Your SlideShare is downloading. ×
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Eye On Defense April 2012
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Eye On Defense April 2012

4,464

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
4,464
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
106
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Eye on defence April 2012 Dear readers,• Indian defence budget 2012-2013: The first quarter of the New Year has witnessed some significant an analysis 02 developments in the Indian defence sector.• DOFA: a single window mechanism 08 Recently the 7th Defence Expo was held in Delhi in the last week• Alenia: C-27J ‘SPARTAN’ Tier 1’s 13 of March. There was certainly some reduction in the fanfare and glamor, which was expected following the MMRCA decision. The• Request for Information (RFIs) 15 coinciding of the Defexpo with the financial year closing also had an• Request for Proposal (RFPs) 16 impact with most senior level representatives of Indian companies• List of industrial licenses (ILs) filed being present only for selected periods of time. from 01/01/2012 TO 29/02/2012 17 The Union Budget was also presented in the Parliament on 16 March 2012. Keeping with• New projects/investments/contracts 18 the trend the defence budget was increased by double-digit percentage points (17.6%) over the previous year. With the MMRCA now almost certain to be signed within this fiscal, the• Joint ventures and alliances 21 adequacy of the defence budget is likely to be tested.• Country-level deals and initiatives 23 Last but not the least, there were a flurry of articles in all major news-papers and the• Industry buzz 24 internet about the amendments to the Offset policy. Noticeably these amendments• Sources 28 permitted ToT as offsets and also intro duced the concept of multipliers. However there has been no official statement or release or document uploaded on the MoD website to this effect. In our current issue, we have analyzed the latest defence budget; proposed certain methods of imple-menting the recent changes to the offset policy (official announcement awaited) and described the Tier-1’s of Alenia Aermacchi’s C-27J “SPARTAN” platform, which is in contention for multiple programs in In-dia. We hope you enjoy reading this issue of the Eye on Defence. It has been our constant endeavor to make this publication more relevant to you and would appreciate your comments and suggestions in this re-gard. K. Ganesh Raj Partner and Leader Aerospace and Defence Practice
  • 2. Indian defence budget 2012–13: an analysisThe Government of India (GoI) in its Union Budget 2012-13 has earmarked INR1,934 billion(US$42.97 billion) for defence, increasing it by 17.6% as compared defence allocation ofINR1,644 billion (US$36.536 billion) in 2011–12. The defence budget 2012–13 accountsfor 12.97% of the total government expenditure and 1.9% of GDP. INR795.79 billion(US$17.68 billion) has been allocated for capital expenditure and INR1,138.28 billion(US$25.29 billion) has been allocated for revenue expenditure. The attached diagramshows the defence budget allocations (including capital and revenue) in the last three years:Defence budget = Capital + Revenue 50 42.97 45Amount in USD billlion 36.75 40 32.74 35 30 25.29 25 21.38 19.41 20 15 10 17.68 13.33 15.37 5 0 2010 - 2011 2011 - 2012 2012 - 2013 Capital Revenue Total defence budgetShare of servicesIn 2012–13, the Army with an approximate budget of INR969.43 billion (US$21.54billion) accounts for the highest share of around 50%; at a distance followed by the AirForce with INR475.59 billion (US$10.56 billion), which accounts for 25% of the defencebudget and the Navy, with an approximate budget of INR217.58 billion (US$4.83 billion),which accounts for 19% of the total defence budget. Defence Research and DevelopmentOrganization (DRDO) with INR106.35 billion (US$2.36 billion) allocation, and ordnancefactories (OFs) with INR4 billion (US$0.088 billion) allocation together account for 6% of thetotal budget. The pie diagram depicted below gives us the percentage shared by defenceservices in Defence Budget 2012–13: Eye on defence | 2
  • 3. Share of defence services in defence budget 2012–13 Indian Air Force Indian Navy 24% 19% OF+DRDO 6%Indian Army Miscellaneous 50% 1%Capital expenditureThe capital expenditure, which is meant for acquiring new weapon systems and platformshas been scaled up to INR795.79 billion (US$17.68 billion), a 15.7% hike from lastyear’s capital allocation of INR691.99 billion (US$15 billion). However, the actual capitalexpenditure (revised estimates) was INR661.43 billion in 2011–12, which will mean thatactual hike is around 20%. In other words, this year the MoD surrendered INR30.56 billion(4.41%) as unspent from its capital head. But, the overall share of capital expenditure asa part of total defence expenditure has actually fallen to 41.11% from 42.09% from theprevious financial year.Share of capital: Revenue 2011-12 Share of capital: Revenue 2012-13 Capital expenditure Capital expenditure 42% 41%Revenue expenditure Revenue expenditure 58% 58%Eye on defence | 3
