Security of Supplies Arrangement (SOSA)

India and the US have recently signed two important defence agreements: the Security of Supplies Arrangement (SOSA) and a Memorandum of Understanding (MoU) on the Assignment of Liaison Officers. These agreements aim to strengthen defence cooperation between the two nations. India & US now aim for Reciprocal Defense Procurement (RDP).

What is SOSA?

• SOSA facilitates closer industry cooperation between India and the US, focusing on reciprocal priority support for defence-related goods and services.
• Mechanism: Under SOSA, both countries can request priority delivery for contracts and orders from each other's companies, helping to manage supply-chain disruptions in the defence sector.
• US Assurance: The US will provide India with assurances under the US Defense Priorities and Allocations System (DPAS), including support from the Department of Defense (DoD) and the Department of Commerce (DOC).
• Indian Commitment: India will establish a government-industry code of conduct, encouraging Indian firms to prioritize US defence needs.
• Global Participation: India becomes the 18th country to sign SOSA with the US, joining nations like Australia, Israel, Japan, and the UK.
• Implications for Indian Companies:
• Code of Conduct: Indian firms will voluntarily agree to provide priority support for US defence contracts, reflecting their reliability and commitment.
• Priority Requests: US DoD and contractors can request priority delivery for materials and services from participating Indian companies when needed for US defence requirements.

What is Reciprocal Defense Procurement (RDP)?

• The Reciprocal Defense Procurement (RDP) agreement will be legally binding, promoting joint production and sourcing between India and the US on a larger scale.
• Significance: RDP is already in place with 28 countries and aims to standardize and enhance interoperability of defence equipment.
• Benefits for US Companies: RDP allows American companies to bypass certain domestic procurement restrictions, facilitating easier collaboration and investment in signatory countries.
• The agreement also allows American companies to bypass the “Buy American statute”–similar to “Make in India”–entitling firms to set up manufacturing bases and collaboration with signatory countries

The SOSA and potential RDP agreements represent key steps in enhancing defence ties between India and the US, focusing on improving supply chain efficiency and fostering closer military cooperation.

PYQ

Q: What is the significance of Indo-US defence deals over Indo-Russian defence deals? Discuss with reference to stability in the Indo-Pacific region. (2020)