F-35 is not an Ideal Choice for India

The recent Pentagon report on US-India Security Cooperation which indicates the possible sale of the F-35 Joint Strike Fighter to India has created a hubbub in the media. Some have even gone to the extent of suggesting that New Delhi should scrap its ongoing, half-a-decade, effort to procure 126 Medium Multi-Role Combat Aircraft from European countries and instead buy the F-35, the only fifth generation fighter that is available for international customers. However, a careful analysis would show that the F-35 is not an ideal choice for India for a variety of reasons ranging from the delay in its developmental schedule, a tight production line, prohibitive cost, India’s own efforts to jointly develop and produce a fifth generation fighter with its traditional supplier, Russia, and little technological or industrial benefits that would accrue to India from the F-35 purchase.

The first and foremost reason why F-35 is not the ideal choice for India is that the fighter is yet to come out from its developmental phase to the production floor and for exports. The radar evading plane, the biggest ever collaborative project involving the US and eight international partners (UK, Canada, Denmark, the Netherlands, Norway, Italy Turkey and Australia), is still facing many design and technological complexities, which have pushed back the original induction schedule by three years from 2013 to 2016. Even if New Delhi believes in the revised induction schedule and places orders now, deliveries to India are unlikely to commence immediately thereafter. With over 3,000 assured orders for the F-35, including 2,443 units from the US alone, Lockheed Martin, the prime contractor for the plane, would be constrained in meeting its export obligations before executing the existing orders.

The second reason why F-35 is of little relevance to India is because New Delhi’s own efforts to jointly build and develop the Fifth Generation Fighter Aircraft (FGFA) with Russia. Consequent to the government-to-government agreement in 2007, India’s state-owned Hindustan Aeronautics Ltd (HAL) and Rosoboronexport of Russia signed an agreement in 2010 for the preliminary design (PD) of the FGFA at a cost of $295 million. As per the agreement, HAL and Sukhoi Design Bureau (Russia) will undertake the PD for 18 months, followed by Full Scale Design and Development to be undertaken in a separate contract. India has already made it clear that it wishes to procure around 250 FGFAs, with the likely induction starting from 2018 onwards. Given this, it will be quite difficult, if not impossible, for India to go with the US which would be the only county in the world to operate two classes of 5th generation fighters (F-22 and F-35) in the coming years.

The third reason why F-35 is not an ideal choice for India is because of the fighter’s prohibitive cost. As reported by the Pentagon’s Select Acquisition Report, issued in December 2010, the unit procurement cost of F-35 (at 2010 prices) stands at $132.8 million. For the non cost-sharing international customers, the unit cost would be much higher because they are expected to pay a part of the F-35’s developmental cost, which has ballooned to total nearly $55 billion at the end of 2010. The higher price for non-partnering nations is evident from the unit cost of $144.7 million that Israel has agreed to pay for 19 of these fighter aircraft. At this price tag, affordability becomes the key issue for India, whose whole annual defence capital acquisition budget barely matches with the US’s one year F-35 acquisition cost. Although it can be argued that a few F-35s can perform the role of many existing or planned planes in the IAF’s inventory, this argument does not hold ground as the ongoing debate in India between numbers and capability still favours the former.

Last, but not the least, from the defence industrial and technological point of view, there is little that India can benefit from the procurement of F-35, which, if at all happens, will most likely be an off-the-shelf purchase, rather than involve technology transfer to India for license production. Technological secrecy has been a major cornerstone of the US defence programme in general and F-35 in particular. It is noteworthy that despite the F-35 being a multi-country developmental project, core technologies have been denied by the US to its partnering nations. This has often been a stumbling block between the US and its cost-sharing partners, forcing some to threaten to quit the project or reduce their procurement numbers of F-35s from what was originally intended. Even the UK, the closest ally of the US and the only level-1 partner for the F-35 programme, has been denied some core technologies to independently maintain and upgrade the fighter. Compared to this likely technology denial, India’s initial contribution to the FGFA is believed to be around 25 per cent, which can progressively increase if HAL shows maturity in its indigenisation process. Given the technological and industrial benefits of the FGFA and the absence thereof with respect to the F-35, it makes little sense for India to choose the F-35

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.

Weekly Defence News Report (WDNR) - March 29-April 04, 2010

• India launches third indigenous destroyer, INS Chennai

April 01, 2010

India launched its third destroyer, INS Chennai at Mazgoan Docks Ltd (MDL). The 130-meter long indigenously designed warship, to be constructed under the code name Project 15-Alpha, will be inducted into Navy in August 2013. The advanced ship will have stealth features and will be armed with supersonic BrahMos surface-to-surface missile system. The construction of the ship will use a ‘Pontoon Assisted Launching’ method, in collaboration with Baltisky Zavod of St. Petersburg, Russia.

