High Flier

The recent Lockheed-Tata deal will boost defense manufacturing in India

Published 7 years ago on Jun 20, 2017 1 minute Read

The recent Paris Air Show witnessed an unprecedented agreement. Lockheed Martin inked an understanding with the defence arm of Tata Group, Tata Advanced Systems to manufacture F-16 Block 70 fighter aircraft in India, which is the newest, most advanced and powerful of the F-16s. These new single-engine fighter aircraft are set to replace the IAF’s Soviet-era fleet. The industry partnership is in line with India’s Make in India initiative, and will help develop its private aerospace sector and defence manufacturing capacity.

With the US being among the top three arms suppliers to India along with Israel and Russia, India and the US have forged a close defence relationship over the past couple of years. However, it was from France and not the US that the defence ministry bought its latest jets. In September 2016, India confirmed its intent to buy 36 Rafale jets for nearly € 8 billion. Incidentally, the initial plan was to buy 126 Rafale jets.

The recent Lockheed-Tata announcement is interesting and possibly signals new aggression on the part of US defence manufacturers to increase their foothold in India. With an eye on the ageing Indian air force fleet, Lockheed also plans to shift its Fort Worth plant in Texas, US to manufacture here and used the joint venture as an export base.

The agreement, which conflicts with US President Donald Trump’s aggressive America First policy wherein companies are expected to invest and stay in the US rather than establishing factories overseas, precedes Prime Minister Narendra Modi’s first bilateral meeting with Trump, to be held on June 26. With Lockheed intending to move some of its assembly lines to India, it is apparent that jobs will be lost in the US.

However, even as it contradicts Trump’s campaign, those at the helm at Lockheed Martin are quick to assure that the deal will create supplier jobs in the US. How far will the deal benefit India? As far as jobs go, quite a bit. The government’s policy of having foreign suppliers tie up with a local partner to make aircraft in India means that the domestic manufacturing will receive a boost.