Pilatus Trainer from Swiss for the IAF with Offsets

The IAF will acquire basic trainer,75 Pilatus Planes, starting later this year for Rs 2,800 Crore from a Swiss company. The aircraft will replace its fleet of HPT-32 basic trainer aircraft.

Delivery of the aircraft and the complete training system is scheduled to commence in fourth quarter this year, as per media reports. The ac would be procured together with its integrated ground based training system and a comprehensive logistics support package.

The Pilatus will also do 30 % offsets of the cost of the deal. ToT will also be done to HAL.

Defence Offset Contracts Till Now (15 May 2012)

Defence Minister informed the Indian Parliament in writing on 14 May 2012 that 17 contracts worth 4.27 b USD were signed as defence offsets. Out of this, 3.43 b USD were for IAF- related projects and 843 m USD for Naval projects. Nothing for the Army; may be some would come in the coming months. 

The budge about the defence offsets in India is right, but unfortunately most of it, for the time being, is for Govt. Units, Large Private Sector Units and DRDO /Other High-End R & D  with almost none for micro and small enterprises. SMEs are likely to figure towards the tail-end unless Obligors prefer them. Offsets-Cash/Kind-given to large units are slated to yield low returns for the Indian Defence Industry for various reasons.

ToT-Quality & Depth, Valuation for grant of Offset Credits, Strict Implementation, Inclusive Distribution of Offsets, Plugging Leakages, ETC, should be some of the major concerns of the Govt. and Industry.

Development of Personnel for Offset Implementation

Offsets is a specialized field. You may have military knowledge, industry knowledge, required dynamism and will to contribute to the system long-term in a transparent and ethical manner with probity , but still not be able to serve as an effective Offset Manager / Consultant in the Industry.

We train You in concert with our JV Partner in the US, Tucson Transatlantic Trade Inc. Holding Group, www.ttthg.com

Defence Ventures with Foreign Entities to Face Closer Scrutiny

The Govt. is planning guidelines for defence sector joint ventures (JVs) between Indian and foreign firms. And these will be similar to foreign direct investment (FDI) norms for defence collaborations in certain developed countries.

The idea is to institute security and auditing procedures for JVs and their supply chains. The norms will apply to JVs based on ‘threat perception’ and the sensitivity of products to be manufactured. Such JVs will have to seek prior separate security clearances from the home ministry regarding subsidiaries, directors and foreign nationals (if engaged).

The JV companies must be owned and controlled by Indian residents and their companies. Despite the 26% FDI cap, the defence sector has attracted top overseas defence equipment manufacturers like the UK’s BAE, European consortium EADS, US-based Sikorsky and Lockheed Martin,etc.

Read Report: Defence Ventures with Foreign Entities

PPP for ICVs in India

The MOD/India has thrown open its doors for private players to bid for a project to build the Future Infantry Combat Vehicle(ICV).

Two companies will be shortlisted and asked to build one prototype each—the manufacturing of these will be funded 80 % by the Govt.

The Army needs about 2,600 ICVs over 20 years. All four bidders—Tata Motors, Mahindra Defence Systems, L&T and the Government-owned Ordnance Factory Board (OFB)—have presented their designs. The evaluation is set to move to the final phase within a month. The Rs 50,000-crore order is likely to be divided between the winner and runner-up.

Challenges

• The systems integration of the FICV is likely to be a big challenge. The platform, the software and electronics have to be integrated for the vehicle to function well. Indian companies have little experience in this.

• Keeping it local. All the four bidders are likely to have foreign partners. The fear is that the high-end work will be done abroad defeating the purpose of the exercise. Russian aircraft have been assembled in India for decades—yet the design and development of every new generation plane was done in Russia.

Read More: PPP for ICVs in India

DAC/MOD Eases the Offset Fulfillment Policy

As per media Reports , the MOD on 02 Apr 2012 eased its defence offsets norms with the value of technology transferred under a deal could be written off against the offset The offsets clause is expected to bring in investments of $30 billion in ‘cash or kind’ over the next decade. The revised provisions also make a distinction between equity and non-equity route, that is investment in "kind" made by the OEM for discharge of offset obligations.

"Investment in kind in terms of TOT must cover all documentation, training and consultancy required for full TOT (civil infrastructure and equipment excluded)", the Report said.

The TOT should be provided without license fee and there should be no restriction on domestic production, sale or export. The offset credit for TOT shall be 10 per cent of the value of buy back by the OEM during the period of the offset contract, to the extent of value addition in India.

The guidelines also noted that the technology acquisition by Defence Research and Development Organisation (DRDO) for a list of specified technologies will be treated as an eligible offset with a multiplier up to three.

It has already been decided to allow the tier-I sub-vendors under the main procurement contract to discharge part of the offset obligations on behalf of the main vendor. However, the overall responsibility for discharge of the offset obligations shall rest solely on the main vendor. The agreement between the OEM, vendor and tier-I sub-vendor and the Indian offset partner will mandatorily be subject to Indian laws.

The revised guidelines are said allow offset obligations to be discharged within a time frame that can extend beyond the period of main procurement contract by a maximum period of two years. The overall cap on penalty will be 20 per cent of the total offset obligations during the period of the main procurement contract. There will be no cap on penalty for failure to implement offset obligations during the period beyond the main procurement contract, which may extend to a maximum period of two years.

The period of validity for banked offsets has been increased to seven years.

In the discharge of offset obligations relating to direct export, foreign direct investment and technology transfer or investment in 'kind' in Indian enterprises through non-equity route, a multiplier of 1.50 will be permitted where micro, small, and medium enterprises (MSME) are the Indian offset partners. The monetary limits specified by the Indian government's department of MSME shall be applicable for identification of the MSME.

"In exceptional cases, the competent authority may permit change in offset partners or offset components provided the value of offset obligations remains unchanged. This will provide greater flexibility in implementation", the Report said.

Formal Govt. Guidelines are Awaited.