• HAL’s Light Combat Helicopter makes successful maiden flight

March 29, 2010

Hindustan Aeronautics Ltd’s (HAL) Light Combat Helicopter, made its first flight test at its Helicopter Complex, Bangalore. The 5.5 ton indigenously designed and developed attack helicopter, a derivative of HAL’s Advanced Light Helicopter, flew for 20 minutes and performance of various parameters was found ‘satisfactory’. The maiden test marks the culmination of three years of design and developmental efforts of HAL. The helicopter, which features “Weapon Systems, Mission Systems and Crashworthy Wheel Landing Gear with in-built Stealth characteristics, will be inducted into the armed forces after initial operational clearance by December 2012.

• ISRO aims for low-cost access to space

April 04, 2010

Indian Space Research Organisation (ISRO) is working on GSLV Mk3 that will bring down the cost of accessing space. The Chairman of IRSO K. Radhakrishnan noted that GSLV Mk3 with indigenous cryogenic technology will reduce the launch cost by a half from present 20,000 per kg. The Chairman also noted that India’s human space flight programme will put two Indians in an orbit around the Earth. A project report has been submitted to the government for approval.

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

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

• Defence Offsets worth Rs.49,000 crores to be finalised in next couple of years

February 16, 2010

India will finalise defence offsets worth Rs. 49, 000 crores in next few years, said India’s Minister of State for Defence, Pallam Raju. In a speech delivered in a conference organised by the PHD Chamber at DefExpo–2010, the Minister Said: “There are 41 offset contact worth more than Rs. 49000 crores in the pipeline at various stages of negotiations which are going to materialise in the next couple of year.” So far, the MoD has signed 10 offset contracts worth Rs. 8,200 crores. Apart from state-owned DPSUs and OFs, 31 private companies have received offsets.

• Akash missiles to be deployed in North-East

February 16, 2010

Reports noted that India is planning to deploy surface-to-air Akash missile in North-East. As per the plan, the India Air Force (IAF) will deploy eight squadrons of the missile at the cost of over Rs. 6,100 crores by 2015, with the first squadron being expected to come up by 2011. The deployment is part of Indian defence forces’ plan to step up military preparedness, in move to “counter China’s massive build-up of military infrastructure all along the unresolved 4057-km Line of Actual Control (LAC).” In other measures, the Indian Army is raising two infantry mountain divisions and an artillery brigade in Arunanchal Pradesh. The infantry division, which will have 1260 officers and 35,011 soldiers, is expected to go operational in 2012. The IAF is raising two squadrons of Su-30 MKI, one each in Tezpur and Chabua in Assam.

• Army wants to ‘dump’ Insas rifle

February 18, 2010

Reports noted that the Indian Army wants to ‘dump’ the indigenous assault rifle Insas, developed by Defence Research and Development Organisation (DRDO). A global RFP (request for proposal) has been issued by the Army for a new assault rifle, stipulating that the rifle’s weight needs to be lighter than 3.5 kg. The Insas, which weighs 4.1 kg, may find it difficult to compete in the tender, unless some modification is carried out. The Army’s lack of enthusiasm for Insas is because “it does not measure up its requirements”.

Weekly Defence News Report (WDNR) - February 08-14, 2010

• India releases three joint military operational doctrines

February 09, 2010

General Deepak Kapoor, Chief of the Army Staff (COAS), and the Chairman, Chiefs of Staff Committee released three joint operational doctrines: Joint Doctrine for Sub Conventional Operations, Joint Doctrine for Electronic Warfare and Joint doctrine for Maritime Air Operations. “Since wars would be fought not only in air, on land and sea but also in cyberspace, on electronic fronts, along information highways and media fronts”, the Doctrines emphasise on enhancing joint fighting capabilities of the Indian armed forces. Formulated by the Headquarters Integrated Defence Staff (HQ IDS), a tri-service body under the Ministry of Defence, the “doctrines would fundamentally shape the way Armed Forces plan, think and train for military operations.”

• Indian to launch defence satellite

10 February 2010

Reports noted that Indian Space Research Organisation (ISRO) and Defence Research and Development Organisation (DRDO) are developing a satellite “with sensors to pick up conversations and detect espionage activities” across the borders. The 100-crore satellite, to be placed in the lower-orbit by a polar satellite launch vehicle (PSLV), is likely to be launched in 2014. Among the components, Defence Avionics Research Establishment (DARE) and Defence Electronics and Research Laboratory (DLRL) will jointly develop the electronic warfare system of the satellite, and Bharat Electronics Ltd. (BEL) will manufacture the radar.

• HAL demands $10.5 million compensation from BAE for AJT Hawk troubles

February 10, 2010

Reports noted the Hindustan Aeronautics Ltd (HAL), the largest defence public sector undertaking under the Ministry of Defence has demanded $10.5 million compensation from UK’s BAE Systems for the ‘troubles’ in assembling Advanced Jet Trainer (AJT) Hawk. In 2004, India had signed a contract with BAE systems, under which 24 aircrafts were to be delivered off-the-shelf, and 42 to be assembled by HAL. During the assembly, the HAL however faced problems in re-tooling and re-designing the components supplied by BAE, resulting in delay in its schedule.

