Weekly Defence News Report (WDNR) - June 21-27, 2010

Rs 15,000 crore Sukhoi deal cleared

Josy Joseph, The Times of India, June 26, 2010

The Cabinet Committee on Security earlier this month quietly cleared one of the biggest defence orders of recent times. The almost Rs 15,000 crore order for an additional 42 Sukhoi-30 MKI fighters would add up the total number of these modern Russian fighters for Indian Air Force to 272. When the entire Sukhoi-30 MKIs, including the 42, are delivered to IAF by around 2018, it would become the single largest type of fighters in service, marking a huge technological transition from the dominance of MIG-21 fighters today. A senior official said the CCS cleared the new order in the first week of June. By the time HAL begins manufacture of the 42 aircraft sometime in 2014, each of them would cost in the range of Rs 350 crore, according to present day projections. The new order for Sukhoi-30 MKIs comes even as attention is fully on the tender floated by the Air Force for $10 billion worth 126 MMRCA (medium multi role combat aircraft). But by the time the MMRCA enters the service, it would be the Sukhoi-30 MKI that would actually be the dominant fighter of the Air Force. And the combined contract value of SU-30 MKIs would be more than double that of the MMRCA. The Su-30 MKI was originally contracted in 1996, when the Russian military-industrial complex was in a shambles after the Soviet Union collapsed. Its design and capabilities, however, continues to impress globally. The initial contract was for 50 fighters, at $1.46 billion. Over the years, the numbers kept increasing. In 2000, the government contracted the licenced production of 140 of these highly advanced fighters by the Hindustan Aeronautics Limited. Then another 40 were added to the contract. The present order for 42 fighters was originally supposed to be 40, but two more were added to the order book to make up for the two crashed fighters. A senior official said that HAL is expected to complete all the SU-30 MKI orders by 2016-17 period. HAL has been steadily stepping up its Sukhoi-30 MKI delivery schedules. While last year it delivered 23 of these fighters, this year it is expected to produce 28. HAL has already supplied 74 of these fighters.

LCA's Naval version prepares to roll out

Sify News, June 26, 2010

India's first indigenous Naval Light Combat Aircraft, the LCA (Navy) NP1 is scheduled to roll out from the Hindustan Aeronautics Limited (HAL) Aircraft Research and Design Centre (ARDC) design hangar on July 6.The Defence Ministry has said that the aircraft will be an important milestone for the prestigious Naval Program of Aeronautical Development Agency (ADA), Bangalore. The Chief of The Naval Staff Admiral Nirmal Verma would be the Chief Guest at the function. 'Roll-Out' is a significant milestone when the aircraft is brought out of the build hangar, where the aircraft is actually assembled part by part, ready for the phase of systems integration tests leading to Ground runs, taxi trials and flight. Once the ground based tests are completed, the NP1 is expected to fly by the end of this year and the NP2 is likely to fly by the end of 2011. The aircraft, with state of the art technologies and punch, is designed to operate from the future Indigenous aircraft carriers the Navy plans to acquire. The LCA (Navy) program was sanctioned by the Government in 2003. The first stage of development includes design and fabrication of one Trainer and one Fighter, NP1 and NP2 respectively, along with a Shore Based Test Facility (SBTF) at Goa. The SBTF will be used to simulate carrier take off and arrested landing. The NP1 would be flying with the GE-F-404-IN20 engine and is designed for ski jump take off and arrested landing. The only carrier borne aircraft in the light category in the world, it will be operating with a wide variety of operational weapons and equipment like the Beyond Visual Range (BVR) missile, Anti-ship Missiles, Conventional bombs, Air Defence guns, CCM's and drop tanks. The Indian Navy, the Centre for Military Airworthiness and Certification (CEMILAC) and Directorate General of Aeronautical Quality Assurance (DGAQA), in the development of its aircraft, have played an important role right from its inception supporting the program.


Lift ban on DRDO, ISRO, India tells US

The Economic Times, June 25, 2010

India has asked the US to remove vital defence research organisations ISRO and DRDO from the entities list. ISRO and DRDO were put on American technology export control blacklist after the 1998 Pokhran nuclear blast. “Now that the Indo-US relationship has gained a new momentum with the Strategic Dialogue, it makes no sense to keep vital research organisations like Indian Space and Research Organisation (ISRO) and Defense Research and Development Organisation (DRDO) in the entities list,” commerce and industry minister Anand Sharma, who is on a visit to the US, said. The minister also asked US companies to invest in defence sector in the country and assured major liberalisation in the FDI policy. In his interaction with US officials, the minister said it was high time that the US removed restrictions placed on DRDO and ISRO as they are very actively involved in partnership or in co-ordination with the US agencies. The minister also said India cannot be bracketed with other countries as its record in missile and nuclear non-proliferation was exemplary. On the investments in defence sector , the minister said technology inflow would not be restricted to defence field only but also have multiple industrial application. “We are open to foreign investments in defence. India is willing to change. We have friendly investment regime and there is very little negative list,” he said. On the demand to raise the FDI cap in defence sector to 49%, the minister said a debate was on the country which could lead to a change in the policy.

Govt may allow higher FDI in Defence
Mayur Shekhar Jha, NDTV.com, June 23, 2010

Finance minister Pranab Mukherjee has said that the government is on track, when it comes to foreign investment in defence. He was speaking at the Indo-US CEO forum in Washington. The finance minister's assurance comes after the department of industrial policy and planning had moved a discussion paper earlier this year, recommending up to 74 per cent FDI in the defence sector. Sources in the government say that in the near term, the government would only look at raising the cap to 49 per cent from 26 per cent at present. The finance minister's words would have also reassured several Indian corporations including Tatas, Mahindras, Larsen & Toubro, BHEL and BEML, along with international players like Lockheed Martin, EADS and Raytheon, who are looking for a share of the defence pie. However, the move could blow up into a political debate. “The move could lead to an increased dependence on foreign capital for our defence needs,” said Prosenjit Bose, convener of the research wing of the CPI(M). To address these concerns, the DIPP (Department of Industrial Policy and Promotion) discussion paper has suggested the use of specific riders, such as imposing a condition that the successful bidder would have to set up the system integration facility in India with a certain minimum percentage of value addition in India. The hurry on government's part is quite understandable. India is one of the largest users and importers of conventional defence equipment and ranks among the top ten countries in the world in terms of military expenditure. According to estimates, nearly 70 per cent of our defence requirements are met through imports – a trend that the government wants to reverse, but cannot do so, unless foreign expertise, technology and capital is not tapped.