Lisa Simpson
Aug 13,2009
In: Finance

USA and India Shake Hands on Defense Agreement Giving a Boost to American Business

handshake

On Monday USA and India shook hands on a defense agreement. It is an important step in promoting sale of sophisticated American arms to India. India is keen to modernize its military.

This comes at the close of Hillary Clinton’s visit to India – her first as the Secretary of State.

Clinton added that India had given its approval to the setting up of two nuclear sites for USA firms. This is part of the famed civilian nuclear understanding that had been inked between the two countries in 2008. She said, “I am also pleased that Prime Minister Singh told me that sites for two nuclear parks for U.S. companies have been approved by the government.”

According to the estimates of USA officials this means $10 billion business deals of USA nuclear reactor building firms like General Electric and Westinghouse Electric a branch of Toshiba Corporation of Japan.

The twin agreements were the tangible signs of the success of Clinton’s trip to India that had been planned to strengthen ties between the two countries. Also it was meant to show the commitment of the Obama government to recognizing India as one of the emerging powers.

The External Affairs minister of India S.M. Krishna said, “We have agreed on the end-use monitoring arrangement which would refer to … Indian procurement of U.S. defense technology and equipment.”

The agreement has been dubbed as an “end-use monitoring”. It is necessary by USA laws before sanctioning of any sale of weapons. The pact will permit US to check if India was making proper use of the arms and seeing to it that technology was not being leaked out to others.

Over the following five years India will be spending over $30 billion on modernizing its old stock of arsenal – stuff that were mostly made in Soviet Russia. About a third of the contract relates to the purchase of 16 multi-role-fighters.

The agreement would come as a boom to American firms like Lockheed Martin Corp and Boeing Co. The latter two are vying with Russian, French, Swedish, Italian and Spanish manufacturers.

Clinton also said last Monday that the Prime Minister of India Dr. Manmohan Singh had responded to an invitation to make a state visit to Washington on 24th November 2009. On grounds of anonymity an official from the State Department said that Dr. Manmohan Singh would be the first state visitor under the Obama regime. This is another sign of the importance of relationship between the two countries.

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