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

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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.

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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

Svipja Technologies

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.

Svipja Technologies
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.

Svipja Technologies

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.

Svipja Technologies
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.

Svipja Technologies
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.

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)

India Developed Naval Gun Fire Control System (GFCS)

India has developed a new generation multi-sensor, multi-weapon defence system against enemy targets on board naval ships. The state-of-the-art "Gun Fire Control System" (GFCS) developed by Bharat Electronics Limited will be installed on board the P-28 class of ships.

"The GFCS is a quick reaction, multi-sensor, multi-weapon, short/medium/long range defence system against air, surface or shore targets on board naval ships", a senior official of the Bangalore-based Navratna defence PSU told PTI.

The GFCS is designed to provide air, surface or shore defence with 76 MM and 30 MM guns. Its purpose is to locate a hostile target using a radar or video tracker, acting on early warning search radars and to track its approach with high accuracy, in order to obtain reliable target data.

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

US Clears 145 x M777 Howitzers for India

The US Congress has cleared to sell 145, M777 Howitzers to India in a deal worth 647 m USD.

It is the light-weight towed Howitzer with Laser Inertial Artillery Pointing Systems (LINAPS).

The deal will include warranty, spare and repair parts, support and test equipment, publications and technical documentation, maintenance, personnel training and training equipment, US government and contractor representatives' technical assistance, engineering and logistics support services, and other related elements of logistics support, the US Defense Security Cooperation Agency said in its notification.

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

DRDO Signs Six MoUs with Pvt Industry Players

FICCI has established a Centre for Technology Commercialisation to provide an organized structure to link the mind to the market. The Centre will be supported by the IC2 Institute at the University of Texas at Austin. All activities of technology assessment and commercialization at FICCI could be undertaken as part of this Centre.

The DRDO-FICCI’s Accelerated Technology Assessment and Commercialisation (ATAC) Programme reached a new landmark on Monday with the signing of six memorandum of understanding (MoU) between DRDO and leading industry players.

The industries include Jyothy Laboratories and Alkali Metals for multi-insect repellant based on DEPA; Jyothy Laboratories for woolcare ; Vantage Security for explosive detection kit; Deltapure Water India Ltd. and Ariva Group for RO based Water Purification System; MGM Associates for High Altitude Pulmonary Oedema (HAPO) Chamber and GSC Glass for electrochromic window.

DRDO Signs Six MoUs with Pvt Industry Players

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

America Impatient Over Pending Defence Agreements

The United States, according to credible recent press reports, is training Special Forces to “grab” Pakistan’s nuclear weapons if they seem about to fall into terrorist hands. And if the Indian Army is to play a role in the operations, here is how it might play out.

While US Special Forces are heli-dropped onto known Pakistani nuclear missile sites, and the US Air Force suppresses Pakistan’s air defences, the IAF’s newly acquired C-130J Hercules aircraft take off from Udhampur, flying Indian commandos to an unused airstrip near Kahuta which American Green Berets have temporarily secured. The Hercules’ electronic jammers blind Pakistani radars before entering Pakistani airspace; the Green Berets give the all-clear to the airborne Indian commander on secret frequencies that cannot be intercepted or jammed.

The Hercules lands in pitch darkness, satellite navigation directing the aircraft precisely to the landing site. Indian assault teams spill out to secure and deactivate the endangered nukes.

But there is a hitch……………………

Read Full Article: America Impatient Over Pending Defence Agreements

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

US: Partnership with India is Critical and Very Important

"It should be clear that we continue here at the White House and in the National Security Council to view the partnership with India is critical and very important," Mike Hammer, White House spokesman said yesterday on the occasion of US President Barack Obama completing one year in office.

In the words of Secretary of State Hillary Clinton, it launched third phase -- Indo-US 3.0 -- of relationship with New Delhi.

For Indo-US relationship, one of the key features of the second year of Obama Administration would be Obama's visit to India sometime this year.

President Obama had made priority in the first year of his Administration to a develop close partnership with India to build on the previous administration's work.

Sukhwindar
http://www.svipja.com/
Credit: PTI.

DRDO Flight Trials of Laser-Guided Bombs (LGBs) for the IAF

India , on 21 Jan 2010, carried out two successful flight trials of laser-guided bombs (LGBs) for the IAF to test the effectiveness of the guidance and control systems at the Chandipur integrated test range in Orissa.

"Two flight trials were conducted today at Integrated Test Range, Chandipur, to test the effectiveness of the guidance and control systems of the LGBs," a Defence Ministry release said here.

IAF officers flew their aircraft and released the LGBs as per prescribed standard operating procedures. "On-board systems in both the trials worked satisfactorily and the mission objectives have been met," the release added.