Mahindra JV with Rafael

Mahindra & Mahindra Ltd and Rafael Advanced Defense Systems Ltd, a manufacturer of defence systems for air, land, sea and space applications, today agreed to form a Joint Venture in India to develop and manufacture products such as Anti Torpedo Defence Systems, Electronic Warfare Systems, Advanced Armouring Solutions and remotely operated weapon stations for Futuristic Infantry Combat Vehicles (FICV).

Rafael will make investments in Mahindra's existing Naval Systems division in Pune which will also be the location of a production facility which will be set up to meet the long-term requirements of the JV company.

The companies have also approached the Foreign Investment Promotion Board (FIPB) for creation of a 74:26 company, the company statement said.

Link: Mahindra JV with Rafael

Def Expo 2012: MOD Reaffirms Its Resolve to Grow Indian Defence Industry

DG (Acquisitions) indication of the MoD’s inclination towards private sector participation by strongly supporting the “Make” procedure. According to the Defence Procurement Procedure, this allows private industry to bid for building complex military platforms, with the MoD funding 80% of the cost of development. There are currently only two “Make” projects being pursued: the Future Infantry Combat Vehicle (FICV); and the Tactical Communications System (TCS).

“To build up the defence base, we need to generate a lot of “Make” procedure (procurements). We will make a list of 150-180 “Make” procedure projects…. to energise the industrial base of the country.

RRM, however, cautioned the private industry not to expect a fully-funded stroll into defence production. “The industry also needs to commit itself to the field in terms of establishing the required infrastructure and develop the capacities. Commitment to R&D effort is also required by the defence industry both in the public and private sector if the long-term goals are to be met,” said Shri Raju.

Read Ajai Shukla's Report: Defence Min signals growing acceptance of private sector

Def Expo 2012 : Curtain Raiser

There are going to be 232 foreign firms, mainly from the US, Russia, France, Israel, the UK and Germany, and 60 official delegations in town this week for the four-day "Def Expo 2012' that begins on 29 Mar.

Over 335 Indian exhibitors, including major ones like Tatas, Punj Lloyd, L&T and Mahindra, will also be there to explore tie-ups and joint ventures with foreign companies as well as DRDO, defence PSUs and domestic shipyards.

"We understand fully well that indigenization cannot happen through only defence PSUs. We have taken several steps to encourage the private sector," said Mr Shekhar Agarwal, Secretary (Defence Production).

The Defence Ministry has been pushing for JVs and Technology Transfers to strengthen the Defence Industrial Base in India. FDI is 26% in the Defence Production Sector.

Full Report: Def Expo 2012 : Curtain Raiser

'Man-Machine-Logistics' Optimization

“Indian Air Force (IAF) is highly professional, and its fighter pilots super. A 'flying machine' would always have certain limitations for certain reasons, may be non-compliant in some ways. It is the pilot-machine team that would deliver the results unimaginatively”. Discuss. 

This discussion started by Me on Linked-in about a month ago in ‘Aerospace and Defence Group’ is inviting insightful comments and views many ways.

A Very Useful condensed knowledge on fighter ac!

Pse visit Man-Machine-Logistics Optimization

Sukhwindar 

Defence Offset Implementation Debate

John Williams has started a very interesting discussion on offset Implementation on Linked-in at

John’s Discussion on Offsets

My rejoinder on Comments till date is as under:

I did not suggest the Offset Implementation structure in the MOD by design. Wanted it to evolve naturally in Indian conditions.

I think the answer lies in creating an indep 'Offset Implementation Agency' under an Addl secretary/secretary level officer with minimal staff to support it, and expertise drawn, as it is, from the working desks of Acquisition Wing, DDP, DRDO, DGQA, Ministries of Home Affairs and Aviation, Defence Services, etc without burdening the existing MOD set-up for obvious reasons.

Offset Project Approvals should continue to remain with the DOD as of now. Will ensure transparency and probity. DOFA organized to clear the Offset Credits. Offset Implementation Agency just implements offset projects in concert with the offset recipients. In this concept, offset projects approvals, ground implementation of offsets, and approving offset credits are the responsibility of different offices. This would ensure transparency, and the fact that offsets are not diluted/'leaked'.

I am sure the Indian MOD has requisite expertise and experience in evolving organizations meeting Indian ethos. A Single Point Agency, all inclusive, is likely to run into lots of difficulties, and representations/complaints as a result affecting the acquisition process.

The Organization will not be what each stakeholder desires, but an optimized set-up per our system of governance for the strategic sector.

www.svipja.com

Mirage 2000 Upgrade for the IAF by Dassault and Thales

French firms Dassault and Thales will upgrade is to upgrade IAF Mirage 2000 fleet under a deal worth $2.4 billion. The Indian government has started making payments for the deal to upgrade the Mirage ac as per a media report.

Under the deal, the French firms will help in upgrading the avionics, navigation systems, mission computers, electronic warfare systems and radars bringing the aircraft to the Mirage-2000-5 standards. The French companies will have to invest over $900 million into the Indian defence sector as defence offsets.

As per the agreement, India has sent two of its aircraft to France for upgrades and thereafter the rest would be upgraded at Hindustan Aeronautics Limited facilities.

Mirage 2000 Upgrade for the IAF by Dassault and Thales

MOD India Blacklists Six Defence Firms

India has blacklisted six armament firms for 10 years on bribing charges.

The sanctions targets four foreign companies, namely Israel Military Industries (IMI), Singapore Technologies Kinetics Ltd, Switzerland's Rheinmetall Air Defence, and Russia's Corporation Defence (CDR).

The other two companies targeted, RK Machine Tools Ltd and TS Kisan and Co Private Ltd, are both Indian.

Report: MOD India Blacklists Six Defence Firms

DCNS Partners SEC Industries, Hyderabad

DCNS has signed a partnership sub-contract with SEC Industries, Hyderabad, for the manufacture of Scorpene submarine components. The deal is worth €50 million (approx Rs 310 crore).

