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

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

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

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

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

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


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India – Russia Partnership

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

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

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

Read More: India – Russia Partnership

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Defence Offset Policy Debate

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

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

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

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

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

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

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

Full Report : Offset Policy Debate

We need to wait and watch, advocacy notwithstanding.

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Update India SAM Missile Systems

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

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

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

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

Read full Report: Update India SAM Missile Systems


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Dassault Systems and Infosys in Pact

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

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

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

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Credit: PTI, New Delhi.

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

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

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

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

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

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

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


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Defence Offsets India Until Oct 2010

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

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

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

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

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

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

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India-Russia Co-operation for 5th Generation Aircraft

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

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

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

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


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The Research Center Imarat (RCI)

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

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

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

Courtesy: USIBC and Its News Agencies.

EoI for TCS Issued

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

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

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

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

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

Click for the Report: EoI for TCS Issued

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Network Centric Warfare Capability for the IAF

The IAF launched its Air Force Network (AFNET), a reliable and robust digital information grid that enables accurate and faster response to enemy threats.The modern, state-of-the-art AFNET is a fully secure communication network, providing IAF critical link among its command and control centre, sensors such as the Airborne Early Warning and Control Systems and shooters like the fighter jets and missile squadrons.

While launching the AFNET, the Defence Minister said that the aim of network spectrum policy of the government was two-fold -- growth of teledensity in the country, and modernisation of the defence forces' communication systems. With this, the IAF entered the digital information grid and a "giant stride" towards attaining network centric warfare capability. The other two Services would also launch their networks in the due course.

The AFNET is part of the overall mission to network all three services. The mission comes in the backdrop of an IT Roadmap document of the Defence Ministry stipulating automation, simulated training and mandatory computer proficiency in the three Services.

Click to read the full Report: Network Centric Warfare Capability for the IAF


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JVC in India for Design and Development of Multirole Tpt ac

A Joint Venture will be formed between HAL and the Russian Partners, namely United Aircraft Corporation & Rosoboronexport to co-develop and co-produce Multirole Transport Aircraft (MTA).

MTA is a 15-20 tonne payload capacity Aircraft which would meet the requirement of the IAF and the Russian Air Force. The project has been approved by both the Government of India and the Government of Russian Federation.

The main features of MTA are: Maximum take-off weight 65 tonne, Payload Capacity 15-20 tonne, Cruise Speed 800 kmph, Range 2500-2700 km, Service Ceiling 12 km. The Aircraft will have two engines, state-of-the-art features such as fly-by-wire, full authority digital engine control, modern avionics and glass cockpit.

The total development cost is around US $ 600.70 million (approx Rs.2900 crore) to be equally shared by both the sides. It is planned to manufacture 205 ac with 50:50 work share between HAL and the Russian partners.

The JVC will be established with its HQ in Bangalore, India for executing the MTA project in which HAL and Russian participants will have equal shareholding.

Courtesy: Broadsword, http://www.ajaishukla.blogspot.com/

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

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

The letter urges the following specific policy reforms:

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

Demands from MoD by the US/EU Offset Consortium

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

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

Svipja Technologies

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

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

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

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

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

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


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Courtesy: Wikipedia

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 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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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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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.

Svipja Technologies
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 Ltd (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.

Svipja Technologies

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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India Tells US to Remove ISRO and DRDO from Blacklist

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

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

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

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

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Courtesy: Business Standard.

India's Defence and Aerospace Market: Emerging Trends

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

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

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

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

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

Svipja Technologies.
Courtesy: Business Standard.

Debate of FDI in 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”.

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.

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

Svipja Technologies
Courtesy: Financial Times.
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.

Svipja Technologies
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.’

Svipja Technologies
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’

Svipja Technologies

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.

Svipja Technologies

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.

Svipja Technologies

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.

Svipja Technologies

Defence Procurement: A Serious Business 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 pragmatic, accountable and true to the ‘nation’, personal gains notwithstanding.

India is presently one of the largest arms and systems importers in Defence.

The MOD is likely to release a comprehensive Defense Production Policy (Drip), on the lines of the DPP to strengthen the country’s Defence Industrial Base (DIB). The DPrP and DPP will give a new impetus to indigenisation 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

Svipja Technologies

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.

