Pentagon Notifies Apache Helicopters Sale to India

The Pentagon has notified the US Congress about the possible sale of 22 Apache helicopters and that of AGM-84L Harpoon Block II missiles to the country at a potential cost of USD 1.6 billion. India has yet to select the Boeing-United States Army proposal.

AH-64D Block III Apache helicopters which includes engines, equipment, weapons, training, parts and logistical support will cost about USD 1.4 billion, whereas USD 200 million is the package of 21 AGM-84L HARPOON Block II Missiles and associated equipment, parts and logistical support.

If India selects the Boeing-US Army proposal, the Government of India will request a possible sale of 50 T700-GE-701D engines, 12 AN/APG-78 Fire Control Radars, 12 AN/APR-48A Radar Frequency Interferometers, 812 AGM-114L-3 HELLFIRE LONGBOW missiles, 542 AGM-114R-3 HELLFIRE II missiles, 245 STINGER Block I-92H missiles, and 23 Modernised Target Acquisition Designation Sight/Pilot Night Vision Sensors, rockets, training and dummy missiles.

Besides, the order would also include 30mm ammunition, transponders, simulators, global positioning system/inertial navigation systems, communication equipment, spare and repair parts; tools and test equipment, support equipment, repair and return support, personnel training and training equipment; publications and technical documentation, US Government and contractor engineering and logistics support services; and other related elements of logistics support to be provided in conjunction with a proposed direct commercial sale of 22 AH-64D Block III APACHE Helicopters.

Full Report: Pentagon Notifies Apache Helicopters Sale to India

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'Buy Indian, Make Indian' Defence Procurement/ Production Renewed Thrust

Indian Defence Industry is poised to witness major policy changes. The first ever Defence Production Policy is likely to be unveiled soon and major changes incorporated in the Defence Procurement Policy.

MoD, aims to have a strong defence industrial base in India. A country like India cannot indefinitely depend on foreign suppliers for majority of our equipments, the Defence Minister averred. At the moment 65-70 percent of the equipments are imported, this trend needs to be reversed.

New mantra is to be 'Buy Indian, Make Indian.' There is plenty of space and opportunity for the public and the private sector to contribute in this effort, coexist and thrive. "A growing nation like India, a nation aspiring for the membership of the Security Council, a place on the high table of the nations still depending heavily on foreign countries for supply of defence equipments is not good for us," he added.

Defence R&D needs to keep pace with the state-of-the-art technologies. Resources will not be the constraint.

Full Report: India’s Defence Minister hints at major policy changes in defence industry


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India – Russia Partnership

India possibly realises only Russia will be ready to supply it with some "sensitive" military hardware.

The expansive Indo-Russian defence partnership, which has already zoomed past $35 billion since the 1960s, marked a new high on Tuesday with the two nations inking the Preliminary Design Contract (PDC) for joint development of the fifth-generation fighter aircraft (FGFA). The PDC may be only worth $295 million but it will lead to India spending around $35 billion over the next two decades to induct between 250 and 300 of advanced stealth fighters from 2020 onwards in what will be its biggest-ever defence project. The Indian FGFA or "perspective multi-role fighter" will be based on the Russian single-seater FGFA Sukhoi T-50, a prototype of which is already flying, but will be tailored to the IAF requirements. The IAF wants a twin-seater FGFA powered by a new engine "with a higher thrust". India and Russia propose to market the FGFA to "friendly third" countries at a later stage.

India has consciously diversified its defence imports since the 1999 Kargil conflict, turning towards countries like Israel, France, UK and now increasingly the US. Israel, in particular, is snapping at the heels of Russia, notching up sales worth over $10 billion since Kargil.

Read More: India – Russia Partnership

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Current Media Debate on Defence Offsets and Implementation Process

Our country is new to Defence Offsets. Our stated aim in seeking defence offsets is ‘to develop and build Indian Defence Industry’ with support from our defence suppliers. Media is full of articles/comments on the issue. We need to however articulate a pragmatic take on this.

Obligors by all means would shun any offset projects that create a competitor for them unless they are allowed to become ‘substantial partners' in the outcome. This should be appreciated as a basic premise by our policy makers. It is from this baseline that we need to proceed to seek the defence offsets; direct or indirect.

Also, Obligors may like capability mapping of offset partners themselves in partnership with some high-tech company that may be up-to-date in defence technologies and local dual-use industry knowledge. It is a business case after all. DAC/DOFA/Other stakeholders could intervene at the offset proposal acceptance stage in case the offset project does not build capability of the Indian Defence Industry in line with its aim.

Obligor-Foreign Patent Holder- Foreign TT Partner- DAC/DOFA- Local Partner have to work in very close co-operation and of course transparently for implementing offset project(s) within the Defence Offset Policy.

Any changes to our offset policy should keep these terms of reference in view.

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DRDO in Nano-Technology Research

The Defence Research and Development Organisation (DRDO) will set up a nano-foundry. This project will partner IITs and other academic institutions in India.

Nano-Technology applications enhance strength and capabilities of missiles. The outcomes are also highly useful in healthcare, medicine, sensors, and energy harvesting. The R&D facilities for nano-technology thus created can be used by industry and various academic institutions for research purposes.

We need to also develop capabilities in nano-technologies in the fields of agriculture and healthcare, and ability to apply the technology in varied field.

Please Click: DRDO in Nano-Technology Research


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Defence Offset Policy Debate

Indian Defence Offset Policy is continuously evolving, as it should be. With the size of defence offsets due and desire of foreign vendors to partner more with the Private Defence Industry in India for obvious advantages, various defence policy researchers have been propounding liberlising the Policy to include areas that are complementary/supplementary to defence, and thus enhance country’s strategic needs in allied areas. The Govt. is not averse to this idea. MoD however has to discuss the changes pragmatically.

Svipja has always maintained that we must permit defence offsets, direct and indirect, in the Industry to consolidate our high-tech reach. May be we lay down certain % of offsets for direct and indirect; say 60:40. We also support multipliers and ToT for offset credits amongst few others discussed on this Blog earlier.

As per Business Standard , the following amendments to the offsets policy may come-up for discussion in a DAC/MOD Meeting on 15 Dec 2010:

• Liberalising the policy to permit indirect offsets in civil aviation and homeland security. Currently, vendors must discharge their offset obligations entirely within the defence industry.

• Expanding the definition of services that qualify as offsets. Currently, those that qualify for defence offsets are “maintenance, overhaul, upgradation, life extension, engineering, design, testing of defence products, defence related software or quality assurance services”. Many more are being considered, including training.

• Allowing transfer of technology to be eligible for offset credit. So far, the MoD has insisted it will pay upfront for technology, as a part of the main contract. Now, by providing technology as an offset, a vendor could discharge his offset liability.

• Permitting foreign vendors to invest ‘in kind’ in Indian defence industry. Presently, the policy permits ‘direct foreign investment’. Permitting investment in kind would allow vendors to claim as offsets the supply of goods and services, e.g. training simulators.

Full Report : Offset Policy Debate

We need to wait and watch, advocacy notwithstanding.

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Update India SAM Missile Systems

The SAM Systems-- to detect and destroy hostile aircraft, drones and helicopters at ranges between 25 and 70 km – codenamed Akash Systems, are the indigenous missile systems , and the two other Systems being developed with the help of Israeli Aerospace Industries (IAI) -- the long-range SAM (LR-SAM) and medium-range SAM (MR-SAM).

Akash systems are already on course to be inducted, with the IAF order being worth Rs 6,200 Crore and the Army's Rs 12,402 Crore. The first IAF Akash squadron, with two `flights' of four launchers each, is expected to be operational by next year. Six of the squadrons will subsequently be based in the North-East.

The 70-km-range LR-SAM project -- with multi-function surveillance and threat radars, weapon control systems and missiles -- is slated for completion by May 2012. In the first phase, it will arm the three destroyers being built at Mazagon Docks.

Under the MR-SAM project, which will also have a strike range of 70 km, the delivery of the first firing unit to the IAF is scheduled for March 2013, with the 18th one coming in October 2016.

Read full Report: Update India SAM Missile Systems


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Dassault Systems and Infosys in Pact

Infosys Technologies, India, signed a pact with French software company Dassault Systems to become its global system integration partner. The deal will help in promoting Dassault solutions in India and the other markets in South Asia, Europe and North America.

Dassault offers imagining and simulating solutions across sectors like aerospace, defense, ship building, engineering, construction, and life sciences.

Dassault centres in India work with other centres (globally). The company has three R&D centres in Pune, Bangalore and Chennai.

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Credit: PTI, New Delhi.

DRDO Delivers Life Support System For Tejas

The DRDO has developed an Integrated Life Support System (ILSS) for fighter aircraft pilots, potentially adding India to a group of nations owning such technology.

An ILSS for fighter aircraft is a state-of-the-art technology that enables a fighter pilot to venture to the limits of the aircraft capability in terms of flight altitudes and g-forces. The first batch of ILSS will go into Tejas aircraft.

The ILSS can also be customized to the needs of MiG-29, Su-30 and Mirage 2000.

Full Report: DRDO Delivers Life Support System For Tejas


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Obama's India Visit: US-India Defence Industry Co-operation and ‘ A Sticking Point’

The U.S. may withhold several subsystems until India ratifies certain specific Agreements, which govern current and future transfers of high-tech military systems to India. India is not ready to commit to the security pacts for various reasons.