This is a significant win for private sector manufacturer of key defence components. In addition to executing the contract, SEC Industries will benefit from the transfer of technology from the French company.

Read the Report: DCNS Partners SEC Industries, Hyderabad

Govt sets joint venture norms for defence PSUs

Read the Full Report: Govt sets joint venture norms for defence PSUs

MMRCA Deal a Shot in the Arm for Industry

The impending $12 billion contract to buy 126 Medium Multi Role Combat Aircraft (MMRCA) by the defence ministry from Dassault, is set to be a game changer for the Indian aerospace and defence industries with about $6 billion worth of offset contracts expected to flow to Indian companies.

This deal, as and when signed, ensures that Dassault along with its two major suppliers Thales and Safran Group would place offset contracts on Indian vendors amounting to minimum of 50 per cent of the value which in this case could be $6 billion and this obligation would be co-terminus with fulfillment, which is 12 years span.

With this, new technology absorption, world class facilities, adaptation of cutting edge processes, systems and the skilled manpower would create a formidable ecosystem for India to compete in the global marketplace.

Of the $6 billion in offset money flowing into India, about 50 per cent is likely to be spent on manpower. On an average of $20,000 per man year, this would mean 150,000 man years of new jobs in the defence aerospace industry. This would translate into 5,000 jobs in the3rd year and stabilize at 20,000 jobs in the ninth year. Also, all support services like maintenance, training and logistics have to be provided by Indian industries with the technology and know-how of Dassault, Thales and Safran for the next 40 years. This could create an additional 4,000 jobs. And more……

Read Full Article: MMRCA Deal a Shot in the Arm for Industry

Indian MMRA Competition Declares Dassault Rafale as L1

"The French firm Dassault Rafale has emerged as the L-1 (lowest bidder) and cheaper than its European rival EADS (maker of Eurofighter) in the tender and will be offered to supply the aircraft to the IAF."

French company Dassault Rafale today qualified to bag India's contract for supplying 126 combat ac for the IAF.

Dassault Rafale as the lowest bidder, is likely to get the contract under India's Defence Procurement Procedure. Further negotiations are likely to move with Dassault in this deal.

The TOI Report: Indian MMRA Competition Declares Dassault Rafale as L1

Private Sector Participation in Defence Production: Industrial Licensing and FDI Issues

India has permitted 100 % participation by the private sector in defence sector, with foreign direct investment (FDI) permissible up to 26 per cent in the manufacturing, subject to licensing and security clearance. However, 100 % FDI is permitted in the case of the services sector.

By October 2011, the Department of Industrial Policy & Promotion (DIPP) gave 200 Letters of Intent/Industrial Licenses (LoI/IL) to various private entities, with proposed investment totaling Rs 11,773 Crore, and potential employment opportunities for 38,579 people. By November 2011, a cumulative FDI of Rs 17.68 Crore (US $3.72 m) was received by the Indian defence industry.

As per the guidelines of the DIPP, defence falls under the ‘Manufacturing’ sector. So, the companies in the manufacturing business can apply for a license and get it (subject to approval), and be formally part of the defence industry. However, this is not the case for companies in the services sector (such as, engineering, design and software, etc.), which do not come under the purview of ‘Manufacturing’, and hence do not require a license for their services. Consequently, they are not formally part of the defence industry, even though their services have direct application in defence products.

For the services sector, the equivalent minimum equity share (by the Indian shareholder) is 51 per cent in order to be called an Indian company. However, Defence Offset Facilitation Agency (DOFA) —responsible for facilitating offsets in defence contracts—insists that companies in the services sector must have a minimum 74 % domestic equity share in order to participate as an Indian Offset Partner.

Full Article with Other Implications: Private Sector Participation in Defence Production

Aerospace and Defence exports likely to reach USD 2 billion in 2011-12

Aerospace and defence exports are likely to clock two billion dollars in the current fiscal, industry chamber Assocham has said.

With about 18% growth during the first three quarters of 2011-12, aircraft exports including component parts stood at about 1.31 billion dollars against 1.11 billion dollars in the corresponding period of previous fiscal, Assocham said.

Parts and components have contributed a major 96% of the total aerospace exports, highlighting India's manufacturing capability in aerospace sector oriented towards tier I, II and III suppliers as against aircraft Original Equipment Manufacturers (OEMs).

Read the Report: Aerospace and defence exports likely to reach USD 2 billion in 2011-12

Thales-Samtel Defence Systems (SDS) Partnership

Thales has a joint venture company, Samtel Thales Avionics. Thales' offset liability from the Mirage upgrade contract for Euro 1.47 b (Rs 9000 Crores) amounts to Euro 441 m (Rs 3,000 Crores). That induces Thales to source from SDS a significant share of the avionics (aviation-electronics) for upgrading the Mirage-2000. SDS already supplies Hindustan Aeronautics Ltd (HAL) with cockpit displays (multi-function displays, or MFDs) for the Sukhoi-30MKI fighters that are built at HAL's Nashik plant. The Ghaziabad-based company is also competing to build avionics for the IAF's forthcoming Sukhoi-30 MKI upgrade.

And, if the Rafale fighter — built by Dassault with a large avionics component from Thales — is chosen by the MoD as the IAF's new medium multi-role combat aircraft (MMRCA), SDS could benefit enormously from another wave of offset-driven orders for display systems and other avionics in the 126 MMRCA.

Read the Full Report: Thales-Samtel Defence Systems (SDS) Partnership

Indian Defence Industry, Defence Exports and Offsets

A number of Private Indian A & D Companies have obtained Letter of Intent / Industrial Licenses for manufacture of defence products & Services in India. These products would have markets in India and abroad, quality and price being primary issues. It is important that JVs or any other type of co-operation are set-up with such manufacturers/vendors which bring-in international standards to the firm.

The companies could invest in production themselves, or seek offset funding in addition to other sources of funds. DPP 2011 and other regulations of the MOD/India set the stage for the industry in the Private Sector to develop and manufacture defence products.