• HAL, Boeing sign $4.5 million offset deal

February 12, 2010

US company Boeing and HAL signed a $4.5 million offset deal, under which the Indian company would supply weapons bay doors for the P8-I maritime reconnaissance and anti-submarine aircraft. India had earlier signed a deal with the US major for supply of eight P8-I in a deal worth $2.1 billion. Under the India’s defence offset policy, Boeing is required to provide offsets of 30 per cent of the contract’s value to Indian defence industry.

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

• L&T, EADS revive defence JV plan

February 05, 2010

Reports noted that India’s Larsen & Toubro (L&T) and Franco-German aerospace and defence group, EADS, are reworking on their defence JV plan after the said plan failed to get clearance earlier from the Government on the ground of non-conformity with the FDI policy. As per the revived plan, L&T will hold 74 per cent of the proposed JV and the rest by EADS. The Indian company is planning to step up its defence business from the present Rs 400 crores to Rs. 2,500 crores in next five year and the proposed JV is crucial in that direction. For EADS, “India is a key market … [and its] target is to establish long-lasting partnerships in India” Says the spokesperson for EADS Defence & Security.

• Agni-3 test fired Successfully

February 07, 2010

The fourth test of the nuclear capable Agni-III missile was test fired successfully from the Wheeler Island, situated in the Bay of Bengal off the coast of Odisha. A Government Press Release noted that the missile, with a flight range of 3,500 KM was “tested for the full range, hit the target with pin-point accuracy and met all the mission objectives.” The test was part of the user (the Army) trial and the missile is “now” expected to be “fully inducted into the armed forces.”

Agni-II is 17 meters long and 2 meters in diameter, has a launch weight of 50 tons. It is a two stage solid propellant system with a pay load capability of 1.5 tons. The first test of the in July 2006 had failed, but its second and third flights in April 2007 and May 2008 were successful. About 80 to 85 per cent of the components of the missile are indigenously developed. “The missile is equipped with a state of the art computer system, navigated with a most advanced Navigation system and guided with an innovative guidance scheme. The Navigation system used for guidance is first of its kind.”

Weekly Defence News Report (WDNR) - January 25-31, 2010

• India to buy 29 more MiG-29Ks

January 18, 2010

Reports noted that India is planning to sign a $1.2 billion deal with Russia to buy 29 more MiG-29Ks. The Cabinet Committee on Security (CCS), chaired by the PM, has approved the said proposal. These planes are in addition to 16 jets that Indian has already ordered along with Gorshkov aircraft carrier in 2004 in a 1.5 billion contract. These planes are slated to operate from both Russian made Gorshkov as well as the indigenous aircraft carrier Air Defence Ship (ADS), which is presently being built at MoD’s recently acquired Cochin Shipyard.

• India raises defence export license concerns with US

The defence minster AK Antony raised “concerns regarding denial of export licenses” to various Indian defence industrial establishments and their inclusion in the ‘Entity List’ of the US with the visiting Secretary of Defence, Robert Gates. While expressing “satisfaction” with the progress of bilateral defence cooperation since the signing of bilateral cooperation agreement in 2005, the Indian minister told his visiting counterpart that “the bilateral defence trade relations between India and the USA should move from a purely buyer-seller relationship to a more comprehensive relationship covering transfer of technology and co-production.”

Weekly Defence News Report (WDNR) - January 11-17, 2010

• Astra test-fired successfully

January 12, 2010

India’s Defence Research and Development Organisation (DRDO) successfully conducted two back to back test of the indigenously developed Astra missile. The test which was conducted from ground based launcher follows DRDO’s earlier captive flight trials on Sukhoi-30 MKI. The integrated test of the missile is expected within a year.

Astra is a beyond visual air to air missile. Once operational, India will join the club of the select countries such as US, Russia, Israel and France which have such technologies. The missile is “designed for an 80-km range in head-on mode and 20 km-range in tail-chase mode. As an anti-aircraft missile, it can be fired after receiving a signal from the far away target through its on-board manoeuvres based on radio frequency.”

• CII-KPMG asks for reforms in defence sector

The Confederation of Indian Industry (CII) and consultancy firm KPMG in a joint study report has asked the Ministry of Defence (MoD) to bring more reforms in defence to enable India “to influence its future growth trajectory.” To enable the Indian industry to play a more meaningful role in defence production, the reports asks the MoD to improve “visibility of Government’s order book; increase industry’s inputs and feedback into the request for proposal (RFP) process; take steps to reduce bidders’ costs, allow private sector to take a large role in defence R&D.”. Also the report asks for formulation of an industrialization strategy to increase the private sector’s role in defence industry.

• China tests interceptor missile

January 12, 2010

China’s official new agency, Xinhua reported a “test on ground-based midcourse missile interception technology.” The test “achieved the expected objective”, and is “defensive in nature”, said the report. The test however comes few days after the US’s approval to sell air defence missiles worth $6.5 billion to Taiwan.