President Obama has removed certain Indian companies and Govt. organizations from the U.S. Entities list, a clause that has been blamed for holding back India’s development of major missile systems and space programs.

The Indian Space Research Organization (ISRO), Defense Research and Development Organization (DRDO) and Bharat Dynamics Ltd. (the country’s prime production agency for missile systems) as well as many of their respective laboratories are set to benefit from the Entities list action. Laboratories at the DRDO dropped from the list include the Armament Research and Development Establishment, Defense Research and Development Laboratory, Missile Research and Development Complex and the Solid-State Physics Laboratory. ISRO’s subordinate entities include the Liquid Propulsion Systems Center, Solid Propellant Space Booster Plant, Sriharikota Space Center.

India has welcomed amongst others, steps to expand the cooperation in space, civil nuclear, defense and other high-end sectors.

India’s inhibition to sign the security pact was not discussed publicly but is understood to have been a sticking point between the two countries. Still, India is purchasing 10 C-17 heavy-lift military transports, eight P-8I maritime patrol jets, Harpoon anti-ship missiles, Apache attack helicopters and Chinook transport helicopters, all manufactured by Boeing. Anticipating the announcement, Boeing noted prior to Obama’s visit that the Harpoons would not be ensnared by the security pact.

Full Report: Security Pact Remains U.S.-India Hurdle


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Defence Offsets India Until Oct 2010

Three US companies have hogged at least 42 per cent of recent national military contracts worth nearly Rs 39,000 crore (around $8.78 billion at current exchange rates). The contracts were given out between March 2008 and October 2010.

Boeing, Lockheed Martin and GE Aviation totally won contracts worth around Rs 16,631 crore ($3.75 billion) among 13 overseas companies that won different orders from the Government.

Of the US suppliers, Boeing topped the pack with 21 per cent of the orders given, worth $2.1 billion and likely to go up (around Rs 9,314 crore), followed by Lockheed Martin with 11 per cent of the contracts worth $1 billion (Rs 4,434 crore) and GE Aviation 7 per cent at $650 million (Rs 2,883 crore), says a just-released KPMG-American Chamber of Commerce report on the Indian Defence sector.

The recent deals clinched by the US companies include - the P-8I Poseidon maritime surveillance aircraft from Boeing; C 130J transport planes from Lockheed Martin; GE's engines for the light combat aircraft Tejas; Harpoon anti-ship missiles and ultra light howitzers.

Offsets from the three US companies alone amount to around $1.1 billion, out of a total of $2.6 billion from all the 13 companies listed. These are for the products and services related to the contracts that Indian companies will export, in a move aimed at encouraging collaborations, building up indigenous capabilities and make them part of global Defence supply chains.

Click for the Report: Defence Offsets India Up till Oct 2010

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India's UAV Rustom I Takes to Air

India has flown the homegrown Rustom-1 unmanned aerial vehicle for the first time.

Developed by the DRDO Aeronautical Development Establishment (ADE), the 30-min. flight took place on Oct 16 from a Taneja Aerospace and Aviation Ltd. airfield at Housr, near Bangalore.

“Notwithstanding erratic weather conditions, the UAV had a perfect textbook flight, meeting all mission parameters,” says Dr. Prahlada, Chief Controller at DRDO. It flew to a planned altitude of 3,000 feet.”

The Rustom-1 has autonomous features such as GPS-controlled waypoint navigation. With a maximum endurance of 15 hr., Rustom-1 can carry payloads up to 75 kg. (165 lb.) and climb up to 25,000 ft.

The UAV’s datalink was designed and developed by DRDO’s Defende Electronics Applications Laboratory, located in Dehradun, while the airframe was made by Coimbatore-based private firm Zephyr. DRDO hopes that Rustom-1 will act as a stepping stone for future programs such as the medium-altitude, long-endurance UAV project Rustom-H and an unmanned combat aerial vehicle project.

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India-Russia Co-operation for 5th Generation Aircraft

India and Russia will jointly produce 5th Generation Aircraft (FGA) at an estimated investment of about $ 25 billion. The production partners would be Sukhoy from the Russian side and HAL from the Indian side. Within a span of next 10 years, India will get about 250 to 300 FGA from this joint production.

India will also get 45 Medium Transport Aircraft (MTA) within a period of 10 years.

India and Russia will also cooperate in the areas of R&D and technology transfer with the active involvement of the DRDO from the Indian side.

Click for the Report: India-Russia Co-operation for 5th Generation Aircraft


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The Research Center Imarat (RCI)

The Research Center Imarat (RCI), a sensitive wing of India’s Defense Research and Development Organization (DRDO), is playing a key role in India’s next-generation missile programs.

RCI is currently involved in Air Defense Systems (ADS) and the Agni-V long-range strategic missile. The lab has successfully participated in demonstration of ADS with over five launches so far. The Agni-V, capable of traveling a maximum range of 6,000 kilometers is scheduled for a maiden launch in March 2011. This would further put India among a select group of nations with such advanced deterrent systems.

The Exposition Hall at RCI provides a peek into various missile systems and other platforms that are currently being developed by the lab. The RCI is to become a leader in missile technologies.

Courtesy: USIBC and Its News Agencies.

EoI: Tactical Communications System (TCS) for the Army

The EoI for the TCS has gone out to at least five private companies, Tata Power (Strategic Electronics Division); HCL Infosystems; Wipro Technologies; Rolta India; and L&T in addition to three public sector undertakings — Bharat Electronics Ltd (BEL); Electronics Corporation of India Ltd (ECIL); and ITI Ltd.

The TCS project was sanctioned by the Defence Acquisition Council in May 2009. It may cost around INR 10,000 Crore.

The EoI places the TCS project in the “Make” category of the Defence Procurement Procedure of 2008 (DPP-2008). Under this, the MoD will fund 80 per cent of the development costs, while the selected company (termed the Development Agency(DA)) will fund the remaining 20 per cent. The “Make” procedure mandates that at least 30 per cent of the system must be indigenously developed. However, one of the companies that have received the EoI confidently claims that it will develop at least 70-80 per cent of the system in India.

The TCS is to provide a robust, secure, mobile network for the Indian Army for tactical communications.

The TCS the second project under the “Make” procedure, after the Future Infantry Combat Vehicle (FICV) development project sanctioned in early 2010.

Click for the Report: EoI for TCS Issued

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Boeing-Mahindra Progress on Aerospace Parts Procurement

Mahindra & Mahindra Ltd. has signed a deal to buy aircraft parts-making machinery from Boeing Co.'s plant in Melbourne, Australia. M & M feels the deal will boost orders as it will likely help improve the quality of aircraft parts it produces and attract clients that need to fulfil their offset obligations in India.

The Indian Govt. had put an offset clause on a $15 b, 111 aircraft deal signed in 2005 by national carrier Air India with Boeing and European manufacturer Airbus. Boeing also last year signed a $2 bn deal with the Govt. to supply eight long-range maritime recce and anti-submarine warfare P-8I aircraft to the Indian Navy with offset clause.

In 2009, Mahindra had purchased 75.1% stake in two Australian aerospace companies--Gippsland Aeronautics and Aerostaff Australia--for a total of 1.75 b INR($37.9 m) to expand its aircraft and aerospace-component manufacturing capabilities in Australia.

The company plans to establish an aerospace facility in India, possibly in the South Indian State of Karnataka.

Mahindra Systech's component manufacturing units include Mahindra Aerospace Pvt. Ltd, as well as Mahindra Forgings Ltd, Mahindra Composites Ltd and Mahindra Ugine Steel Co Ltd.

Read the full Report: Boeing-Mahindra Deal for Aerospace Components


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Aerospace and Defence SEZ by Karnataka Govt. Near Bangalore International Airport

Bangalore-based companies such as Bharat Fritz Werner (BFW), Ace Group and Kennametal India Limited (KIL) and Rajkot-based Jyoti Huron are already supplying machining centres for making moulds, prototyping models, forging dyes and precision mechanical parts to the aerospace sector.

Boeing estimates that India will need 1,000 commercial aircraft worth $100 billion over the next 20 years, while PricewaterhouseCoopers estimates that India will spend $25 billion on commercial aircraft and $100 billion on defence until 2014. This will drive growth for domestic components suppliers.

The Karnataka Govt. has acquired 1,000 acres near the Bangalore International Airport in Devanahalli for the aerospace SEZ. About 55 per cent of the land will be allotted to companies for setting up factories.

Units in the SEZ will cater to domestic demand as well as the export market. The park will include aviation MRO (maintenance, repair and overhaul) activities too.

So far, state-owned defence suppliers BEML Limited and HAL, Mahindra and Mahindra, Dynamatic Technologies and Japan’s Amada have been allotted land. These companies are eyeing a substantial portion of the business emerging out of the offset business opportunity.

Read the Report: Aerospace and Defence SEZ by Karnataka Govt Near Bangalore International Airport

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India Ranks Second in Arms Transfer Agreements with US During 2006-2009: A US Report

India ranked second in arms transfer agreements with US during 2006-2009 period, while Saudi Arabia is the leading developing world arms purchaser from 2002-2009.

