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Cablegate: Defense Secretary Singh Emphasizes Positive

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DE RUEHNE #0638/01 0591341
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FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0669
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RUCPDOC/DEPT OF COMMERCE WASHDC
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RHEHNSC/NSC WASHDC
RUEIDN/DNI WASHINGTON DC
RUCNDT/USMISSION USUN NEW YORK 6086
RHMFISS/HQ USCENTCOM MACDILL AFB FL
RUEHGV/USMISSION GENEVA 7581
RHHMUNA/HQ USPACOM HONOLULU HI
RUEKJCS/JOINT STAFF WASHDC

C O N F I D E N T I A L SECTION 01 OF 03 NEW DELHI 000638

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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

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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

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