Weekly Defence News Report (WDNR) - March 22-28, 2010

• L&T to build 36 boats for Coast Guard

March 22, 2010

Reports noted that India’s leading technology, engineering, construction and manufacturing company, Larsen and Turbo (L&T) has bagged an order worth 970 crore from the Ministry of Defence for supply 36 high speed interceptor boats to the Coast Guard. The boats are to be designed by the company’s own design centre and constructed at its Hazira-based shipyard. The MoD’s contract is in view of its various initiatives to strengthen costal security.

• Government mulling 100 per cent FDI in defence; NSC wants extra filter in clearing FDI proposals

May 25, 2010

In what could be major policy development, the government is considering a proposal to allow 100 per cent FDI in defence production. The Ministry of Commerce has sent a ‘note’ to the Cabinet Secretariat for discussion on allowing foreign companies to bring in 100 per cent equity to set up their own manufacturing or integration centres in India. Allaying the concerns that India based fully foreign-owned companies may not be the county’s security interest, the note argues that the same concern remain in case of direct import and hence can not be cited for opposing higher FDI.

In a related developed the National Security Council (NSC), a body which reports to PM, has proposed a layer in addition to the existing Foreign Investment Promotion Board (FIPB), for filtering inflow of foreign equity into the country. The Council’s proposal is in view of concerns “over flow of funds from inimical forces into the nation masquerading as FDI in sensitive areas of defence, telecom, pharmaceutical and airports.”

• Dhanush, Prithvi-II missiles test-fired successfully

March 27, 2010

India successfully test fired on same day two of its indigenously developed, nuclear capable missiles, Dhanush and Prithiv-II. The test was conducted by the country’s Strategic Forces Command (SCF) as part of user-training exercise, in the presence of high-officials from the premier Defence Research and Development Organisation (DRDO). Both the missiles, tested in salvo-mode, hit the pre-identified targets with high degree of accuracy.

Dhanush, a naval version of Prithvi missile, has a flight range of 250 km, and can carry a payload of about 500 kg. The missile has been weaponised on INS Subhadra and Suwarna. Prithvi-II is a surface-to-surface missile, has the same flight range and payload capacity as Dhanush.

• Agni-I test-fired successfully

March 28, 2010

A day after successful test of Dhanush and Prithvi-II missiles, India test succsfully fired its nuclear capable Agni-I missile from the Wheeler Island off the Orissa coast. "It was a fantastic mission carried out by the Indian Army. The test-firing of the Agni-I missile met all parameters," S P Dash, the director of Integrated Test Range. The missile, which can carry one tonne warhead with a flight range of 750 km, was equipped with a new navigational technology to help it to home on to the target.

Rising Dragon, Slumbering Elephant*

World Politics Review, March 26, 2010

Laxman Kumar Behera

Recently, both China and India increased their official defense budgets for fiscal year 2010, to $78 billion and $32 billion, respectively (although according to Western observers, China's actual military spending is up to three times the official figures). In doing so, Beijing raised its defense allocation by 7.5 percent, and New Delhi by just under 4 percent. Besides the differences in absolute budget and percentage growth, the two countries also demonstrate contrasting approaches to achieving their overall military objectives. For China, defense spending is a means toward achieving long-term power ambitions and military supremacy, while India is caught in an exercise of resource allocation, devoid of long-term goals. The result, visible in the two countries' military capabilities, is distinctly favorable to China.

*:The article was first published in World Politics Review on March 26, 2010. To read the complete article click on http://www.worldpoliticsreview.com/article.aspx?id=5338 (freely availabel till April 03, 2010).

