US defense firms have sought assurances from the Indian government that they won't have to share proprietary technology if they manufacture sophisticated weapons in the country.
In a letter to the Indian defense minister, lobby group US-India Business Council (USIBC) wrote that the US companies also should not be held liable for defective products manufactured along with local partners under Make in India.
US-Indian firms tie up under defense Strategic Partnership model
US defense firms Lockheed Martin and Boeing are both pushing for multi-billion dollar deals to sell fighter aircraft to India.
Lockheed has tied up with Tata Advanced Systems to manufacture the F-16 warplanes in India for a proposed requirement of at least 100 single-engine jets.
The tie-up with Tata is part of the Indian defense ministry's recently announced Strategic Partnership model for production.
US firms want to retain sensitive technology
The USIBC sought a guarantee that US firms would be able to retain sensitive proprietary technologies.
This could go against Indian PM Narendra Modi's Make in India initiative which considers the transfer of technology (ToT) a critical requirement.
ToT is crucial as it will provide India with knowledge and expertise develop its own future indigenous military industrial base and reduce India's reliance on imports.
ToT essential for Make in India's success
Under previous defense deals that lacked the ToT provision, India's primarily state-owned companies were relegated to assembling knock-down kits for tanks and aircraft being license produced from foreign vendors. The Make in India program seeks to change this.
US firms reject liability on quality of locally manufactured equipment
The USIBC also opposes a clause in the new Indian Strategic Partnership rules which place the liability for the quality of domestically-manufactured equipment jointly on Indian and foreign firms.
The lobby group claims the foreign companies shouldn't "be liable for defects outside their company's control."
The Indian government's rules apply to major planned defense modernization projects which have a combined value of $150 billion.