Weekly Defence News Review (WDNR) -January 04-10, 2010

• India to contribute 25% to fifth generation fighter aircraft

January 06, 2010

Reports noted that Hindustan Aeronautics Ltd (HAL), the biggest Defence Public Sector Undertaking under the Ministry of Defence (MoD), has negotiated for a 25 per cent work share in the design and development of Fifth Generation Fighter Aircraft (FGFA) with the Sukhoi Corporation of Russia. HAL’s work will include ‘critical software, including the mission computer, navigation system, most of the cockpit displays, the counter measure dispensing (CMD) system, and modification the aircraft to enable it to a twin-seater plane. In 2007, India and Russia had signed an Intergovernmental Agreement for the joint development and joint production of the aircraft. The FGPA, known as PAK FA in Russia, is expected to cost around $8-10 billion and both sides are expected to induct around 250 planes each.

• MoD cancels 6,000 cr mid-air refueling contract

January 07, 2010

Reports noted that Indian MoD has cancelled the 6,000 crore contract to purchase six mid-air refuelling aircraft. The cancellation comes after the Finance Ministry’s objection over the competitiveness of the bid, in which the European consortium, EADS was selected over its Russian rival. Indian Air Force, after over a two year long evaluation process, “had recommended the government to buy the Airbus A330 multirole transport tanker aircraft as it believed that the European aircraft was technologically more capable than the Russian IL-78 aircraft in the fray.”

• India issues letter of request to acquire 10 Boeing C-17 Aircraft

January 07, 2010

In what could be the biggest defence deal so far between New Delhi and Washington, Indian MoD has sent letter of request to the US government, enquiring about the possibility of acquiring 10 C-17 Globemaster III heavy lift aircrafts. Vivek Lall, India country head of Boeing Integrated Defense Systems said his company “is very pleased that the Indian government has expressed interest in acquiring the C-17 to modernize its airlift capabilities, and we look forward to working closely with them.” Although financial details are yet to be known, each aircraft, as per the US Air Force, costs US $202.3 million. If the deal fructifies, India will buy the aircraft through the Foreign Military Sales (FMS) route, under which it is expected to pay the price which the US pays to Boeing, plus some service charges. According to Boeing, the C-17 has a “payload of 1,60,00 pounds, can take off from a 7,600-foot airfield, fly 2,400 nautical miles, and land on a small, austere airfield in 3,000 feet or less”.

Weekly Defence News Review (WDNR) - December 28, 2009-January 03, 2010

Defence expenditure review committee submits report

December 29, 2009

Reports noted that the Defence Expenditure Review Committee (DERC), a high powered group set up by the Ministry of Defence under the Chairmanship of VK Misra, former Secretary (Defence Finance) has submitted its report. The report, although yet to be made public, has made a number of suggestions. It has recommended to increase the FDI cap in defence production to 49 per cent (from the present level of 26 per cent) across the board and to a higher level (up to 74 to 100 per cent) on a case by case basis. To expedite the acquisition process, the Committee has suggested to cut down the time taken between request for information (RFI) and the final acquisition, through a series of efficient measures. To promote greater competition it has advised that except for strategic and operational reasons, single source procurement should be avoided.

To enhance the domestic defence industrial and technological capability, the committee has suggested to further promote the private sector; reform the existing public sector enterprises; and bring “synergy among the DRDO, Ordnance Factory Boards, defence PSUs and the private sector to address design, manufacturing and maintenance concerns of India's defence.” Besides the Committee has recommended “setting up of a defence regulatory authority to deal with a range of issues concerning offsets, defence industrialization, capital acquisitions and potential reforms in defence on a permanent basis (Source: DNA).”

• India may get Nerpa nuclear sub in mid-2010

December 28, 2009

Nerpa, an Akula II class nuclear powered attack submarine joined Russian navy after months of trial, in which it met with a fatal accident in November, killing 20 sailor and technicians. The underwater boat, weighing 12,000 ton, is to be subsequently handed over to India around mid-2010 under the name INS Chakra. India has reportedly paid $650 million for a 10-year lease. The submarine, when joins Indian Navy, will not be armed with ‘strategic weapons’ like Russian 3,200-km range Granit nuclear-capable cruise missiles due to restriction under Missile Technology Control Regime(MTCR). Rather it is expected to be armed with 300-km range Klub-S land-attack cruise missiles.

• India building technology to defeat enemy satellites

January 03, 2009

Scientific Advisor to Defence Minister and chief of Defence Research and Development Organisation (DRDO), VK Saraswat told that his organising is building “technology that could be used to neutralise enemy satellites” in low-earth orbit and polar orbit. Although trial of the technology has so far not been planned, the scientists are gearing toward to building a weapon in case the country needs it, he added.

