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.

Svipja Technologies
(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)

Def Expo 2010: ‘Self-Respect’ comes from ‘Self-Reliance’

India has fairly large-sized Security Forces to maintain its integrity with hostile environment in the South Asia and not very conducive environment for its development & growth in the rest of the world. Do we let India realize its potential, is the question to be answered by the developed nations, and how would it affect Us? This should be the main ‘Term of Reference’ for developed nations.

We have small and large advocacy organizations operating in India which are always happy in ‘Doing Down Indian Achievements’ for reasons best known to them. 30% of Us below poverty line, corruption, slow Govt. processes, etc are well drummed, but what is not appreciated is ‘middle class and above’ in India, tone of young Indians to achieve heights, its technological leaps, improvements all around despite certain problems, etc. It is a kind of Psy War unleashed on Us by interested parties with connivance of some of Us, even intellectuals ‘hired’ to do Us down --- a dangerous trend.

GoI has always had a vision to achieve ‘near-self-reliance’ in various fields. It has achieved this with mixed success. Security Industry, Defence & Aerospace specifically, has not reached the objective for various strategic and tactical reasons. Our focus to achieve high degree of self-reliance in this Segment must remain – a message delivered loud and clear in Def Expo 2010.

Policy Initiatives like ‘Buy’, Buy & Make (Indian)’, and ‘Make’ need implementation in all its facets. ‘Tainted Advocacy’ by Indians must stop for larger good whether You are part of an Indian or a foreign firm. Look at the development of the Indian Industry pragmatically in keeping with the ‘strategic needs’ of the country, of course with business sense. All this will help Us retain our independence in thought and action.

National Security is Not a Pure Business Case, Nevertheless Profits Flow.

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

Def Expo 2010: Offset Policy Implementation

India’s defence offset policy would be the key driver for growth and modernisation of the defence industrial base, says the Govt. “The industry therefore will evolve in sync with the overall development, leading to progressive policy initiatives coming up in future,” said Minister of State for Defence MM Pallam Raju.

Raju outlined that offset proposals worth 49,000 crore are in the pipeline. Given the complexity involved in supervision of offset, an administration infrastructure has been put in place.

Public Sector alone will not be able to absorb the offset that are to be generated in future, he said. Offset, therefore, give domestic players an opportunity to enter the sensitive defence industry. The Govt. is also planning to extend tax sops enjoyed by exports firms to domestic players as well. Also, combining Public and Private Sector skills that will help achieve higher degree of defence indigenisation is also being mulled upon.

According to Raju, the role of SMEs has been a testimony of being a backbone of the defence industry and its role is vital for the self reliance of the industry. Urging the industry to gear up, the Minister earmarked the prospects of Buy and Make (Indian) category which facilitates JVs with foreign OEMs, strengthening R&D and technology up-gradation among others.

A strong defence industry will help India leverage its Buying Power, expanding technological base, facilitating global tie-ups and JVs. This will be aimed at reducing defence imports and promoting indigenisation, Raju said.

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

Def Expo 2010: Inaugural Message

Point to Remember


Sukhwindar

Def Expo 2010: Offset Issues Special

A No. of Seminars and Wksps are scheduled on Offsets During the Def Expo 2010 to advocate & understand issues relating to the Defence Offsets in the Indian Context.

Any 'imported model' of offsets will not work for India for variety of reasons. We need our own model with a view to realise 'near-self-reliance' in Defence - and we are on course. My views on certain 'hotly' debated / to-be-debated points on defence offsets are discussed briefly in the succeeding paras, advocacy by certain interested parties notwithstanding.

FDI: It relates to Corporate Governance and how much equity in the JV Indian Corporates can hold with their present state of fund position in strategic Indian Industry like A & D. I feel 26% present limit is adequate with proviso to enhance it on case-to-case basis. This provides due flexibility in structuring any JV.

ToT: It is extremely difficult to valuate technology, but we do have models and experience to valuate the ToT realistically. ToT can be paid upfront, and also its cost component built-in the main contract for manufacturing in India knowing fully well that direct offset obligations would need to be discharged. I think with 'open and pragmatic' negotiations, this could be tackled.

Multipliers: This could be revisited in case of critical technologies. ToT and Multipliers are related to an extent.

Banking: This could be revisited. Trading of banked offsets could be permitted after certain period, say 4 - 5 years.

