eye on defense april 2012

31
Indian defence budget 2012-2013: an analysis 02 DOFA: a single window mechanism 08 Alenia: C-27J ‘SPARTAN’ Tier 1’s 13 Request for Information (RFIs) 15 Request for Proposal (RFPs) 16 List of industrial licenses (ILs) filed from 01/01/2012 TO 29/02/2012 17 New projects/investments/contracts 18 Joint ventures and alliances 21 Country-level deals and initiatives 23 Industry buzz 24 Sources 28 April 2012 Eye on defence Dear readers, The first quarter of the New Year has witnessed some significant developments in the Indian defence sector. Recently the 7th Defence Expo was held in Delhi in the last week of March. There was certainly some reduction in the fanfare and glamor, which was expected following the MMRCA decision. The coinciding of the Defexpo with the financial year closing also had an impact with most senior level representatives of Indian companies being present only for selected periods of time. The Union Budget was also presented in the Parliament on 16 March 2012. Keeping with the trend the defence budget was increased by double-digit percentage points (17.6%) over the previous year. With the MMRCA now almost certain to be signed within this fiscal, the adequacy of the defence budget is likely to be tested. Last but not the least, there were a flurry of articles in all major news-papers and the internet about the amendments to the Offset policy. Noticeably these amendments permitted ToT as offsets and also intro duced the concept of multipliers. However there has been no official statement or release or document uploaded on the MoD website to this effect. In our current issue, we have analyzed the latest defence budget; proposed certain methods of imple-menting the recent changes to the offset policy (official announcement awaited) and described the Tier-1’s of Alenia Aermacchi’s C-27J “SPARTAN” platform, which is in contention for multiple programs in In-dia. We hope you enjoy reading this issue of the Eye on Defence. It has been our constant endeavor to make this publication more relevant to you and would appreciate your comments and suggestions in this re-gard. K. Ganesh Raj Partner and Leader Aerospace and Defence Practice

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Page 1: Eye On Defense April 2012

• Indiandefencebudget2012-2013:ananalysis 02

• DOFA:asinglewindowmechanism 08

• Alenia:C-27J‘SPARTAN’Tier1’s 13

• RequestforInformation(RFIs) 15

• RequestforProposal(RFPs) 16

• Listofindustriallicenses(ILs)filedfrom01/01/2012TO29/02/2012 17

• Newprojects/investments/contracts 18

• Jointventuresandalliances 21

• Country-leveldealsandinitiatives 23

• Industrybuzz 24

• Sources 28

April2012 Eye on defence

Dearreaders,

ThefirstquarteroftheNewYearhaswitnessedsomesignificantdevelopmentsintheIndiandefencesector.

Recentlythe7thDefenceExpowasheldinDelhiinthelastweekofMarch.Therewascertainlysomereductioninthefanfareandglamor,whichwasexpectedfollowingtheMMRCAdecision.ThecoincidingoftheDefexpowiththefinancialyearclosingalsohadanimpactwithmostseniorlevelrepresentativesofIndiancompanies

beingpresentonlyforselectedperiodsoftime.

TheUnionBudgetwasalsopresentedintheParliamenton16March2012.Keepingwiththetrendthedefencebudgetwasincreasedbydouble-digitpercentagepoints(17.6%)overthepreviousyear.WiththeMMRCAnowalmostcertaintobesignedwithinthisfiscal,theadequacyofthedefencebudgetislikelytobetested.

Lastbutnottheleast,therewereaflurryofarticlesinallmajornews-papersandtheinternetabouttheamendmentstotheOffsetpolicy.NoticeablytheseamendmentspermittedToTasoffsetsandalsointroducedtheconceptofmultipliers.HowevertherehasbeennoofficialstatementorreleaseordocumentuploadedontheMoDwebsitetothiseffect.

Inourcurrentissue,wehaveanalyzedthelatestdefencebudget;proposedcertainmethodsofimple-mentingtherecentchangestotheoffsetpolicy(officialannouncementawaited)anddescribedtheTier-1’sofAleniaAermacchi’sC-27J“SPARTAN”platform,whichisincontentionformultipleprogramsinIn-dia.

WehopeyouenjoyreadingthisissueoftheEyeonDefence.Ithasbeenourconstantendeavortomakethispublicationmorerelevanttoyouandwouldappreciateyourcommentsandsuggestionsinthisre-gard.

K. Ganesh RajPartnerandLeaderAerospaceandDefencePractice

Page 2: Eye On Defense April 2012

Indian defence budget 2012–13: an analysisTheGovernmentofIndia(GoI)initsUnionBudget2012-13hasearmarkedINR1,934billion(US$42.97billion)fordefence,increasingitby17.6%ascompareddefenceallocationofINR1,644billion(US$36.536billion)in2011–12.Thedefencebudget2012–13accountsfor12.97%ofthetotalgovernmentexpenditureand1.9%ofGDP.INR795.79billion(US$17.68billion)hasbeenallocatedforcapitalexpenditureandINR1,138.28billion(US$25.29billion)hasbeenallocatedforrevenueexpenditure.Theattacheddiagramshowsthedefencebudgetallocations(includingcapitalandrevenue)inthelastthreeyears:

Share of services In2012–13,theArmywithanapproximatebudgetofINR969.43billion(US$21.54billion)accountsforthehighestshareofaround50%;atadistancefollowedbytheAirForcewithINR475.59billion(US$10.56billion),whichaccountsfor25%ofthedefencebudgetandtheNavy,withanapproximatebudgetofINR217.58billion(US$4.83billion),whichaccountsfor19%ofthetotaldefencebudget.DefenceResearchandDevelopmentOrganization(DRDO)withINR106.35billion(US$2.36billion)allocation,andordnancefactories(OFs)withINR4billion(US$0.088billion)allocationtogetheraccountfor6%ofthetotalbudget.ThepiediagramdepictedbelowgivesusthepercentagesharedbydefenceservicesinDefenceBudget2012–13:

Defence budget = Capital + Revenue

13.33 15.37 17.68

19.4121.38

25.29

32.7436.75

42.97

05

101520253035404550

2010 - 2011 2011 - 2012 2012 - 2013

Am

ount

in U

SD b

illlio

n

Capital Revenue Total defence budget

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Capital expenditureThecapitalexpenditure,whichismeantforacquiringnewweaponsystemsandplatformshasbeenscaleduptoINR795.79billion(US$17.68billion),a15.7%hikefromlastyear’scapitalallocationofINR691.99billion(US$15billion).However,theactualcapitalexpenditure(revisedestimates)wasINR661.43billionin2011–12,whichwillmeanthatactualhikeisaround20%.Inotherwords,thisyeartheMoDsurrenderedINR30.56billion(4.41%)asunspentfromitscapitalhead.But,theoverallshareofcapitalexpenditureasapartoftotaldefenceexpenditurehasactuallyfallento41.11%from42.09%fromthepreviousfinancialyear.

Share of defence services in defence budget 2012–13

Indian Army50%

Indian Air Force24%

Indian Navy19%

OF+DRDO6%

Miscellaneous 1%

Share of capital: Revenue 2011-12

Capital expenditure42%

Revenue expenditure58%

Share of capital: Revenue 2012-13

Capital expenditure41%

Revenue expenditure58%

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Currently,allthethreesegmentsoftheArmedForces,theArmy,theNavyandtheAirForce,areonatransformationdrivetoacquireplatformsandweaponswithcutting-edgetechnology,whichareexpectedtobefinalizedin2012–13.Thegraphgivenbelowshowsthesuballocationsandpercentageshare,outofthetotalcapitaloutlayallocatedtothedifferentservices:

Thecapitalacquisitionsallocationshastocaterforcommittedliabilitiesfortheyearfromtheorderssignedpreviousyearsandarelikelytobeincurredonaccountofthefreshschemes,duringthefinancialyear.Thecommittedliabilitiesasondatearearound65%–70%ofthetotalcapitaloutlay,thusleavingaround30%–35%onlyfornewschemes.Underthecapitalhead,oftheINR795.79billion(US$17.68billion)nearly70%oraroundINR550billion(US$12.22billion)willbeforcommittedliabilities,thusleavingaroundINR250billion(US$5.55billion)forfreshpurchases.Withtheimpendingdefenceacquisitions,theabilityoftheGoItocompletenewpurchasesiscomparativelymorelimitedthanbefore.Amongthedealsinthefinalstagesfor

whichthecapitalexpenditureislikelytobespentuponinclude126fighterjetsforUS$20billion,sixmid-airrefuellingaircraftforUS$2billion,75traineraircraftforUS$1billion,US$647for145UltraLightHowitzers(ULH),197utilityhelicoptersforUS$750million,22attackchoppersvaluedatUS$600millionandGEF414-INS6enginesforindigenousLightCombatAircraft(LCA)TejasandHarpoonanti-shipmissilesestimatedatUS$170million.Besides,aUS$1.18billiondealtoprocure490MICAmissilesforMirage2000Hmultirolefighters,42additionalupgradedSukhoi-30MKIaircraft,around40warshipoftheNavy,includingrefurbishmentofanaircraftcarrierandnuclear-poweredsubmarine,areunderconstructionathomeandabroad.

