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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 

 

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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