By the Blouin News Business staff

New drone export rules to help U.S. compete with Israel

by in U.S..

Israeli Defense Minister Moshe Ya'alon visits the arms exhibition in India with Indian Prime Minister Narendra Modi at Aero India 2015, February 18, 2015. Handout/Getty Images

Israeli Defense Minister Moshe Ya’alon visits Indian P.M. Narendra Modi at Aero India 2015, 2/18/15. Handout/Getty Images

On Tuesday, the U.S. State Department issued new rules allowing the sale of armed drones under certain conditions, on a case-by-case basis. Recipient nations must agree to abide by international law and human rights protections, meaning that they cannot “conduct unlawful surveillance or use unlawful force against their own populations.”

Part of the reason for the change is to help American defense firms that manufacture drones that have been hamstrung by the existing domestic legislation that governs all U.S. military transfers, which effectively banned most drone exports. Additionally, the U.S. is a signatory to the Missile Technology Control Regime dating to 1987, whose aim is to restrict the proliferation of delivery systems including rockets and unmanned aerial vehicles (UAVs) capable of carrying a 500 kilogram payload at least 300 kilometers. Under that accord, such systems are given a “strong presumption of denial” for export, though such sales may be permitted if justified on “rare occasions.” Russia is among the 34 members, and according to Bloomberg, while China is not a signatory, it has agreed to abide by the basic accord.

Israel is not a signatory of the accord either, and in 2013 it overtook the U.S. as the world’s leading drone exporter. American firms like Northrop Grumman have urged the U.S. government to facilitate drone exports to better compete with Israel and China, which actively market a range of drones to foreign buyers. The global drone market is currently estimated to be worth $6 billion per year, but that will surely increase as UAVs become a standard component of national security for countries all over the world. The Foreign Policy Research Institute noted that between 2004 and 2011, the number of states with active UAV programs doubled, from 40 to over 80.

Of particular note is the massive Indian arms market in which both the U.S. and Israel wish to expand their lucrative shares. Since Narendra Modi became prime minister in May 2014, India has spent about $20 billion in arms purchases, part of a planned $150 billion binge through 2027 to import or jointly produce all kinds of upgraded military equipment, including drones.

India has had high-level diplomatic meetings and arms deal discussions with both the U.S. and Israel recently. When U.S. President Barack Obama visited India in January, he and Modi agreed to several defense projects, including a trial one for the two countries to jointly produce parts for drones and transport jets. India bought nearly $2 billion of U.S. arms exports in 2013, and has been negotiating with major American defense firms for big-ticket projects. In December 2014 New Delhi finalized a $1 billion deal with American firm Sikorsky to buy helicopters, and its decision on a $2.5 billion deal with Boeing to buy other helicopters was extended for six months in October but could still happen.

On Wednesday, Modi met Israel’s Defense minister at Israel Aerospace Industries’ exhibit at the Aero India exhibition in Bangalore. This symbolic meeting and informative tour lifts the Israeli-Indian strategic relationship from substantial but low-key to very prominent. Haaretz reported that “over the last two years, India has become the largest customer of Israeli defense exports, with the value of arms deals between the two countries eclipsing $1 billion per year, constituting almost 15 percent of all Israeli defense exports.” Israel is also accommodating on technology transfer and shifting production to follow Modi’s “Make in India” campaign, which would actually save Israel some manufacturing costs through cheaper labor.

Expect stiff competition in India between Israeli and American drones in the near future.