Svipja Technologies

Today's Think Tanks

Firstly, Think Tanks should in the normal course aim to influence targeted audience for getting their ‘mind share’. It should take a ‘systems approach’ to an issue with the ultimate objective of sound implementation to achieve the desired outcome. It is not correct to say that the Policy Makers or Others may not ‘heed to the advice, or may not be influenced’ by the Think Tanks. It does in a way. If not, these are not Think Tanks then - their research results may be ‘tainted’, not in line with the democratic values, or totally out of context. Think Tanks need not work in ‘vacuum’ of any kind and should relate to the existing or future course(s). That much for the concept.

Secondly, Think Tanks need to be staffed with practicing managers/researchers and academia of the right kind to tackle real-life situations, and not be pure ‘philosophic’. These should relate to our ‘own’ environments. This would help in looking at their findings from ‘Policy Angle(s)’. Who funds it may not be very important in today’s intellectual scenario; system sees it through and places credibility on the Think Tanks accordingly. There may be hundreds of them but a few are creditworthy.

Thirdly, the subject matter to be tackled could take the form of a 'Chair’, for long life. The Chair could be established in Corporates, Universities, Foundations, etc, provided they operate under the Charter of Think Tanks. Intellect is widely dispersed.

Mr Kanti Bajpai’s Article in today’s TOI on ‘ Think Tanks in India’s Democracy’ puts the subject issue in a perspective, but the 'common notion'.

Click: Think Tanks in Democracy

'Svipja Civil-Military Relations (CMR) Chair' be seen in this context, a faithful delivery to the Indian Democracy and its People in CMR.

Svipja Technologies

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

Launch of ‘Svipja Civil- Military Relations Chair’

General

“Svipja Civil- Military Relations Chair” (or ‘Chair’, for short) has been set-up by Svipja Technologies with a view to harness Ideas from Intellectual Defence Community to promote Civil-Military Relations in India. Views from the International Community will also be welcome.

This work is needed in order to raise intellectual capital of the stakeholders in line with the values enshrined in the Indian Constitution. It would help reinforcing democratic values in the Defence Community with Military Ethos intact.

Objectives

The establishment of the Chair and Fellowships is expected to:

1. Promote healthy and meaningful exchange of ideas amongst the intellectual Defence Community on civil-military relations in the Indian Context.

2. Facilitate wider, deeper, and un-biased discussions / interactions amongst the intellectual Community, and Faculty / Moderator(s) appointed against the Chair or as Fellows, in particular.

Terms and Conditions

The creation and operation of the Chair and Fellowships will be subject to the terms enumerated in the succeeding paras.

Methodology Research work on the subject will be undertaken by a Team constituted by Svipja Technologies within the Objectives laid. Certain identified Blogs / Sites will be used to initiate discussions amongst the stakeholders. Once done, ‘finished product’ would be circulated to the stakeholders, and published in a transparent manner.

Donor(s) Svipja Technologies will meet all the expenses of the Chair as a Founder.

Founder Fellowship Brigadier (Retired) Sukhwindar Singh will be the first faculty against the Chair.

Guidelines for “Appointment” of Faculty Against the Chair To be approved by the Board of Governors established by Svipja Technologies / Trusts / Donors.

Eligibility Anyone with a track record in defence with independent, impartial & sound logical abilities would be eligible to be considered for “appointment” against the Chair. Individual(s) being considered would first be appointed as Moderator(s). The Chair has a Think Tank’s charter.

Duration of the Chair The “appointment” against the Chair will be made for a period of up to five years. However, continuation into the fourth and fifth years will be subject to a review at the end of the third year. Further, an individual may be eligible to be considered for re-appointment, together with other eligible candidates, for a period of up to 5 years (without a break) any number of times.

Designation Member(s) appointed against the Chair will be called “Svipja Civil-Military Relations Chair Emeritus Research Fellow / Research Fellow / Research Associate Fellow”.

Research Grant To be assigned by Svipja Technologies on need basis as the faculty / work expands.