Weekly Defence News Review (WDNR) - December 21-27, 2009

Home Ministry unveils draft policy on Arms and Ammunitions

December 21, 2009

The Ministry of Home Affairs (MHA) has unveiled a draft policy for regulating production and supply of arms and ammunition in the private sector. The policy, which supports the existing norm for production in private sector, stipulates certain conditions with a view to ‘prevent diversion to unauthorised hands.’ Under the draft guidelines, only big private companies willing to invest more than Rs. 50 crores (subject to maximum 26 per cent FDI) are to be issued industrial licenses by the Department of Industrial Policy and Promotion (DIPP) in consultation with the MHA to produce various arms and ammunitions. However the supply of such items, except for sports weapons and the like, are strictly restricted to the defence forces, paramilitary forces and state governments. To enable the government to monitor the activities of producers, it authorises the District Magistrate of the concerning area to inspect and file report to the secretaries at state and central levels.

India, Israel to step up defence cooperation

December 23, 2009

Reports noted that India and Israel have decided to enhance bilateral defence cooperation in the areas such as trade in military goods, counter terrorism, intelligence sharing and joint R&D projects. The decision came after the meeting in New Delhi of Joint Working Group on Defence, co-chaired by director-general of Israeli Defence Ministry, Brigadier-General Pinchas Buchris (Retd) and Indian Defence Secretary Pradeep Kumar. Israel is one of the biggest defence suppliers to India, supplying nearly $9 billion worth of military products since 1999. Last week the Defence Minister, AK Antony informed the lower house of the Parliament that India’s Defence Research and Development Organisation (DRDO) and Israel Aerospace Industries (IAI) are presently working on two projects worth over Rs. 12,680 crores to develop long and short-range surface to air missiles for the Air Force and Navy.

Navy’s Submarine strength hit by delays

December 23, 2009

Reports indicated that Indian Navy’s submarine strength – presently comprising of 10 Russian Kilo-class, four German HDW and two Foxtrot – is likely to depleted to just five in 2014-15. The depletion is mainly due to the delays in induction schedule of new class submarines and obsolescence of some of the present ones. The Rs. 18,798 P-75 project under six Scorepene-class submarines are planed for induction by 2017 is facing delays of at least two years. It successor, the P75-I project, under which another six submarines are planned for induction at a total cost of nearly Rs. 30,000 crores, has not moved beyond the planning stage. It is believed that the MoD has not been able to decide which shipyard could execute the project.

Hindustan Shipyard is now under Defence Ministry

December 24, 2009

The central government has approved the transfer of the Hindustan Shipyard Ltd (HSL), a fully government-owned enterprise located in the port city of Visakhapatnam on the East coast of India from Ministry of shipping to the Ministry of Defence. A press Release issued by the Government said the transfer of shipyard would enable the defence ministry to meet “national security requirements of building strategic vessels for Indian Navy.” The decision, which came after the concerns expressed by the Navy about delays in constructing tactical submarines, is expected to boost the submarine and other shipbuilding activities. With the recent transfer, the MoD will have four dedicated shipyards under its direct control – Goa Shipyard Ltd (GSL), Garden Reach Shipbuilding and Engineers (GRSE) and Mazagon Dock Ltd (MDL) and HSL.

Mahindra’s Giant Leap into Defence Production: The Need for Further Policy Initiatives to Promote Private Sector*

On December 15, India’s Mahindra Group, a US $6.6 billion dollar industrial conglomerate, simultaneously acquired majority stakes in two Australian defence companies, Aerostaff Australia and Gippsland Aeronautics, signalling its entry into the defence and aerospace business. The acquisition, valued at nearly Rs. 1.75 billion, follows Mahindra Defence Systems’ (a Speciality Business entity of the Group), November 2009 announcement about setting up a joint venture (JV) in India with the UK’s largest defence company, BAE Systems. The intention of the JV, in which Mahindra holds a 74 per cent equity stake, is to produce a range of high-mobility, armoured and bullet-proof vehicles as well as artillery items. This commentary assesses the importance of Mahindra’s forays into the defence business and suggests further policy measures to promote the Indian private sector at large.

The acquisition of the Australian companies is no doubt a major step for the Mahindra group. This is the first time an Indian private sector company has successfully acquired majority equity share of not one but two foreign defence companies at the same time. However, unlike its previous interests shown mostly in land-based systems, the recent acquisition is directed towards aerospace components and the aviation market in general and India’s defence offsets market in particular. Aerostaff Australia is a certified company with expertise in manufacturing “close tolerance high precision sheetmetal components and assemblies.” Gippsland Aeronautics on the other hand is a designer and manufacturer of a range of 20-seater turboprop aircraft. Acquiring a majority stake in these companies will provide Mahindra a direct yet controlling access to their services, products and technologies. Besides, their customer base will also be of great utility for Mahindra. Aerostaff’s customer base, for instance, includes global majors such as Boeing, Lockheed Martin, BAE Systems, General Dynamics, and Thales, among others. These customers will be valuable for Mahindra when they win orders from India’s Ministry of Defence (MoD) and discharge their offset obligations. Under the MoD’s offset policy provisions, foreign vendors are free to choose their Indian offset partner. Mahindra will be a natural partner for them because of the working relationship they have established. To gain benefits from the offset business, estimated to be at least $10 billion by the end of 10th Plan period, Mahindra plans to set up a plant in Bangalore.