Bangalore-based Aeronautics Development Establishment (ADE) has developed the guidance kit for 1000-pound LGBs and these are designed to improve accuracy of air-to-ground bombing by IAF.

Credit: PTI News.

India Raises Defence Export License Concerns with US

India raised serious concerns relating to defence trade with the US, including export licence restrictions on its PSUs and DRDO by including them in the American 'Entity List'.

During a meeting between Defence Minister A K Antony and US Defence Secretary Robert Gates, India also informed the US that its bilateral defence relations should grow from seller-buyer to a comprehensive cooperation rooted in transfer of technology and co-production of equipment and weapons.

Indicating its hesitation in going ahead with certain defence agreements as a precursor to significant defence co-operation, it stressed that these pacts, including Communication Inter-operability and Security Memorandum of Agreement (CISMOA), being pushed by US, would have to be studied for their benefits before signing them.

Brigadier(Retired) Sukhwindar Singh
http://www.indiandefenceindustry.com/
(An e-Hub for Indian Defence Industry Ecosystem)
Credit: PTI News.

US Defense Secy Seeks Arms / High-Tech Policy Change on Both the Sides

U.S. Defense Secretary Robert Gates said he’ll use his first visit to India this week in two years to seek progress on accords already initiated. “Not getting these agreements signed is an obstacle to Indian access to the very highest level of technology from the US", Gates said.

Monitoring the use and any attempted resale of U.S. defense technology to third parties, is a requirement of the U.S. Arms Export Control Act of 1996.

India is looking to strengthen its defense industry by buying U.S. weapons, then manufacturing them at home to supply its own forces and ultimately to export supplies to other countries. “We both have to re-examine policies dealing with exchanging technology”, as per Gates.

US / EU Industry are lobbying India to increase the level of foreign investment allowed in its defense industry to 49 percent from 26 percent. That would let the contractors have more control over joint ventures while giving them greater incentive to transfer proprietary technology, and participate in joint production. This is their pressing demand.

Gates said, India is a “critical partner” of the US on issues from climate change to combating terrorism.

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

India as a Major Defence Sourcing Hub: CII-KPMG Study

The Govt. should consider the establishment of dedicated A & D SEZs, establishment of a tax equalization subsidy linked to value of goods and services supplied to the Defence Sector, and exemptions to Offset JVs from R&D Cess," as per a study by CII-KPMG.

"The fiscal regime plays a critical role in any defence market in creating an environment that incentivises and supports the long term risk taking, investment and R&D required by the industry," the study noted. It said with skilled intensive manufacturing capabilities and a world class IT base, India had the "right ingredients to become a key link in the global defence supply chain".

New initiatives such as improving visibility of Govt. Defence Order Book, Increasing Industry Output and Feedback into the Tender Process, Reduction in Bidders' Costs, Extending the Use of Offset Credit Banking, Allowing Offset Credit Trading, and Introducing the Use of Multipliers, could be considered further.

FDI cap of 26 %, the study said, though the opinion was divided on increasing the FDI limit due to security considerations, there was clear expectation from the industry that it should be hiked from the present level.

Click for full Article: India as a Major Defence Sourcing Hub

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

Govt Set to Ink Record $2.2bn Arms Deal with US

New Delhi has formally approached Washington for a direct Govt-to-Govt deal for acquiring 10 C-17 Globemaster-III giant strategic airlift ac, each of which comes for over a whopping $220 million.

India sent `a letter of request' for the acquisition of 10 C-17s to the US Govt last week. "Under FMS, we will get C-17s at the same price the US Govt buys them from Boeing, plus some service charges,'' said an MoD official.

IAF certainly needs to augment its strategic airlift capability to move large combat systems and troops over national and international distances, given that it has barely a dozen Russian-origin IL-76 `Gajraj' aircraft. IAF's medium-lift fleetincludes 104 Russian AN-32 aircraft.

The massive four-engine C-17 dwarfs them all. Capable of carrying a payload of up to 170,000 pounds, it can transport tanks and troops over 2,400 nautical miles.

With mid-air refueling, the C-17 can go even longer distances. Rugged , a C-17 can even land at a small forward airbase on a semi-prepared runway or airdrop over 100 combat-ready paratroopers directly into a battlezone.

Pse Click for the full Report: Govt Set to Ink Record $2.2bn Arms Deal with US

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

DRDO to Tie-up with SNECMA, France, for Kaveri Engine

The Govt. has given go-ahead permission to the Defence Research and Development Organisation (DRDO) to take up an offer of SNECMA to ‘partner’ with the Gas Turbine Research Establishment (GTRE) for jointly developing the Kaveri aero engine.