We at http://www.freemarketsdefence.com/  / http://www.indiandefenceindustry.com/  are aggregating the industry into the global landscape. This adds value to the industry manifold, in various ways. Please contact Us at svipja@airtelmail.in  for your defence exports, offset fulfillment, and any other requirement relating to the Indian Defence Industry.

Indian Defense Sector Spend by 2015

The Indian defense sector is one of the fastest growing markets globally, with an estimated US$13.9 billion of the annual budget allocated for the acquisition of military hardware and technology in 2010.

Defense expenditure, which refers to the part of the budget that is spent on the acquisition of all types of military hardware and technology, has grown at a CAGR of 12.14% from 2005-09. Defense expenditure is expected to record a CAGR of 6.59% during 2010-15, to reach an annual spend of US$42.6 billion by 2015. This is primarily due to ageing military hardware and technology, domestic insurgencies and hostility from neighboring countries.

Strong growth in the sector is attracting foreign original equipment manufacturers (OEMs) and leading players from the domestic private sector to enter the market. Moreover, terrorism is leading to sharp increases in the defense budget and a shorter sales cycle, which translates as an attractive market for defense manufacturers.

The areas that are specifically expected to emerge over the short to medium-term include unmanned combat aerial vehicles (UCAVs), advanced electronic warfare systems, combat systems, rocket and missile systems, fighter and trainer aircraft, stealth frigates, and submarines. In addition, spend on IT and communications is expected to increase significantly, with a strong focus on enterprise applications, systems integration, and real-time mobile communications.

Among the defence services the Army with a budget of approximately Rs. 74,582 Crores in 2010-11 has the largest share, followed by the Air Force (Rs. 40,462 Crores), Navy (Rs. 21,467 Crores), DRDO (Rs. 9,809 Crores), and Ordnance Factories (Rs. 1,015 Crores).

Credit: USIBC and Its News Agencies

MoD Approves Offset Proposals for the MMRCA Deal

The defence ministry approved the offset proposals for the MMRCA Deal paving the way for opening the commercial bids.

The offset proposals from Dassault Aviation (Rafale) and the Eurofighter consortium (Typhoon) were presented before the DAC by director general acquisition Vivek Rae. Besides the Defence Minister, the two-hour meeting was attended by the three Service chiefs, the Defence Secretary, the Secretary, Defence Production, the DG (Acquisition) and concerned joint secretaries in the Ministry.

Foreign vendor bagging MMRCA Deal will have to invest back 50 per cent of the worth of the deal in Indian Defence Industry. This means investment of more than Rs 21000 Crore in India, in military, homeland security and civil aviation.

Click: MoD Approves Offset Proposals for the MMRCA Deal

Defence Offsets India Fund & Offsets

Please read below my Post on 'Defence Offsets India Fund' dt Jun 28, 2008.

We still feel that India should create a PE Fund to Develop Indian Defence Industry incl MSMEs for Inclusive Growth with Seed Funding by the MOD, & Cash out of Unabsorbed Offset Funds Due from the Obligor(s). A difficult proposition, but must be discussed.

In addition, the following should considered:

1. Banking of offsets beyond the present limit to 10 years and above in case of infrastructure,special and greenfield projects rendering value to the Indian Defence Industry.

2. FDI 26%, and extendable to 49% with approval. Anything beyond this has to be discouraged to retain our 'freedom'; commerce is not end all of everything.

3. Defence & Aerospace high-tech start-ups should get their rightful share of Offsets. Creation of long-term value addition should be seen in these companies.

These are some of the points that merit attention, especially in the backdrop that we may not get the desired technology thru the offset route.

Svipja Technologies

Undue Criticism: Defence Offsets

Some Knowledge Professionals / Think Tanks provide exaggerated views on the defence offsets deals being executed lately. They may not be in full picture, or  may not have an access to 'right source(s)'. These comments need 'mature' interpretation, sometimes the observations may even be biased or motivated.

Market Forces play in offsets. Obligors' Power, Buyers' Power, Threat of New Entrants / Competitors, Rivalry amongst Obligors, Alliances,etc, play its role. 'What You Need/Want', and 'What You Get' may have very little co-relation as a result.

We need to weigh it up all. Everything should not be seen with a 'black eye' sensing only kickbacks and corruption.

Sukhwindar

We Need to be Pragmatic in Offset Contracts

I feel judicious application of the Policy by India in defence procurement is the key to reaching high-tech zone where we do not have the desired grip in India, though the ToT may not be totally current in the ‘World of Defence Technology’. Pragmatism is the key to success; MOD does exhibit it abundantly in various negotiations in defence deals.

We must read Ajai Shukla’s Article keeping in mind that ‘no one will give you the current technologies; no one would like to create a competitor; Yes, still you can reach state-of-the-art technologies by leapfrog’. India will have to do this. Wisdom dictates that nothing would come on platter.

Click: MoD Flouts Offset rules, Favours Foreign Vendors

Sukhwindar

Defence Offsets: Indian Parliament Informed

The Indian defence industry will benefit from an inflow of $30 billion as offsets through military procurements from abroad over the next decade, according to a report submitted to parliament on Wednesday, 03 Aug 2011.

In a deposition before the Parliamentary Standing Committee, the MOD said that the projection, amounting to INR 1.5 lakh crore, was made in view of the $100 billion that India is expected to spend on defence procurements in the next 10 years. The deposition was part of a report on budgetary demands for grants for 2011-12, submitted by the committee to the Lok Sabha.

Offsets is a clause in the defence ministry’s procurement policy under which any equipment import worth more than Rs.300 crore will involve ploughing back of 30 percent of the contract amount back in Indian defence, homeland security and aviation industry. The policy is in existence since 2005, and has been refined over the years now.

‘As far as offsets are concerned, it is true that our procurements in the next five to 10 years would be more that $100 billion and 30 percent of that is $30 billion, which is INR 1.5lakh crore,’ a defence ministry official told the committee.

