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) - 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) - 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.

Gorshkov Deal: India’s Helplessness with Russia*

By Laxman Kumar Behera

The Gorshkov deal between India and Russia has run into controversy over the price and cost overruns of the planned induction of the 44,500 tonne aircraft carrier into the Indian Navy. The Russian failure to adhere by contractual agreements also reveals India’s helplessness in regard to Russian military hardware. This article discusses key developments in the Gorshkov deal and the reasons for its being against India’s interests.

The deal goes back to 20 January 2004, when India signed the Contract and Supplementary Agreements worth US$974 million for inducting the Admiral Gorshkov into the Indian Navy. The agreements related to repair and re-equipment, logistics support, shore infrastructure, training of ship’s crew, repair and technical documents. The delivery of the carrier was scheduled for August 2008. However, as time elapsed, questions were raised over its timely delivery. But, the Indian establishment was assured that the ship would be delivered on the contractual terms.