Mahindra’s venture into defence production and acquisition of foreign companies in particular is a clear indication of how much the Indian private sector is interested in participating in the defence industry. It also shows that given the right impetus from the MoD, the private sector can venture into hitherto unassailable areas.

There is no doubt that the MoD of late has taken a keen interest in promoting the private sector to increase self-reliance in defence production. The intent - which started in 2001 in the form of opening up of defence industry to private sector, with an added stimulant by way of foreign direct investment (FDI) up to 26 per cent (both of course subject to licensing) - has taken the shape of many other reform measures in recent years. The ‘Make’ procedure and offset policy of 2006 and the recent ‘Buy and Make (Indian)’ provision along with the provision of sharing a public version of the long-term plan of the Armed forces with the industry - are the indications of such measures. These efforts notwithstanding, the MoD needs to examine how to further promote the private sector in defence industry.

As of now, the private sector is still at a disadvantage vis-à-vis the established defence public sector enterprises comprising eight Defence Public Sector Undertakings (DPSUs) and 40-odd Ordnance Factories (OFs). Unlike the government-owned enterprises for which dedicated high-level MoD officials are appointed and hold responsibility for their growth, the private sector is struggling to push its interests through non-governmental channels such as the Confederation of Indian Industry (CII), Federation of the Indian Chambers of Commerce and Industry (FICCI) and Assocham. Given the fact that many a time public sector enterprises get a non-competitive advantage because of their close proximity with the MoD, the government needs to ensure that the private sector is not discouraged. In this regard, the MoD needs to redefine the role of its Department of Defence Production (DDP), so as to enable it to play a larger role beyond its current confinement to the public sector. Among others, it needs dedicated officials appointed and made responsible for the growth of the industry in the private sector.

The private sector is also at a disadvantage vis-à-vis state-owned enterprises in terms of technical limitations, even though the former does not suffer from financial and managerial shortcomings. This is primarily because of their late entry into the industry and the government’s years of investment in its own companies. To raise its technical capability in the shortest possible time, the private sector needs to form a partnership with domestic as well as established foreign companies. As far as forging partnership with foreign companies is concerned, the existing FDI cap of 26 per cent seems to be the biggest hurdle. It is noteworthy that prior to Mahindra’s November announcement of a JV, it was denied permission to bring in 49 per cent FDI into it. Although BAE Systems finally accepted 26 per cent equity share in the JV, not many foreign companies have the same inclination. Big international companies are not interested to part with technology to an Indian JV in which they have so little control. That is why despite eight years after the opening up of the industry, the FDI in defence industry is at an abysmal level. The latest data published by the government puts the figure at a mere $0.15 million - a fraction of inflows compared with even a sector like Timber Products.

The private sector’s role in the Indian defence industry is still at a nascent stage, though it is growing. What India needs to do is nurture at least a part of the industry that has the potential to assume the role of a system integrator for platform producers. Keeping this in view, the Kelkar Committee in its Report-I has suggested that government designate a select number of private companies as Raksha Udyog Ratnas (RURs), whose prime responsibility would be system integration and the manufacture of big-ticket items for the armed forces. Even though an Expert Committee was appointed to go into the identification process and submitted its report, the implementation of its recommendations has been somewhat delayed for unknown reasons. It is high time the MoD re-examines the concept of RUR and makes an immediate announcement.

Mahindra’s foray into defence production and the recent acquisition of foreign companies is demonstrative of Indian corporate initiative in the private sector. The government needs to seize the opportunity and introduce further reforms to promote private companies. It needs to enhance the role of its DDP in taking direct responsibility for promoting the private sector, increase the FDI cap to at least 49 per cent, and make an immediate announcement with regard to RURs.

*: The article was originally published by Institute for Defence Studies and Analyses (www.idsa.in) at http://www.idsa.in/idsacomments/MahindrasGiantLeapintoDefenceProduction_lkbehera_221209l

Weekly Defence News Review (WDNR) - December 14-20, 2009

NATIONAL

Offsets rise past Rs. 8900 Cr

December 14, 2009

In a written reply in the Lok Sabha, Defence Minister Shri AK Antony informed that about 10 offset contracts have been signed so far under the provision of Defence Procurement Procedure (DPP). The companies with whom the offset contracts have been signed include Rosoboronexport Russia, RAC MiG Russia, Fincantieri Italy, Lockheed Martin USA, Boeing USA, Elta Israel, Israel Aerospace Industries Israel and Rafael Israel. The estimated value of the offsets involved in these contracts is over Rs. 8909 crores. Implementation of the offsets is expected to result in expanding and enhancing the manufacturing infrastructure and technical knowledge necessary for indigenous manufacture of weapon systems required by the Armed Forces. The benefits of offsets accrue to both Defence Public Sector Undertakings as well as to private Indian Industry engaged in the manufacture of defence systems and equipments. (Source: PIB; Dec 14)

India-Israel to joint develop LRSAM and MRSAM at the cost of Rs. 12,681 croes


December 14, 2009
Defence Research Development Organization (DRDO) and Israel Aerospace Industries (IAI) have undertaken two projects to jointly develop Long Range Surface-to-Air Missile (LRSAM) and Medium Range Surface to Air Missile (MRSAM) for India’s Navy and Air Force, respectively. Total cost of these projects is around Rs. 12, 681.02 crores, of which MRSAM accounts for Rs. 10,075 crores. The missiles being developed “are comparable in performance and cost to missiles available in their class in the world market” told Defence Minister, AK Antony.