  • 4. Currently, all the three segments of the Armed Forces, the Army, the Navy and the AirForce, are on a transformation drive to acquire platforms and weapons with cutting-edgetechnology, which are expected to be finalized in 2012–13. The graph given below showsthe sub allocations and percentage share, out of the total capital outlay allocated to thedifferent services:Capital expenditure 2012–13: Service wise The capital acquisitions allocations has to cater for committed liabilities for the Miscellaneous year from the orders signed previous 2% Naval Fleet years and are likely to be incurred on 17% IA account of the fresh schemes, during the 24% financial year. The committed liabilities OFB as on date are around 65%–70% of the 1% total capital outlay, thus leaving around DRDO 30%–35% only for new schemes. Under 6% the capital head, of the INR795.79 billion IN (US$17.68 billion) nearly 70% or around IAF 12% INR550 billion (US$12.22 billion) will 38% be for committed liabilities, thus leaving around INR250 billion (US$5.55 billion) for fresh purchases. With the impendingIA: Indian Army; IN: Indian Navy; IAF: Indian Air Force; defence acquisitions, the ability ofDRDO: Defence Research & Development Organization; the GoI to complete new purchases isOFB: Ordnance Factory Board comparatively more limited than before. Among the deals in the final stages forwhich the capital expenditure is likely to be spent upon include 126 fighter jets for US$20billion, six mid-air refuelling aircraft for US$2 billion, 75 trainer aircraft for US$1 billion,US$647 for 145 Ultra Light Howitzers (ULH), 197 utility helicopters for US$750 million, 22attack choppers valued at US$600 million and GE F414-INS6 engines for indigenous LightCombat Aircraft (LCA) Tejas and Harpoon anti-ship missiles estimated at US$170 million.Besides, a US$1.18 billion deal to procure 490 MICA missiles for Mirage 2000H multi rolefighters, 42 additional upgraded Sukhoi-30 MKI aircraft, around 40 warship of the Navy,including refurbishment of an aircraft carrier and nuclear-powered submarine, are underconstruction at home and abroad.Revenue expenditureRevenue expenditure 2012–13: Service wise In the budget for 2012–13, the revenue expenditure, which caters to DRDO 5% the everyday “operating” expenditure IN of the three services has been raised11% IAF to INR1,138.28 billion (US$25.29 16% billion) as compared with last year’s revenue allocation of INR1,035 billion (US$23.62 billion). IA 68%IA: Indian Army; IN: Indian Navy; IAF: Indian Air Force;DRDO: Defence Research & Development Organization;OFB: Ordnance Factory BoardEye on defence | 4
  • 5. Defence budget 2012–13: key statistics The defence budget for 2012–13 has been increased by 17.6% over the previous year’s allocation. The increase in the defence budget has the following impact on almost all key components (see Table). On the positive side, however, the ratio between revenue expenditure and capital expenditure has improved toward the former. Comparison defence budgets, 2010-11, 2011-2012 and 2012-13 2010–11 2011–12 2012–13 Defence budget ($ in billions) $32.74 $36.75 $42.97 Growth of defence budget (%) over 3.98% 11.59% 17.63% Previous year Revenue expenditure ($ in billions) $19.03 $23.62 $25.20 Share of revenue expenditure in 60% 58% 59% defence budget (%) Capital expenditure ($ in billions) $11.95 $13 $17.29 Share of capital expenditure in defence 40% 42% 41% Budget (%) Growth of capital expenditure (%) 25.40% 15.33% 15.70% Revenue vs. capital expenditure The percentage share of capital allocation in the defence budget as compared to revenue allocation has seen a decline this time. This growth has, however, been driven primarily because of the increase in pay and allowance of the armed forces, which has increased by 27% to INR631.82 billion (US$14.04 billion), accounting for around 46% growth of the total defence budget. Budget utilization The defence budget for 2011–12 has been revised upward by INR65.21 billion (US$1.44 billion) to INR1,709.36 billion. However, unlike the revised estimate for 2010–11, in which both the revenue expenditure and capital expenditure were higher than their respective budget estimates, the revised esti-mate for 2011–12 shows an increase in revenue expenditure (by INR9,576.32 million or 10.06%) and decline in capital expenditure by INR3,056 million (or 4.41%). Thus, this year the MoD has returned about INR30.56 billion (US$0.67 billion) but fresh major purchases in 2012 are expected to be executed in 2013, which gives an impression that the next revised capital budget may even exceed the earmarked INR800 billion (US$17.77 billion) in 2012–13. Returning of unspent capital funds shows a lack of planning, as is evident from the past.Utilization of allotted capital budget (amount in USD billion) 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 $=45 INR BE RE BE RE BE RE BE RE BE RE CE 9.32 8.38 10.67 9.11 12.18 10.63 13.33 13.52 15.38 14.7 BE-RE 0.94 1.56 1.56 -0.19 0.67 CE-Capital Expenditure BE-Budget Estimate RE-Revised Estimate Eye on defence | 5