Revenue expenditureInthebudgetfor2012–13,therevenueexpenditure,whichcaterstotheeveryday“operating”expenditureofthethreeserviceshasbeenraisedtoINR1,138.28billion(US$25.29billion)ascomparedwithlastyear’srevenueallocationofINR1,035billion(US$23.62billion).

IAF38%

Capital expenditure 2012–13: Service wise

IA: Indian Army; IN: Indian Navy; IAF: Indian Air Force; DRDO: Defence Research & Development Organization; OFB: Ordnance Factory Board

IA24%

IN12%

DRDO6%

OFB1%

Naval Fleet17%

Miscellaneous 2%

Revenue expenditure 2012–13: Service wise

IA: Indian Army; IN: Indian Navy; IAF: Indian Air Force; DRDO: Defence Research & Development Organization; OFB: Ordnance Factory Board

IAF16%

IA68%

IN11%

DRDO5%

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Defence budget 2012–13: key statisticsThedefencebudgetfor2012–13hasbeenincreasedby17.6%overthepreviousyear’sallocation.Theincreaseinthedefencebudgethasthefollowingimpactonalmostallkeycomponents(seeTable).Onthepositiveside,however,theratiobetweenrevenueexpenditureandcapitalexpenditurehasimprovedtowardtheformer.

Comparison defence budgets, 2010-11, 2011-2012 and 2012-13

2010–11 2011–12 2012–13

Defencebudget($inbillions) $32.74 $36.75 $42.97

Growthofdefencebudget(%)overPreviousyear

3.98% 11.59% 17.63%

Revenueexpenditure($inbillions) $19.03 $23.62 $25.20

Shareofrevenueexpenditureindefencebudget(%)

60% 58% 59%

Capitalexpenditure($inbillions) $11.95 $13 $17.29

ShareofcapitalexpenditureindefenceBudget(%)

40% 42% 41%

Growthofcapitalexpenditure(%) 25.40% 15.33% 15.70%

Revenue vs. capital expenditureThepercentageshareofcapitalallocationinthedefencebudgetascomparedtorevenueallocationhasseenadeclinethistime.Thisgrowthhas,however,beendrivenprimarilybecauseoftheincreaseinpayandallowanceofthearmedforces,whichhasincreasedby27%toINR631.82billion(US$14.04billion),accountingforaround46%growthofthetotaldefencebudget.

Budget utilizationThedefencebudgetfor2011–12hasbeenrevisedupwardbyINR65.21billion(US$1.44billion)toINR1,709.36billion.However,unliketherevisedestimatefor2010–11,inwhichboththerevenueexpenditureandcapitalexpenditurewerehigherthantheirrespectivebudgetestimates,therevisedesti-matefor2011–12showsanincreaseinrevenueexpenditure(byINR9,576.32millionor10.06%)anddeclineincapitalexpenditurebyINR3,056million(or4.41%).Thus,thisyeartheMoDhasreturnedaboutINR30.56billion(US$0.67billion)butfreshmajorpurchasesin2012areexpectedtobeexecutedin2013,whichgivesanimpressionthatthenextrevisedcapitalbudgetmayevenexceedtheearmarkedINR800billion(US$17.77billion)in2012–13.Returningofunspentcapitalfundsshowsalackofplanning,asisevidentfromthepast.

Utilization of allotted capital budget (amount in USD billion)

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012

$=45INR BE RE BE RE BE RE BE RE BE RE

CE 9.32 8.38 10.67 9.11 12.18 10.63 13.33 13.52 15.38 14.7

BE-RE 0.94 1.56 1.56 -0.19 0.67

CE-CapitalExpenditureBE-BudgetEstimateRE-RevisedEstimate

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Itistobenotedthattheprocurementprocesshasthuspickedupandtheallocationshavebeenfullycommittedasagainstsurrenderearlierasshowninthetableandfigureabove.Therevisedestimatefor2011–12alsoshowsonlymarginalsurrenderofaround4%.

Impact analysis IndiahasanannualcapitalexpenditureofaroundUS$15billion,andistheworld’sbiggestimporterofdefenceequipment,accountingfor10%ofglobalarmsimportsbetween2007and2011.WhileIndia’sdefenceimportsareofficiallyputat70%,theactualfigureisconsiderablyhighandislikelytobearound85%,ifimportsmadequietlybydefencepublicsectorcorporations(DPSUs)areincluded.

AlthoughIndia’sdefencespendinghasmorethandoubledinthelastfiveyears—fromINR960billiontoINR1,934.07billion—butthemilitaryestablishmentstillfeelsthatthefinancialoutlayshouldbefurtherincreasedtobeefupcapabilities.Inrealterms,thisincreaseamountstoINR289.92billion(US$6.44bil-lion)inthetotaloutlayfordefencefor2012–13comparedtothedefencebudgetforthepreviousyear(2011–12).However,ifwetaketherevisedestimatesofthebudget2011–12thenthisbudgetedestimatehasseenanincreaseof13.1%fromthepreviousyear’srevisedestimateofINR1,709.36billion(US$37.98billion)in2011–12.TheGoI’sfinebalancingofresources,risinginflationandtheexchangeratevariations(ERV)leadingtosharpdevaluationoftheIndianrupeeagainsttheUSdollar,havecausedthedefenceservice’smodernizationbudgettobeeffectivelyreducedforthefirsttimeindecades.

Theshareofthisyear’sdefencebudget,whichaccountsforonly12.97%(approx.)ofthetotalCentralGovernment’sexpenditurefortheyear2012–13hasseenadeclineascomparedtolastyear.Also,themoneyallocatedfordefenceisbelow2%oftheGDPwhereasahealthydefencebudgetisexpectedtobebetween2.5%and3%ofthecountry’sGDP.Thisyear,thedefencebudgetconstitutes1.90%oftheGDP(estimatedtobeINR101598.84billion(US$2257.75billion).Itwas1.83%oftheGDPin2011–12andwas2.2%in2010–11.Whatissignificantisthatitisthesecondsuccessiveyearwhenthedefencebudgetwaslessthan2%oftheGDP.ThefiguregivenbelowshowsthedeclineinGDPindefencebudget.

Capital budget: Spending

9.316 10.67 12.18 13.33 15.38

-10%-15 %

- 13%

1%-4.5%

0

2

4

6

8

10

12

14

16

18

2007 -2008 2008 -2009 2009 -2010 2010 -2011 2011 -2012

Am

ount

in U

SD b

illio

n

Budget estimate Budget unspent Budget over-spent

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Thearmedforces,andeventheParliament,havebeenaskingforanallocationof3%ofthenation’sGDPtodefenceforalongtimebuttheprojectedGDPofthisyearfallsshort.Itistobeseenthatifoureconomygrowsataround8%perannum,itwillnotbedifficultfortheGoItoallocatearound3%ofGDPforNationaldefence.

Acloserlookatthegrowthofthecapitalbudgetfor2012–13wouldrevealthatthefocusisentirelydrivenbytheNavy,whichhasgota72%hike(toINR241.51billion)initsmodernizationbudget.TheAirForce’smodernizationbudgethasincreasedmarginally(by0.5%)toINR285.03billion,whiletheArmy’shasdeclinedby3%toINR138.04billion.Trendsinservice-wiseallocations,especiallyincapitalbudgets,suggestthatIndia’scurrentmilitarymodernizationisweightedheavilyinfavoroftheAirForceandtheNavy,whichtogetheraccountforINR540billionapproximately(US$12billion).Thisconformstoalargerdefencelandscapewheretheaerospaceaswellasmaritimedomainsarelikelytoplayacriticalroleinfuture.However,whatisofconcernistheincreasingrevenueallocationfortheArmyatthecostofcapitalacquisitions.TheArmy’smodernizationhasalreadybeenhitbycancellationofmajorpurchases,especiallyinartillery,armoredandsoldiermodernizationandcombathelicopterequipment.Theobsoleteairdefencesystems,shortageoftankammunitionanddeficienciesinnight-fightingcapabilitieshasadverselyaffectedtheArmy’scapabilities.UnlesstheMoDcatchesupwithatleastreplenishmentrequirements,theArmyislikelytolagbehindinoverallmodernization,whichinturnwillcausemoreproblems.

Notwithstandingabove,thestrategicshiftinthethreatperceptionfromconventionalwartoasymmetricalchallengeshavetobekeptinmindduringresourceallocationbesidesmaintainingafinebalancebe-tweendefenceanddevelopment.Theeventualobjectiveofwaristobreakdowntheadversary’seconomicprowessbyneutralizingstrategicassets.Ourendeavorshouldbetofocusonthoseareasaswell.Thedefenceforceswilldowellincasetheyrationalizethetooth-to-tailratio.Timehascometodiscardthebaggage,whicharenotrequiredinthepresentoperationalenvironment.