The Rs. 2,839-crore Kaveri engine programme was launched in 1989, specifically to power the Light Combat Aircraft, Tejas, now under development at the DRDO’s Aeronautical Development Agency (ADA). In 2005, the GTRE indicated that it would not be able to develop the Kaveri engine on its own.

There was a hitch in the technology transfer earlier. Now SNECMA has indicated that the technology can be given as fast as the Indians can assimilate it.

The GTRE hopes to use the SNECMA – GTRE Kaveri to replace the GE F404 (IN20) engine that will fly two squadrons of the Tejas.

Full Report:

Kaveri Tie-up with SNECMA, France

Brigadier(Retired) Sukhwindar Singh
Credit: USIBC and Its News Agencies.

Defence Expenditure Review Committee (DERC) Panel Proposals

A high-level committee, the Defence Expenditure Review Committee (DERC), looking into defence expenditure has recommended a host of sweeping reforms, including a hike in the foreign direct investment (FDI) limit in the defence sector to 49%, and divestment of defence public sector units (PSUs).

The DERC has made far reaching recommendations in our Acquisition System, such as:

The Govt should encourage the private sector to take over foreign defence firms.Consider setting up a sovereign wealth fund to assist this activity.

A five-fold increase in the financial powers of the defence minister -- up to Rs 500 Crores.

For accountability, transparency and efficiency, time-bound disinvestment plans should be worked out for each PSU.

Across the board increase in FDI limit to 49% with the provision for a case by case enhancement to 74%-100%.

Extensive use of ICT in the defence procurement processes.

Compress the time between RFI and actual procurement.

Read the full Report: DERC Panel Proposals

Brigadier (Retired) Sukhwindar Singh
http://www.defenceoffsetsindia.com/

Foreign A & D Majors Insist on Higher FDI Limit

FDI cap in Defence Sector is perceived lower by potential suitors. The upper limit prescribed for foreign companies to invest in JVs is 26 per cent. Echoing the view of industry bodies and foreign companies, the pre-budget economic survey this year suggested that FDI limit in defence industries be raised to 49 per cent from 26 per cent, and even allowed up to 100 per cent on a case-to-case basis, in high technology, strategic defence goods, services and systems that can help eliminate import dependence.

All this needs deliberations in wider national security interests, and NOT purely a business proposition.

Indian Defence Industry is very keen to forge JVs with foreign partners. For example, BEL is keen to forge JVs in the areas such as missiles, electro-optics and "portions of radars like radars for civilian areas". BEL is ready to work with potential partners either through a JV or some sort of arrangement like long-term partnership (not called a JV).

Click to read the full Report: Foreign A & D Majors Insist on Higher FDI Limit

Comments: MOD could always consider higher % of FDI limit on case-to-case basis for technologies extremely essential for India in next 4-5 years of time frame, with some 'special rider' on the JV company ownership and management.

Brigadier(Retired) Sukhwindar Singh
http://www.svipja.com/
(A Global Solution for Offsets)
Credit: USIBC News & Its Agencies.

DRDO & MOD Units for Self-Reliance and Self-Sufficiency

No country would wish to part with its state-of-the-art front line technology know how despite any arrangements. Technology leadership in Aerospace and Defence is a 'strategic tool' and an instrument of policy dictation. This basic fact is reiterated.

Under these terms, we need to view our indigenous capabilities and the fact that we are a large-sized country which can not remain dependent on imports. It has its implications, strategic, developmental and financial. DRDO and MOD Units' Role needs to be viewed in this context; any advocacy contrary to it notwithstanding.

Aerospace and Defence capability can not be seen as a business proposition alone by large-sized countries including India in complex power play game.

The Defence Minister's stance on the DRDO & MOD Units is timely.

Click to read the full Report: DRDO & Govt. Units for Self-Reliance and Self-Sufficiency

Brigadier(Retired) Sukhwindar Singh
http://www.DefenceOffsetsIndia.com/
(A Global Solution for Offsets)
Credit: USIBC News & Its Agencies.

Mahindra Buys 2 Australia Aerospace Firms

Mahindra & Mahindra and India's Kotak Private Equity had bought majority stakes in component firm Aerostaff Australia and aircraft maker Gippsland Aeronautics for 1.75 billion rupees ($37.5 million). Aerostaff supplies components to companies such as Boeing, Airbus, but the firms were not in a position to scale up their operations.

Australian firms would get a small upfront payment, some shares in the group's aerospace unit, and be eligible for milestone payments. Mahindra coming in with capital, they will have the ability to scale up and able to duplicate the facilities in India.

Mahindra are eyeing a potential $100 billion Indian defence market over the next 10 years.

Click to read the full Report: Mahindra Eyeing Offsets

Brigadier(Retired) Sukhwindar Singh
http://www.svipja.com/
(A Global Solution for Offsets)
Credit: Reuters India.