Finance Ministry expresses concern over competitiveness of mid-air Refueller bid

December 14, 2009
The ministry of Finance (MoF) “has expressed certain reservations relating to the competitiveness of the bids and the reasonableness of the price” relating to six Flight Refueller Aircrafts that the MoD intends to procure for the Air Force and Navy. Four years ago the Defence Ministry had floated a tender to four global companies – Lockheed Martin, Boeing, EADS and Ilyushin – of which the later two had expressed interest. The procurement process was then initiated as per the provisions under the Defence Procurement Procedures 2006 (DPP 2006). The Finance Ministry’s reservation may now quash the process and a fresh bid is expected to be issued next year.

Mahindra buys majority stakes in two Australian aerospace companies

December 15, 2009
India’s Mahindra Group, a $6.6 billion industrial conglomerate, simultaneously acquired majority stakes in two Australian defence and aerospace companies, Aerostaff Australia and Gippsland Aeronautics. Aerostaff Australia is a component manufacture of high-precision close-tolerance aircraft components and assemblies for large aerospace companies. Gippsland Aeronautics is a manufactures of small segment turbo-prop aircrafts. The acquisition of the companies, valued Rs. 175 crores, will propel Mahindra to expand its interests in defence beyond the land based systems. Last month it has announced to set up a joint venture with UK’s largest defence company BAE Systems to manufacture land-based system

Weekly Defence News Review (WDNR) - December 07-13, 2009

NATIONAL

Boeing places P-8I offset orders over $600 million on Indian companies

December 07, 2009

Vivek Lall, India country head of Boeing Integrated Defense System told that his company has “started to place contracts worth over $600 million with Indian companies,” as part of offset obligations accruing from the P-8I contract. The said contract valued about $2.1 billion, was signed in January 2009, under which the US major will supply eight long range maritime reconnaissance and anti-submarine warfare aircrafts to the Indian Navy by 2015. The first plane is expected to be delivered within 48 months from the date of contract signing. The contact involves 30 per cent offsets. Indian companies who have been awarded contracts include Electronics Corporation of India (ECL), Hindustan Aeronautics Ltd (HAL) and Bharat Electronics Ltd (BEL).

France faces stiff competition from Israel for IAF Mirage upgradation

December 10, 2009

Reports noted that Israel has shown keen interest in upgradation of Indian Air Force’s (IAF’s) Mirage fighters and offered a price which is 40 per cent less than that of France, the original supplier. A delegation led by General Gabi Ashkenazi, Israel’s defence services chief, has made presentations in this regard to the high officials, including IAF Chief, Air Marshal PV Naik during his recent visit to India. It is reported that Israel Aerospace Industries-led upgrade could cost Rs. 96 crore per plane compared to Rs. 152 core demanded by France’s Dassault Aviation and Thales. It is expected that France could consider its offer prices in the face of competition from Israel.

Eurojet and General Electric submit Tejas Offset proposals

December 12, 2009

Reports noted that European military engine consortium Eurojet and America’s General Electric (GE) have submitted their offset proposals concerning the engine of the Light Combat Aircraft, Tejas. India’s Ministry of Defence (MoD) had issued in July 2009 a Request for Proposal (RFP) to these vendors for supply of 99 engines for the indigenous Tejas. The contact is valued at $750 million. Under the offset policy, global vendors are mandated to provide offsets amounti ng to at least 30 per cent of contract’s value. The offsets can be discharged either though direct purchase of Indian defence goods/services or by investing in Indian defence industrial and/or R&D enterprises. For Tejas, Eurojet’s EJ200 engine is competing with GE’s F-414 engine. Both the companies have reportedly got the approval from their respective authorities to meet the key requirements of India’s MoD.

Nuclear-capable Dhanush test fired Successfully

December 13, 2009

Reports noted that India successfully test fired a nuclear-capable, ballistic missile 'Dhanush'. The missile, with a range of 350 km, and a payload of 500 kg, was fired from a naval ship, INS Subhadra off the Orissa coast at around 11.30 am on November 13. It can hit both sea and shore-based targets. Developed by the Defence Research and Development Organisation (DRDO), Dhanush is a naval version of Prithvi missile. The successful test of the missile comes after a failed first ever night trial of Agni-II missile, conducted on November 23.