The official also went on to explain that the offsets clause involved either in a direct purchase by foreign arms companies from Indian industry, or technology transfers, or joint ventures with domestic firms in the defence, homeland security and aviation sectors.

The official, in its report, gave the example of the recent Indo-US deal for supply of 10 Boeing C-17s to Indian Air Force (IAF), under which India’s premier military research agency Defence Research Development Organisation (DRDO) will get high altitude engine test facility and a wind tunnel facility, both firsts in the country.

The Indo-Asian News Service (IANS)

Mahindra Aerospace Looks at US/Europe Defence firms

Mahindra is eying aircraft-part makers in the U.S. and Europe for a stake purchase. It may acquire stakes in Tier-I suppliers, specializing in sheet metal components for aircraft, This will give it an access to them for orders from companies such as Boeing Co. and EADS in the commercial as well as defense aircraft markets.

Mahindra Aerospace started its expansion in 2009 by acquiring Australian companies Gippsland Aeronautics and Aerostaff Australia. Last year, the company signed an agreement to acquire parts-making machinery from Boeing's facility in Melbourne, Australia. Mahindra has a three-year plan of spending 4.5 billion INR ($102.2 million) in its aerospace business, of which about 1 billion rupees was spent in the two acquisitions above. The company plans to spend 2.8 billion rupees in a factory near Bangalore city and the rest will be spent in setting up a distribution network in the U.S. and China,

Mahindra Aerospace has developed a five-seater aircraft which will be tested in September. The company plans to develop a 10-seater and an 18-seater plane in the future, he added.

Mahindra Aerospace and Eurocopter Sign MoU

The Mahindra join hands with Eurocopter to manufacture sub-assemblies and other engineering products for helicopter market in India.

The partnership would focus on manufacturing of sub - assemblies, engineering and customisation of civil helicopters, and the joint development of specific market segments. The scope and structure of the partnership would be decided accordingly.

Mahindra Satyam already provides IT and Engineering Services to the Aerospace Sector, particularly to plane manufacturer Airbus.

Eurocopter partnered with HAL in 1962 , enabling HAL to manufacture more than 600 helicopters based on the Alouette 3 and Lama heptrs, more popularly known in India as the Cheetah and Chetak.

Indian Companies Supply for Boeing Dreamliner Project

B-787 , Boeing Dreamliner, has components, software and designing services from Indian companies like Tata Motor's Nagpur-based fully owned subsidiary TAL Manufacturing Solutions Limited, HCL, Wipro and Tata Consultancy Service (TCS).

Tata's are providing the floorbeams for the airline, on which the seats are laid. HCL has provided with advance software and some designing work was done by TCS.

Boeing and TAL Manufacturing Solutions entered into a manufacturing contact in 2008 for light weight floor beams made out of titanium and composite materials by using state-of-the-art technology.

Currently the company also buys parts for its other aircraft from Hindustan Aeronautics Ltd. (HAL) and service from Infosys.

Full Report: Indian Companies Supply for Boeing Dreamliner Project

IAF Briefs Lockheed Martin on MMRCA Deal

Lockheed Martin, one the two US companies eliminated from the 126 combat aircraft tender, has said it had met the Indian Air Force this week to know the reasons for its non-compliance in the contract.

"We had a meeting this week with the IAF to learn about the reasons for our aircraft being non-compliant in the deal," Lockheed Martin's Vice president Orville Prins told reporters here Thursday.

He said such a meeting would help the company prepare itself in a better manner for future competitions.

The request for the debriefing was made by the US Government, which had offered the aircraft to the Indian establishment through the Foreign Military Sales route.

In April, India had shortlisted Dassault and Eurofighter for 126 Medium-Multirole Combat Aircraft (M-MRCA) deal and excluded the two American companies including Boeing along with Russian MiG Corporation and Swedish Saab Gripen.

Asked if he was satisfied with the explanation given by the IAF, Prins said, "We are satisfied that we had the meeting and we could ask questions."

Commenting on the two shortlisted aircraft, he said, "I think Eurofighter and Rafale were evaluated as per the provisions of the DPP-06 which I understand says that in order to be shortlisted, the equipment should be fully compliant without any waivers."

The IAF had evaluated the six competitors on 660 parameters; Prins said adding that if waivers were to be granted to the aircraft, "I don't know where to draw the line."

Asked if the short listing of the two aircraft was a political decision, he said, "I think it was a political plus decision", which was a usual practice world over.

Courtesy: http://www.brahmand.com/

US-India Strategic Defence Co-operation

Senate Armed Services Committee (SASC), which oversees the US Department of Defense, has ordered the Pentagon to submit a report by November 1 with a detailed assessment of the current state of US-India security cooperation; and a five-year plan for enhancing that cooperation in the Indo-Pacific region and globally.

The SASC has also ordered “a detailed assessment of the desirability and feasibility of the future sale of F-35 Joint Strike Fighters to India, and a potential US partnership with India to co-develop one or more military weapon systems, including but not limited to the anticipated program to replace the US Air Force T-38 trainer jet”.

“It is in the national interest of the United States… to support India’s rise and build a strategic and military culture of cooperation and interoperability between our two countries, in particular with regard to the Indo-Pacific Region.”--- opined certain Senators.

Senior US officials privately contrast the flowering of the broad US-India strategic relationship with deepening scepticism about the defence relationship.

Read the full Report: US-India Strategic Defence Co-operation

Svipja Technologies

DCNS and Flash Forge India Private Limited Partner for Scorpene Submarines

DCNS has signed an indigenisation contract with Visakhapatnam-based Flash Forge India Private Limited for the supply of critical parts for the Scorpene submarines being built at MDL. MDL is to build six Scorpene submarines under a Rs 20,000 Crore ($4.5 billion) contract and the first of these Project-75 vessels is expected to be commissioned in the Indian Navy in 2015. DCNS, a French Company, is partnering the project.