Note: The conversation rate for $: INR has been kept at 1:45 for sake of uniformity and standardization with the previous figures.

Share of defence budget in GDP

0

0.5

1

1.5

2

2.5

In p

erce

ntag

e

2008-2009 2009-2010 2010-2011 2011-2012 2012-2013

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DOFA: a single window mechanismBackgroundIndiaisprobablytheonlycountryintheworldthathasaninstitutionalizedmechanismforfacilitationofOffsets.TheMoDclearlylistsoutthenuancesofthepolicy,itsprocedures;etc.Yesthereisscopeforimprovement,butthetransparencyshownbytheMoDcannotbeoverlooked.

ThefirstDPPthatincludedOffsetsimplementationwaspromulgatedin2005butthefirsteffectiveDPPinthisregardisalwaysregardedasDPP2006,whereindetailedguidelinesforimplementationofoffsetsdischargewasincorporatedaspartofDPP2006.Atthattimeitwasenvisioned,mostappropriately,thatthereisaneedforagovernmentagencythatislikelytoactasafacilitatorforforeignOEMsandIndianindustryalike.Herewasagovernmentthatincluded―consultancy―perseasoneofthefunctionstotakethisgreatinitiativeforwards.Thethinkingwithinthegovernmentthenwastocreateavibrantstructure,yetprovidetheOEMswithallpossibleassistancetoensurethesuccessofimplementationinOffsets.IfoneobservedthefunctionsandscopeofworkassignedtotheDOFAthen,itisevidentthatthissingleorganizationwasintendedtoworkhard,collectanddisseminateinformation,provideAdvisoryservicestotheindustryaswellastothegovernmentarmsinthisbusiness,provideforane-solutionbycreatingandsustainingadynamicwebsite,bethefrontendforfacilitationandyetremaininthebackgroundtoaidinthedecision-makingprocessoftheacquisitionunderconsideration.

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How it all startedSoonafterthepromulgationoftheDPP2006,DOFAwasfoundedandwasestablishedaspartoftheDDP.AsmallorganizationwasputinplaceheadedbytheJointSecretary(Exports).Soonafter,aweb-sitewasalsolaunched,whichincludedtheextractoftheDPP,theprocedureforimplementationofoffsetguidelines,listofcompaniesthatrequiredanindustriallicenceandafewinteractivefeaturesforqueries.DOFAwasasinglewindowadvisoryfortheIndiandefenceindustryandthevariousassociationssuchasCII,FICCI,ASSOCHAMandforeignOEMs.

DOFA,initsenvisionedform(ofhavingmembersfromtheindustryassociations,andotherstakeholdersasamulti-disciplinaryorganization),existedfornotmorethanthreemonthsorsowhenallthemembersasindicatedinthepolicywereinvitedforDOFAmeetings.Mostprobablytwosuchmeetingswereheldafterwhichitfeltthatsuchanextendedbodywasnotwasreallyrequired.DOFAreallymeanttheChairperson,whoheadedtheorganizationandthePO(CAP)undertheDirectorP&C,whowasassignedtheadditionalresponsibilityofOffsetsaswell.ThisleanorganizationwaseffectiveintheformativeyearsandprovidedthesinglepointadvicetotheServices(TOEC),theMoD(CNC)andtheindustry.

TheeffectivenesscameaboutfromthesingularfocusthatDOFAmaintainedtillthen,―TobeacredibleAdvisoryandFacilitateinimplementation,unmindfulofauthority―.ThenameDOFAisself-explanatory,itisafacilitationagency,andstrivestoprovideservice,provideinformationandadvicetoallthestakeholders.

Lost focusTheyears2006,2007andearlypartof2008witnessedfructificationofsomemajordealssuchastheNavalFleetTanker,theMaritimeReconnaissanceandSurveillanceaircrafts,upgradestotheMig29andprocurementofHelicoptersamongothers.Thesewereabouteightornineinnumberandaccountedformorethanacoupleofbilliondollarsinoffsetsalone.Despitesuchmajorprogramshavingbeenfinalizedandmanymoreunderprocess,DOFAwasneverstrengthenedtoeffectivelytakeontheincreasedwork-load.RevisionstoDPP2006wereatthebehestofsomeverysoundfeedbackfromtheenvironment,whichincludedaprocedureforBankingofOffsetscreditsandremovalofthecompulsorylicensingconditiontoestablishtheeligibilityoftheIndianOffsetpartner.Atthisjuncture,insteadofstrengtheningtheDOFA,itwasfeltmoreprudenttointroduceyetanotherorganizationintheDDP(someonecalledDirectorS1,hithertolookingaftersupplieswingundertheJointSecretary(Supplies),intheDDP)tobemaderesponsibleforbankingofoffsets.

Duetothisnewstructure,severalbankingproposalsthatareinthequeue,onlytwohavebeenapprovedevenafterfouryearsofintroduction.Thecruxofthismattercanpossiblebetracedtothedilutedresponsibilitiesinthenewstructureandasaresult,oneofthemostimportanttoolstobeintroducedintheoffsetpolicyisyettotrulyplayitsroleinoffsetdischarge.

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What is needed?AsharpfocusisexpectedofDOFAtoenabletheorganizationtodischargeitsfunctions.Anypolicy,howeverwellitisintentioned,andhoweverwellitisdrafted,canfail,iftheoriginalgoalsarelostdowntheroad.

• Asingle-windowapproach,fortheindustrytoseekguidanceandthenecessarysupportintheirendeavorstobeabletoefficientlyexploitthisopportunityprovidedbytheoffsetpolicy

• Integratethestrengthsofthegovernmentandincorporateaholisticapproach

• Strategizetheconceptsinimplementationbeforepromulgatingyetanotherpolicyandstructures

Implementation strategyOneofthequestionsthatemergeis,―shouldDOFAremainafacilitationagencyordoesithavesomemeritinupgradingitselfontoanauthorityofsorts―?

Consideringtheenormousamountofmoneyinvolvedintheprocurementprocessandsubsequentlyinoffsets,manyanalystshaveputthefigureofoffsetsatUS$5billioninthenextthreeyears,thenumbersinvolvedareofthehighestmagnitude,wrestingallthecontrolofOffsetsinasinglehandcouldbepotentiallyfraughtwithdanger.AllthismoneyisthroughindustrialparticipationguidedbytheavenuesfordischargeasenunciatedbytheDPP,inthechapter,―Procedureforimplementingoff-sets’provisions―.

Consideringtheavenuesfordischargeandthesubsequentprocessforapprovals,itcanbeseenthatthereisnosingleagencythatiscompletelyresponsibleforapprovals.Thishasadvantagesaswellasdisadvantages.Theprosarethat,distributedresponsibilitydoesnotconcentratepowerinonehandanddivergentviewsareexpectedtobefreelyairedwithoutbeingafraidofconsequences.Thegreatestdisadvantagethishasisthatthereisnotime-boundsolution.Theprocesscanbeindefinitelydelayedandtheblamecanbepassedfromonetoanother.

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Asingle-windowmechanismisexpectedtoresolvemostoftheissuesandwillexpeditethedecision-makingprocess.Theindustry,bothdomesticandforeign,willnothavetokeeprunningfromoneofficetoanother,inanefforttoresolvetheirqueriesandproblems.

DOFAneedstobefocusedonfacilitationandbededicatedtothiscause.Thisisanimportantcause,thoughwithoutanypowersassignedtoit.Theentireindustry,researchanalystsandworldforumsseektoattributemanyreasonstowhyimplementationofoffsetsinIndiawillnotsucceed,bothfromanangleofpoorimplementationbytheMoDaswellasthelackofcapabilitywithintheIndianindustry.Whilethecapabilityhasindeedcomealongwayandwillonlyenhanceinthecomingyears,boththroughorganicand

inorganicmethods,focusoneffectiveimplementationisanimmediateneed.TheMoDmustdecidedlyupholdtheoriginalcauseforfacilitationandencouragetheindustrytoexploitthisimportantforum.TheclarificationsprovidedbyDOFAmust,inmostcases,bebindingonthegovernmentwhileprocessingthecasesatalaterdate.ThiswillencourageOEMstoseeknecessaryadvanceclarificationpriortostructuringtheirproposals.

Thismeans,thenewsinglewindoworganization,whichthegovernmentisintheprocessofestablishing,mustincorporateasoundfacilitationarmandretainasoundAdvisoryinsidethegovernment,bothforinternalpurposestoeducatevariousstakeholders.ThisfacilitationarmcancreateandsustainaninstitutionalmemoryandrefreshtheannalsofMoDandtheindustryinaperiodicmanner.Thisfacilitationarmcanalsoactastheknowledgepartnertothesinglewindowoffsetauthority.TheMoDcandowelltooutsourcethistasktotheindustryonaPPPmodel.

