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

55. Telegram From the Department of Defense to the Embassy in Pakistan¹

Washington, June 7, 1964, 0008Z.

DEF 972285. From OASD/ISA. This is a joint State/Defense message. Reference Deptel 2374.² As indicated in our cables to New Delhi on the need for cautious press play on the McNamara-Chavan understanding, we recognize that Paks will have difficulty in swallowing new stage of US military assistance to India. The Indian military buildup inevitably is changing the military power balance in the subcontinent and we recognize that Pak unhappiness over this is compounded by our significant assistance role with the Indians. It is extremely important therefore that both India’s buildup and most particularly our role be kept in as accurate a perspective as possible by the Paks. Following should be helpful in clarifying for your information what has been agreed to with the Indians as reftel has indicated some misunderstanding.

Our discussions with the Indians resulted in a cut back of their program for offshore defense acquisitions during five years from a total of $1911 million including aircraft to $1432 million averaging $286 million annually. The latter includes all identifiable offshore acquisitions including US, UK and Soviet assistance as well as those from India’s own foreign exchange (do not understand source of your erroneous figure of $400 million for the annual level of Indian offshore acquisitions). The offshore procurement ceiling of $1432 million includes not only all direct procurement for the armed forces but also many of the indirect foreign exchange charges, e.g., raw material for Indian ordnance factories (does not however include certain other indirect foreign exchange costs such as POL).

The $286 million annual rate is about the average for the past two Indian fiscal years including all foreign military aid. The result, therefore, of our $50 million credit in FY 65 will be to reduce the use of India’s own foreign exchange for military procurement to a level well below that of the past two years and primarily result in channeling increased procurement to US market. We realize that this is a difficult point to convince the Paks on; however, given the ceiling we have agreed to with the Indians, it is valid and needs to be reiterated to the Paks.

Our assistance to Indian defense production has been concentrated on infantry requirements, particularly ammo production and not, as Paks may fear, in major equipment production. For example, the Ambajhari ordnance plant is to produce primarily ammunition for mortars, pack 75’s and recoilless rifles which are particularly required for mountain divisions even though also used for the regular infantry divisions.

You can indicate to the Paks that our review of the Indian five year plan has resulted both in substantial reduction in Indian plans and also in increased concentration of their buildup to respond to the Communist threat. (FYI. e.g., Indian plans for naval modernization were cut back drastically by some 75 per cent. End FYI)

You will note from McNamara letter to Chavan³ and memorandum of understanding that in fact US has agreed only to FY 1964 and FY 1965 programs. Longer term projection of our assistance will depend upon India satisfying certain conditions as listed in McNamara letter. We anticipate that as a minimum it will take several months before we are in position make long term projection should we decide at that time such a course is appropriate.⁴

1. Source: National Archives and Records Administration, RG 59, Central Files 1964–66, DEF 19 US–INDIA. Secret. Repeated to New Delhi, London, CINCMEAFSA, and State Department Operations Center.
2. The reference is in error. The correct reference is telegram 2374 from Karachi, June 5, in which the Embassy expressed concern about the memorandum of understanding on military assistance to India that was about to be signed. Although the agreement did not embrace the sensitive issue of supersonic aircraft for India, the Embassy was deeply concerned about the impact of the agreement upon the balance of military power on the subcontinent, upon prospects for an Indo-Pak reconciliation, and upon the U.S. position in Pakistan. (Ibid., DEF 19–3 US–INDIA)
3. Document 52.
4. On June 15 the Embassy reported that Foreign Minister Bhutto expressed sharp criticism of the U.S. military assistance agreement with India. Bhutto stated in a press conference that the agreement would aggravate tension on the subcontinent and make a settlement between India and Pakistan more difficult. (Telegram 2459 from Karachi; National Archives and Records Administration, RG 59, Central Files 1964–66, DEF 19–3 US–INDIA) The Embassy noted in telegram 2498 from Karachi, June 19, that Bhutto’s attitude reflected the concerns of the rest of the Pakistani Government. Since the United States was held to be largely responsible for what the Ayub government saw as an increasingly dangerous situation, the Embassy felt there was a need to restore the U.S. position in Pakistan and to give Pakistan a greater sense of confidence in its security. (Ibid.)