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 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.

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) - 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.

Weekly Defence News Review (WDNR) - November 23-29, 2009

NATIONAL

• Agni-II missile fails in night trial

Reports noted that first ever night trial of the 2000 km plus, nuclear capable Agni-II missile failed to achieve desired results. The missile, fired at around 7.50 PM on November 23, from the Wheeler Island, off the Orissa coast, tumbled into the sea after a snag was developed just before the second stage separation. The lift off and the first stage separation was reportedly smooth. The test was a part of user’s trial and conducted by the Army officials with the DRDO scientists present to provide necessary logistical help. This is the fist time in the history of DRDO’s missile programme that trial was conducted in the night.

• Mahindra Defence Systems to bid for $3.5 bn defence projects

Reports noted that Mahindra Defence System (MDS), a unit of Mahindra and Mahindra (M&M) would bid for defence projects about $3.5 billion over the next seven years. These projects would come mostly from artillery systems and armoured vehicles, said Kutab A Hai, CEO, MDS. He also said that his company, which has formed a joint venture company with UK’s BAE System, will try to generate up to $430 million by 2016. In January 2009 the two companies announced that they have got a clearance from Department of Industrial Policy and Promotion (DIPP) to set up a JV in India, in which the British company would hold 26 per cent equity shares and rest by its Indian partner.

• DRDO to develop unmanned combat aerial vehicle

Reports noted that India’s premier Defence Research and Development Organisation (DRDO) would design and develop an indigenous unmanned combat vehicle (UCAV). Quoting the head of the organisation, Dr V K Saraswat, the report said, the UCAV “will not only do surveillance, but will also help detect the target and destroy the identified object”. The project will be led by its Bengaluru-based Aeronautical Development Establishment (ADE), with private sector participation. In the mean time, ADE is also developing a medium altitude long endurance unmanned aerial vehicle (MALE), codenamed Rustom. Its prototype, developed by Taneja Aerospace and Aviation Ltd, was however crashed in its first ever trial in November 16, 2009.

• Tejas trainer makes successful maiden flight

Reports noted that the first flight of the two-seater trainer version of Light Combat Aircraft, Tejas was successful. The flight test, conducted on November 26th, “covered an altitude of 9 km and a speed of 0.85 Mach,” according to a Defence Research and Development Organisation (DRDO) official. The trainer is likely to replace Indian Air Force’s (IAF’s) HPT-32.

• UK offers India to upgrade Jaguar; discusses HAWK AJT problems

A three-member British delegation led by the Minister for Defence Equipment and Support (DE&S), Mr. Quentin Davies met India’s Minister of State for Defence Shri MM Pallam Raju in New Delhi on November 27th. Mr. Davies told his country was eager to help India in the upgradation of the Jaguar fighter jets and overcome problems related to licensed production of Hawk Advanced Jet Trainer at the Hindustan Aeronautics Ltd (HAL). Both the leaders expressed satisfaction over the ongoing Defence Cooperation between the two countries. Shri Pallam Raju said that all the three Services have been holding Joint Exercises every year alternately on each other’s soil and territorial waters. Mr. Davies said that the UK Forces have participated in Joint Exercises with India despite being overstretched due to commitments in Afghanistan and Iraq while a number of such exercises with other countries were not held. Shri Pallam Raju informed the visiting dignitary that India was ready to sign a General Security Arrangement (GSA) with the UK while an MoU on Host Nation Support (HNS) was under examination of an inter-ministerial committee.

INTERNATIONAL

• Japan considers F-35 Purchase

Reports noted that Japan is considering to buy about 40 F-35 fighter jets as the future mainstay of its air force (see image of F-35; source: Lockheed Martin). Earlier it had proposed to buy F-22 Raptor, considered to be the most advanced with radar-evading capability, to replace its aging F-4EJ fighter fleet, but failed to acquire as America announced a plan to halt its production. Each of the F-35 is likely to cost Japan an estimated $101 million.

The Great Indian Arms Bazaar*

By Laxman Kumar Behera

The DefExpo 2008, the fifth biennial defence exhibition on land and maritime systems held recently in New Delhi, conveyed most emphatically India's growing clout in the international arms bazaar, albeit mostly as a buyer. The exhibition, which saw a record 475 participants, including 273 foreign companies from over 30 countries, was in full swing for four days and had global biggies showcase the comparative advantages of their products. With India emerging as a major customer with considerable financial power, the global companies left no stone unturned to make India a partner in their ventures to access its huge arms bazaar.

Gone are the days when India, constrained by limited resources and Cold War politics, depended significantly on the single-source, 'cheap' Soviet-era weaponry for its armoury. With the end of Cold War and the global political realignment, especially post-9/11, Indian security requirements are no longer viewed adversely by the West. The impressive growth story of the Indian economy and its global character have favourably moulded the West's perception of India, which increasingly sees its security interests broadening as the economy goes global. Indian policy makers, for the first time, feel an urgency to protect the country's economic interests through a concomitant enhancement of its military might. This is reflected by the continuous upward movement in recent years of India's defence and more importantly modernisation expenditure on its armed forces. The modernization drive of the security infrastructure, backed by the country's ability to pay, has seen India spending more than Rs. 80,000 crore on procurement of defence items in the last three years. Besides, if all future plans materialize then the total procurement budget would amount to a whopping Rs. 1,88,000 crore in the next five years. The huge potential of the Indian arms market is what makes it attractive to global companies who are constrained by shrinking defence spending in their domestic markets.