Inordertobeanapostleofknowledge,thefacilitationarmmusthaveintimateinteractionwiththeindustry,bothdomesticandforeign.Thereisalsoarequirementofanin-depthunderstandingoftechnologyasitrelatestodefencepreparednessofthecountry.Towardthisend,thefacilitationarmmustalsoincorporateexpertsinthefieldofeducation,technologistsandhaveaccesstoknowledgethatresidesinthevariousresearchinstitutionsinthecountry.

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ThenewandvibrantOffsetAuthoritythatisintheprocessofbeingformedneedstobeasingle-windowagencythatincorporatesafacilitationarm,whichisalsoaknowledgearm,andaseparateexecutionarm.TheExecutionArmmustnecessarilysynergizethestrengthsavailableinthegovernmenttoformaformidableauthority.

So what are the strengths available within the MoD?DRDOistheTechnologyArmoftheMoDandhasinherentstrengthstoprovideforback-boneresilience.IntimateassociationwiththeDRDOisaninescapablerequirement.Adetailedknowledgeofthetechnologiesbeingharnessedacrossvariouslaboratories,therequirementsoftheArmedForces,technologiesinvogueacrosstheArmedForcesoftheworld,needtobestudiedandgapsidentified.ThenewOffsetAuthoritymaynotdotheentireprocessing,yetitneedstohaveagoodholdonthesubjectforeffectiveexploitation.TheArmedForcesdoincorporateandusenewtechnologiesandhaveafairideaofwhattheyneedincombat,theymustbeintegratedinasoundmannerinthisprocess.Thus,Services,TheIntegratedDefenceStaff,DRDOshouldbeintegratedintothedecision-makingprocess.

ThenewOffsetAuthoritymustintegrateallactivitiesoffacilitation,banking,processingandevaluations,approvals,monitoring(forbankingandpost-contractmonitoring),andcoveralltheactivitiesassociatedwithoffsets.Thiswillensureaccountabilityandeffectivenessinimplementation.Theintegrationwiththeacquisitionprocessmustbefullandtotal,leavingnoroomforanydelaysintheacquisitionsduetothelethargyoftheOffsetAuthority.

ItistimeforMoDtostrategizetheconceptsforimplementationpriortopromulgatingyetanotherpolicyororganization.Thedrawbacksofthepreviousorganizationmustbestudiedandanalyzedthreadbareandtheneffectivecountermeasuresmustbetakenandimplementedinthenewstructures.ThiswillaugurwellbothfortheMoDandtheindustry.

ConclusionThenewoffsetauthoritybeingconceivedbytheMoDmustberobust,wellstaffedbothintermsofqualityandquantityandincorporatethebestpracticesingovernance.Fromthehighesttothelowestlevel,thestaffmustbededicated.Maybeatlevelshigherthanthis,multi-taskingcouldbepermitted.DRDOmustnecessarilyplayadominantroleinacquiringtechnologyandbeabletofillingapssoidentifiedasalsoaggressivelyfindtheroutetoproduction.

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Alenia: C-27J ‘SPARTAN’ Tier 1’sTheC-27Jisamediumcategorytransportaircraftandsharesmanyofitssystems(RollsRoyceengines)withtheC-130JwhichIndiacurrentlyposses.TheC-27JiscurrentlylookingatparticipatinginmultipletendersthathavebeenfloatedbytheCentralparamilitaryandarmedforces.Theaircraftiscapableoftakingofffromunpreparedstripslessthan500meterslongwithamaximumtakeoffweightof30,500kg.TheaircraftisdesignedtooperateinremoteareaslikethoseinJammuandKashmirandtheNorth-Eastfromgravelorsandasbesidesthetwin-engines,ithasanauxiliarypowerunit(APU)thatprovideselectricityandmaintainspressurewithouttheneedtokeeptheenginesrunningwhentheaircraftisonground.

Atpresent,besidestheUS,theC-27JhasbeenorderedbytheairforcesofItaly,Greece,Bulgaria,Lithuania,Romania,Morocco.Slovakiahasalsoselectedtheaircraft.

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No.

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4Sp

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5Out

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Page 15: Eye On Defense April 2012

Request for Information (RFIs)

January 2012 – 15 April 2012

Date of issue RFI details Response date Issued by Service

6Jan2012 RFIandInteractionwithManufacturersofOperatingTheatreShelterInflatable

11Jan2012 MGO/EM/GS&CRoomNo206

Army

6Jan2012 GeneralPurposeMachineGunforPARA(SF)

20Jan2012 DirectorGeneralofInfantryInfantry-7

Army

6Jan2012 Spares,RepairandOver-haulofMissileTestStation

23Jan2012 DirectorateGeneralOfEME(Electronics)MasterGeneralofOrdnanceBranch

Army

22Feb2012 UnmannedAerialvehicle(UAV)missionsimulatorforUAVcrew

22Mar2012 DirectorateGeneralOfArtillery5 Army

21Feb2012 FullBodyTruckScanners 13Mar2012 MIDte Army

22Feb2012 NightSightforCarbine 10Mar2012 InfDte Army

23Feb2012 OpticalTheodoliteInstrument 15Mar2012 DirectorateGeneralofArtillery5 Army

23Feb2012 ElectroOpticalInstrument 30Mar2012 DirectorateGeneralofArtillery5 Army

15Mar2012 SpecialistVehicle 15April2012 InfDte Army

19Mar2012 Newpowerpackwithminimum360horsepowerengineincludingrunninggearandsuspensionforInfantryCombatVehicle(ICV)BMP-2/2K

30April2012 DGMF Army

13Jan2012 TechnicalAndCommercialInformationForAWIMAXSystem

6Feb2012 JointDirectorofNavalSignals(Networking)DirectorateofNavalSignals

IndianNavy

3April2012 DiverNavigationSystem 20April2012 DirectorateofSpe-cialOps&Diving

IndianNavy

1April2012 SurveillanceRadar 23April2012 HQCACBamrauliAllahabad

IndianAirForce

20Mar2012 DeepSearchMetalMineDetector(DSMD)

2April2012 CRPF CRPF

1April2012 SurveillanceRadar 23April2012 HQCACBamrauliAllahabad

IndianAirForce

9April2012 ComjamAndSigintAircraft 24May2012 PDASR(RoomNo460)AirHQ(VayuBhawan),RafiMarg

IndianAirForce

11Apr 30mmormoreADGun 30Apr2012 DGWE(WE-9)GeneralstaffbranchRoomno208g,southblockIntegratedhqmod(army)Dhqpo,NewDelhi-110011

IndianAirForce

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Page 16: Eye On Defense April 2012

Request for Proposal (RFPs)

Date of issue RFP details/equipment Response date Issued by Remarks

19Jan2012 GPSforAviationNavigation 19March2012 ArmyCommanderSpecialFinancialPowerCellNorthernCommand

ForArmy

7Feb2012 CounterTerrorismOperationsPlanningToolandWargamingSystem

14April2012 WARDEC ForArmy

7Mar2012 LightWeightBPJacket 12Mar2012 INSAbhimanyu ForNavy,Qty:48

11Jan2012 Portableairsupply&communicationsystem

30Jan2012 CommanderOperationsOfficer

ForNavy

24Feb2012 ExpressionofInterestforTechnicalConsultancyServicesforPhaseIIAofProjectSeabird,NewDelhi

21Mar2012 DirectorGeneralProjectSeabird

ForNavy

23Jan2012 HandHeldLEDTorcheswithAccessories

13Feb2012 SOPROVOSTHQWACIAF

ForIndianAirForce

21Feb2012 RepairoverhaulofRussianoriginaggregatesofIllushinaircraftofIAF

3Apr2012 DEngTIAirHQ(VB)

ForIndianAirforce

27Jan2012 SupplyAndInstallationOfCCTVSurveillanceSystem

27Feb2012 WingCommanderUnitsLogisticsSectionTrainingCommand

ForIndianAirForceQty:12Nos.

30Jan2012 FUZETANDPDANO213P-MK-5(M-2)

28Feb2012 OrdnanceFactoryDehuroad,Pune

ForOFBQty:10190

15Feb2012 SmokelessPyroxylenePropellantPowderfor14.5MMAmmn.

20Mar2012 OrdnanceFactoryKhamariaJabalPur

ForOFB

15Feb2012 SmokelessPyroxylenePropellantPowderfor14.5MMAmmn.

20Mar2012 OrdnanceFactoryKhamariaJabalPur

ForOFB

3Mar2012 PowerUnitPartNo.1155261,completeasperBOMandDrg.AttachedasAnnexure-Ifor155mmFHGun

10April2012 JointGeneralMan-agerGunCarraigeFac-tory

ForOFBQty:06

14Feb2012 ImageIntensifierTube18mmAVGGlassI/P

20Mar2012 OrdnancefactoryDehradun

ForOFBQty:352units

Jan2012 ExplosiveDetectionKit 15Feb2012 DeputyInspectorGeneralofPolice,CentralReservePoliceForce

ForCRPFQty:10Nos.