INTERNATIONAL

Pakistan gets first AWACS aircraft

December 08, 2009

Pakistan on December 8 inducted the first of the four Saab-2000 Airborne Early Warning & Control (AWACS) aircrafts. The aircraft, procured form Sweden, landed at one of the Pakistan Air Force’s (PAF’s) Main Operating Bases. “ Besides detection of High and Medium altitude flying aircraft, this state-of-the-art system is also capable of detecting low level flying objects over land and sea at extended ranges; the system is capable of picking even the surface targets over the sea” noted an official statement issued by PAF.

Weekly Defence News Review (WDNR) - November 30-December 06, 2009

• Mahindra and BAE Systems to set up joint venture in India

November 30, 2009

Post approval by the Department of Foreign Investment Promotion Board earlier this year, India’s Mahindra and Mahindra (M&M) and UK’s BAE systems have signed an agreement to set up a joint venture (JV) in India with an initial investment of $21.25 million spread over a three year period. The JV, owned 74 per cent by M&M and rest by its British partner, will focus on land-based systems, at a facility south of Faridabad, outside of Delhi. It will initially employ about 100 employees and execute projects including the Axe high mobility vehicle and up-armoured and bulletproof Scorpios, Boleros, Rakshak, Rapid Intervention Vehicles and Marksman light armoured vehicle, Besides, the JV will also manufacture a brand new vehicle named Mine Protected Vehicle India (MPVI), the developmental process of which has been completed based on both companies’ respective strengths. In future, the JV intends to execute a number of artillery programmes, including the M777 light weight howitzer and the FH77B howitzer. The JV’s official name is presently going through official certification process.

• Admiral Gorshkov scheduled for induction in late 2012

November 30, 2009

In a written reply to the Lok Sabha, the Union Defence Minister, AK Antony told that aircraft carrier, Admiral Gorshkov was scheduled for induction in December 2012. It is noteworthy that following an Intergovernmental Agreement in 2000, India and Russia had signed a contract worth $974 million in 2004 for induction of the carrier into Indian Navy in August 2008. However, later on the Russian side submitted a revised plan, indicating delay in delivery and increase in prices to $1202 million. India has agreed to negotiate a revised contract, following which the details of final prices would be known.

• Second SU-30MKI Crash

November 30, 2009

In a second mishap involving the most advanced fighter with the Indian Air Force, a SU-30 MKI crashed near south-west of Pokhran on November 30. The aircraft was airborne on a routine training sortie and following the crash, the IAF has grounded the entire fleet. The IAF has about 90 SU-30MKI, and is in the process to take the total to 230, of which 140 would be manufactured/assembles by the state-owned Hindustan Aeronautics Ltd (HAL). The fighter which crashed in Pokhran was reportedly supplied by the HAL.

• FIPB Rejects EADS-L&T joint venture

December 01, 2009

The Foreign Investment Promotion Board has rejected a proposal from the Franco-German aerospace and defence group, EADS and India’s Larsen and Toubro’s (L&T) to set up a joint venture in India. The JV’s proposal was to supply electronic warfare system, avionics and radars. Although FIPB has not elaborated the reasons for rejection, it was reported that the proposed JV could exceed the maximum FDI limit allowed in defence production sector. India at present allows 26 per cent FDI in defence industry, subject to prior approval and licensing.

• Import-Indigenous technology for Arjun and Tejas

December 02, 2009

In a written reply in the Rajya Sabha, the Defence Minister, AK Antony informed that MBT Arjun’s power-pack comprising of engine and transmission is imported from Germany, while the armament system is indigenously developed. In Tejas aircraft, the engine is fully imported from the US, which also contributes along with Israel, France, Italy and UK, 30 per cent of the aircraft’s avionics. To indigenise the technology currently imported for these two items, India is taking further actions. It is currently contemplating a plan to work with an international manufacture to give additional boost to the indigenous Kaveri engine developed by DRDO for Tejas. To develop the indigenous power-pack for Arjun, a Project involving the DRDO and potential players has also been proposed on a joint venture basis.

• Delay in Scorpene delivery

December 02, 2009

Giving a reply in the Rajya Sabha, Defence Minister, AK Antony told that there could be delay in delivery of Scorpene submarine to the Navy, due to “some teething problems, time taken in absorption of technology and delays in augmentation of industrial infrastructure and procurement of Mazagon Dock Ltd (MDL) purchased materials.” As per the initial schedule, a total of 6 submarines were to inducted by December 2017, starting from one in December 2012, followed by one each year thereafter. The Scorpene project was sanctioned in October 2005 with an estimated budget of Rs. 18,798 crore, under a technology transfer agreement with French company Armaris.

• Navy gets first batch of Mig 29 K fighters

December 04, 2009

The first batch comprising four Mig 29 K fighters reached India in knocked down form onboard AN 132 cargo aircraft. The fighters, two of which are single seater aircrafts and two twin-seater trainers, are to be based on Goa and operate from shore until the Gorshkov carrier is inducted in December 2012. India has already ordered 16 Mig 29 Ks and is believed to be interested to procure 29 additional fighter of the same class.