From 2006-2009, Saudi Arabia ranked first in arms transfer agreements, with a substantial increase to USD 29.5 billion from USD 15.3 billion in the earlier 2002-2005 period. This total constituted 17.2 per cent (USD 171.5 billion) of all arms transfer agreements with developing nations during these four years.

India ranked second in arms transfer agreements during 2006-2009 with USD 17.1 billion (in current dollars), or about 10 per cent of the value of all developing world arms-transfer agreements.

Congressional Research Service (CRS) told Congressmen that India, while the principal Russian arms customer, has begun to diversify its weapons supplier base. In 2008, India purchased 6 C130J cargo aircraft from the US. This pattern of Indian arms purchases indicates that it is likely that Russian will face strong new competition from other major weapons suppliers for the India arms market.

According to CRS, Asia has traditionally been the second largest developing-world arms market. In 2006-2009, Asia ranked second, accounting for 34 per cent of the total value of all arms transfer agreements with developing nations (USD 59.8 billion).

Read the full Report: India Ranks Second in Arms Transfer Agreements with US During 2006-2009: A US Report


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MOD Floats RFI for 6 Submarines

MOD has issued a global request for information (RFI) to shipbuilding majors to submit their initial offers by the end of Sep 2010 for the six submarines to be constructed under 'Project-75 India'. This comes after the Defence Acquisition Council (DAC) cleared P-75I Project in June. The gigantic naval project will clearly overtake the Rs 42,000 crore project to procure 126 multi-role fighters for IAF, so far dubbed the "mother of all defence deals".

Foreign collaborator is to specify the air-independent propulsion (AIP) being offered for the project. Conventional diesel-electric submarines have to surface every few days to get oxygen to recharge their batteries. But with AIP systems, they can stay submerged for much longer periods, narrowing the gap with nuclear-powered submarines which can operate underwater for virtually unlimited periods.

Read more: MOD Floats RFI for 6 Submarines

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An Appeal by US/EU Vendors to Soften India Defence Offset Policy

An appeal has been made by the USIBC; the US AIA (Aerospace Industries Association); the British ADS (Aerospace, Defence and Security); French aerospace body GIFAS; German aerospace body BDLI; and Canadian aerospace body AIAC to the MOD 'to soften India Defence Offset Policy'. Israeli and Russian companies are conspicuously absent from this initiative.

The letter urges the following specific policy reforms:

• Enhancing the current 26% ceiling on foreign direct investment (FDI) in defence. The letter states that accepting the Ministry of Commerce’s proposal to enhance FDI to 74% would “bolster confidence” and enable “robust investment in… technology transfer”.
• It suggests allowing dual-use technologies and high-tech civilian projects to be counted as defence offsets. This, the letter argues, would create a high-tech, civilian industry, that would build dual-use products to feed the defence industry. The current offset policy mandates only direct offsets, i.e. products that are directly used in defence systems.
• The MoD should offer multipliers for offsets in key sectors where the MoD most wants technology transfers. For example, if the MoD wants radar technology, it could specify an offset multiplier of 2. A company that transferred radar technology worth $1 million would get $2 million in offset credits. The current policy treats all offsets equally.
• The creation within the MoD of an empowered and adequately staffed permanent “offset authority”. Currently, “there is still ambiguity in how offset contracts will be approved, validated, discharged and measured.”
• Capping financial penalties in defence cooperation, in order to “not deter competition for defence contracts.” The letter points out that “(u)nlimited financial liability inhibits industrial defence cooperation.”

Demands from MoD by the US/EU Offset Consortium

• Raising FDI limit from 26%.
• Allowing offsets outside defence.
• Use of offset multipliers.
• An empowered offset authority in MoD.
• Capping financial penalties.

Read the full Report: An Appeal by US/EU Vendors to Soften India Defence Offset Policy

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India Signs Deal for 24 x Harpoon Block II Missiles with US

India has signed an agreement with the US government to purchase 24 Harpoon Block II missiles for its Jaguar strike aircraft, in a bid to ramp up its maritime warfare capability.

In production at Boeing facilities in Saint Charles, Missouri, is the Harpoon Block II, intended to offer an expanded engagement envelope, enhanced resistance to electronic countermeasures and improved targeting. Specifically, the Harpoon was initially designed as an open-ocean weapon. The Block II missile provides the Harpoon with a littoral-water anti-ship capability.

The key improvements of the Harpoon Block II are obtained by incorporating the inertial measurement unit from the Joint Direct Attack Munition program, and the software, computer, Global Positioning System (GPS)/inertial navigation system and GPS antenna/receiver from the SLAM Expanded Response (SLAM-ER), an upgrade to the SLAM.

Although initially tested from U.S. Navy ships, the decision was made to not procure Harpoon Block II for the U.S. Navy fleet. Boeing lists 28 foreign navies as Block II customers.

Read the Report: India Signs Deal for 24 x Harpoon Block II Missiles with US


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Courtesy: Wikipedia

Indian Private Shipyards Role in a New Submarine Project?

DAC/MOD has decided to exclude Indian Private Shipyards from the construction of six submarines for the Indian Navy under Project 75I. Instead, the first two submarines will be built at a foreign shipyard.

Project 75I initially envisaged all six submarines to be built in India. The MDL was to build three; Hindustan Shipyard Ltd — recently acquired by the MoD from the Ministry of Shipping — would build one; while Indian private sector shipyards, L&T and Pipavav, were to compete to build the remaining two. Now the first two are likely to be built abroad.

This change in earlier decision will require fresh sanction from the CCS typically involving a 12-24-months time.

L&T and Pipavav have invested sufficiently to build world-class shipyards, and have lobbied intensely for a share of the submarine programme.

Senior L&T officials feel that MDL would have its hands full with Scorpene production until at least 2019 and has no capacity to take on another three submarines. MDL has however presented a detailed plan to set-up a second submarine line.

Click to read the full Report: Indian Private Shipyards Role in a New Submarine Project?

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India to Buy Javelin Missiles

Delay in the manufacture of indigenous NAG missiles has forced India to consider buying thousands of Javelin anti-tank guided missiles from the United States.

The Indian government would go down the route of a U.S. direct foreign military sale when ordering the Javelin, made by Raytheon and Lockheed Martin. The process could frustrate European, in particular Russian, ATGM manufactures because it bypasses the global competitive tender route.

A letter-of-request has been sent to the U.S. government for procurement of the third-generation off-the-shelf Javelin including ToT.

The Javelin has been used by U.S. forces during bilateral battalion-level combat exercises, including the annual Yudh-Abhyas at the Indian army's Babina base, in the state of Uttar Pradesh, last October.

Click to Read: India to Buy Javelin Missiles


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3 b USD Offset Opportunities in the Navy

Naval projects offer 3 b USD offsets in the mid-term. Defence PSUs and the Private Sector could absorb these offsets.

As per Plans, in addition to the acquisition of six Scorpene class submarines by 2012, the Navy has also received AON for acquiring six more submarines, four destroyers and seven frigates over the next two plan periods. The Navy, as you know, is in the forefront of indigenization. It may be recalled that India is among the 20 nations capable of indigenously designing and construction of warships.

The Navy had concluded 11 offset contracts so far, while 40 proposals were in various stages of finalization. Although many countries were wary of technology transfer of their defence products owing to IP issues, the offset route loosens the ‘grip’ as the manufacturers were willing to share technology while offering offsets.

Pse read the full Report: 3 b Offset Opportunities in the Navy

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’Make’ Project for Future Infantry Combat Vehicles

Four Indian companies - Tata Motors; the Mahindra Group; L&T; and the MoD-owned Ordnance Factory Board (OFB) --- will compete to design and build qty 2600 new-generation Future Infantry Combat Vehicles (F-ICVs) to replace the existing BMP-IIs. Two of these vendors will be nominated to develop a prototype each and the winning design selected for the F-ICV production.

Cost of developing and manufacturing 2600 FICVs could add up to Rs 50,000 crores.

The MoD will fund 80% of the cost of developing the FICV under the ‘Make’ procedure; the selected contractor will pay just 20%. It has been mandated that the FICV must have an indigenous content of at least 50%. With a development time of 7-8 years, the FICV should be ready by 2018.

Read the full Report: ’Make’ Project for Future Infantry Combat Vehicles

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DRDOs Border Intelligence Systems

Defence Electronics Research Laboratory (DLRL),and Electronics and Radar Development Establishment's (LRDE), both located in Hyderabad, are very versatile and credible labs of the DRDO.

DLRL has developed a border communication intelligence gathering system that would be of help to the armed forces and paramilitary in intercepting communication of our adversaries. It will be introduced into service by end-2011.

LRDE is working on low level light radars (LLLRs). A set of LLLRs has been tested in mountainous terrain successfully, both for Army and Air Force. LRDE is also working on an Active Electronically Scanned Array (AESA) radar for use in future Light Combat Aircraft (LCA) 'Tejas' for both IAF and Navy, apart from a Maritime Patrol Airborne Radar (MPAR) that could track even sea-skimming missiles.The AESA would be ready by 2013.

Laser System and Technology Centre (LASTEC), New Delhi, has developed laser-based ordnance disposal system (LORDS). The system is capable of destroying rockets, bombs and explosives that have completed their shelf-life without having to get closer to them. LASTEC was also working on other laser-based systems such as direct energy warfare application, low intensity conflict (LIC) applications, battlefield optoelectronic systems and advanced science and technology for future systems.

