Foreign Relations of the United States, 1964–1968, Volume XXV, South Asia

46. Memorandum of Conversation¹

Washington, May 22, 1964, 8:30–9:30 a.m.

SUBJECT

• Indian Military Assistance

PARTICIPANTS

• Indian Side
  • Minister of Defense, Y.B. Chavan
  • Ambassador B.K. Nehru
  • Defense Secretary, P.V.R. Rao
  • Mr. S. Soundararajan, Deputy Secretary to MOD
  • Mr. R.D. Pradhan, Secretary to the Minister of Defense
• United States Side
  • Secretary of Defense—Robert S. McNamara
  • Deputy Assistant Secretary of State—James P. Grant
  • Deputy Assistant Secretary of Defense (ISA)—Peter Solbert

1. Foreign Exchange Expenditures. The Secretary opened the meeting by asking Mr. Chavan whether he had any comments to make on the progress of the past week’s negotiations. Mr. Chavan responded by stating that he understood the level of foreign exchange expenditures under the Plan was a point of difference between us, and suggested that a solution might be reached if we could increase our military assistance from $50 million a year to $60 million a year. In fact, he said he had understood before coming here that we were planning on a continuation of the Nassau level of $60 million a year.

2. Military Credit Sales for FY 65. Mr. McNamara responded by raising the question of our providing military assistance credit in the amount of $50 million for FY 65. He stated that he was willing to provide this credit if the Indians would reduce the foreign exchange expenditures under the Plan to a level of 682 crores ($1,435 million) and to try to work toward a level of 650 crores ($1,365 million). This would be regarded as an Indian declaration of intention. He went on to say that this figure of 682 crores of foreign exchange would include all of India’s defense foreign exchange requirements, including the purchase of any aircraft.

3. Long Term Military Assistance. The Ambassador pointed out that unless the United States is prepared to declare its intentions over the five-year period, this would require the Indians to give a commitment to keep their foreign exchange at the 682 crores level for the five-year period against a one-year commitment by the United States to provide $50 million of military grant aid assistance and $50 million of military credit sales. Mr. McNamara agreed that this was the proposition, but that he would also be willing to agree to five-year military assistance of the Indian Plan, subject to the availability of funds, if the Indians would:

a. Agree to limit their foreign exchange expenditures to 682 crores or less;

b. Make corresponding reductions in their rupee defense budget; and

c. Support reasonable force levels during the Five Year Plan, particularly in the air defense field.

In response to Ambassador Nehru’s point that this appeared to be a five-year commitment by the Indians as against a one-year commitment by the United States at this time, Mr. McNamara pointed out that if it became necessary for the Indians to go beyond the 682 crores foreign exchange level, one way was for them to pay back the U.S. $50 million loan and then be free of their commitment on foreign exchange expenditures.

It was agreed that for the purpose of computations necessary to arrive at the 682 crores level of foreign exchange expenditures, $50 million of U.S. military assistance grant aid annually could be assumed over the period of the Plan. Mr. McNamara made it clear that this was not a commitment on our part to provide that amount of assistance over the period of the Plan.

4. Memorandum of Understanding. It was agreed that the best way to resolve the general question under discussion was to postpone commitments until Mr. Chavan returns to Washington on May 28th to see the President. In the meantime Secretary Rao will work with us to prepare a memorandum of understanding² to set forth clearly what we have in mind. Mr. Rao said that he would reduce the Plan to 682 crores and make the corresponding reductions.

5. Air Defense. Mr. Chavan asked the Secretary’s advice as to what should be done in the area of air defense. Mr. McNamara responded by saying that his Air Force people believed that the Chinese Communists have a limited offensive potential. They have obsolete aircraft with spare parts problems and limitations on pilot training, with no prospects for an improvement over the next 3 to 5 years. He did not feel that it was wise for nations on the perimeter of Communist China to expend excessive sums for air defense against such a limited air threat. Specifically, he believed the Indians should reduce their number of squadrons from the 45 level and that they should phase out as rapidly as possible the obsolete aircraft which they had in their aircraft inventory.

6. Aircraft. In response to Ambassador Nehru’s comment that the Indians needed to look to replacement aircraft before removing obsolete aircraft, the Secretary responded that having a large number of obsolete aircraft results in a drain on the effectiveness of the other aircraft and that some reduction would improve the combat effectiveness of the Indian Air Force.

With respect to the question of more modern aircraft, the Secretary said that he could not advise them specifically on this problem at this time. He said he knew that they had HF–24 problems, the question of MIG production, their desire for 104’s, etc. He felt this would take some time to sort out, possibly weeks or even months.

Ambassador Nehru and Secretary Rao commented that the Chinese Communist Air Force could bomb India today without successful interception and for this reason they needed Mach 2 aircraft. The Secretary of Defense stated that he did not agree with the need for a Mach 2 aircraft. This led to a discussion of details of the appropriate response to the Communist air threat to India and our view that subsonic aircraft, including F–6A, were nearly as effective at this time as Mach 2 aircraft.

Ambassador Nehru then asked Secretary McNamara as to the correctness of his information that we had F–104s coming into surplus availability. Mr. McNamara pointed out that we were phasing F–104A/Bs from our Air Force into our National Guard, and that in any event only a limited number of about three squadrons were in our inventory at present.

1. Source: Washington National Records Center, RG 330, OSD Files: FRC 77–0075, Memos of Conversation Between Sec. McNamara and Heads of State (Other than NATO). Secret. Approved by Peter Solbert on May 22. A stamped note on the memorandum reads, “Mr. Vance has seen.”
2. Rao prepared a draft memorandum of understanding, drawn up on the basis of the discussion between McNamara and Chavan, and sent copies to James Grant and Peter Solbert later in the day on May 22. (National Archives and Records Administration, RG 59, Central Files 1964–66, DEF 1 INDIA)