30Jan2012 HandHeldThermalImagersandAccessories

14Mar2012 Directorate-General,CRPF ForCRFPQty:100

23Feb2012 GlobalPositioningSystem 17Mar2012 CRPF CRPF,Qty:77

4April2012 AmmunitionforShootingcompetition

18May2012 DirectorateGeneral,BorderSecurityForce

ForBSF,Qty:882400Rounds

4April2012 Dopplerradarsystemforvelocitymeasurementofsub-sonicandsuper-sonicprojectiles

29May2012 IndianOrdnanceFactoriesAMMUNITIONFACTORY,KHADKI

ForOFB

2April2012 RubberizedinflatableBoatswith25HPOBM

15May2012 DirectorateGeneral,BorderSecurityForce

ForBSF,Qty75No’s.

January 2012 – 15 April 2012

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Page 17: Eye On Defense April 2012

List of industrial licenses (ILs) filed from 01/01/2012 TO 29/02/2012Application no. and date Name of the applicant Item of manufacture

1:5/1/2012 MistralSolutionPvt.Ltd. Defenceelectronicshardwareboards

2:6/1/2012 TataAdvancedMaterialsLtd. ManufactureofpartsandaccessoriesN.E.C.foraircraftorspacecraft

3:31/01/2012 VinyasInnovativeTechnologiesPvt.Ltd. Electronicprintedcardboard,assemblies/electronicsubassemblies/militarywireharnessesfordefenceandaerospaceapplication

4:31/01/2012 ElcomemarineservicesPvt.Ltd. Systemintegrationforelectronicsincludingdesignandproductionofcustomizedhardwareandsoftware(GUI/APIbased,aswellasembedded)(NIA620)

5:7/2/2012 TaraAerospaceSystemsLtd. Componentskits/accessoriesforaircraft(rotorcraftsandfixedwingaircraft)

6:13/02/2012 NavanidhiElectronics(P)Ltd. Antennas,HF/VHF/UHF/RFpoweramplifiers,electroMechanicalmasts,securityjammers,mo-bileJammers&cellphonejammers,microwavesystemsandcomponentsforEWequipment,V/UHF,l-bandDigitallytuneablefilters,activenightvisionandfogvisionequipment

7:22/02/2012 PipavavDefenceandOffshoreEngineeringCo.Ltd.

Manufactureoftanks(armoredfightingvehicles)gunTurrets(landandsea),artillerysystems(includingupgradesandoverhaul)

8:22/02/2012 UniqueInstruments&Mfrs-Pvt.Ltd. Manufactureofaircraftandengineparts,ac-cessoriesandsub-assemblies

9:23/02/2012 SriLakshmiExploChemicals Solderingoffuseheaduntoinsulatedtwinwiresofprecutlengths,sleevingandtagging

10:29/02/2012 AshokLeylandDefenceSystemsLtd. Designdevelopment,manufactureassembly,overhaul,repairandupgradeofdefenceequipmenttoincludearmoredfghtingvehicles,otherarmoredcombatvehicles,unmannedground/aerialvehicles,armorprotectedvehicles,specialistvehiclesetc.

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Page 18: Eye On Defense April 2012

New projects/investments/contracts

Name of entity Project details Value

BharatDynamicsLtd.(BDL)

• BDLplanstosetupasurface-to-airmissileunitinHyderabadwithacapacitytoproduceanestimated6,000sophisticatedmedium-rangemissiles.

• Theplantspreadover630acresisexpectedtobeoperationalby2016andcreateemploymentfor700peopledirectlyand2,000indirectly.

INR300billion

IndianAirForce

• GOIhassignedcontractswithM/sThales,FranceandM/sDassaultAviation,France,aswellasM/sHindustanAero-nauticsLimited(HAL),IndiatoupgradetheMirage2000aircraftoftheIndianAirForce(IAF),scheduledtobecompletedby2021.

• AnothercontracthasbeensignedwithM/sMBDA,France,forprocurementofair-to-airmissilesfortheMirage2000aircraft.Thedeliveryofmissilesisscheduledbetween2015and2019.

ContractwithM/sThalesandM/sDassaultAviation:INR101.66billionContractwithM/sHAL:INR20.2billionContractforpro-curementofthemissiles:INR66.25billion

PawanHans

• Indiangovernment-ownedPawanHanshassubmittedaproposaltofourcentralministriesseekingthepurchaseof249helicoptersand10seaplanesandtheconstructionof180helipadsacrossIndia.

• Theaircraftandhelipadswillimproveaerialsurveillance,law-and-ordermonitoringandIndia’sresponsetomedicalemergenciesandnaturaldisasters.Thisisalsolikelytomakeatleast30%ofIndia’sdistrictsandmanyremoteareasmoreaccessible.

INR100.30billion

Defencepublicsectorunits

• FourdefencepublicsectorunitsaresettingupninemanufacturingunitsinAndhraPradeshthatisexpectedtocreate10,000jobsinthestate.

• ThisincludesBharatDynamicsLtd.(threeunits),BharatElectronicsLtd.(3units),ElectronicsCorporationofIndiaLtd.(2units)andMishraDhatuNigamLtd.(MIDHANI)(oneunit).

INR70billion

GovernmentofIndia

• TheRussianAkula-IIclasssubmarine“K-152Nerpa”wascommissionedintotheIndianNavyas“INSChakra”ona10-yearleaseagreement.INSChakra,commissionedatthePrimoryeregioninfarsoutheasternRussiawillsoonbesenttoIndia.

• Withthis,Indiahasbecometheworld’ssixthcountryaftertheUS,Russia,France,theUKandChinatooperatenuclearpoweredsubmarines.

INR46.67billion

GovernmentofIndia

• TheGoIispurchasing75PilatustraineraircraftfromSwitzerland.Deliveriesoftheaircraftareexpectedtobeginin2013.

• ThePilatusaircraftislikelytoreplacetheearlierHPT-32trainersthatweregroundedafterafatalaccidentin2009.

INR18.50billion

Poland

• Bumar,Polish-basedsupplierofarmamentsanddefencesignedanexportcontractforarmoredunitstotheIndianarmy.

• ItalsosignedanagreementwithBEMLstipulatingco-operationonprojects,includingsalestothird-partymarkets.

INR15.56billion

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Page 19: Eye On Defense April 2012

Name of entity Project details Value

Pratt&Whitney

• Pratt&Whitney,unitofUnitedTechnologies,isexploringtosetupanMRO(maintenance,repairandoverhaul)unit,anaircraftenginecomponentsfacilityandatrainingcenterinIndia.

• Thecompanyisholdingtalkstoset-upaJVwithTatasandL&TandtheproposedunitisexpectedatBangaloreorHyderabad.

INR7.78billion

BharatEarthMoversLimited(BEML)

• BEMLinitiatedtheprocessofsettingupanAerospacemanufacturingdivisionnearBangaloreairport.Thefacilitywillbespreadover3,00,000sqftandisexpectedtobereadybySeptember2012.

• ThisAerospaceFacilitywillbecapableofmanufacturingaerospacecomponentsandparts,assemblingofaircraftandhelicopterupto21metersheight.

INR4.45billion

TataMotors

• TataMotorsLtd.willinvesttobuildafactorysubjecttosupplyorderof2,000infantrycombatvehiclestotheIndianArmy.

• Thecompanysubmittedabidtwoyearsagotosupplytheinfantryvehicles.

INR3billion

HindHighVacuum

• ―HindHighVacuum(HHV),avacuumtechnologymajorthatsuppliesequipmentforsatelliteandaircraftprojectstoISRO,HindustanAeronautics,DRDOetc.hasstatedplanstoset-upathirdplantnearBangalorefocusingonthedefenceandaerospacebusiness.

• HHVisopentoaforeignequitystakeoraninvestorinitsexistingplant.

• ThecompanywantstoincreaseitspresencegloballyandaimstomorethandoubleitsturnovertoINR5billionby2014(fromnearlyINR2billionthisfiscalyear).

INR2-3billion

IndianCentralBoardofExciseandCustoms

• SmithsDetection,partoftheUK-basedglobaltechnologybusinessSmithsGroup,haswonacontracttosupplytheIndiancustomsauthoritieswithhigh-energy,X-rayscreeningsystems.

• SmithsDetectionwillworkinpartnershipwithBharatElectronicsLimitedandwilldeliverthesystemstotheportsofChennai,Tuticorin,KandlaandMumbaioverthenexttwotothreeyears.