Flash Forge is a manufacturer of customised special material forgings used for severe service conditions in industries such as defence, aerospace, power, oil and gas, shipbuilding, petrochemicals and process plants.

The indigenous elements to be installed onboard the Scorpene submarines include systems and sub-systems such as engines, pumps, valves, accommodation elements and safety equipment, as also the combat and ship control systems that are part of the Mazagon Procured Materials element of the contract.

MDL is the main contractor It is to sub-contract work to the local players. Together, DCNS & MDL, are qualifying the suitable local companies to partner in the project.

Read Report: DCNS and Flash Forge India Private Limited Partner for Scorpene Submarines

Svipja Technologies

Defence Offsets and SMEs

The defence offset policy needs further revamping to allow small and medium industries (SMEs) to partake in defence offsets. Indian SMEs has a potential in areas like aero structures, landing gear, brakes and wheels, avionics, IT-based design and analysis solutions.

Defence public enterprises which get the offset benefits should outsource at least part of their orders to SMEs.

It is suggested that a permanent regulatory body of specialists should handle all offsets as a single window, preferably it to be a corporate body. It should be empowered to take decisions and guide local suppliers and MNC vendors within Govt. Guidelines.

Click to read an interrelated Article: Defence Offsets and SMEs

Svipja Technologies

French Dassault Rafale and Eurofighter Typhoon Fighter Jets

Eurofighter Typhoon is the front-runner for the USD 11 billion contract of Indian Air Force Multi-Role Combat Airacraft deal, a senior official of the BAE Systems has said indicating that if the contract goes through a part of fighter manufacturing would be off loaded to India.

"The negotiation for crucial commercial terms will begin next month," Michael Christie, Senior Vice President, BAE Systems India told a group of visiting journalists at BAE Systems' production centre at Warton, Lancashire, in UK yesterday.

India had short-listed French Dassault Rafale and Eurofighter Typhoon fighter jets for the project to acquire 126 fighters, while rejecting American Boeing F/A-18 Super Hornet, Lockheed Martin F-16, Sweden's Gripen and Russian MiG-35 fighters.

Dassault and Europefighter have been asked by the Ministry of Defence to extend the offer validity.

Credit: PTI News

Technology Transfer: Aircraft Propulsion System to Replace Existing APUs

This system technology aims to equip existing in-service 50 to 190 passenger aircraft with Aircraft Propulsion System , named, “PlanePower”, to replace the Auxiliary Power Units.

It is a secondary propulsion system (Patents pending) for The Boeing Company, Airbus Industries, Bombardier, and Embraer companies as OEM supplier. It is being developed in the US. The real customers are the Airlines around the World.

Its Objective is to reduce fuel burn on ground by 80% and protect the environment and reduce the noise while reducing recurring operational costs.

There are over 17,600 aircrafts in service which could benefit from the system and represent the retrofit market of over $14 b.The global market forecast anticipates a demand for over 16,600 new single-aisle aircrafts in the next 20 years creating OEM market of over $15 b.

The System does NOT require any electrical, hydraulic, or pneumatic power to taxi the aircraft. It does NOT use aircraft Auxiliary Power Unit (APU) power to taxi. The following companies are developing competing systems / technologies:

1. Delos Aerospace.
2. Chorus Motors, subsidiary of Borealis Exploration, Ltd. of UK – “WheelTug”.
3. The Boeing Company.

All patented systems under development (not yet certified) by the above companies use APU power and / or electrical energy stored to run the motors mounted on the landing gear, whereas “PlanePower” secondary propulsion system is a self-contained.

This technology is available for transfer to a company which is capable of manufacturing the System. Terms can be discussed. Pse contact svipja@airtelmail.in

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Ashok Leyland in Defence and Aerospace

A MoU has been signed between ALDS and KMW Group of Germany which includes scope in development of artillery systems, combat systems, armoured wheeled vehicles, recovery vehicles, bridge laying systems and other similar products. ALDS is a newly formed arm of Ashok Leyland, a Hinduja Group flagship company, in which it owns a 26 per cent stake.

The German firm would provide technology on which a certain amount of customisation would be done and manufactured by ALDS in its existing facility. The details on developing the vehicles and manufacturing are to be finalised,

KMW, a 170-year-old company, has experience in the market for highly protected armoured wheeled and tracked vehicles. It supplies systems like MBT Leopard 2, the artillery system PzH 2000 and the highly protected Dingo 2 to over 30 countries worldwide, in addition to related military wares.

Ashok Leyland, in February, 2010, had signed a principle of co-operation with the Paramount Group, South Africa, for the development and manufacture of mine protected vehicles in India. A vehicle under this tie up is currently in the developmental process.

Article: Ashok Leyland in Defence and Aerospace

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Dhanush, Prithvi-II Ballistic Missiles Test Fired

Two indigenously developed, nuclear-capable ballistic missiles -- Dhanush and Prithvi-II -- were fired of the Orissa coast on 11 Mar 2011. Both missiles have a strike range of 350 km.

'Dhanush' was flight tested from naval vessel INS SUVARNA in the Bay of Bengal, surface-to-surface 'Prithivi-II' ballistic missile was test-fired within an hour from Launch Complex-3 of the Integrated Test Range (ITR) at Chandipur-on-Sea.

"The flight tests were in text book fashion with the missiles reaching the target points with high accuracy," said ITR director S. P. Dash. "All the radars and electro-optical systems located along the coast tracked the missiles and monitored the parameters. The final event was witnessed from a ship located near the impact point," Dash said.

The missiles were launched by the Strategic Force Command as part of the regular user training exercise.

A successful demonstration of Ballistic Air Defence Missile System was held on 6 March, 2011, by DRDO. "The series of successful launches have boosted the morale of scientists and armed forces. The missiles have been integrated under the supervision of Missile Systems Quality Assurance Agency (MSQAA)," a DRDO release said.

