Foreign Relations of the United States, 1958–1960, South and Southeast Asia, Volume XV

271. Memorandum From the Joint Chiefs of Staff to the Secretary of Defense (Gates)¹

JCSM–507–60

Washington, November 15, 1960.

SUBJECT

• Sale of Soviet Aircraft to India

1. Recent reports from India indicate that the Soviets will be successful in their efforts to sell MI–4 helicopters and possibly transport aircraft to the Indian Government for use in their Border Road Development Program. Even more significant is the report that an Indian Defense team was sent to the USSR on 15 October 1960, to survey other Soviet equipment and possibly open negotiations for the manufacture in India of MI–4 helicopters under licensing agreement.

2. From a military point of view the Joint Chiefs of Staff consider that the purchase by India of a small number of transports and helicopters from the Soviets would have relatively minor consequences in a narrow, short-term sense. However, the broader and longer range aspects of the purchase or manufacture of Soviet aircraft have much greater significance, for the reasons given in the Appendix hereto.

3. The Joint Chiefs of Staff believe that the most productive way to counter Soviet moves in this area would be to accelerate the expansion and development of the Indian aircraft and related military equipment industries. For example, the current Indian-Lockheed negotiations mentioned in the Appendix could probably be speedily concluded provided the United States assisted in the difficult foreign exchange problem. This assistance would be required in those areas where existing monetary sources such as the Development Loan Fund and Export-Import Bank could not be utilized. Without such assistance Western companies cannot successfully compete with a subsidized Soviet program. While the cost to the United States of guarantees, loans, conversion of soft currencies, etc., would undoubtedly be substantial, the cost of this form of subsidization would probably compare favorably with the cost of grant military aid and would certainly be cheaper and more productive than to counter Soviet offers through sale of U.S. equipment at subsidized discounts.

4. Accordingly, the Joint Chiefs of Staff recommend that you seek Department of State agreement to early implementation of a program whereby the United States renders financial assistance in accelerating the expansion and development of the Indian aircraft and related military equipment industries.

For the Joint Chiefs of Staff:

L.L. Lemnitzer²
Chairman Joint Chiefs of Staff

Appendix

SIGNIFICANCE OF INDIAN PURCHASE OR MANUFACTURE OF SOVIET AIRCRAFT³

1. The Indian Armed Forces have heretofore been oriented strongly towards the West, and despite the anti-West proclivity of the Indian Minister of Defense and certain other influential officials, the top military officers, including the three Service Chiefs, have until recently successfully opposed any military relations with the Soviets. Acquisition, or the manufacture under licensing agreement, of Soviet military aircraft would be a defeat for these pro-West officials and would constitute a major reversal of India’s traditional policy of procuring military hardware from Western sources, thereby setting a precedent for future purchases and license agreements of greater magnitude.

2. The USSR is well aware of the Western orientation of the Indian Armed Forces. In an effort to instill in the Indian forces a feeling of trust and reliance, it is probable that any equipment furnished by the USSR will be first rate and will be backed up with the best possible service, support and training effort. The passage of time is now causing the British-trained, Western-oriented Indian officers to pass from the scene. Their replacements are not so pro-West and could easily be impressed by good, cheap Soviet equipment. The Soviets could accelerate this process by a careful choice of the military technicians who would be sent to India under the legitimate cover of supplying pilot training, technical training, and establishing aircraft manufacturing facilities under licensing agreement.

3. Much of the military equipment, especially aircraft, now being operated by the Indians is obsolescent by modern standards and will need replacing over the next decade. Once the Soviets establish themselves in the eyes of the Indians as a dependable and economical source of aircraft, their opportunity to conclude other deals for military equipment would be enhanced, thereby increasing Indian dependence on the Soviet Union, fostering closer Indian-Soviet technical and military relations, and bringing about a diminution of Western influence in the Indian Armed Forces.

4. The Soviets with a controlled economy are in a position to provide military equipment to India at prices below those of the West either through direct sale or licensing agreement. They have demonstrated their willingness to sell equipment at unrealistic prices when to do so they would obtain a substantial long-range commercial or political advantage. As to the quality of the Soviet equipment thus far offered to the Indians, the MI–4 helicopter has demonstrated its superiority over any Western model tested for use in the border regions of India. The U.S. Kaman would undoubtedly compare favorably but was not tested by the Indians and in any event would have cost 40% more than the MI–4.

5. In view of the Indian determination to strengthen its border development program, the relatively backward state of its over-all economy and its perennial shortage of foreign exchange, it is perfectly natural that the Indian Government should be tempted by arrangements for low-cost purchase or manufacture of military equipment which does not require foreign exchange. The pro-West Indian military leaders are hard-pressed to combat the arguments advanced by the Indian Minister of Defense, i.e., 40% cheaper price, unlimited spares, payment in rupees and possible licensing agreements.

6. According to the recent report of conversation⁴ between Lockheed officials and several Indian Cabinet Ministers, important segments of the Indian Government seem to be particularly interested in encouraging the build-up of indigenous sources of supply for military aircraft, thereby decreasing India’s dependence upon any outside source, as well as building up the Indian economy and saving critically short foreign exchange funds. Lockheed’s proposal to construct an aircraft plant to manufacture a transport aircraft in India would generate a requirement for approximately $20 million in foreign exchange funds. The requirement for these funds, plus delaying tactics reportedly employed by the Indian Defense Ministry, have apparently delayed final agreement.

7. Since India refuses to participate in grant military aid, the United States is left with few alternatives to block the sale of Soviet military equipment. Direct subsidization through use of contingency funds could be resorted to, but this could ultimately lead to U.S. expenditures of unpredictable magnitude. Moreover, under such a program, the United States would remain on the defensive, reacting to Soviet initiative. A broad program which gives promise of a permanent “cure” is therefore indicated.

1. Source: Washington National Records Center, OASD/ISA Records, Country Files, India. Secret.
2. Printed from a copy that bears this typed signature.
3. Secret.
4. American Embassy New Delhi Foreign Service Dispatch to Department of State, No. 182, dated 23 August 1960. [Footnote in the source text. Despatch 182 from New Delhi is in Department of State, Central Files, 891.3333/8–2360.]