WASHINGTON - An American global security and aerospace company's offer to shift all of its F-16 manufacturing to India could give New Delhi partial control, along with the US, over which countries are able to purchase the jets and spare, according to a media report.

The report by Bloomberg News comes as a Congressional report showed a 73 percent decline in US aid to Pakistan since 2011 due to deterioration in ties following the killing of Osama bin Laden in a commando raid in Abbottabad.

Bloomberg News said Lockheed Martin Corp’s proposal to make India hub for F-16s "comes with an added benefit for Prime Minister Narendra Modi: A strategic win against nuclear rival Pakistan." 

Such a move may allow India to choke off key supplies to Pakistan, which has relied on F-16s as its main aerial defence for decades, "if the US allows it do so", the report said.

“Some components may be produced only in India," Abhay Paranjape, Director of Business Development at Lockheed Martin Aeronautics, was quoted as stating while talking about the company’s F-16 proposal.

Asked whether Pakistan would still be able to source F-16 jets or parts elsewhere under the arrangement, Paranjape said questions about foreign military sales policies should be referred to the US government. Roger Cabiness, a spokesman for the US Department of Defence, in turn referred questions on the sale of F-16 spare parts to Lockheed, Bloomberg News said.

The strategic element is a key selling point as Lockheed pushes to win an order that may exceed 100 fighter jets, part of Modi’s plan to spend $150 billion on the armed forces and create jobs under his “Make-in-India" policy, the report said.

A deal would breathe new life into the F-16, an older model than the stealth F-35 warplane, and further boost US-India defence ties at the expense of Pakistan, it said.

“What we are doing is putting India as the center of the supply base," Randall Howard, Lockheed Martin’s aeronautics business development director, said on Aug. 4 in New Delhi. “Today, there is no potential Pakistan sale."

Amid deteriorating Islamabad-Washington ties in recent years, Congress in May refused to give subsidies for Pakistan to buy new F-16s, prompting it to consider buying used ones from Jordan instead.

The US this month withheld another $300 million in military aid to Pakistan over its alleged failure to take action against terrorists carrying out attacks on American troops in neighbouring Afghanistan.

Nafees Zakaria, a spokesman for Pakistan's Foreign Office, declined to answer questions about Lockheed Martin’s F-16 proposal, as did Nungsanglemba Ao, a spokesman for India’s Defence Ministry, according to the report.

The company’s overtures to India will prompt Pakistan to look more to China and Russia for military hardware, Najam Rafique, Director at Islamabad’s Institute of Strategic Studies, was cited as stating by Bloomberg News. “Pakistan is diversifying its options," he said.

Competition for the India jet order is fierce, the report noted.  Lockheed Martin’s rivals such as Boeing Co. and Saab AB are all offering to shift some production to India as part of their bids to replenish India’s aging fleet. About a third of the nation’s 650 planes are more than 40 years old and set to retire in the next decade, it said.

Modi last year scaled back an earlier deal with Dassault Aviation SA, opting to buy 36 Rafale fighter jets off the shelf instead of building 126 in India after negotiations hit repeated delays. That effort has since stalled over price, providing an opportunity to other jet-makers to step in. It’s unclear when a decision will be made.

Lockheed’s proposal attempts to turn its greatest weakness - the fact that Pakistan also flies F-16s - into a main reason for India to acquire the jet, according to the report.

“Since India would house the only existing production line, it would be able to deny Pakistan any further platforms or also have influence on Pakistan Air Force logistics," Pushan Das, who follows military modernisation at the Observer Research Foundation in New Delhi, was quoted as stating.

Lockheed Martin, which is winding down F-16 production in the US, has successfully sold the jet for decades.

The proposed facility in India would provide much-needed highly skilled jobs as Modi heads into several important State-level elections in 2017, Bloomberg News said.

“We are not looking at just assembling India’s F-16 here," Lockheed Martin’s Paranjape said. “We are looking at establishing a complete manufacturing base ecosystem." The report said it was still unclear which firm will win India’s lucrative fighter jet contract, citing some analysts as dismissing the F-16 as a dated “fourth generation" platform opposed by the Indian Air Force because it won’t have major upgrades in the future. Others like Georgetown University associate professor C. Christine Fair have suggested New Delhi is unlikely to get a more advanced fighter jet made in India because of difficulties with transferring state-of-the-art technology.

While many obstacles remain, an agreement with Lockheed Martin would cement closer ties between the nations if the US government doesn’t prevent the transfer of advanced radar or avionics technologies, according to Anit Mukherjee, an Assistant Professor at Singapore’s S Rajaratnam School of International Studies.

“If this deal was to happen - and that’s a big if - then it will be a big plus for US-India relations and a significant indicator of the transformation in the defence relationship," he said. “If this deal goes through, and the US is honest about tech transfer, then it has the potential to really build up India’s military-industrial base."

Meanwhile, the report about heavy decline in US security assistance to Pakistan since 2011, was prepared for the US Congress by the Congressional Research Service (CRS). It covers both military and economic assistance given between 2002 and 2015 as well as those earmarked for fiscal years 2016 and 2017.

It also shows a 53 percent decrease in economic assistance since 2011.

Security aid fell 73 percent from nearly $1.3 billion in 2011 to $343 million in 2015. Economic aid declined from nearly $1.2 billion in 2011 to $ 561 million in 2015, the report said.

The cancelled $ 300 million payments were in the form of Coalition Support Fund (CSF) under which Pakistan has received over $14 billion since 2002.

The CSF accounted for “as much as one-fifth of Pakistan’s total military expenditures” from 2002 to 2014, said the CRS, a US government news and analysis service for Congress.

The CSF is meant to reimburse US-allied nations “for their operational and logistical support of US-led counterterrorism operations”.

The CRS data shows that CSF accounts for 43 per cent of $ 32.2 billion worth of US government financial transfers to Pakistan from 2002 to 2015. Economic aid comprises 33 per cent of transfers at $10.6 billion followed by 24 per cent in security aid at $ 7.6 billion.

The CRS report, however, shows that Pakistan has or still is in the process of receiving nearly $1.2 billion worth of weapon systems from the US since 2001. This includes, eight P—3C Orion maritime patrol aircraft worth $ 474 million and 20 AH—1F Cobra attack helicopters at $48 million.

Pakistan is also getting mid-life update kits for 60 F—16A/B fighter jets already in its inventory at a cost of $ 892 million, of which the US paid $ 477 million through FMF.

Since 2001, Pakistan has paid or is still paying $2.5 billion for US arms.

This includes big-ticket items such as $1.43 billion for 18 new F—16C/D Block 52 Fighting Falcon combat aircraft and additional armaments for the aircraft at a cost of $629 million.