Click for the Report: DRDOs Border Intelligence Systems

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DRDO Consortium to Design, Develop and Manufacture 155 mm Gun

The Armament Research & Development Establishment (ARDE), Pune, could become the hub for developing an indigenous 155-mm towed gun, with the DRDO partnering private industry giants such as Bharat Forge and Larsen & Toubro.

Shri A K Antony informed Parliament that the CBI had recommended the blacklisting of four companies that had been involved at various stages of this procurement: Singapore Technologies Kinetics (STK); Germany’s Rheinmetall; Israel Military Industries (IMI); and another Israeli Company, Soltam. Denel, a South African company, had been blacklisted earlier; and the only other gun on offer, the BAE Systems FH-77B-05 howitzer, is a modernised version of the controversial Bofors gun.

The contract, is estimated at Rs 8,000 Crore, which had envisaged buying 400 towed guns off the shelf and building 1,180 in India from transferred technology.

The ARDE is one of DRDO’s star laboratories, having developed over 200 items that are in service with the military today. With just one per cent of DRDO’s total budget and five per cent of the DRDO’s manpower (1,300 persons, including 220 scientists and 250 technical officers), the ARDE has developed 70 per cent of the equipment that the Ordnance Factories have manufactured for the military.

Click to Read the Full Report: DRDO Consortium to Design, Develop and Manufacture 155 mm Gun

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Credit: Business Standard.

700 m Pound Hawk Deal for HAL

India and the United Kingdom signed a £700 million Advanced Jet Trainer (AJT) Hawk deal on 28 Jul 2010. Cameron, the British PM, oversaw the signing of the agreement between BAE Systems and HAL for India to produce additional 57 of BAE's Hawks.

India had earlier purchased 66 Hawks from BAE that included 24 in fly-away condition, with 42 to be produced by HAL under licence from BAE.

The aircraft will be manufactured under licence at HAL's facilities in Bangalore. BAE Systems will provide specialist engineering services, raw materials and equipment for airframe production, and the support package for the IAF and Indian Navy.

The Hawk is flown in 18 countries including the IAF.

Read the Full Report: 700 m Pound Hawk Deal for HAL

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US Navy Gets the first F/A-18 Super Hornet with HAL Gun Bay Doors

Boeing has delivered the first F/A-18 Super Hornet Combat Jet to the US Navy featuring a gun bay door manufactured by HAL. The gun bay door contract is the first military contract between Boeing and HAL.

Boeing and HAL are also working together on projects for the P-8I multi-mission maritime aircraft for the Indian Navy, and for the commercial Boeing 777 airplane.

The gun bay door covers the F/A-18's six-barrel 20 mm, externally powered M61A2 Gatling gun system that can fire 4,000-6,000 rounds per minute. Made by General Dynamics, the gun however carries only about 600 rounds.

The gun can be used in a dogfight. Also the aircraft is loaded with long-range precision strike weapons and missiles as the emphasis now is on beyond visual range (BVR) engagement.

HAL has already sent five sets of the gun bay doors to Boeing and 13 more are under manufacture as part of an initial contract. HAL is also hoping for a repeat order.

So far, Boeing has been sourcing gun bay doors from the Czech Republic's AERO Vodochody, which has already supplied more than 300 of these doors.

The gun bay door contract is not tied to any project but is part of a Boeing Initiative to source USD one billion worth of parts and services from India. As part of this, Boeing is also sourcing wire harnesses for the F/A-18 from HAL.

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Courtesy: USIBC News Letter.

MMRCA Jets for India

India may be in a position to sign the MMRCA contract within a year from now.The flight evaluation report on the aircraft under evaluation is likely to be ready by Jul-end. This will be followed by internal discussions/clarifications of the field evaluation report within the MOD, evaluation of offset proposals, opening of commercial bids and the final negotiations.

The IAF is keen to induct the first lot of the MMRCA by 2014. The contenders are F/A-18 ‘Super Hornet’, F-16 ‘Falcon’ , Gripen (Swedish), Rafale (French), MiG-35 (Russian) and Eurofighter Typhoon jets.

India has also signed deals for 230 Sukhoi-30 MKI fighters (over 110 have been inducted) with Russia. Another 42 Sukhois are likely to be ordered shortly. This is in addition to LCA (light combat aircraft ) and FGFA (the fifth-generation fighter aircraft) planned.

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Courtesy: The Economic Times

6 Submarines for India

Stage is being set for six new-generation diesel-electric submarines for the Indian Navy. The deal could be for over Rs 50,000 Crore.

Three of the six submarines will be constructed at Mazagon Docks (MDL) in Mumbai, and one at Hindustan Shipyard Ltd (HSL) in Visakhapatnam, with the help of a foreign collaborator. The other two submarines will either be imported from the foreign vendor directly or constructed at a private shipyard in India. Fresh estimates show that the six submarines will cost almost Rs 8,500 Crore per unit.

Under the programme—Project-75 India (P-75I)—apart from stealth, land-attack capability and the ability to incorporate futuristic technologies, all the submarines will be equipped with air-independent propulsion (AIP) systems to boost their operational capabilities.

If everything goes smoothly, the first submarine under P-75I will be available to the Indian Navy in 6-7 years,ie by 2016-17, instead of 10 years.

Click to read the Report: 6 Submarines for India

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C-17 Airlifter for India

India and the United States have begun talks here on the onboard equipment for the 10 Boeing C- 17 military transport aircraft, and the associated price structure.

United States Air Force (USAF) C-17 which had come to India for trials last month has met the IAF specs. The aircraft was tested in short and high altitude runways.

DOD/USA has set the maximum price at $5.8 b for the aircraft and standard systems loaded on the aircraft,but the actual price would depend upon what equipment and onboard options the IAF finally needs.

The US government will issue a Letter of Acceptance (LOA) after these discussions are finalized, indicating the equipment, services, and lifecycle support and their costs. There would be a 3.8 percent administrative fee that the US Government now charges on all FMS deals. (This fee varies periodically between 2.5 to 5 percent).

C-17 Globemaster-III, which India is seeking, can carry a maximum payload of 74,797 kilograms for 2,400 nautical miles without refueling and 45,495 kilograms for 4,000 nautical miles without refueling.

Click to read the Report: C-17 Airlifter for India


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Courtesy: USIBC and Its News Agencies

Tata Advanced Systems (TASL) in JV with Lockheed Martin

As per news report, the Tata group’s Defence and Aerospace arm, Tata Advanced Systems (TASL), has forged a JV with Lockheed Martin Corporation to manufacture defence equipment and aircraft parts in India. TASL is a wholly-owned subsidiary of Tata Sons. The JV will have 26% stake for Lockheed Martin . Indian partner will hold the rest.

The proposal submitted by TASL to the FIPB stipulates that Lockheed Martin Aeroframe Corporation (LMAC), wholly-owned subsidiary of Lockheed Martin , will invest Rs 42.82 Crore in the proposed JV for 26% stake.

Tata Aerostructures Ltd, the JV company in India, will design, develop and manufacture Aerospace and Aerostructure products.

The Indian partner will bring in Rs 121.87 Crore.

There is an export potential of $200 million (Rs 920 Crore) over a period of five years in this JV.

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MOD, Armed Forces, DRDO and Defence Systems

It is expected that MOD, Armed Forces and DRDO should work in ‘total co-ordination’ in order to execute the identified defence projects in time and without cost overruns. The DRDO should inspire desired confidence level in the stakeholders. There appears to be some trust deficit.

Who imports systems and serves the Armed Forces is immaterial on a few major counts. Firstly, it is national money being spent, Secondly, delivery of the systems needs to be timely, Thirdly, the Armed Forces must be content with the systems, and Lastly, the nation should get best value for the money. ‘Scramble’ for imports must stop.

It has been the experience that whenever new systems are needed, the DRDO ‘jumps’ to grab the project on the pretext of ‘can do’ and ‘indigenisation’, cost and time overruns notwithstanding. Invariably systems are delayed, and the Forces begin to ‘crib’ till some via media is found. A bad show for all involved.

It is worth studying projects handled by the DRDO since its raising in relation to time and cost overruns with technology perspective. The DRDO should be encouraged, developed and strengthened but not at the cost of efficiency; it impacts our defence preparedness.

Same is the case in case of Tejas Engines as reported in the Press. Read the Full report: Air Force Says DRDO Stalling Tejas Fighter Engine

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No Rushing with FDI Reforms

India favours calibrated liberalisation of foreign investment norms in sensitive sectors like retail, defence, banking and insurance on account of domestic sensitivities.

India already has a liberal and transparent FDI regime in place except for a few sensitive sectors where the country was in favour of `calibrarted liberalisation’.

India's initiatives like simplification and consolidation of the FDI policy would go a long way in improving business environment. At present, FDI is not allowed in multi-brand retail in India, but it is permitted in wholesale trade and single-brand retail. Up to 26% FDI is allowed in defence and insurance sectors, while banks can have up to 74% of foreign investment.

The US wanted India to address longstanding impediments such as investment caps, agricultural market access barriers, high tariffs, intellectual property rights and the need for continuing regulatory streamlining and transparency,etc, in recently concluded CEOs Meet in the US.