  • 6. Capital budget: Spending 18 16 - 4.5% 1%Amount in USD billion 14 - 13% 12 - 15 % 10 -10% 8 6 4 9.316 10.67 12.18 13.33 15.38 2 0 2007 - 2008 2008 - 2009 2009 - 2010 2010 - 2011 2011 - 2012 Budget estimate Budget unspent Budget over-spentIt is to be noted that the procurement process has thus picked up and the allocations havebeen fully committed as against surrender earlier as shown in the table and figure above.The revised estimate for 2011–12 also shows only marginal surrender of around 4%.Impact analysisIndia has an annual capital expenditure of around US$15 billion, and is the world’s biggestimporter of defence equipment, accounting for 10% of global arms imports between 2007and 2011. While India’s defence imports are officially put at 70%, the actual figure isconsiderably high and is likely to be around 85%, if imports made quietly by defence publicsector corporations (DPSUs) are included.Although India’s defence spending has more than doubled in the last five years — fromINR960 billion to INR1,934.07 billion — but the military establishment still feels that thefinancial outlay should be further increased to beef up capabilities. In real terms, thisincrease amounts to INR289.92 billion (US$6.44 bil-lion) in the total outlay for defencefor 2012–13 compared to the defence budget for the previous year (2011–12). However,if we take the revised estimates of the budget 2011–12 then this budgeted estimate hasseen an increase of 13.1 % from the previous year’s revised estimate of INR1,709.36 billion(US$37.98 billion) in 2011–12. The GoI’s fine balancing of resources, rising inflation andthe exchange rate variations (ERV) leading to sharp devaluation of the Indian rupee againstthe US dollar, have caused the defence service’s modernization budget to be effectivelyreduced for the first time in decades.The share of this year’s defence budget, which accounts for only 12.97% (approx.) ofthe total Central Government’s expenditure for the year 2012–13 has seen a declineas compared to last year. Also, the money allocated for defence is below 2% of theGDP where as a healthy defence budget is expected to be between 2.5% and 3% of thecountry’s GDP. This year, the defence budget constitutes 1.90% of the GDP (estimated tobe INR101598.84 billion (US$2257.75 billion). It was 1.83% of the GDP in 2011–12 andwas 2.2% in 2010–11. What is significant is that it is the second successive year when thedefence budget was less than 2% of the GDP. The figure given below shows the decline inGDP in defence budget.Eye on defence | 6
  • 7. Share of defence budget in GDP 2.5 2In percentage 1.5 1 0.5 0 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 The armed forces, and even the Parliament, have been asking for an allocation of 3% of the nation’s GDP to defence for a long time but the projected GDP of this year falls short. It is to be seen that if our economy grows at around 8% per annum, it will not be difficult for the GoI to allocate around 3% of GDP for National defence. A closer look at the growth of the capital budget for 2012–13 would reveal that the focus is entirely driven by the Navy, which has got a 72% hike (to INR241.51 billion) in its modernization budget. The Air Force’s modernization budget has increased marginally (by 0.5%) to INR285.03 billion, while the Army’s has declined by 3% to INR138.04 billion. Trends in service-wise allocations, especially in capital budgets, suggest that India’s current military modernization is weighted heavily in favor of the Air Force and the Navy, which together account for INR540 billion approximately (US$12 billion). This conforms to a larger defence landscape where the aerospace as well as maritime domains are likely to play a critical role in future. However, what is of concern is the increasing revenue allocation for the Army at the cost of capital acquisitions. The Army’s modernization has already been hit by cancellation of major purchases, especially in artillery, armored and soldier modernization and combat helicopter equipment. The obsolete air defence systems, shortage of tank ammunition and deficiencies in night-fighting capabilities has adversely affected the Army’s capabilities. Unless the MoD catches up with at least replenishment requirements, the Army is likely to lag behind in overall modernization, which in turn will cause more problems. Notwithstanding above, the strategic shift in the threat perception from conventional war to asymmetrical challenges have to be kept in mind during resource allocation besides maintaining a fine balance be-tween defence and development. The eventual objective of war is to break down the adversary’s economic prowess by neutralizing strategic assets. Our endeavor should be to focus on those areas as well. The defence forces will do well in case they rationalize the tooth-to-tail ratio. Time has come to discard the baggage, which are not required in the present operational environment. Note: The conversation rate for $: INR has been kept at 1:45 for sake of uniformity and standardization with the previous figures.Eye on defence | 7
  • 8. DOFA: a single windowmechanismBackgroundIndia is probably the only country in the world that has an institutionalized mechanism forfacilitation of Offsets. The MoD clearly lists out the nuances of the policy, its procedures;etc. Yes there is scope for improvement, but the transparency shown by the MoD cannotbe overlooked. The first DPP that included Offsets implementation was promulgated in 2005 but the firsteffective DPP in this regard is always regarded as DPP 2006, wherein detailed guidelinesfor implementation of offsets discharge was incorporated as part of DPP 2006. At thattime it was envisioned, most appropriately, that there is a need for a government agencythat is likely to act as a facilitator for foreign OEMs and Indian industry alike. Here was agovernment that included consultancy‖ per se as one of the functions to take this great ―initiative forwards. The thinking within the government then was to create a vibrantstructure, yet provide the OEMs with all possible assistance to ensure the success ofimplementation in Offsets. If one observed the functions and scope of work assignedto the DOFA then, it is evident that this single organization was intended to work hard,collect and disseminate information, provide Advisory services to the industry as wellas to the government arms in this business, provide for an e-solution by creating andsustaining a dynamic web site, be the front end for facilitation and yet remain in thebackground to aid in the decision-making process of the acquisition under consideration.Eye on defence | 8
