The US pressure, however, continued for the signing of three so called “foundational” agreements. While two of these were technical agreements, the third was the LSA that would allow the armed forces of the two countries to procure fuel and supplies from each other’s facilities. This was to help the Indian and US militaries refuel ships and aircraft in cashless transactions that are balanced at the end of the year. The LSA would require both countries to provide their military bases, fuel and other kinds of logistics support to each others’ fighter jets and naval warships.
The LSA would have lowered the operational costs of Indian defence forces. India participates in various multilateral exercises internationally and has to pay for its logistical requirement upfront in scarce foreign exchange. With LSA in place, the issue of physically paying the money could have been avoided. India, instead, would have to provide reciprocal facilities for the US defence forces when requested.
In any case with the enhancement of naval cooperation between the two countries, India has taken advantage of the Fuel Exchange Agreement (FEA) since 2005, which has led to a major reduction in time and cost of operations, with Indian ships refueling from US tankers, especially while on anti-piracy missions around the Gulf of Aden.