These insights emerged in an official and industry delegation in the second meeting of the Forum co-chaired by Tata Group Chairman Ratan Tata and Honeywell Inc CEO Dave Cote. The meeting was also attended by finance minister Pranab Mukherjee and deputy chairman of Planning Commission of India Montek Singh Ahluwalia.

The US official delegation included secretary of state Hillary Clinton, treasury secretary Timothy Geithner, commerce secretary Gary Locke, US Trade Representative Ambassador Ron Kirk and director of National Economic Council Larry Summers.

Read the full Report: No Rushing with FDI Reforms

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Credit: Business Standard.

India Tells US to Remove ISRO and DRDO from Blacklist

India has asked US to remove its two state-run frontline technology establishments ISRO and DRDO from the entities list, in apparent anticipation of Washington and New Delhi opening cooperation in hi-tech systems.

ISRO and DRDO were put on American technology export control blacklist after the 1998Pokhran nuclear blast.

India has also urged American companies to invest in defence sector in the country. On the investments in defence sector, it was felt that 26 per cent FDI in the sector was very high.

Read the full Report: India Tells US to Remove ISRO and DRDO from Blacklist

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Courtesy: Business Standard.

India’s Defence and Aerospace Market: Emerging Trends

All the Studies/Reports/Surveys indicate that as defence expenditure is dropping in the traditionally big-spending western economies, including the USA, Indian defence spending will grow steadily over the next 20-25 years, as India implements a major defence modernisation. CIIs Report entitled “Prospects for Global Defence Export Industry in Indian Defence Market”, released in Jun 2010 at the Eurosatory 2010 too indicates this.

Linking defence spending to the International Monetary Fund (IMF) prediction that India’s economy will grow in real terms by 7.5 per cent from 2010 to 2014, the Studies indicate that India’s current defence expenditure of $32.03 billion will rise to an estimated $42 billion by 2015. The Capital Expenditure on new weapons / platforms will rise from the current $13.04 billion to $19.2 billion in 2015.

The figures are impressive. India will spend $100 billion on weaponry during the current Five Year Plan (2007-12), which will rise to $120 billion during the next Five Year Plan (2012-17), as per reports in the media.

“Buy Local” and "taxation arrangements" create special advantages for Indian firms. In case of Defence Public Sector Undertakings (DPSUs), tax advantages can be as high as 50 per cent. There are therefore clear opportunities for foreign firms in providing specialist inputs to Indian Defence Industry for developing advanced platforms and systems indigenously.

Read the full Article: India’s Defence and Aerospace Market: Emerging Trends

Svipja Technologies.
Courtesy: Business Standard.

Debate of FDI in the Indian Defence Industry

India’s business media reports possible changes in foreign direct investment (FDI) limits that range over legally significant figures from nothing to 26% and 49%, and on to 50%, 51%, 74% and 100%. The figures give foreign companies varying degrees of control. All this makes interesting story at home and abroad.

In the past the debates – or, rather, the pushes and pulls of (often suitcase-carrying) vested interests – have been invisible behind the headlines. But that has now partly changed. The Commerce Ministry’s industrial policy department (DIPP) has publicised a debate about whether FDI should be raised in defence production by issuing a discussion document that covers all the issues. Could find the Discussion Paper on http://dipp.nic.in/DiscussionPapers/DiscussionPapers_17May2010.pdf

The government’s defence manufacturing discussion paper has raised the basic question of whether FDI is needed and, if so, how much. This is a good question, and it has rarely been asked on any Indian FDI in the past.

Indian companies need time to establish themselves before FDI is allowed at such high percentages that foreign companies swamp the market and make India in effect a virtual subsidiary of powerful developed economies.

That is the issue now in defence – is it time to open up and how far? Currently the FDI limit is 26%, apart from a very few higher exceptions, and it is generally accepted that this is not enough to attract commitment, top executives and high technology from most foreign defence companies.

Strengthening that argument is the government’s evolving “offset” policy that requires foreign defence suppliers to spend 30%-50% of a contract’s value on defence equipment investment and purchasing in India. This is making it more attractive for the foreign suppliers to set up joint ventures here, and is correspondingly leading to increased foreign pressure on the government for FDI above 51%.

The domestic industry, led by companies such as Larsen & Toubro (L&T), M&M and various Tata group businesses, however wants the limit raised only to 49%so that they maintain control and have a chance to grow, having been restricted till relatively recently from doing more than supply components. This view has been backed by a recent Confederation of Indian Industry-KPMG survey with 57% of respondents saying “yes” to a higher FDI limit and 26% more saying “maybe”.

You could read the full Article on Debate of FDI in the Indian Defence Industry

Svipja Technologies has always advanced the argument on this Blog to limit FDI in Defence to 26% it being a strategic sector with provision of enhancement on 'case-by-case' depending on the quality and depth of technology being offered by a foreign partner, advocacy notwithstanding. I think that is fair and logical. Does not hurt anyone except for some procedural delays.

Svipja Technologies
Courtesy: USIBC and Its News Agencies.
Note: The Article was first written on RidingTheElephant Blog and then transferred to Financial Times.

Indian Aerospace Industry Nets $185 m Worth of Projects

Aerospace Sector gets projects worth USD 185 m for component makers.

Eight new projects that will entail an investment of Rs 885 Crores were finalised during the two-day Global Investors Meet in Bangalore.

"Bangalore, being the nerve centre of the aerospace sector, gives Karnataka an edge as the preferred destination for ventures in aerospace," said Ashok Nayak, chairman, Hindustan Aeronautics Ltd (HAL). "The state also provides a well-developed IT sector which is vital for aerospace."

The state is home to the only Aerospace SEZ, set up in Belgaum by engineering firm Quest Global. The Govt. is also setting up an Aerospace SEZ at Devanahalli, near the Bangalore International Airport.

Quest, on 03 Jun , signed an MoU with Indo Schottle, a Pune-based engine components maker, to set up a facility at the Belgaum SEZ to manufacture and export engine parts.

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Credit: Business Standard.

Boeing Wants India to be Part of Its International Supply Chain

Boeing plans to bid for defence projects worth up to USD 30 b (Rs 1,43,480 Crore) in India over the next 10 years. Space, Homeland Security and UAVs are some of the big businesses the company is targeting. Vivek Lall, in an interview, to the Financial Express commented on various issues covered in the succeeding paras.

‘Over the last four-five years, we have entered the defence segment. We come into the market with aspirations to be India's preferred partner. The Apache and the Chinook CH-47 are shortly going for summer trials. The US Congress has been informed about the possible sale of 10 C-17 Globemaster strategic air lifters, potentially valued at USD 5.8 b. This strengthens the growing partnership between the two countries.’

‘The competition for the MMRCA deal is very significant for all companies involved. We have completed all of the three trials. I think it is a very strategic acquisition, considering the number of competitors, but the Ministry of Defence has done a great job and done a thorough process. We want to establish a strong India footprint, regardless of the platform sales. This is a very important dimension to our company.’

‘We have a USD 600 m plus (Rs 2,777 Crore) commitment on offsets for the P-81. A USD 4.7 m (Rs 22 Crore) contract with HAL has been signed to provide weapon bay doors for the eight P-81 long-range maritime reconnaissance and anti-submarine warfare aircraft for the Indian Navy. We have an engagement strategy for India and want to make it part of our international supply chain. We want to be partners in India's mission to become self-reliant and a net exporter of defence products. As part of our F/A-18E/F campaign, we have signed 13 MoUs with Indian companies. This conglomerate has signed up with a cross section of 38 Indian companies for offsets. We have been looking at SMEs too.’

‘India's Defence procurement process is very forward-looking. We applaud the policy. The MoD introduced banking offsets. It is a welcome addition as it incentivises the original equipment manufacturers to work with the Indian partner. The buy-and-make clause shows the government's confidence in the industry. We've done USD 40 b (Rs 1, 85140 Crore) worth of offsets in over 30 countries and never defaulted. Fifty per cent of offset is a challenge. We are now looking forward to DPP 2010.’

Boeing’s future Plan calls for ‘An increase in UAV capabilities. We will engage in discussion with the forces here in conjunction with the government. We also have Homeland Security Solutions to offer.’

‘The good thing about the FMS Route, even though sometimes it is hard to understand, is that it brings with it the full support of the US Govt. If we get that, then we can hopefully show the Indian government the commitment of the US government. This is important.’

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Credit: USIBC and Its Agencies

US High-Tech to India Stumble on Safeguards

The Communications Interoperability and Security Memorandum of Agreement (CISMoA); and the Basic Exchange and Cooperation Agreement for Geo-spatial Cooperation (BECA) are the stumbling blocks for high-tech systems transfer from the US to India.

Indian establishment possibly feels that it may compromise security in today’s Information Warfare scenario. These concerns need to be ‘prudently' addressed and negotiated.

Article by Ajai Shukla in the Business Standard on ‘US high-tech arms to India stumble on safeguards’ details various blocks in the high-tech transfers from the US.

Click: ‘US High-Tech to India Stumble on Safeguards’

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India’s First Light Combat Helicopter( LCH) Flight-Tested

India's first indigenous attack helicopter took to the skies on 23 May 2010, Sunday morning, marking the country’s entry into a league of select nations that can design and manufacture the complex rotary wing attack aircraft.