INR1.04billion

KalyaniGroup

• KalyaniGroup,adiversifiedIndianconglomeratewillinvestINR1billiontodevelopatowedartilleryguntomeetthefutureneedsofthecountry’sarmedforces.

• Itisdevelopingthegunonitsownwithatechnologypartnerandhashired60expertsforitsdevelopment.

INR1billion

MinistryofDefence

• ThedefenceministryispurchasingsixMi-17V-5helicop-tersfromRussiatobeusedbytheUnionHomeMinistrytoassisttheforcesininternalsecurityduties.

• ThesehelicoptersarebeingbuiltbyRussianHelicopters’KazanHelicopterFactory(KVZ)subsidiary.

NA

HindustanAeronauticsLtd.(HAL)

• AnewunitofHALatSeethangoli,KeralawasinauguratedinFebruary.Theunitwillprepareindigenousdesignsandassemblecomponentspurchasedfromabroadforthearmedforcesaircraftandchoppersandstate-of-the-artcommunicationequipment,radioaltimeterusedinradardevicesandnavigationradarcomputers.

NA

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Page 20: Eye On Defense April 2012

Name of entity Project details Value

BharatElectronics(BEL)

• TheCoastGuardhasselectedBharatElectronics(BEL)toprovideturnkeysurveillancesolution.

• BELhasalsogivenacontracttoObzervTechnologiestosupplyitwith46ARGC-2400cameras.

• ThisprogramisthefirstphaseoftheIndiancoastalsurveillanceprojectdesignedtocovertheentirecoast.

NA

Russianairplane-buildingcorporation(RAC)-MiG

• Russianairplane-buildingcorporation(RAC)-MiGcompletedsupplyofshipbornefightersMiG-29K/KUBin-tendedforaircraft-carrierVikramadityatothenavyofIndiainlate2011.

• Thecontractonsupplyof16combatairplanesinthesingle-seatversionK(shipborne)anddouble-seatversionKUB(shipbornecombattraining)wassignedin2004.

• Thecompanyhasalreadystartedproductionofthenextbatchof29suchfightersinaccordancewiththeadditionalcontractsignedwithIndiainMarch2010.

NA

IndianRotorcraft

• IndianRotorcraft,aJVcompanyofTataSonsandAgustaWestland,hasproposedtosetupanassemblylineforhelicoptersinHyderbadona10-acresite.TheJVwillcommenceproductionfromJune2013andwillinitiallyproducetheeight-seaterAW119Kelighthelicopter.

• Thefacilitywillbecapableofproducingupto30helicoptersperannum.

NA

TataPowerStrategicElectronicsDivision(SED)

• NewZealand-basedRadiolaAerospaceLimitedhaswonafour-yearcontracttoundertakeflightinspectionsofnewnavigationaidsat30militaryairfieldsthroughoutIndia.

• ThecontractisawardedbyTATAPowerSED.TataPowerSEDholdsaprimecontractwiththeIndianMoDtomodernizethefacilitiesatairfieldsoperatedbytheIndianAirForce.

NA

*ThevaluesofthedealshavebeenconvertedtoIndianRupeesusingOandacurrencyconversiontool

1US$=INR51.8521(Valuesason31March2012)

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Joint ventures and alliances

Name of entities Nature of transaction Value

DCNSandSECIndus-tries

• ―DCNS,aFrenchnavaldefencecompanysignedacontract(throughDCNSIndia)withHyderabad-basedSECIndustriesforthelocalmanufacturingofequipmentfortheP75Scorpenesubmarines.

• SECwillmanufactureequipmentunderaTOTprovidedbyDCNSIndiaandtheywillbedeliveredtoitscustomer,MazagonDockLimited(MDL).

INR3.1bil-lion

Larsen&ToubroandThalestLtd.

• TheelectricalandautomationbusinessdivisionofL&TacquiredThalest,UK-basedproviderofshipcontrolandautomationsystems.―

• Theacquisitionisaimedatexpandingtheautomationofferingsforships.

INR240million

IndustriadeTurboPropulsoresandReginsonEngineeringLtd.andRaghuVamsi

• ―Spanishmanufacturerofturbinesforaircraftengines,IndustriadeTurboPropulsores(ITP),inalliancewithBritishfirmReginsonEngineeringLtd.andIndianfirmRaghuVamsihavesetupaplantinIndiawithanobjectiveofex-pansionanddiversification.

• TheagreementwassignedbyITP’ssubsidiaryTuberiasAeronauticaswiththelocalfirms.

• Theproductionoutputisplannedtodoublein2014whereasthenumberofemployeeswillbemorethan100people.

INR165.98million

RelianceIndustriesLtd.andDassault

• RelianceIndustriesLtd.(RIL)andFrenchDassaultAviationSAhavesignedapreliminaryagreementtoexploredefenceprojectsinalliance.

• Thetwocompaniesareyettoidentifyareaswheretheycancollectivelywork.

NA

TTI,Inc.andRadiantCorp

• ―TTIenteredanagreementwithRadiantCorporationtosupplyinterconnects,electromechanical,andpassive(IP&E)components.

• RadiantmanufacturesitsownrequirementsofcompositecablesandrecentlyenteredthefieldofaviationgradecableloomsandwiringharnessestoparticipateinthegrowingoffsetbusinessgeneratedasaresultofaircraftsupplycontractstotheIndianArmedForces.

NA

MahindraandMahindraandRafael

• Mahindra&MahindraannounceditsJVwithRafaelthatwillfocusondevelopmentandmanufacturingofproductssuchasTorpedoDefenceSystems,ElectronicWarfareSystems,AdvancedArmourSolutionsandRemotelyOperatedWeaponStationsforFuturisticInfantryCombatVehicles(FICV).

• AmanufacturingfacilityisexpectedtobesetupinPune.Mahindrawillowna74%stakeintheJVwithRafaelandisexpectingaturnoverofUS$500millioninthenext10years.

NA

Larsen&TubroandNexter

• Larsen&TubrosignedanagreementwithFrenchdefenceproductscompanyNextertojointlybidfortheIndianarmy’sartillerygunprograms.

• NexterisexpectedtotransfertechnologyforitstowedandmountedgunsystemstoL&T.TheIndiancompanyplanstoassembleNexter’sCaesarandTrajangunsinIndia.

NA

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Name of entities Nature of transaction Value

Larsen&ToubroandSamsungTechwinCo.

• ―Larsen&ToubroLtd.enteredanagreementwithSouthKoreandefenceproductscompanySamsungTechwinCo.tomakehowitzergunsinIndia.

• Thecompanieshavealreadysubmittedabidtosupplyupto100gunstotheIndianarmy.

NA

SelexGalileoandDataPatternsPvt.Ltd.

• ―SelexGalileoandDataPatterns(India)Pvt.Ltd.willseekapprovalfromtheGoItoformaJVtomakedefenceelectronicsproducts.ThetwocompanieswillestablishanewfacilityatChennai.

• SelexGalileowillholda26%stakeintheplannedjointven-ture(JV)andplanstoemploy100peopleinitially.

NA

ITTExelisandTataAdvancedSystems(TASL)

• ITTExelisandTataAdvancedSystemsLimitedhaveformedastrategicalliancetosupportGeneration(Gen)3nightvisionrequirementsinIndia.

• ITTExeliswillprovideTASLwiththetechnologytobuildnightvisiondevicesinIndia,whichwillbefollowedbymanufactureofhighprecisioncomponentsandsub-assembliesofthedevicesbyTASL.

NA

DHSSystemsandBharatElectronics

• ―DHSSystemsInternational,manufacturerofsheltersenteredIndianmarket,throughalongtermdealwithBharatElectronicsLimited’sNaviMumbaiunit.

• DHSSystemsInternationalaimstogeneraterevenueofINR1billioninthenextthreeyearsfromthedefenceandhealthcaresectorsinIndiaandalsosetupamanufactur-ingfacilityby2015.

NA

DCNSandIITBombay

• ―NavalDefenceCompany,DCNSenteredanagreementwithIITBombayforeducationandresearchprogramsinnavaldefenceandenergy.

• AccordingtotheMoU,R&DprogramswillbecarriedoutjointlybyIITBombayandDCNSResearchteamswhiletrainingofDCNSpersonnelwillbeconductedbyIITBombay.

NA

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Country-level deals and initiatives

Country Nature of transaction Additional details

US ForthefirsttimeinIndo-USwargames,theAmericanswilldeploytheirtanksinthecompany-levelExerciseYudhabhyasscheduledtobeheldintheMahajanfieldfiringrangesintheRajasthandesertinMarch.

Apartfromfieldingthreetanks,theUSwillalsodeployaround200menaccompaniedbyarmoredpersonnelcarriersforthewargames.

IndiawillfileitsRussian-originBMPsalongwithtanksforthewargame.

Russia TheMoDplanstopurchasesixMi-17V-5heli-coptersfromRussiatobeusedbytheUnionHomeMinistry.

