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 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 16-22, 2009

NATIONAL

• Indian may buy an advanced aircraft carrier from Britain

Reports noted that India has “lodged a firm expression of interest” to buy an advanced 65,000 tonne aircraft carrier worth £2 billion from the UK (see right for an artistic impression of the carrier under construction; source: Guardian). The BAE Systems of the UK, the second largest defence contractor in the world, is presently building two carriers– HMS Queen Elizabeth and HMS Prince of Wales – for the Royal Navy. The £4 billion carrier programme, which has been delayed by two years, is facing threat of government’s cost cutting plans. According to officials, "selling a carrier is one very serious option," although, a formal decision in this regard has so far been not taken by the UK MoD. If India succeeds in buying the aircraft, it is unlikely to handover to its Navy before 2018, when the second carrier is due for launch. The first carrier, as per the current schedule, would join Royal Navy in 2016.

At present India has only one carrier, INS Viraat, against the Navy’s desire of having three carriers so as to enable it to have two operational carriers at any given time. To fill the void India has signed in 2004 a contract with Russia to buy a 44,500 tonne carrier, Gorshkov. Besides, India is constructing a 37,500 tonne carrier, Air Defence Ship (ADS) at Cochin Shipyard Ltd.

• ASSOCHAM reiterates its demand for 49% FDI in defence, finds support in US and IAF Vice Chief

The Associated Chambers of Commerce and Industry of India (ASSOCHAM), has reiterated its demand for enhancing FDI limit in defence production from present 26 per cent to 49 per cent. In a statement the industry representative observed that higher FDI limit would help India’s self-reliance in defence production to grow with “faster adoption of latest technology transfer.” Presently India imports most of its defence equipments (valued over $6 billion in 2008), although the government had a long time ago set a target to produce indigenously 70 per cent of its requirements. To shed the import dependence, it said the government could accelerate the FDI limit which, along with the offset policy, would help Indian industry to develop its technological and manufacturing capabilities. It also said the private companies will be the main catalyst for increasing country’s self-reliance in future.

In the meantime, a top official from the Obama Administration asked India to raise FDI in defence to 49 per cent. Talking to reporters the Assistant Secretary of State for South and Central Asia, Robert Blak said “the Indian government could do would be to lift the cap on foreign equity in Indian defence firms, from 26 per cent to 49 per cent."

In a similar demand, the Indian Air Force’s (IAF’s) Vice Chief Air Marshal P K Barbora also stressed the need for higher FDI in defence industry. Talking in a conference organised by Confederation of Indian Industry (CII), he said "we need to be bold enough to invite Foreign Direct Investment (FDI), more so into defence use."

• Indian Defence Offsets touches Rs. 8,000 crore; Private sector gets upper hand

Reports noted that Indian MoD has so far signed nearly Rs. 8,000 crore worth of offsets, of which 94 per cent are in aerospace sector, and the rest 6 per cent in the naval domain. Between the state-owned defence enterprises – Defence Public Sector Undertakings (DPSUs) and Ordnance Factories (OFs) – and the private sector, the latter has got more offsets, with a total share of 60 per cent. In the private sector, big companies account for 33 per cent of total offsets and the small and medium enterprises 27 per cent.

• Thales wins IAF Radar Contract

Reports noted that French multinational Thales has won a contract from the Indian Air Force to supply 19 low-level transportable radar systems. The radar system is based on Ground Smarter (GS) 100 sensor, which can detect and track targets in the range of 180 km. The contract involves technology transfer, under which Thales will build six radars and the rest 13 by India’s Bharat Electronics Ltd (BEL), a defence public sector undertaking under the MoD.

INTERNATIONAL

• Russia pumps $33.8 billion into its Defence Industry in 2009

To counter the negative fallout on its defence industry, Russia has provided an “unprecedented” $33.8 billion worth of aid to its defence industry in 2009, said the PM Vladimir Putin. The aid, which is in the form of low interest loans, guarantees, and direct subsidies, has helped the industry to grow at 3.8 per cent since the beginning of the year. Russia has ambitious modernisation plan, which is based on equipping its armed forces with nearly 70-80 per cent of ‘modern and promising’ equipments by 2020.