The twin engined LCH has been derived from the Advanced Light Helicopter (ALH). The LCH programme was given clearance by the government in October 2006.

The LCH, which has been developed by Hindustan Aeronautics Limited (HAL). It will now go through a series of tests and evaluations over the next few years before its planned induction into the Army and Air Force by 2014-15.

Pse Click for the full Report: India’s Light Combat Helicopter Flight-Tested

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DRDOs AGNI-II Successful

Agni II Long range nuclear capable Ballistic AGNI-II Missile has been successfully launched on 17 May 2010 (Monday) from the Wheelers Island in the Bay of Bengal off the coast of Orissa. Indian Navy ships tracked the missile and confirmed the Missile hitting target. It meets the mission objectives fully.

The two stage solid propellant based AGNI-II Missile has 2000 kms range with a pay load capability of one ton. The missile is equipped with a state-of-the-art Navigation System for taking the Missile towards its designated target. Number of Radars and electro-optical tracking systems, located along the coast of Orissa have monitored the path of the Missile and evaluated all the parameters in real-time. Strategic Forces Command carried out the launch under supervision / guidance of the DRDO.

DRDO officials and senior officers of the Strategic Forces Command witnessed the launch.

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DRDO Being Revamped

India will set-up a new Defence Technology Commission to provide a major boost to Defence R & D in the country. The Govt. also decided to go for the second generation of main battle tank 'Arjun' and 'Akash' surface-to-air missile. It is a welcome step!

Aeronautical Development Agency (ADA) will continue to design and development of combat aircraft, and continuation of the Kaveri aero-engine programme.

Management of the DRDO will be de-cetralised with a view to make it a leaner organisation by merging some of its laboratories with other public-funded institutions with similar discipline, interest and administrative system. It will form technology domain-based centres or clusters of laboratories, numbering Seven, each headed by a DG. The DGs will be responsible for time-bound delivery of the programmes.

Present DRDO Director General would be re-designated as 'DRDO Chairman' with Directors General at centres and Chief Controllers of Research and Development (CCsR&D) at the HQ DRDO reporting to the DRDO Chairman, the head of the organisation.

Budget for rejuvenating research should be 5 per cent of DRDO's budget for a period of three years.

The new Commercial Arm of DRDO would be a Private Limited Company with a seed capital of about Rs 2 Crore. It would deal only with spin-off products and technologies meant for civilian use. It will not take up any manufacturing activity, public or private sector industry will do it.

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Indian-designed Data Link for P8I of Boeing for the Indian Navy

BEL has begun supplying communication technology to Boeing to install in P-8I long-range maritime reconnaissance and anti-submarine ac it is building for the Indian Navy.

BEL delivered the Indian-designed Data Link II, a communications system that will enable exchange of tactical data and messages among Indian Navy aircraft, ships and shore establishments. Boeing will install the system on P-8I at its facility in Renton, Wash.

India inked the $2.1 billion deal with Boeing for eight customized P-8A Maritime Multi-Mission Aircraft, designated P-8I, in January 2009. India will get its first P-8I in late of 2012 or early 2013, with delivery of the remaining seven aircraft expected by 2015 -16. India is the first international customer for the P-8 aircraft.


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Credit: DefenseNews

Time and Cost Overruns in DRDO Projects

DRDO will use a consortium approach for design, development and fabrication of critical components, Project Monitoring Reviews and joint funding by the military services to try to overcome delays in Defence Projects/Pgmes, as per the Indian Defence Minister.

Some of the DRDO projects that have missed their original timelines include:

• The LCA Full Scale Engineering Development (FSED) Program – Phase II was approved in 2001. It has overshot its budget by almost 100%. It was to be completed by 2008; the latest probable completion date is 2012.

• The Full Scale Engineering Development Program for the Naval Light Combat Aircraft (LCA-Navy) also overshot its budget and timeline by four years, from 2010 to 2014.

• The Interception, Monitoring, Direction Finding and Analysis System (IMDFAS) – Divyadrishti. Started in 2002, it was to be completed in 2008. The new date for completion is 2010.

• The Integrated Guided Missile Development Program (IGMDP), begun in 1983, was to be completed by 1995. The revised date is 2010.

• The Kaveri Engine for LCA was approved in 1989 with a completion date of 1996. The latest schedule is 2010.

Reasons for delays and cost escalation include “technical/technological complexities; sanctions imposed, increase in scope of work, creation of more infrastructure, test facilities and their maintenance; change/enhancement in user requirements during development; deviations/failures during testing; [and] extended and long-drawn user trials.”

The R & D in any country does take time. This should not unduly alarm Us. We should however project realistic timeframe and funding needs at the time of project /pgme approval. Tendency in the Organisations to get the projects approved ‘at low outlay and least project timeline’ needs to be checked with a firm hand.

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Credit: Aviation Week.

National Seminar on Defence Acquisition by the IDSA

There are many stakeholders in India’s defence industrial base and acquisition, but the Armed Forces remain central to it. The Forces have valid concerns about time-bound delivery of arms and systems to them. Any delay in any supply is counterproductive and thus has to be checked.

As per me, Defence Acquisition in India is plagued with ‘lack of transparency’, ‘deal money or corruption’, and ‘undue advocacy by vendors and their team’, as elsewhere. Cumulative effect of this results in delays. We need to check this.

The existing Acquisition Procedure(s) with sound trial system and ‘dispersed’ indep checks and balances, is considered highly adequate provided we lay down realistic timeframe, and adhere to it. Lapses in failing the timelines must be made accountable, and punishable.

There is a need for an integrated process and time-bound smooth acquisition. This does not mean creating yet another organisation /agency. It could happen from the present ‘desks’; just move integratedly. Seminar Summary can be read at:

http://idsa.in/event/NationalSeminaronDefenceAcquisition2010

We need not justify our ‘failures’ to deliver in-time, but endeavour to handover the right equipment at the right time to the Forces.

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Mahindra-BAE Defence JV Gets Operational

Defence Land Systems, India, a 74:26, JV between Mahindra and BAE Systems was declared operational on 04 May 2010 at its first Board Meeting. Mr Anand Mahindra was elected as Chairman of the JV.

The Company starts functioning with existing products, business and facilities, and the present Team with Brigadier (Retd) Khutub Hai as MD & CEO .

"It is intended that the Company will become a National Centre of Excellence for design, development, manufacture, final assembly, integration and test of artillery systems in support of the Indian Army's Field Artillery Rationalisation Plan and upgrade programme for artillery," a press release said. The company is focused on the manufacture of up-armoured light vehicles, specialist military vehicles, mine protected vehicles, artillery systems and other selected land system weapons, support and upgrades.

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India Commissions Its First Indigenous Stealth Warship, INS Shivalik

India commissioned its first indigenously-built stealth warship, INS Shivalik with sophisticated systems integrated ,the first of the three-ship Project-17 frigates, at Mazagon Docks (MDL), on 29 Apr 2010.

The 143-metre-long warship, with 6,000-tonne displacement, has "versatile control systems with signature management and radar cross-section reduction features." The other countries having the capability to build stealth warships are the US, the UK, Russia, France, China, Japan and Italy.

The Navy currently has a 130-warship which includes an aircraft carrier, twenty landing ships, eight destroyers, twelve frigates and sixteen attack submarines.

Shivalik class warships can deal with multiple threat environment and are fitted with weapon suite comprising both area and point defence systems. It has sensors for air, surface and subsurface surveillance, electronic support and counter equipment and decoys for 'soft kill measures'.

Shivalik marks Indian capability in design and development of indigenous vessels.

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MMRCA, India

IAF is presently conducting flight trials for the MMRCA Jets. The bids are to expire on April 28. The MOD has asked manufacturers to extend offers for an additional year with the option of revising their price, if warranted, as per report.

The Jets need to go through field trials in all the terrain obtaining in the country. It is a normal process to ask for extension of the validity of the bids by a few months if delay in contract signing is envisaged. One year extension should suffice.

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Indigenous Anti-Submarine Corvettes for the Navy

India launched its first anti-submarine warfare corvette built by GRSE, Kolkata, on 19 Apr 2010. It would be commissioned in 2012. Four ships of this class are under construction, other three are expected to be commissioned by 2015.

The corvette is a small, fast-moving ship with 3,100-tonnage. It will be fitted with the latest indigenous sonars. The torpedo tubes, and scutter (torpedo decoys) launchers contribute to its anti-submarine capability. In addition, the ship will also be equipped with vertically launched Point Defence Missile System (PDMS) and Close- In-Weapon-Systems (CIWS) such as AK 30s and Super Rapid Gun Mount (SRGM). The ship is equipped with decoy system, Kavach which counters the threat of various anti-ship missiles.

At present the Indian Navy does not have any anti-submarine corvettes. It uses bigger ships like frigates and destroyers for anti-sub ops.

Svipja Technologies.

IDSA Defence Acquisition Seminar Special, Jan 2010

'Our defence forces require timely and cost effective acquisition of defence equipment to enable them to meet any challenge to the country's security. The emerging security scenario is very challenging. Nobody can say what will happen in some of our neighbouring areas. India will have to be fully prepared, our armed forces will have to be fully prepared to meet any challenge from any quarter and they must be able to protect every inch of Indian territory' said the Defence Minister in the IDSA Defence Acquisition Seminar in Jan 2010.

