US to press India on F-16 and F-18 deal, to call for opening of its markets

The US said it was up to India to clinch a deal to co-produce F-16 and F-18 fighter jets, adding that the agreement would “enhance interoperability” between the two militaries.

“We strongly support these transfers,” Alicia Wells, a senior state department official told a subcommittee of the House of Representatives on Thursday. “If India can seize these opportunities, we can enhance interoperability between our militaries and support thousands of jobs in both countries.”

India is in the market for the joint-production of single-engine fighter jets, and US firm Lockheed Martin’s F-16 and Swedish Saab’s Gripen are competing for the contract. The Indian Air Force is expected to release a Request for Information (RIF) in two months.

US firm Boeing’s F-18 is in the race to sell deck-based fighters to the Indian Navy, and is competing with French, Swedish and Russian firms. A global tender is expected in 2018.

In a written testimony, Wells drew an extremely positive picture of the state of bilateral ties, quoting President Donald Trump during Prime Minister Narendra Modi’s visit in June. The US president had said that the “relationship between India and the United States has never been stronger, has never been better”.

However, there is a wrinkle — the deficit in bilateral trade.

“We do need to do more to balance the trade deficit between our two countries, which totalled nearly $30 billion last year,” Wells said. “We are working closely with United States trade representative and the commerce department to address the concerns of the US business community regarding India, including tariff and non-tariff barriers, subsidies, localisation policies, restrictions on investment, and intellectual property concerns that limit market access and impede US exporters and businesses from entering the Indian market.”

The commerce department is currently in the final stages of a review and analysis of a country-wise breakdown of its trade deficit, as ordered by Trump. The department will also recommend follow-up action, which could include punitive measures if the deficit was caused by unfair practices.

“We are committed to ensuring our trade relationship with India is fair and reciprocal, and will continue to press India to further open its markets and create a level-playing field for US companies,” Wells said.

India-US trade stood at $114 billion in 2016, more than doubling from $45 billion in 2006. Wells said US exports to India support more than 260,000 jobs in America, while investment from Indian companies supported more than 52,000 jobs in the US in 2016.

The two-way investment between the US and India in 2016 was nearly $40 billion.

Wells also referred to growing energy trade ties, and noted the first-time purchase of US crude oil by Indian companies beginning in August.