Throughthepurchase,theMinistrywillassistitsforcesengagedininternalsecurityduties.ThesehelicoptersarebeingbuiltbyRussianHelicopters’KazanHelicopterFactory(KVZ)subsidiary.

Currently,thedefenceministryisnegotiatingpurchaseof59Mi-17safteritsfirstorderof80suchhelicopterstotheRussiancompany.

Brazil(Defencetalks)

ThetalksbetweentheDefenceministersofIndiaandBrazilwereheldinIndiainFebruary2012.

TopicsofdiscussionrevolvedaroundcooperationinthenavalsectortobuildaircraftcarriersandsubmarinesoftheScorpeneclass,expansionoftheexistingvacanciesforexchangeofmilitaryofficers,andcoursesofhighereducationofferedbythemilitaryschoolsofbothcountries.

OtherkeyareasontheagendaincludedtalksonpartnershipsbetweenBrazilianandIndianarmiestoestablishresearchcentersfordevelopmentofdefenceequipmentthatmeetthefutureneedssuchastheBorderMonitoringSystem(Sisfron),talksrelatedtotheirrespectiveairforces,exchangesbetweenschoolsofpilots,aerospacemedicine,searchandrescueoperationsandparachuting.

Australia TheSocietyofIndianAerospaceandTechnol-ogies(SIATI)andAviationAerospaceAustralia(AAA)haveforayedintoalong-termpacttojointlydeveloptheaerospaceindustryinboththecountries.

Theagreementhassignaledanewlevelofcooperationandthecollaborationislikelytohelpboththeorganizationstoshareknowledge,developdomainexpertiseandtransferskills.

Singapore AirChiefMarshalNAKBrowne,ChiefoftheAirStaff,wentonafourdayDefenceCooperationvisittoSingapore.

Thediscussionissuesrevolvedaroundtheongoingdefencecooperationbetweenthetwocountriestowardexpandingthealreadyrobustbilateralmilitary-to-militarytiesandalsoavisittheSingaporeAirShow.

SriLanka Inauguraldefencedialoghastakenplacebe-tweentheDefenceSecretariesofIndiaandSriLanka.

RegionalsecuritysituationincludingissuesofmaritimesecurityintheIndianOceanregionwerethekeythemesattheinauguralannualdefencedialog.

Japan JapanesedelegationledbyAdmiralHisayasuSuzuki,theCommandant,JapanCoastGuard(JCG),fortheXIHighLevelMeetingandCombinedExercisesmetwiththeIndianCoastGuard(ICG).

Thefive-dayvisit,wasinpursuanceoftheMemorandumofCooperation(MoC),signedbetweenthetwoCoastGuardson24November2006,whichstipulatesthattheheadsofthetwoorganizationsmeetalternatelyinIndiaandJapan,todiscussmaritimeissuesofmutualconcernsandformulateacooperativeapproachtoaddressthese.

SaudiArabia TheIndianandSaudiarmedforcesarelikelytoconductjointexercisesinvolvingSaudiandIndianshipvisitsfrombothsidesandtoworkcloselytocombatseapiracy.

Thejointcommitteewillalsoprepareadraftagreementthatwillbeendorsedbybothsidesinthefieldofhydography.Thetwosidesintendtodiscussthedetailsoftheirfuturedefencecooperation,includingthedetailsofanagreementinthedefencesector.

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Industry buzz

Stronger role of private sector in DefenceTheprivatesector’sroleintheDefencesectorislikelytogetstrengthened,underthe“ArmedForcesLong-termIntegratedPerspectivePlan”soontobemadepublicbytheUnionGovernment.Underthe15-yearplan,theprivatesectorwillhaveagreaterroleinmeetingtherequirementsofthearmedforces,intermsofinvestmentandinresearchanddevelopmentoftechnologysuchaselectronicwarfare.

(Source:“GreaterroleforprivatepartiesinDefencesector,”TheHindu,23February2012,viaFactiva,©2012Kasturi&SonsLtd.)

Electronic warfare proposition attractive for IndiaIndiacouldsoongetaccesstoelectronicwarfare(EW),thescienceofelectronicallydodgingandattackingtheenemy,withanINR250billionbusinesspropositionawaitingthecountry’spublicandprivatesectors.Thecountry’smilitarylabswereequippingthethreeforceswithfuturisticEWorintelligentdevices,includingradarwarners,missilewarners,electronicandleak-proofcommunicationintelligence,jammersanddetectors.Thesewillbefittedongroundvehicles,shipsandalsoonunmannedcombatairvehicles,fighterplanesandevenfuturesatellitestoenhancethemilitary’s”seeingandhearing”ranges.Currently,BharatElectronicsLtd,(BEL)isamajorproviderofEWhardwareandsolutionstothemilitary.

(Source:“ElectronicwarfareoffersRs25,000-crbizforIndiaInc.,”BusinessLine(TheHindu),22February2012,viaFactiva,2012TheHinduBusinessLine.)

Government extends support on Defence PSU JV’s TheofficialguidelinesonformationofaJVbyDefencePSU’sareanattempttowardafairandtransparentframeworktoenablesuchtie-ups.AcaseinpointistherecentcontroversyaroundtheJVbyMazagonDockLtd.,ashipbuilderundertheMinistryofDefence,withtheprivatelypromotedPipavavShipyardforconstructingwarshipsfortheNavy.TheGoIisrespondingtotheseconcerns,withtheguidelinescontainingprovisionsonselectionofJVpartnersbytheDefencePSUs.

(Source:“Indefenceofjointventures,”BusinessLine(TheHindu),13February2012,viaFactiva,2012TheHinduBusinessLine.)

Indian records success in missile test fireIndiahasachievedanotherdefencemilestonebysuccessfullyflight-testingoneofitssophisticatedin-terceptormissilesfromWheelerIslandinOrissa’sBhadrakdistrict.TheinterceptornamedAdvancedAirDefence(AAD),destroyedatargetmissile.Thetestwaspartofacoordinatedairdefenceexercise,whichfeaturedtwomissiles—aninterceptorandatargetmissile.

(Source:“Advancedinterceptormissiletest-firedsuccessfully,”TheTimesofIndia,12February2012,viaFactiva,2012TheTimesofIndiaGroup.)

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Ministry of Defence debars firmsTheMinistryofDefencehasdebarredsixfirms—M/sSingaporeTechnologiesKineticsLtd.(STK),M/sIsraelMilitaryIndustriesLtd.,M/sRheinmetallAirDefence,Zurich,M/sCorporationDefence,Russia,M/sTSKisan&Co.Pvt.Ltd.,NewDelhiandM/sRKMachineToolsLtd.,Ludhiana—fromfurtherbusinessdealingswiththeOrdnanceFactoryBoard,DepartmentofDefenceProduction,MoD,foraperiodoftenyears.ThefirmshavebeenblacklistedbytheCBIontheevidencecollectedagainstthem.

(Source:“MoDDebarsSixFirmsfromBusinessDealingsforTenYears,”PressInformationBureauwebsite,http://pib.nic.in/newsite/AdvSearch.aspx,accessed15March2012.)

Indian IT majors work hard to lure MNC defence playersIndianITcompaniesareworkinghardtoforgepartnershipswithaerospacemajors,asthecountry’sdefencebudgetisexpectedtoreachUS$50billioninthenextthreeyears.SoftwarefirmsareexploringopportunitiesarisingfromoffsetobligationsofmultinationaldefencecompaniesasITadoptionrelatedtocommunication,humanandmachinemanagementinArmedForcesisontherise.Accordingtotheoffsetpolicy,foreigndefencemanufacturershavetobuyfromlocalplayersorformJVstopassback30%ofthecostofthecontract.AcaseinexampleistheWipro’stie-upwithanEuropeanorganizationformanufacturingandglobalsupplyofactuatorsforlandinggears.

(Source:“Softwarecosaggressiveondefenceoffsetpolicy,”FinancialExpress,14February2012,viaFactiva,©2012IndianExpressOnlineMediaPvt.Ltd.)

Hatsoff simulator receives Level D certification AJVofHALandCAE,HelicopterAcademytoTrainbySimulationofFlying(Hatsoff)recentlyannouncedthatoneofitssimulatorcockpitshasreceivedacertificationofLevelD.LevelDisthehighestqualificationforflightsimulatorsandHatsoffhasgotthecertificationforEurocopterAS365N3Dauphinhelicopter.India’sDirectorateGeneralofCivilAviationandtheEuropeanAviationSafetyAgency(EASA)havegiventhecertification.Further,itsthreesimulatorcockpits-aBell412,aHALcivil/conventionalDhruv,andtheEurocopterAS365N3Dauphin-havebeencertifiedasLevel2(JAR)/Level6(FAA)flight-trainingdeviceswhenusedasfixed-base,non-motionsimulatorsinthedockingstationinstalledatthefacility.