Defence equipments are technology intensive involving heavy investments. Moreover, the equipment remains in an inventory for a long time. Acquisition of defence equipment requires expertise in diverse fields from technical to administrative such as military, technology, industry, market research, contract management, project management, administration and policy making. Defence acquisition is, therefore, a time consuming and a cumbersome process

It is therefore essential that we all are conversant with India's Defence Acquisition Process to make it happen expeditiously but correctly.

Pse read the Defence Acquisition proceedings compiled by the IDSA in its Special Issue on the Defence Acquisition: http://idsa.in/jds/4_1_2010

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Arty Guns for India

Trials for procuring 155 mm, 52-calibre towed guns began in summer 2002, when the Ministry of Defence (MoD) began evaluating three guns from BAE Systems, Soltam; and Denel. Five rounds of trials, conducted in 2002; 2003; 2004; and 2006; reached no conclusion. Denel was blacklisted for corruption in September 2005; the other two guns did not meet the army’s standards.

A fresh tender was issued in 2008.

Indian Field Howitzer-2000 (IFH-2000), developed by Singapore Technologies Kinetics, or STK joined-in the tender. In 2009, STK was 'blacklisted' for corruption after the arrest of the Chairman, OFB. STK has now been asked to field its gun for trials.

Guns under trials are to be from BAE (Indian Partner M & M), and STK (Indian Partner Punj Loyd). The Order for 155 mm Gun, 52 Calibre towed gun, is for about INR 8000 Crores.

Pse read the full Report from Business Standard on: Arty Guns

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Defence Procurement: A Serious Matter to Give Way to Advocacy

There is ‘understandable rhetoric’ in the media about Indian Defence Procurement. It is unsettling in a sense. Creates confusion all round. It is to the credit of DAC/MOD that it does not let itself swayed in a hurry – after all defence procurements are not be made in a jiffy. We need to be pragmatics, accountable and true to the ‘nation’, personal gains notwithstanding.

India is one of the largest armed and systems importers in Defense.

The MOD is likely to release a comprehensive Defense Production Policy (Drip), on the lines of the DPP that to strengthen the country’s Defence Industrial Base (DIB). The DPrP and DPP will give a new impetus to indigenization in line with our goal of near- self-reliance.

As per the DPP, The Govt. is willing to fund up to 80% of the development costs of some systems.

Also, the draft Long Term Integrated Perspective Plan (LTIPP) up to 2022 is under making.

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http://www.svipja.com/

Consolidated FDI Policy India, effective 01 Apr 2010

FDI in Defence Industry is permissible up to 26%, under Government route subject to Industrial license under the Industries (Development & Regulation) Act 1951 and the following conditions:

Licence applications will be considered and licences given by the Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, in consultation with Ministry of Defence.

Cases involving FDI will be considered by the FIPB and licences given by the Department of Industrial Policy & Promotion in consultation with Ministry of Defence.

The applicant should be an Indian company / partnership firm.

Government decision on applications to FIPB for FDI in defence industry sector will be normally communicated within a time frame of 10 weeks from the date of ack.

Consolidated FDI Policy India, 2010

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India for more AEW ac

India has sought RFP from Israel Aerospace Industries(IAI) to supply another three Ilyushin Il-76-based airborne EW ac.

The deal could be worth $1.5 billion. It follows India’s previous order for three IL-76s modified by IAI's Subsidiary, Elta Systems. India is likely to receive its second AEW ac in mid-2010 under the first contract, with the third to follow next year.

The ac is deployed for tactical surveillance, and EW Int missions.

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Credit: USIBC & Its News Agencies.

DRDO Launches Aero Programme With Civil Industry

Gas Turbine Research Establishment (GTRE), HQ Bangalore, a DRDO lab, is the nodal agency to spearhead Rs 100 Crores initiative to fund R&D projects in the area of gas turbines. Under this venture, aero R&D projects for investments of Rs 50 lakhs to Rs 5 Crores would be considered for funding. Rs 78 Crores have already been sanctioned. GRTE would support 40 to 45 such projects.

The initiative is expected to fuel "coherent directed research" in the area of gas turbines, DRDO said.

DRDOs Approach takes into account futuristic national programmes. It would support, encourage, nurture, monitor and exploit the design, research, development and manufacturing capability of academic institutions and R&D establishments, industries and other think tanks to carry out frontline work in bringing out next generation gas turbine engine system.

The programme envisages participation of 100 R&D Centres and 1,000 scientists, engineers and technicians.

High-Tech MSMEs should come forward to join the programme.

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Indian Defence Industry Development: INS Chennai Launched

India's indigenous naval destroyer, INS Chennai , built in Mazagaon Docks , Mumbai, under the code name, Project 15 Alpha, has been launched on 01 Apr 2010 in Mumbai by the India’s Defence Minister.

The destroyer is the third of the Kolkata class warships built at Mazagaon Docks and displaces more than 6,000 tonnes. Its weaponry is entirely indigenous comprising 16 Brahmos missiles and torpedos. The warship is also equipped with the indigenous Humsa sonar and Ellora EW suite, and carries two helicopters on board.

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Indian Defence Industry Development

Air Force to Get Brahmos. The Govt. has cleared Rs 11,600 Crore Agreement for formal induction of the Brahmos missile into the IAF. It has also cleared two more regts of the supersonic land attack system to the Army.

The missile is already in service with the Navy and Army. This is the first time that a surface-to-surface version of the missile will be inducted into the IAF.

Brahmos Aerospace, a joint venture between the DRDO and Russian company. This is to develop and manufacture of advanced versions of the cruise missile that can be launched from aircraft, submarines, ships and land. Brahmos is capable of attaining speeds between 2.5 and 2.8 mach, it has a range of about 290 km .

Indian Light Combat Helicopter(LCH). India has flight-tested a prototype of the LCH successfully.

"The maiden test flight of the LCH on 29 Mar 2010 was successful. Though it was a short haul lasting about 20 minutes, the performance was good," said the CMD, HAL.

The 5.5-tonne attack helicopter copter is an Air Force derivative of HAL's Advanced Light Helicopter (ALH), known as Dhruv. The LCH can operate at altitudes up to 6,000 m. It has Shakti engine, developed by HAL in partnership with Turbomeca, France.

HAL plans to supply about 150-175 units of the LCH to the Indian Air Force (IAF) and Indian Army which already operates the military version of Dhruv for various functions.

The LCH will be equipped with advanced weapons systems , helmet-mounted targeting system, EW Systems. It will incorporate a number of stealth features and crash-worthy landing gear for better survivability. It will have a narrow fuselage, with two crew stations.

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100% FDI in Defence Sector

It could be a 'wishful thinking' to reach 49% figure and a 'red herring' of a special variety etched differently. MOD remains firm on 26% FDI generally enhanced on case-to-case basis.

Sukhwindar
Svipja Technologies

India to Get Second AWACS Today

India will receive another Israeli-made Phalcon Airborne Early Warning and Control System (AWACS) today, giving it the second 'eye in the sky' for enhanced surveillance.

The second AWACS will arrive in Jamnagar in Gujarat and will be based in Agra.

With the arrival of the second AWACS, officials said the IAF can keep an eye on both the Eastern and Western Fronts.After the induction of the third system, India would be able to virtually cover the whole nation at one go.

The system, primarily used for detection of incoming hostile cruise missiles and aircraft from hundreds of kms away, can also direct air defence fighters during combat operations against enemy jets. It also helps detect troop build up across the borders.

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Credit: PTI.

Indigenous Effort in A & D

India's Public and Private Sector would have a much bigger role to play in the production of defence equipment in the near future if the country is to achieve near-self-reliance, Defence Minister A.K. Antony said on 17 March after commissioning the ICGS ‘Vishwast' at the Goa Shipyard Limited. Our desire is to strive for more self-reliance in this critical area.

“We should reduce reliance on other countries and make more space for Indian industries in both the Private and Public Sectors,” he said.

The bottom line is, while underlining the growing importance of the Private Sector in the area of defence equipment production, it would not mean the weakening of the Public Sector. Private Sector production in the A & D is to be add-on. Defence equipment supply to other friendly countries should also be on our agenda.

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Credit: The Hindu.

Transparency and ‘Value Receipt’ in Offset Projects

Offsets are to flow in India in the next 5-10 years. This could give rise to ‘scandals’ if not handled prudently. It is important that offsets drive value to the Buyer in a transparent and accountable manner without compromising professional integrity in the Offset System which includes all the ‘players’ both in India and abroad.

Offset projects should be screened with the same diligence as the main contract. This would need an ‘organisation’ that should be capable of conducting ‘due diligence’ on a number of offset projects, large number in most cases, with each project evaluated and valuated with ‘buyer-country-fit’ to get real value of the offsets.

All ‘leakages’ need to be plugged while evaluation is under way.

DOFA-MOD and DAC have to ‘mediate’ effectively. It is no secret that most of the offset agencies quite often are not very experienced to handle the offset projects. If required, professional help from ‘neutral experts’ can be taken. Defence Industry Units, both at home and abroad, are quite burdened with their routine schedules; offsets are extra work, need extra professional staff.