  • 9. How it all startedSoon after the promulgation of the DPP 2006, DOFA was founded and was establishedas part of the DDP. A small organization was put in place headed by the Joint Secretary(Exports). Soon after, a web-site was also launched, which included the extract of the DPP,the procedure for implementation of offset guidelines, list of companies that required anindustrial licence and a few interactive features for queries. DOFA was a single windowadvisory for the Indian defence industry and the various associations such as CII, FICCI,ASSOCHAM and foreign OEMs.DOFA, in its envisioned form (of having members from the industry associations, and otherstake holders as a multi-disciplinary organization), existed for not more than three monthsor so when all the members as indicated in the policy were invited for DOFA meetings. Mostprobably two such meetings were held after which it felt that such an extended body wasnot was really required. DOFA really meant the Chairperson, who headed the organizationand the PO (CAP) under the Director P&C, who was assigned the additional responsibility ofOffsets as well. This lean organization was effective in the formative years and provided thesingle point advice to the Services (TOEC), the MoD(CNC) and the industry.The effectiveness came about from the singular focus that DOFA maintained till then, To ―be a credible Advisory and Facilitate in implementation, unmindful of authority. The name ‖DOFA is self-explanatory, it is a facilitation agency, and strives to provide service, provideinformation and advice to all the stakeholders.Lost focusThe years 2006, 2007 and early part of 2008 witnessed fructification of some major dealssuch as the Naval Fleet Tanker, the Maritime Reconnaissance and Surveillance aircrafts,upgrades to the Mig 29 and procurement of Helicopters among others. These were abouteight or nine in number and accounted for more than a couple of billion dollars in offsetsalone. Despite such major programs having been finalized and many more under process,DOFA was never strengthened to effectively take on the increased work-load. Revisions toDPP 2006 were at the behest of some very sound feedback from the environment, whichincluded a procedure for Banking of Offsets credits and removal of the compulsory licensingcondition to establish the eligibility of the Indian Offset partner. At this juncture, instead ofstrengthening the DOFA, it was felt more prudent to introduce yet another organization inthe DDP (someone called Director S1, hitherto looking after supplies wing under the JointSecretary (Supplies), in the DDP) to be made responsible for banking of offsets.Due to this new structure, several banking proposals that are in the queue, only two havebeen approved even after four years of introduction. The crux of this matter can possiblebe traced to the diluted responsibilities in the new structure and as a result, one of themost important tools to be introduced in the offset policy is yet to truly play its role in offsetdischarge.Eye on defence | 9
  • 10. What is needed?A sharp focus is expected of DOFA to enable the organization to discharge its functions.Any policy, however well it is intentioned, and however well it is drafted, can fail, if theoriginal goals are lost down the road.• A single-window approach, for the industry to seek guidance and the necessary support in their endeavors to be able to efficiently exploit this opportunity provided by the offset policy• Integrate the strengths of the government and incorporate a holistic approach• Strategize the concepts in implementation before promulgating yet another policy and structuresImplementation strategyOne of the questions that emerge is, should DOFA remain a facilitation agency or does it ―have some merit in upgrading itself onto an authority of sorts? ‖Considering the enormous amount of money involved in the procurement process andsubsequently in offsets, many analysts have put the figure of offsets at US$5 billion inthe next three years, the numbers involved are of the highest magnitude, wresting all thecontrol of Offsets in a single hand could be potentially fraught with danger. All this moneyis through industrial participation guided by the avenues for discharge as enunciated by theDPP, in the chapter, Procedure for implementing off-sets’ provisions. ― ‖Considering the avenues for discharge and the subsequent process for approvals, it can beseen that there is no single agency that is completely responsible for approvals. This hasadvantages as well as disadvantages. The pros are that, distributed responsibility does notconcentrate power in one hand and divergent views are expected to be freely aired withoutbeing afraid of consequences. The greatest disadvantage this has is that there is no time-bound solution. The process can be indefinitely delayed and the blame can be passed fromone to another.Eye on defence | 10