(Source:”Simulatorgetsregulators’nod,”DNA-DailyNews&Analysis,13January2012,viaFactiva,2012DiligentMediaCorporationLtd.)

First batch of Mi-17V-5 helicopters made operational in IndiaThefirstbatchofMi-17V-5s,deliveredasperthecontractsignedin2008,hasbeenmadeoperationalbytheIndianAirForces.Acontracton80Mi-17V-5shadbeensignedin2008.Around20helicoptershavealreadybeendeliveredtoIndia.ThesevehiclesarebeingproducedbyKazanhelicopterplant.All80helicoptersareexpectedtobeoperationalby2014.

(Source:”IndiaputsfirstMi-17V-5helicoptersintooperation,”SKRINNewswire,20February2012,viaFactiva,2012SKRIN.)

Delivery of six Scorpene submarines delayedThedeliveryofsixScorpenesubmarines,beingconstructedattheMazagonDockLimited(MDL),Mumbai,underProject-75hasbeendelayed.ThedeliveryscheduleofthefirstsubmarinehasbeenrevisedtoJune2015andthatofthelastsubmarinetoSeptember2018.TheoriginaldeliveryscheduleforthefirstsubmarinewasDecember2012andtheremainingweretobedeliveredwithagapofoneyeareach.

Thedelayinscheduleisbecauseofproblemsinabsorptionofnewtechnology,delayinaugmentationofindustrialinfrastructureatMDLanddelayinprocurementofitemsduetohighcostascomparedtotheearlierindicatedcost.

(Source:“DeliveryofScorpenesubmarinesdelayed:Govt,”19March2012,PressTrustofIndiaLimited,viaFactiva,(c)2012AsiaPulsePtyLimited.)

Cochin Shipyard provides platform supply vessels to SCIIndianshipbuilder,CochinShipyardLtd.,haslaunchedtwoplatformsupplyvesselsforwatertransportcompanyShippingCorporationofIndia(SCI).Theships,BY-85,SCINalanda,andBY-86,SCIYamuna,areplatformsupplyvesselsoftheUT755CDtype,designedbyRolls-RoyceMarineAS,Norway,asubsidiaryofUKengineeringgroupRolls-RoyceGroupplc.

(Source:“CochinShipyardlaunchesplatformsupplyshipsforSCI,”SeeNewsShipping,9January2012,viaFactiva,©2012SeeNews.)

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Police department will get access to Electronic warfare technologiesIndiaissettodevelopelectronicwarfaretechnologiestohelpparamilitaryandpolicefighttheMaoistsandterrorists.DefenceResearchandDevelopmentOrganisation’s(DRDO)ChiefControllerResearchandDevelopment(Avionics)G.Elangovansaidthattheagencyhascreatedaseparatechiefcontroller(R&D)forlowintensityconflicttoidentifyelectronicwarfaretechnologiesthatcanbecustomizedtohelpparamilitaryandpolicemeetinternalsecurityneeds.TheDRDOintendstoinvolvetheprivatesectorinco-developingnicheproductsrequiredforlow-intensityconflictwithanti-nationalelementswithinthecountry.

(Source:“Electronicwarfaretechnologiestobedevelopedforpolice,”Indo-AsianNewsService,22February2012,viaFactiva,2012Indo-AsianNewsService.)

IBM’s security intelligence platform to fight cyber attacksIBM’sQRadarSecurityIntelligencePlatformallowsanalysisofreal-timedatafeedsfrommorethan400differentsources.Thecompanymentionedthatthisplatformhelpsinidentifyingthreatsandhackerswithreal-timeanalysisofthetrafficonthecorporateITinfrastructure.

(Source:“IBM’s‘QRadarSecurity’tofightagainstcyberattacks!,”EFYtimes.com,23February2012,viaFactiva,©2012EFYEnterprisesPvt.Ltd.)

Mahindra Aerospace likely to set up plant abroadMahindraAerospace,theaerospacedivisionofMahindra&MahindraGroupisconsideringsettingupplantsfor8-to18-seateraircraftintheUS,Canada,LatinAmericaandChina.Thisisbeingdonetoestablishitspresenceamongthesemarkets.Mahindrahasplanstoincreaseitsbusinessfive-foldbysellingapproximately100aircraftannuallyby2015.ThecompanyisalsolookingforapotentialtechnologypartneraswellasahangertobuilditsownaircraftinIndiaby2013–14.ItalsoaimstobecomeaTierIcomponentsuppliertoaircraftmakersAirbusandBoeingaspartofthegovernment’sUS$10-billionoffsetprogram.

(Source:KetanThakkar,“MahindraAeroPlansAircraftAssemblyAbroad,”23March2012,viaFactiva,©TheEconomicTimes–BangaloreEdition,©2012.Bennett,Coleman&Co.,Ltd.)

Tatas may make choppers if Sikorsky bags defence deal SikorskyAircraftCo,aUS-basedaircraftmanufacturerisamongthetwocompaniesshortlistedbytheMinistryofDefence(MoD)tosupply16multi-rolehelicopterstotheIndianNavyinaUS$1billiondeal.ItiscurrentlyawaitingalicensefromtheGoItomanufacturecomponentsandassemblehelicoptersfortheIndiandefenceservices.

TataSikorskyAerostructures,joint-venturewithTataAdvancedSystemsLtd,islikelytobenefitifSikorskybagsthedefencedeal.

(Source:KVRamana,”TatasmaymakechoppersifSikorskybagsdefencedeal,”4April2012,DNAMoney,viaFactiva,2012.DiligentMediaCorporationLtd.)

Indian firms to provide food and clothing for space mission TwolifesciencelaboratoriesoftheDefenceResearchDevelopmentOrganisation(DRDO)willprovidefoodandclothingfortheIndianastronauts(Vyomanauts),duringthecountry’sfirsthumanspacemission.TheMysore-basedDefenceFoodResearchLaboratory(DFRL)willprovideready-to-eatfoodinspace,theDefenceBioengineeringandElectromedicalLaboratory(Debel)(bothunderDRDO)willdesignandproducethespacesuitsforthefirstvyomanaut’sofIndia.Bengaluru-basedDebel,whichhasalreadydevelopedNuclearBiologicalandChemical(NBC)protectionsuits,flightclothingandprotectiveequipmentforaircrew,hasbeenassignedtodevelopthehighlycomplexspacesuits.ItisthefirsttimethatspacesuitswillbedevelopedinIndia.

(Source:“Debeltodevelopsuitsforastronauts,”DNA-DailyNews&Analysis,13February2012,viaFactiva,©2012DiligentMediaCorporationLtd.)

DRDO launches explosive detection kitsDRDOlaunchedtheExplosiveDetectionKit(EDK)attheDefenceExpo–2012.Itwaschosenamongmorethan70productsandtechnologiesdevelopedfordefenceapplicationswithpotentialcivilianapplicationsthathavebeenidentifiedforcommercializationundertheDRDO-FICCIATAC(AcceleratedTechnologyAssessmentCommercialization)programme.TheExplosiveDetectionKit(EDK),developedbyPunebasedHighEnergyMaterialsResearchLaboratory,canquicklydetectandidentifyeventracesofexplosives.

(Source:“DRDOtoLaunchExplosiveDetectionandSwineFluDiagnosticKitsatDEFEXPO,”PressIn-formationBureauwebsite,http://pib.nic.in/newsite/AdvSearch.aspx,accessed17April2012.)

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Ashok Leyland launches COLT range of defence vehiclesAshokLeylandDefenceSystemsengagedinthemanufactureofspecializedtacticalandarmoredvehiclesunveiledthefirstoftherangeofCOLTtacticalvehicles-theLightTacticalVehicle(4x4)attheDefenceExpo–2012.TheLightTacticalVehicleisbeingdevelopeditsstrategicpartnershipwithFrench-based,PanhardGeneralDefense,France.

(Source:“AshokLeylandDefenceSystemsunveilstheCOLTrangeoftacticalvehicle,”30March2012,ENPNewsWire,©2012,ElectronicNewsPublishing.)

Tata Motors showcases anti-terrorist combat vehicle and launches Prahar missile launcher and armored vehicles at Defence Expo India 2012TataMotorsshowcasedanewMicroBullet-ProofVehicle(MBPV)atDEFEXPOIndia2012,amobilecombatvehicleforindoorcombatinsideairports,railwaystationsandothersuchinfrastructure.TataMotorslaunchedfourotherdefencevehicles—theTata12x12PrahaarMissileCarrier,theTataLightArmouredVehicle,theTataMobileBunkerandtheTata6x67klRefuelerduringtheevent.

(Source:“TataMotorsshowcasesAnti-TerroristIndoorCombatVehicleconceptatDEFEXPOIndia2012;LaunchesPraharmissilelauncherandarmouredvehicles,”30March2012,ENPNewswire,viaFactiva,(c)2012,ElectronicNewsPublishing.)

Eye on defence | 27

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