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‘Relax Hi-Tech Export Control’, India to US

In the 7th High Technology Cooperation Group held in Mar 2010, India again asked the US to liberalise its export control regulations which restrict ToT to India. India feels that there could be no better partner than India to galvanise its High-Tech.

"We see this as yet another area where Indian and US interest converge and, as a reliable and strategic partner, we look forward to seeing enhancement of trade in such goods and technologies between our two countries and removal of remaining Indian organisations from the Entity List. It is anomalous that a body like ISRO, which is developing several collaborations with NASA, should continue to be on this list," Nirupma Rao, Indian Foreign Secy, said in the Group.

With the US Government's recent decision to undertake a thorough export control review to increase High-Tech exports, Ms Nirupma Rao said, "We noted the announcement of a National Export Initiative - to reform the Export Control System for American strategic, High-Tech Industries, so that their competitiveness is enhanced without compromising the country’s national security”.

India needs a close co-operation with the US in High-Tech Strategic Areas.

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Indian Defence Industry Development

LCA. India is likely to induct the LCA into the Air Force by March 2011, as per the Indian Defence Minister A. K. Antony. LCA is an advanced technology, supersonic, multi-role, air superiority fighter, single-seat, single-engine, lightweight, all-weather ac designed for air-to-air, air-to-ground and air-to-sea combat roles. The IAF has already inducted 20 LCAs at the Operational Clearance Stage. They need more than 200 LCA-type ac.

Nag (Cobra) Missile/ATGM. It is a third-generation (Gen-3) - fire-and-forget- missile. Its optical guidance system is virtually jam-proof. It will be inducted into the Indian Army shortly. Has a range of 500 m to 3000-4000 km. Can be fired at night. Developed by the DRDO under Integrated Guided Missile Development Programme (IGMDP) which was initiated in 1983. The IGMDP has the Agni and Prithvi ballistic missiles; the Akash and Trishul anti-aircraft missiles; and the Nag ATGM to its credit.

Sukhwindar

Indian Defence Industry Development

Issues are falling in place after the recent Def Expo 2010. The Govt./MOD has made its stand clear on certain matters. Some of the important developments are listed in the succeeding paras.

FDI in Defence. As articulated in this Blog from the very beginning, the Govt. may allow higher FDI than 26% on case-to-case basis, but the 26% limit remains.

Basic Trainer Planes. India is to procure 75 Basic Trainer Planes. As per Reports, RFPs have been floated to EADS PZL (PZL-130-TC-11 Orik), Raytheon (T-6 Texan), Grob Aircraft Company (G-120TP) , Embraer’s Tucano, Pilatus (PC-7 or PC-/9), Finmeccanica (M-311), and Korea Aerospace Industries (KT-1). Later, 106 ac will be built by Hindustan Aeronautics Limited (HAL)”.

Russia-India Co-operation. Are likely to sign 4 b USD defence contracts. These are to be three contracts incl retrofitting the Admiral Gorshkov aircraft carrier, possibly during Russian Prime Minister Vladimir Putin's visit to India.

NBC Simulator by Navy. The Navy is setting up a NBC defence training facility for its personnel. Request for Information (RFI) has been issued.

Brigadier(Retired) Sukhwindar Singh
http://www.indiandefenceindustry.com/
(An e-Hub for India Defence & Aerospace Ecosystem)
Credit: USIBC and Its News Agencies.

TCS to BEL?

There is a report in the Business Standard today captioned 'MOD Sidelines Pvt Sector in Crucial Defence Project'. There is a logic in engaging DPSUs, or OFB for sensitive projects though the defence sector participation is open to the Private Sector. Reasons are not difficult to understand. The MOD on case-to-case basis could decide the project clearance. It is therefore not very difficult to appreciate why should BEL be in the lead for getting the TCS project.

BEL can be the main integrator with technology taken from the DRDO and Others incl from abroad. Also MSMEs get their share as vendors of components and subsystems. BEL as a DPSU is best placed to evaluate security needs of our main stay comn system like TCS, and monitor in various stages of its integration.

In fact in EW-intensive battle environments, TCS procurement ‘must’ be categorised as, “Make — Strategic, Complex and Security Sensitive Systems”, and funded accordingly.

If the decision comes through the way it is being reported in the Press, it would be highly pragmatic – no one should be very ‘doubtful’ of the DPSUs and the DRDO in certain abilities, or technologies.

Defence Projects, as I have said elsewhere on this Blog, are 'not a purely business decision’.

Sukhwindar

India Defence Budget: 2010-2011

"Secure Borders and Security of Life and Property Fosters Development”. The Defence Minister proposed to increase the allocation for defence to Rs.147,344 Crore. This includes Rs.60,000 Crore for Capital Expenditure. Any additional requirement for the security of the nation will also be provided for.

The allocation for OFB has been slashed by Rs.1,835 Crore to Rs.1,999 Crore against Rs.3,834 Crore in the previous fiscal.

The Defence Research and Development Organisation (DRDO) receives a hike of Rs.881 Crore to Rs.5,260 Crore from its revised allocation of Rs.4,379 Crore in the FY.

India Defence Budget 2010-2011

Training Capsule ESM: e-SP2

Different Capsules would be needed for Officers, and PBOR. Major coverage would be:

1. Indian Defence Industry Infrastructure, both Govt. and Private.

2. R & D Infrastructure incl DRDO, IITs/IISc and Others.

3. Technology needs of the Armed Forces with specific reference to gaps to be filled.

4. DPP, Offset , Security and Other Regulations /Policies relating to Defence Procurement and Information.

5. Business Plans and Due Diligence Issues.

6. Sales and Marketing knowledge.

7. Documentation.

8. To be e-Savvy to work on the e-Hub for India Defence and Aerospace Ecosystem, http://www.indiandefenceindustry.com/

9. Any Other Module considered essential.

The above subjects could be detailed further to make ESMs/ex-Defence Professionals useful to the Defence Industry. Our Welfare and ESM Resettlement Organisations incl DGR should gear-up accordingly.

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(Development of Defence & Aerospace Consultants)

Foreign Equity Cap and Indo-US Defence Industry Co-operation

India needs state-of-the-art high-tech for its Defence & Aerospace Industry. GoI has capped FDI at 26% in the Industry with provision to increase it on case-to-case basis. The US advocates FDI limit to increase to 49% for the defence co-operation. This view is being 'drummed' for the past 3-4 Years. Possibly both the Govts have reasons to articulate their stands. Can't it be resolved prudently & amicably for a win-win?

Issue like this should not derail or limit the co-operation which has started 'cautiously', as it is.

Another important perspective is the issue of enhanced role of the Private Sector in high-tech Industry in India. The US officials want the US-India CEO Forum "to focus on how the Govts can work with the Private Sector to really capitalise on the energies, ideas, and practical experience of the Private Sector".

The US also wanted to strengthen the Private Sector's role throughout its dialogues with India -- in agriculture, ICT, health, and education, to name just a few, Robert O. Blake, Asst Secy of State for South and Central Asian Affairs, told this to the Washington International Business Council on 24th Feb. Read the full Report:

US Wants India to Raise Foreign Equity Cap in Defence

Brigadier(Retired) Sukhwindar Singh
www.IndianDefenceIndustry.com
(An e-Hub for India Defence & Aerospace Ecosystem)
Credit: The Economic Times.

Defence Offsets India: A Close Review

We have all stakeholders- OEMs, Govts incl the Armed Forces, Industry, Public & Private, DRDO and Other Research Organisations, MSMEs, Industry Associations & Chambers, and Others – present their advocacy in the past 2-3 years eloquently with no hold barred. Everyone has a ‘coloured’ approach.

Buyer Govt., India, has a clear mandate to develop its Defence & Aerospace Industrial Base, but others would attempt to ‘play safe’. It is here that strong resolve and perseverance to build the domestic industry is needed, and all negativity snubbed.

We could slate our need, strategic-techno-commercial, as under:

1. Technologies and Engineering Practices that no country would be willing to part with in order to retain its technological leadership in the defence / industrial domain, such technologies would need to be developed in-house through DRDO/IITs/IISc/ Other Research Ests with major Govt Funding, with / without offset partnership.

2. Technologies and Engineering Practices that are ‘critical’ but can be shared with ‘friends’, and 'allies' by OEMs for various benefits, these could be co-developed through FDI Route/Domestic Investments/Govt / Offset Funding, etc.

3. Designs, Engineering Practices and ToT that come necessarily as part of the contracts in terms of licensed production in India need NOT be separately priced. This could form part of the Product Quote, built in the RFQ. Such a manufacturing and subsequent procurement by the OEM/Its Agencies forms part of the offset fulfillment, gets them offset credits. Indian MSMEs too benefit by this process greatly.

Export clause for products/services manufactured in India irrespective of IP ownership, ownership stake in the JVs in India , Tax Issues relating to domestic consumption and export of such goods to OEM Country(ies) and Others need to be amicably and diligently worked out in the contracts.

We should approve only those offset credits that build and enhance our Defence & Aerospace Industry. How it is to be shared between Public and Private Players including MSMEs is a sensitive decision which surely needs strategic vision.

Brigadier(Retired) Sukhwindar Singh
http://www.indiandefenceindustry.com/
(An e-Hub for India Defence & Aerospace Ecosystem)