  • 11. A single-window mechanism is expected to resolve most of the issues and will expedite thedecision-making process. The industry, both domestic and foreign, will not have to keeprunning from one office to another, in an effort to resolve their queries and problems.DOFA needs to be focused on facilitation and be dedicated to this cause. This is animportant cause, though without any powers assigned to it. The entire industry, researchanalysts and world forums seek to attribute many reasons to why implementation ofoffsets in India will not succeed, both from an angle of poor implementation by the MoDas well as the lack of capability within the Indian industry. While the capability has indeedcome a long way and will only enhance in the coming years, both through organic and inorganic methods, focus on effective implementation is an immediate need. The MoD must decidedly uphold the original cause for facilitation and encourage the industry to exploit this important forum. The clarifications provided by DOFA must, in most cases, be binding on the government while processing the cases at a later date. This will encourage OEMs to seek necessary advance clarification prior to structuring their proposals. This means, the new single window organization, which the government is in the process of establishing, must incorporate a sound facilitation arm and retain a sound Advisory inside the government, both for internal purposes to educate various stake holders. This facilitation arm can create and sustain an institutional memory and refresh the annals of MoD and the industry in a periodic manner. This facilitation arm can also act as the knowledge partner to the single window offset authority. The MoD can do well to outsource this task to the industry on a PPP model. In order to be an apostle of knowledge,the facilitation arm must have intimate interaction with the industry, both domestic andforeign. There is also a requirement of an in-depth understanding of technology as it relatesto defence preparedness of the country. Toward this end, the facilitation arm must alsoincorporate experts in the field of education, technologists and have access to knowledgethat resides in the various research institutions in the country.Eye on defence | 11
  • 12. The new and vibrant Offset Authority that is in the process of being formed needs to be asingle-window agency that incorporates a facilitation arm, which is also a knowledge arm,and a separate execution arm. The Execution Arm must necessarily synergize the strengthsavailable in the government to form a formidable authority.So what are the strengths available within the MoD?DRDO is the Technology Arm of the MoD and has inherent strengths to provide for back-bone resilience. Intimate association with the DRDO is an inescapable requirement. Adetailed knowledge of the technologies being harnessed across various laboratories, therequirements of the Armed Forces, technologies in vogue across the Armed Forces of theworld, need to be studied and gaps identified. The new Offset Authority may not do theentire processing, yet it needs to have a good hold on the subject for effective exploitation.The Armed Forces do incorporate and use new technologies and have a fair idea of whatthey need in combat, they must be integrated in a sound manner in this process. Thus,Services, The Integrated Defence Staff, DRDO should be integrated into the decision-makingprocess.The new Offset Authority must integrate all activities of facilitation, banking, processing andevaluations, approvals, monitoring (for banking and post-contract monitoring), and coverall the activities associated with offsets. This will ensure accountability and effectiveness inimplementation. The integration with the acquisition process must be full and total, leavingno room for any delays in the acquisitions due to the lethargy of the Offset Authority.It is time for MoD to strategize the concepts for implementation prior to promulgatingyet another policy or organization. The drawbacks of the previous organization must bestudied and analyzed threadbare and then effective counter measures must be taken andimplemented in the new structures. This will augur well both for the MoD and the industry. Conclusion The new offset authority being conceived by the MoD must be robust, well staffed both in terms of quality and quantity and incorporate the best practices in governance. From the highest to the lowest level, the staff must be dedicated. May be at levels higher than this, multi-tasking could be permitted. DRDO must necessarily play a dominant role in acquiring technology and be able to fill in gaps so identified as also aggressively find the route to production.Eye on defence | 12
  • 13. Alenia: C-27J ‘SPARTAN’Tier 1’sThe C-27J is a medium category transport aircraft and shares many of its systems (RollsRoyce engines) with the C-130J which India currently posses. The C-27J is currentlylooking at participating in multiple tenders that have been floated by the Centralparamilitary and armed forces. The aircraft is capable of taking off from unprepared stripsless than 500 meters long with a maximum takeoff weight of 30,500 kg. The aircraft isdesigned to operate in remote areas like those in Jammu and Kashmir and the North-Eastfrom gravel or sand as besides the twin-engines, it has an auxiliary power unit (APU) thatprovides electricity and maintains pressure without the need to keep the engines runningwhen the aircraft is on ground.At present, besides the US, the C-27 J has been ordered by the air forces of Italy, Greece,Bulgaria, Lithuania, Romania, Morocco. Slovakia has also selected the aircraft.Eye on defence | 13