Intellectual Property (IP) Rights As a result of the “appointment” against the Chair, there shall be no change in the rights applicable to the IP developed by the researchers / faculty members and/or his/her collaborators.

Strategic Alliance(s) Svipja Technologies would be willing to establish strategic alliance(s) with like-minded bodies.

Research Presentations Research Articles will be published on Media/Sites/Blogs identified for the purpose. In addition, as a result of the “appointment” against the Chair, the faculty would be expected to undertake Presentations of the research findings of the Chair to various targeted audience, organizations and institutions.

Conclusion

This work would enhance intellectual capital of the stakeholders for security of the country in environments unfolding in the 21st Century India. Dynamics of the Civil-Military relations needs to be captured routinely in the Indian Polity.

All Veterans are welcome to contribute their thoughts.

Sukhwindar

www.svipja.com

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.

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, multirole, 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

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 ESMs: 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 & 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

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 Inject 21.25 m USD in Their 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)

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.

India Raises Defence Export License Concerns with US

India today 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 here, 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 Could Become 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.

India's Defence & Aerospace Industry Update

The effective implementation of offset policy can facilitate the absorption and indigenisation of foreign aeronautic technologies that accrue to the country by way of offset deals. In doing this, the Govt wishes to emulate the success of Brazil, Israel and Spain.

In India, over the last 16 years, India has seen more engineering and R&D investments in aerospace than the US or Europe. In Bangalore, Honeywell Technology Solutions has set up an engineering facility with over 5,500 engineers, while GE's Jack Welch Technology Centre has an extensive research lab with over 3,000 engineers.

Airbus is setting up an Airbus Engineering Center India (AECI) facility, which will hire 200-plus engineers of its own, and more than 2,000 through its partners. According to a Nasscom-Booz Allen Hamilton report, there will be a $40 billion opportunity for the offshore engineering industry worldwide by 2020. India is expected to have a 2-3 per cent share in the aerospace offshored engineering service. This amounts to $1.2 billion by 2010.

The government, on the advice of the Kelkar Committee, has opened up the aerospace industry to the private sector. State Govts are doing their bit by setting up special economic zones (SEZs) for the aerospace industry. These include:

• The Rs 3,000-crore Aerospace and Precision Engineering Special Economic Zone to be set up at Adibatla, Ranga Reddy district in Andhra Pradesh
• The specialised aerospace park of around 1,000 acres, proposed near the Bangalore International Airport;
• The 2,500-acre SEZ for the aerospace and avionics industry, proposed to be established in south Gujarat, close to the Delhi-Mumbai industrial corridor. This is likely to have a number of MRO facilities.

The cumulative value of the Indian defence market for the next five years is approximately Rs 180,000 crores (Rs 1.8 trillion), which makes it one of the most attractive in the world -especially, with the capital outlay for defence hiked this year to Rs 54,824 crores (Rs 548.24 billion), up from last year's revised estimate of Rs 41,000 crore (Rs 410 billion).

Indian companies are all set to supply in this market. Hero Motors plans to produce light aircraft at its 300-acre aerospace park in Madhya Pradesh in partnership with an unidentified European manufacturer.

The Tata group is keen to move into full-scale aircraft assembly and production in both the civil and military markets. The group has sought approval to set up an aerospace manufacturing facility on the outskirts of Hyderabad.

Tata has already signed deals with several International companies, including one to manufacture components for Boeing. It has taken a one-third stake in Italy's Piaggio Aero, while Israel Aerospace Industries (IAI) and Tata have signed a memorandum of understanding to establish a new company to develop, manufacture and support a wide range of defence and aerospace products, including missiles, UAVs, radars, electronic warfare systems and homeland security systems.

Mahindra & Mahindra, meanwhile, has signed deals with BAE Systems, and is jointly developing a five-seat light aircraft with the National Aerospace Laboratories. Larsen and Toubro (L&T) has formed a joint venture with the European EADS to develop high-tech defence electronics in Pune.

It is clear that A & D industry will act as a growth stimulant in coming years. However, to fulfill its potential, it must surmount challenges such as inadequate R& D investment, dispersed production centres, frequent change in regulations, and poor co-ordination amongst the different players.

Click to read the full Article:

India's Defence & Aerospace Industry Update

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