procurement 
Policy, which will include updates on offset policy, is due 
out in April. 
 
9. (U) Under Secretary Bodman's delegation has cleared this 
cable. 
MULFORD