Courtesy: Press Trust of India(PTI)

India’s Airborne EW and Control (AEW&C) System

Embraer has unveiled the first of three EMB-145s ordered by DRDO as testbeds for an indigenously developed Airborne Early Warning and Control (AEW&C) System. The three EMB-145 AEW&C testbeds will also be used for a range of tests including cold-weather trials in Alaska.

The first aircraft, equipped with the antenna structure for the phased-array radar under development by DRDO’s Bengalaru-based Center for Air Borne Systems (CABS), is ready for flight testing at Embraer before its scheduled delivery to India in Aug, 2011.

Once delivered, CABS will begin integration of the AEW&C Mission System, which includes the active, electronically scanned array radar, electronic support measures, satellite communications, datalinks and operator workstations.

The full configuration is expected to fly in 2012.

The Indian aircraft incorporates several improvements. These include an in-flight refueling probe; a new electrical generation system with a second auxiliary power unit for the mission suite; and a new cooling system.

Read full Report on Aviation Week: India’s Airborne EW and Control (AEW&C) System


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Raytheon Initiative for India

Raytheon Company is vying for a pie of India’s potential $80 billion defence market in the next ten years. The company is trying to hardsell the Silient Guardian Protection System, the Javelin and the Patriot missile systems and is involved in the coastal surveillance project being carried out by the coast guard, William. L. Blair, the incoming CEO of Raytheon India, said.

Missile transfers are Government to Government engagement. Raytheon is working through the US Government process to determine what we can provide to India by way of technology transfer. In missile systems, there are layers that constitute a systems capability. Raytheon’s approach towards India is likely to be to figure out what weapons we can co-develop with India. All this would be subject to US Govt. approvals.

Raytheon has established relationships with companies such as the Tatas, Godrej, Larsen & Tubro (L&T) and many different Indian companies in the public and private sector to create at least a context in how we can operate. We have also established some pilot projects with some of those partners, where we are actually working on some manufacturing specific to what we will be delivering under the MMRCA, should a platform with our content be selected. We are working very actively with L&T on the T-72 upgrade and with Tata Power Stretegic Electronics Division (SED) for upgrading the infrastructure of the IAF.

Read the full Interview: Raytheon Initiative for India


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Offset Process for MSMEs

India’s aerospace and defence sector is throwing up huge entrepreneurial opportunities worth several hundred million dollars in the form of offsets.

An offset agreement is a stipulation made between a foreign supplier(Obligor) and a local company, which requires the supplier (Obligor) to fulfill certain offset commitments in that country as part of a Prime contract. For the Air India deal, Boeing’s offset commitment is to invest $1.7 billion and for P-8I maritime recce aircraft deal, it is $630 million, President Boeing said.

Boeing has already partnered with TCS , Wipro , Infosys, HCL, Infotech, Tata, etc. The Tier-I companies in the US/EU need to partner with several hundred small companies in India for offsets. As of now, mid-tier companies in India such as Maini, Dynamatic and QuEST support the A & D supply chain directly or indirectly. Opportunities exit for other similar companies to supply to US/EU A & D Companies.

A & D Sector needs skilled labour, capital, technology transfer, equipment and military or civil certification, as appropriate, in US/EU to be part of the chain.

“Entrepreneurs need to have a very good business plan supported by experts in the field. They also might need to partner with Tier-I companies. So, find partners, have a good plan, validated by experts in the field. In this business, there is no reward, if you can’t take risks”, the President said.

TTTHG-Svipja helps You develop business plan in concert with experts in the field from US/EU for You to be capable of becoming part of the supply chain of US/EU A & D Majors. Please read our Industrial Sector Partnership (ISP) Process on this Blog.

Read the Interview of President, Boeing India: International Co-operation and Offsets


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Tata Offset JVs

Tata Advanced Systems Ltd, a subsidiary of Tata Sons Ltd, signed an agreement with Lockheed Martin Corp. to form a joint venture (JV) company, Tata Lockheed Martin Aerostructures, to build aerostructures for the C-130 aircraft produced by the US firm. The Tata Lockheed Martin Aerostructures facility will come up near the Hyderabad airport in the later part of 2011.

Tata Industries Ltd has formed a joint venture with Boeing Co. in 2008 to manufacture defence-related aerospace components in India for export to Boeing and its clients worldwide.

Tata Advanced Systems has also teamed up with Sikorsky Aircraft Corp. and United Technologies to manufacture S-92 helicopter cabins in India.

Report: Tata Offset JVs

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Defence Offset ' Pinks '

It may be difficult to ‘swallow’ an argument that Indian Defence Industry, Govt. and Civil, are not ready to absorb offsets accruing from the ongoing defence projects. Similarly, it may not be a very valid take that any co-development/co-production, low-tech or high-tech, for a system would not develop/build the indigenous defense industry capability; technologies can be put to multifarious usage, contracts permitting.

Recent changes in the Offset Policy in DPP 2011 are to be welcomed. Civil aviation, homeland security and training – equipment, academies, etc – could help our Industry manifold. We need to ensure that we regulate and manage the offsets pragmatically.

The Govt. had initially permitted Direct/Quasi-Direct offsets, but review(s) of the Policy has brought in new areas where offsets can also be discharged. We need not unduly burden ourselves with ‘likely scams syndrome’; just play sincerely and transparently. Everything will fall in place.

Offsets for any major pgme like MMRCA/Others would encompass a fair mix of products/services delivered by an Obligor in certain % in the Offset Programs. These could relate to:

Co-development & Co-production, say about 40%.
Direct Offset Pgms including Infrastructure, say about 30%.
General Indian Defence Industry , say about 20%.
General Security, Training and Civil Aviation Pgms, say about 10%.

DAC/MOD, I am sure, would prioritize, and fix % of offsets delivery in various areas in discussions with the Obligors. And monitor implementation of the pgmes effectively.

Advocacy/Any Fear Psychosis should not derail our acquisition pgms.

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Army Howitzers

The Indian Army is looking at inducting several types of howitzers through inter-governmental pacts and global tenders. It has plans of starting trials for the guns this year and enable their induction by the end of next year.