Weekly Defence News Report (WDNR) - March 15-21, 2010

India signs final agreement with Russia for Nerpa submarine

March 17, 2010

Reports noted that India and Russia have signed the ‘final lease and training agreement’ for Nerpa K-152 (Akula-II class) nuclear submarine during Prime Minister Vladmir Putin’s recent visit to New Delhi. Under the agreement, New Delhi will send a 50-member crew to Russia for training, following which the over 12, 000 tonne underwater vessel would be leased to India for 10 years. The submarine, to be rechristened INS Chakra when inducted into Indian navy, will however not be armed with long-range nuclear missile as its transfer is prohibited under the international treaty, Missile Technology Control Regime (MTCR). Nerpa’s primary roles will be to train Indian sailors of Indian Navy. The training assumes importance given India’s own indigenous efforts to build and operate a range of nuclear submarines. The INS Arihant, the first nuclear submarine to be constructed by India, is expected to become operational in 2011-12. As per reports, India is planning to “have three SSBNs (nuclear-powered submarines with long-range missiles) and six SSNs (nuclear-powered attack submarines) in the long-term.”

BEML bags 632 Cr defence order

March 19, 2010

Reports noted that BEML, one of the eight defence public sector undertakings under the defence ministry, has bagged orders worth 632 crors for supply of 788 Tatra vehicles. This order comprises of BEML Tatra Variants of 498 Nos of 8x8, 278 Nos of 6x6 (with Winch) and 12 Nos. of 6x6 (without Winch) to Indian Army. All the vehicles are to be delivered to Indian Army within a period of 18 months. The MoD has made 50 per cent advance payment.

Russia to bid for US defence contract

March 19, 2010

Report noted that Russia’s state-owned United Aircraft Corporation (UAC) is planning to bid for US Air Force’s (USAF) $35 billion tanker contract. Russia will however partner with a “small U.S. defense contractor” for its offer, based on Ilyushin Il-96 wide-body jetliner, a four engine airliner. A formal announcement is expected from the UAC on 22 March 2010.

Weekly Defence News Report (WDNR) - March 01-07, 2010

• Private sector sidelined in RS. 10,000 cr TCS project

Reports noted that Ministry of Defence (MoD) is “abandoning competitive” bid to award a 10,000 crore contract to develop Tactical Communication System (TCS) for the Army. The move could sideline six private sector companies - Wipro, Mahindra Defence Systems, Tata Power, L&T, Rolta and HCL – who were vetted by the Ministry to participate in the contract. The state-owned Bharat Electronics Ltd (BEL) is most likely to get the contract.

The TCS, when developed, will be a fully mobile network. It will allow the Army to have “network on which it can safely communicate and transfer data. The advantage of the network is that “messages sent out over the TCS cannot be easily intercepted or jammed since they will not remain on a single frequency; instead, transmissions will hop frequencies, dozens of times every second, in a pre-programmed sequence.”

• China's 2010 defence budget to grow by 7.5%

China’s defence budget for 2010 is planned to grow by 7.5 per cent to 532.115 billion yuan (about 78 billion U.S. dollars), said Li Zhaoxing, spokesman for the annual session of the National People's Congress (NPC). Accounting for 6.4 per cent of total fiscal expenditure, the defence budget will be” mainly spent to support the reform of the country's military and improve its capability to deal with varied threats and complete diversified tasks.” added Li.

Budgeting for India’s Defence: An Analysis of Defence Budget 2010-11 and the Likely Impact of the 13th Finance Commission on Future Defence Spending

The Union Budget 2010-11 has raised the defence outlays to Rs. 1,47,344 crore (US $31.9 billion). This represents a growth rate of a mere 3.98 per cent, in nominal terms (or 0.3 per cent in real terms) over the previous years’ allocation of Rs. 1,41,703 crore, and far below the 34 per cent nominal increase witnessed in the budget for 2009-10. The sudden dip in the defence budget’s growth rate follows two related steps taken by the government. While the first one is related to the government’s resolve about fiscal consolidation, the second is on account of the acceptance by the government of the recommendation of the Thirteenth Finance Commission (TFC). This commentary analyses the latest defence budget as well as the likely impact of TFC’s recommendation on India’s future defence spending.

For complete article click on http://www.idsa.in/idsacomments/BudgetingforIndiasDefence2010-11_lkbehera_030310