Boeing and Lockheed Martin promised to build plants in India if the world's biggest arms importer chose their fighter jets and weapons. That was before President Donald Trump's America First call.
This week will be a test for that promise as the biggest U.S. defense contractors, Russia's MiG Corp. and Europe's Airbus line up to display their wares at an air show in Bengaluru in southern India.
Even as they compete for deals, they could find themselves torn between Trump's push for firms to keep jobs in the U.S. — he has singled out a number of multinational firms on Twitter for public criticism — and Prime Minister Narendra Modi's own program that seeks to tie military contracts to some of the manufacturing being done in India.
"All of us in Washington are guessing where Trump is going to land on these issues," said Alyssa Ayres, a senior fellow for India, Pakistan and South Asia at the Council on Foreign Relations in Washington, D.C. "He has certainly been very clear in his tweets and direct outreach to American companies that he wants to try to ensure that people don't move production facilities and try to retain jobs in the U.S."
India's Defense Minister Manohar Parrikar will use the air show to outline Modi's plans to boost the domestic defense industry by giving contracts to local companies, as well as asking foreigners to tie up with Indian firms, said people familiar with the plan.
Modi's promise to shell out $250 billion in the coming years on fighter jets, submarines, howitzers and helmets to modernize his armed forces came with one call — Make in India. Sensing an opportunity, local conglomerates Tata Group, Mahindra & Mahindra Ltd. and Larsen & Toubro Ltd. have expanded more into the defense sector and formed joint ventures with international manufacturers.
India, which has traditionally relied on Russia and the former Soviet Union for fighter jets, is increasingly warming to the U.S.
In his first phone conversation with Parrikar, Defense Secretary Jim Mattis committed to build upon the "tremendous progress in bilateral defense cooperation made in recent years," a Pentagon spokesman said last week.
Modi's domestic manufacturing program is a centerpiece of his economic policy that seeks to boost manufacturing to 25 percent of gross domestic product by 2022 from 18 percent now, and aims to avoid dependence on foreign equipment, particularly in times of war.
Lockheed Martin offered to make its F-16 fighter jet in India, after India scrapped an initial tender with Paris-based Dassault Aviation for 126 planes. India later decided to directly buy just 36 fighter jets from the French government.
That still leaves the country short of planes, meaning potential deals worth billions of dollars are on offer.
The Trump administration will want to take a fresh look at some of Lockheed's proposals, including plans to build the F-16 in India, the company said. All previous orders from India have created jobs for Boeing in the U.S., Boeing India President Pratyush Kumar said in an interview.
The Chicago-based manufacturer sees no conflict between Trump's 'America First' and Modi's 'Make in India' calls, Kumar said separately on Monday in Bengaluru, adding the company is looking to sell locally made F/A-18 jets in the country.