U.S. firm Lockheed Martin may make use of liberalised norms

American military manufacturer Lockheed Martin could soon be producing F-16 fighters in an assembly line based in India, taking advantage of the new liberalised FDI conditions announced by the government on Monday.

If the legendary American fighter is deployed with the Indian Air Force after local production, it would signal a historic shift in India’s military posture that could dramatically affect the country’s relations with China, Pakistan and other nations. It could also draw much criticism to the fact that India was inducting a fighter that first took to the skies more than 40 years ago.

At least two senior officials in crucial ministries handling the issue confirmed that the proposal for setting up an assembly line for F-16 fighters in India was discussed during Prime Minister Narendra Modi’s visit to the U.S. earlier this month.

An official said the negotiations with the French government for the purchase of 36 Rafale fighters haven’t succeeded yet in securing a competitive price. “Lockheed Martin, on the other hand, is keen to close down its F16 production facility in the U.S. Talks are on to invite the company to shift its F16 production line, lock, stock and barrel, to India,” he said.

“This will serve the twin purposes: it will be a success story of Prime Minister Narendra Modi’s Make In India initiative plus it will address the Indian defence establishment’s requirement of a new fighter fleet,” the official added.

The second official confirmed that talks were on with Lockheed Martin for the F-16 assembly line in India.

In an interview to The Hindu last month, Defence Minister Manohar Parrikar indicated that India was looking at getting a foreign military firm to manufacture its fighter in India. “I am not looking for assembly at all. I am looking for a company to join with an Indian partner and to start manufacturing here by Transfer of Technology (ToT) in most of the items. I know that 100 per cent ToT may not be possible and 100 per cent indigenisation is not possible. Even with so many efforts, LCA has only around 40 per cent indigenisation,” he had said.

Several foreign defence firms have been expressing their willingness to set up assembly lines in India. Among them are the Eurofighter consortium ad Sweden’s Gripen. Both Lockheed Martin and Boeing from the U.S. in April held discussions in New Delhi in the presence of Pentagon's Director for International Cooperation Keith Webster about the possibility of producing their jets in India. While Lockheed has proposed F-16, Boeing has offered to make F/A-18s in India.

Based on ongoing discussions, sources said the opportunity to open an assembly line in India could ultimately go to Lockheed Martin, that too for a fighter that is going out of production. The company is believed to have orders only for a few more months, with the US military, F-16’s biggest customer, moving to more advanced fighters and foreign orders drying up.

For many in the air force it would be a surprising, and disappointing move, given that F-16s are a critical part of Pakistan air force’s fighter arm. Besides, it would be ensuring that F-16, a 40-year-old design and fourth generation fighter, would remain in the IAF for another 30-40 years.

“It would fulfil both Make in India projections and also give us an advanced fighter,” one source aware of the discussion told The Hindu.

Former Defence Minister A.K. Antony on Monday cautioned: “Allowing 100% FDI in the defence sector means India's defence sector is thrown mostly into the hands of Nato-American defence manufacturers.”

He went on to warn that if Nato-American defence manufacturers came into India then it would “affect India’s independent foreign policy too. It will also threaten the national security.” Further, it would have an adverse impact on the ongoing indigenous defence research activities, he said. “It is very important to note that all such changes happen immediately after PM Narendra Modi’s recent American visit,” he said.