  • 14. No. Description No. Description 3 Ailerons (L&R) 1 Centre Wing 4 Spoilers (L&R) 2 Outer Wing (L&R) 5 Outboard Flaps (L&R) 7 Horizontal Stabilizer (L&R) 6 Inboard Flaps (L&R) 8 Elevators (L&R) 14 Nose Landing Gear Doors (L&R) 9 Vertical Stabilizer 16 Radome 10 Rudder 18 Main Landing Gear Fairings (L&R) 11 Upr Rear emergency Hatch 22 Centre Wing Airfoil Underside Door 12 Paratroop foors (L&R) 23 Outer Wing Airfoil Underside Door 13 Upr Fwd emergency hatch 24 Wing to Fuse Fairing 15 Side mergency door 25 Forward Fuselage 17 Fwd crew door 26 Centre Fuselage 19 Loading ramp 27 Fwd/Rear Fuselage 20 Loading door 28 Aft/Rear Fuselage 21 Upr ctr emergency hatch 30 Pipes 29 Nacelle (L&R)Eye on defence | 14 31 Wires 32 Propellers Alenia (In House fabrication and assemble) Subcontracted
  • 15. Request for Information (RFIs)January 2012 – 15 April 2012Date of issue RFI details Response date Issued by Service6 Jan 2012 RFI and Interaction with 11 Jan 2012 MGO/EM/GS&C Army Manufacturers of Operating Room No 206 Theatre Shelter Inflatable6 Jan 2012 General Purpose Machine Gun 20 Jan 2012 Director General of Infantry Army for PARA (SF) Infantry - 76 Jan 2012 Spares, Repair and Over-haul of 23 Jan 2012 Directorate General Of EME Army Missile Test Station (Electronics) Master General of Ordnance Branch22 Feb 2012 Unmanned Aerial vehicle (UAV) 22 Mar 2012 Directorate General Of Artillery 5 Army mission simulator for UAV crew21 Feb 2012 Full Body Truck Scanners 13 Mar 2012 MI Dte Army22 Feb 2012 Night Sight for Carbine 10 Mar 2012 Inf Dte Army23 Feb 2012 Optical Theodolite Instrument 15 Mar 2012 Directorate General of Artillery 5 Army23 Feb 2012 Electro Optical Instrument 30 Mar 2012 Directorate General of Artillery 5 Army15 Mar 2012 Specialist Vehicle 15 April 2012 Inf Dte Army19 Mar 2012 New power pack with minimum 30 April 2012 DGMF Army 360 horse power engine including running gear and suspension for Infantry Combat Vehicle (ICV) BMP-2/2K13 Jan 2012 Technical And Commercial 6 Feb 2012 Joint Director of Naval Signals Indian Navy Information For A WIMAX (Networking) System Directorate of Naval Signals3 April 2012 Diver Navigation System 20 April 2012 Directorate of Spe-cial Ops & Indian Navy Diving1 April 2012 Surveillance Radar 23 April 2012 HQ CAC Indian Air Force Bamrauli Allahabad20 Mar 2012 Deep Search Metal Mine 2 April 2012 CRPF CRPF Detector(DSMD)1 April 2012 Surveillance Radar 23 April 2012 HQ CAC Indian Air Force Bamrauli Allahabad9 April 2012 Comjam And Sigint Aircraft 24 May 2012 PD ASR (Room No 460) Indian Air Force Air HQ (Vayu Bhawan), Rafi Marg11 Apr 30 mm or more AD Gun 30 Apr 2012 DGWE(WE-9) Indian Air Force General staff branch Room no 208g, south block Integrated hq mod (army) Dhq po, New Delhi-110011 Eye on defence | 15
  • 16. Request for Proposal (RFPs)January 2012 – 15 April 2012Date of issue RFP details/equipment Response date Issued by Remarks19 Jan 2012 GPS for Aviation Navigation 19 March 2012 Army Commander Special For Army Financial Power Cell Northern Command7 Feb 2012 Counter Terrorism Operations 14 April 2012 WARDEC For Army Planning Tool and Wargaming System7 Mar 2012 Light Weight BP Jacket 12 Mar 2012 INS Abhimanyu For Navy, Qty: 4811 Jan 2012 Portable air supply & 30 Jan 2012 Commander For Navy communication system Operations Officer24 Feb 2012 Expression of Interest for 21 Mar 2012 Director General For Navy Technical Consultancy Services Project Seabird for Phase IIA of Project Seabird, New Delhi23 Jan 2012 Hand Held LED Torches with 13 Feb 2012 SO PROVOST For Indian Air Force Accessories HQ WAC IAF21 Feb 2012 Repair overhaul of Russian origin 3 Apr 2012 D Eng TI For Indian Air force aggregates of Illushin aircraft Air HQ (VB) of IAF27 Jan 2012 Supply And Installation Of CCTV 27 Feb 2012 Wing Commander For Indian Air Force Surveillance System Units Logistics Section Qty: 12 Nos. Training Command30 Jan 2012 FUZE T AND P DA NO 213 P-MK- 28 Feb 2012 Ordnance Factory Dehuroad, For OFB 5(M-2) Pune Qty: 1019015 Feb 2012 Smokeless Pyroxylene 20 Mar 2012 Ordnance Factory Khamaria For OFB Propellant Powder for 14.5 MM JabalPur Ammn.15 Feb 2012 Smokeless Pyroxylene 20 Mar 2012 Ordnance Factory For OFB Propellant Powder for 14.5 MM Khamaria JabalPur Ammn.3 Mar 2012 Power Unit Part No.1155261, 10 April 2012 Joint General Man-ager For OFB complete as per BOM and Drg. Gun Carraige Fac-tory Qty: 06 Attached as Annexure-I for 155 mm FH Gun14 Feb 2012 Image Intensifier Tube 18mm 20 Mar 2012 Ordnance factory For OFB AVG Glass I/P Dehradun Qty: 352 unitsJan 2012 Explosive Detection Kit 15 Feb 2012 Deputy Inspector For CRPF General of Police, Qty: 10 Nos. Central Reserve Police Force30 Jan 2012 Hand Held Thermal Imagers and 14 Mar 2012 Directorate-General, CRPF For CRFP Accessories Qty: 10023 Feb 2012 Global Positioning System 17 Mar 2012 CRPF CRPF, Qty: 774 April 2012 Ammunition for Shooting 18 May 2012 Directorate General, Border For BSF , Qty: 882400 Rounds competition Security Force4 April 2012 Doppler radar system for 29 May 2012 Indian Ordnance Factories For OFB velocity measurement of sub- AMMUNITION FACTORY, sonic and super-sonic projectiles KHADKI2 April 2012 Rubberized inflatable Boats with 15 May 2012 Directorate General, Border For BSF, Qty 75 No’s. 25 HP OBM Security Force Eye on defence | 16