India is already in an advanced stage of negotiations with the US for procuring over 145 M777 Ultra-Light Howitzers for their deployment in mountainous region. Trials for the 155 mm 52 calibre towed artillery guns are also expected to commence soon involving the BAE Systems and Singapore Technologies. As per COAS, the Indian Army is going through a transformation to emerge as a “lethal, agile and networked” force capable of meeting challenges on both the western and eastern fronts.

Arty upgrade plan may cost up to INR 20,000 Crore. As per reports, RFP for Howitzers has already been issued last week.

Full Report:

Army to Induct Howitzers and Other Arty Arsenal

Indian Private Sector in Defence Contracts

Approvals in-principle given by the MoD for purchase of equipment by the Armed Forces between Mar 2007 and Sep 2010, could generate business worth as much as Rs.87,356 Crore for domestic non-state companies. The DAC has approved the “acceptance of necessity” (AoN) for orders worth Rs.40, 368 Crore in 2010 alone. Private Indian defence equipment makers will be allowed to tender for these projects.

Out of this, equipment worth Rs 30,330 Crore is to be under the “buy (Indian)” Category, Rs 33,814 Crore under the “make” Category, and Rs 8,000 Crore under “buy and make (Indian)” Category. These orders are at various stages of procurement—expression of interest, request for information / request for proposal, technical evaluation, field trials, opening of bids, contract negotiation, financial approval, signing of contract and stage-wise progress for deliveries. In addition, Indian Private Sector companies get orders for subsystems/components etc., from OFs, DRDO and DPSUs.

The total value of defence orders given to private sector companies, between March 2007 and September 2010, is worth Rs 21,193 Crore.

Private Sector A & D Companies have also participated in 51 offset proposals, which are at various stages of processes/implementation.

Click for Report:

Indian Private Sector in Defence Contracts

DRDO to Test Upgraded Ballistic Missile Defence Next Month

After carrying out major upgrades, India will testfire an advanced version of its indigenous Ballistic Missile Defence(BMD) System in February allowing it to destroy enemy rockets at a much higher altitude. As part of its efforts to protect itself from enemy missiles, India is developing a two-tier BMD which can intercept enemy missiles at exo-atmospheric (outside the Earth’s atmosphere) altitudes of 80 km and endo-atmospheric (inside the Earth’s atmosphere) heights of 30 km.

Under the improved system, the DRDO-developed missile shield will intercept missiles at exo-atmospheric altitudes of 150 km and endo-atmospheric height of 80 km, DRDO sources told PTI here. The system is being upgraded after DRDO felt that a capability to intercept enemy projectiles at higher altitudes would give it more response time in case the first attempt is a miss and the second layer of the system can be put into action.

Sources said with India facing a theatre-based threat and not a global one from an Inter Continental Ballistic Missile (ICBM), such a capability would also give it an advantage in terms of the area covered by the missile defence system.

The system was first test-fired in November 2006 elevating India into the elite club of four countries to have successfully developed an Anti-ballistic missile system, after United States, Russia and Israel. Last year, DRDO conducted the fourth in a row successful test of the endo-atmospheric interceptor missile at an altitude of 15 km. Sources said if the tests prove successful, the DRDO will go ahead with the deployment of the BMD by 2015.

Courtesy: Colonel (Retired) PN Khera, ADNI News Agency.

DPP 2011 , Revised Offsets Policy, Defence Production Policy 2011, and Supplement 2010 to DPM 2009

Defence Procurement Procedure (DPP 2011) including Revised Offsets Policy, Defence Production Policy, and Supplement to Defence Procurement Manual 2009 has been released by the MOD, India.

The scope of the offset Policy Guidelines has been expanded to include Civil Aerospace, Internal Security and Training within the ambit of eligible products and services. The List of the Eligible Offsets includes most aspects of the Civil Aerospace, including ac, both fixed wing and rotary, air frames, air engines, ac components, avionics, ac design & engg services, ac material and technical publications, flying and technical training institutions. And a wide range of weapons and services for counter-terrorism for ‘internal security’.

All this will provide wider range of offset opportunities to Obligors, and help build the indigenous capability.

Please read the Docus on http://mod.nic.in/dpm/welcome.html

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Pentagon Notifies Apache Helicopters Sale to India

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

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

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

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

Full Report: Pentagon Notifies Apache Helicopters Sale to India

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

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

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

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

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

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


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India – Russia Partnership

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

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

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

Read More: India – Russia Partnership

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Current Media Debate on Defence Offsets and Implementation Process

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

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

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

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

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

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DRDO in Nano-Technology Research

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

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

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

Please Click: DRDO in Nano-Technology Research


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Defence Offset Policy Debate

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

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

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

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

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

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

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

Full Report : Offset Policy Debate

We need to wait and watch, advocacy notwithstanding.

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Update India SAM Missile Systems

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

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

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

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

Read full Report: Update India SAM Missile Systems


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Dassault Systems and Infosys in Pact

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

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

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

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Credit: PTI, New Delhi.

DRDO Delivers Life Support System For Tejas

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

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

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

Full Report: DRDO Delivers Life Support System For Tejas


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

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

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

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

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

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

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


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Defence Offsets India Until Oct 2010

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

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

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

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

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

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

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India's UAV Rustom I Takes to Air

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

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

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

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

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

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India-Russia Co-operation for 5th Generation Aircraft

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

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

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

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


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The Research Center Imarat (RCI)

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

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

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

Courtesy: USIBC and Its News Agencies.

EoI: Tactical Communications System (TCS) for the Army

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

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

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

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

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

Click for the Report: EoI for TCS Issued

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Boeing-Mahindra Progress on Aerospace Parts Procurement

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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


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MOD Floats RFI for 6 Submarines

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

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

Read more: MOD Floats RFI for 6 Submarines

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

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

The letter urges the following specific policy reforms:

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

Demands from MoD by the US/EU Offset Consortium

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

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

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