Indirect Offsets: This could be revisted, may be after gaining experience in direct/quasi-direct offsets. We could consider dual-usage products/services and certain infrastructure projects which have a direct bearing on India's Defence.

Defence Offsets India Fund: This needs to be created. Could act as a 'pool' for inbound and outbound offsets. It is not yet on the 'screen' anywhere.

Tax Structure: To be such NOT to put indigenous defence industry at disadvantage in competition.

Indian Defence Industry could be enhanced through offsets in line with our strategic objectives provided Foreign Suppliers and their Governments see India as their long-term strategic partner, a credible design & supplier base with substantial 'inter-dependence' created with the Indian Defence Industry. At this juncture, India Defence is a 'Buyers Market', we must lead to a win-win.

Sukhwindar

Indian Defence Industry Development

HAL-Boeing: Boeing has signed a contract worth 4.7 m USD with the HAL for supplying equipment for the eight P-8I maritime reconnaissance aircraft contracted for the Indian Navy. The Contract is part of the 640 m USD Offset requirements to be fulfilled by Boeing for the USD 2.1 billion P-8I deal signed in 2009.

Anjani Technoplast-BAE: BAE Systems has tied up with Anjani Technoplast to supply 59,000 bullet-proof jackets to security forces as part of a Govt. contract that is expected to cost Rs 160 Crore. Besides the jackets, Anjani Technoplast would manufacture vehicle armour using Tensylon, a lightweight ultra high molecular weight polyethylene material developed by BAE systems.

BEL Plans to Expand EW Capability: BEL is setting up a Central Research Laboratory (CRL) which will focus on ‘complex’ research on futuristic technologies in the area of EW. BEL already has two CRLs one each in Bangalore and Ghaziabad. The Lab will focus on both EW and EO Warfare. The EW business of BEL contributes close to 17 % to the company’s revenues of about Rs 4,800 Crore. BEL wants to double the EW/EO business in two years.

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

Mahindra and BAE Systems to Invest 21.25 m USD in Defence JV

Mahindra & Mahindra Ltd and UK's BAE Systems today said they will inject a total of USD 21.25- million (Rs 99.4-crore) over a three-year period into their joint venture company, Defence Land Systems India.

Defence Land Systems India will be HQ in New Delhi and will manufacture vehicles at a purpose-built facility in the NCR.

The JV Company will manufacture Axe high mobility vehicle as well as up-armoured and bulletproof Scorpios, Boleros, Rakshak, Rapid Intervention Vehicles and the Marksman light-armoured vehicle.

It would also develop a mine-protected vehicle specifically designed to meet the needs of the Indian armed and paramilitary forces.

Credit: The Economic Times

Renewed Effort of L&T and EADS for Defence JV

Larsen & Toubro and the Franco-German A & D Group, EADS, are working on a new equity structure to revive their proposed JV which was earlier rejected by the Govt. on the ground that it would exceed the 26% cap on FDI in the Defence Sector.

L&T will now hold a 74% stake in the venture, leaving the remaining 26% for EADS. The JV intends to make electronic warfare systems, radar instruments and avionics.

The proposed JV is expected to earn Rs 2,500 Crore in revenues over the next five years. L&T, a supplier of critical systems to India’s defence forces, currently earns revenues of around Rs 400 Crore from this business.

The JV will have a manufacturing facility at Talegaon in Maharashtra. L&T is investing Rs 100 Crore in the Talegaon unit.

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

Tejas Would be Operationally Cleared by end-2012

The indigenously developed Light Combat Aircraft (LCA), Tejas, is likely to be operationally cleared by end-2012.The ac has completed trials in all weather conditions with over 1,000 sorties. Initial operational clearance is likely by end-2010. Indian Defence Minister said this after witnessing a flying display of the multi-role supersonic aircraft recently.

Hindustan Aeronautics Ltd (HAL) has already started the limited series production to deliver eight fighters to the IAF, which has placed an order for 20 aircraft to begin with.

The Cabinet Committee on Security (CCS) has recently cleared Rs.8,000 Crore (Rs.80 Billion) for further development of the LCA's Air and Naval Versions, and a New Engine. Presently it is kitted with GE-404 engines.

Aeronautical Development Agency (ADA) has designed and developed the LCA with HAL as its Partner. Tejas is the smallest, lightest, multi-role supersonic fourth generation aircraft in the world.

It is expected to be inducted into IAF by 2014.

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