  • 17. List of industrial licenses (ILs) filed from01/01/2012 TO 29/02/2012Application no. and date Name of the applicant Item of manufacture1: 5/1/2012 Mistral Solution Pvt. Ltd. Defence electronics hardware boards2: 6/1/2012 Tata Advanced Materials Ltd. Manufacture of parts and accessories N.E.C. for aircraft or space craft3: 31/01/2012 Vinyas Innovative Technologies Pvt. Ltd. Electronic printed card board, assemblies/electronic subassemblies/military wire harnesses for defence and aerospace application4: 31/01/2012 Elcome marine services Pvt. Ltd. System integration for electronics including design and production of customized hardware and software (GUI / API based, as well as embedded) (NIA 620)5: 7/2/2012 Tara Aerospace Systems Ltd. Components kits / accessories for aircraft ( rotor crafts and fixed wing aircraft )6: 13/02/2012 Navanidhi Electronics (P) Ltd. Antennas, HF/VHF/UHF/RF power amplifiers, electro Mechanical masts, security jammers, mo-bile Jammers & cell phone jammers, microwave systems and components for EW equipment, V/UHF, l-band Digitally tuneable filters, active night vision and fog vision equipment7: 22/02/2012 Pipavav Defence and Offshore Manufacture of tanks (armored fighting vehicles) gun Turrets (land Engineering Co. Ltd. and sea), artillery systems (including upgrades and overhaul)8: 22/02/2012 Unique Instruments & Mfrs-Pvt. Ltd. Manufacture of aircraft and engine parts, ac-cessories and sub- assemblies9: 23/02/2012 Sri Lakshmi Explo Chemicals Soldering of fuse head unto insulated twin wires of precut lengths, sleeving and tagging10: 29/02/2012 Ashok Leyland Defence Systems Ltd. Design development, manufacture assembly, overhaul, repair and upgrade of defence equipment to include armored fghting vehicles, other armored combat vehicles, unmanned ground/ aerial vehicles, armor protected vehicles, specialist vehicles etc. Eye on defence | 17
  • 18. New projects/investments/contracts Name of entity Project details Value Bharat Dynamics • BDL plans to set up a surface-to-air missile unit in Hyderabad with a capacity to INR300 billion Ltd. (BDL) produce an estimated 6,000 sophisticated medium-range missiles. • The plant spread over 630 acres is expected to be operational by 2016 and create employment for 700 people directly and 2,000 indirectly.Indian Air Force • GOI has signed contracts with M/s Thales, France and M/s Dassault Aviation, France, Contract with M/s as well as M/s Hindustan Aero-nautics Limited (HAL), India to upgrade the Mirage Thales and M/s Dassault► 2000 aircraft of the Indian Air Force (IAF), scheduled to be completed by 2021. Aviation: INR101.66 billion • Another contract has been signed with M/s MBDA, France, for procurement of air- Contract with M/s HAL: to-air missiles for the Mirage 2000 aircraft. The delivery of missiles is scheduled INR20.2 billion between 2015 and 2019. Contract for pro- curement of the missiles: INR66.25 billion Pawan Hans • Indian government-owned Pawan Hans has submitted a proposal to four central INR100.30 billion ministries seeking the purchase of 249 helicopters and 10 sea planes and the ► construction of 180 helipads across India. • The aircraft and helipads will improve aerial surveillance, law-and-order monitoring and India’s response to medical emergencies and natural disasters. This is also likely to make at least 30% of India’s districts and many remote areas more accessible. Defence public • Four defence public sector units are setting up nine manufacturing units in Andhra INR70 billion sector units Pradesh that is expected to create 10,000 jobs in the state. ► • This includes Bharat Dynamics Ltd. (three units), Bharat Electronics Ltd. (3 units), Electronics Corporation of India Ltd. (2 units) and Mishra Dhatu Nigam Ltd. (MIDHANI) (one unit). Government of • The Russian Akula-II class submarine “K-152 Nerpa” was commissioned into INR46.67 billion India the Indian Navy as “INS Chakra” on a 10-year lease agreement. INS Chakra, commissioned at the Primorye region in far southeastern Russia will soon be sent to ► India. • With this, India has become the world’s sixth country after the US, Russia, France, the UK and China to operate nuclear powered submarines. Government of • The GoI is purchasing 75 Pilatus trainer aircraft from Switzerland. Deliveries of the INR18.50 billion India aircraft are expected to begin in 2013. ► • The Pilatus aircraft is likely to replace the earlier HPT-32 trainers that were grounded after a fatal accident in 2009. Poland • Bumar, Polish-based supplier of armaments and defence signed an export contract INR15.56 billion for armored units to the Indian army. ► • It also signed an agreement with BEML stipulating co-operation on projects, including sales to third-party markets. Eye on defence | 18
  • 19. Name of entity Project details Value Pratt & Whitney • Pratt & Whitney, unit of United Technologies, is exploring to set up an MRO INR7.78 billion (maintenance, repair and overhaul) unit, an aircraft engine components facility and ► a training center in India. • The company is holding talks to set-up a JV with Tatas and L&T and the proposed unit is expected at Bangalore or Hyderabad. Bharat Earth • BEML initiated the process of setting up an Aerospace manufacturing division near INR4.45 billion Movers Limited Bangalore airport. The facility will be spread over 3,00,000 sq ft and is expected to (BEML) be ready by September 2012. ► • This Aerospace Facility will be capable of manufacturing aerospace components and parts, assembling of aircraft and helicopter up to 21 meters height.Tata Motors • Tata Motors Ltd. will invest to build a factory subject to supply order of 2,000 INR3 billion infantry combat vehicles to the Indian Army.► • The company submitted a bid two years ago to supply the infantry vehicles.Hind High • ► Hind High Vacuum (HHV), a vacuum technology major that supplies equipment for INR2-3 billionVacuum satellite and aircraft projects to ISRO, Hindustan Aeronautics, DRDO etc. has stated plans to set-up a third plant near Bangalore focusing on the defence and aerospace ► business. ► • HHV is open to a foreign equity stake or an investor in its existing plant. • The company wants to increase its presence globally and aims to more than double its turnover to INR5 billion by 2014 (from nearly INR2 billion this fiscal year).Indian Central • Smiths Detection, part of the UK-based global technology business Smiths Group, INR1.04 billionBoard of Excise has won a contract to supply the Indian customs authorities with high-energy, X-rayand Customs screening systems.► • Smiths Detection will work in partnership with Bharat Electronics Limited and will deliver the systems to the ports of Chennai, Tuticorin, Kandla and Mumbai over the next two to three years.Kalyani Group • Kalyani Group, a diversified Indian conglomerate will invest INR1 billion to develop a INR1 billion towed artillery gun to meet the future needs of the country’s armed forces.► • It is developing the gun on its own with a technology partner and has hired 60 experts for its development.Ministry of • The defence ministry is purchasing six Mi-17 V-5 helicop-ters from Russia to be used NADefence by the Union Home Ministry to assist the forces in internal security duties.► • These helicopters are being built by Russian Helicopters’ Kazan Helicopter Factory (KVZ) subsidiary.Hindustan • A new unit of HAL at Seethangoli, Kerala was inaugurated in February. The unit NAAeronautics Ltd. will prepare indigenous designs and assemble components purchased from abroad(HAL) for the armed forces aircraft and choppers and state-of-the-art communication equipment, radio altimeter used in radar devices and navigation radar computers. Eye on defence | 19
  • 20. Name of entity Project details Value Bharat • The Coast Guard has selected Bharat Electronics (BEL) to provide turnkey NA Electronics (BEL) surveillance solution. ► • BEL has also given a contract to Obzerv Technologies to supply it with 46 ARGC- 2400 cameras. ► • This program is the first phase of the Indian coastal surveillance project designed to cover the entire coast. Russian • Russian airplane-building corporation (RAC)-MiG completed supply of ship borne NA airplane-building fighters MiG-29K/KUB in-tended for aircraft-carrier Vikramaditya to the navy of corporation India in late 2011. (RAC)-MiG • The contract on supply of 16 combat airplanes in the single-seat version K (ship ► borne) and double-seat version KUB (ship borne combat training) was signed in 2004. ► • The company has already started production of the next batch of 29 such fighters in accordance with the additional contract signed with India in March 2010. Indian Rotorcraft • Indian Rotorcraft, a JV company of Tata Sons and Agusta Westland, has proposed NA to set up an assembly line for helicopters in Hyderbad on a 10-acre site. The JV will ► commence production from June 2013 and will initially produce the eight-seater AW119Ke light helicopter. • The facility will be capable of producing up to 30 helicopters per annum. Tata Power • New Zealand-based Radiola Aerospace Limited has won a four-year contract NA Strategic to undertake flight inspections of new navigation aids at 30 military airfields Electronics throughout India. Division (SED) • The contract is awarded by TATA Power SED. Tata Power SED holds a prime contract ► with the Indian MoD to modernize the facilities at airfields operated by the Indian Air Force.*The values of the deals have been converted to Indian Rupees using Oanda currency conversion tool 1US$ = INR51.8521 (Values as on 31 March 2012) Eye on defence | 20
  • 21. Joint ventures and alliancesName of entities Nature of transaction ValueDCNS and SEC • ► DCNS, a French naval defence company signed a contract (through DCNS India) with INR3.1 bil-lionIndus-tries Hyderabad-based SEC Industries for the local manufacturing of equipment for the P75 Scorpene submarines.► • SEC will manufacture equipment under a TOT provided by DCNS India and they will be delivered to its customer, Mazagon Dock Limited (MDL). Larsen & Toubro • The electrical and automation business division of L&T acquired Thalest, UK-based INR240 million and Thalest Ltd. provider of ship control and automation systems. ► ► • The acquisition is aimed at expanding the automation offerings for ships. Industria • ► Spanish manufacturer of turbines for aircraft engines, Industria de Turbo INR165.98 million de Turbo Propulsores (ITP), in alliance with British firm Reginson Engineering Ltd. and Indian Propulsores firm Raghu Vamsi have set up a plant in India with an objective of ex-pansion and and Reginson diversification. Engineering Ltd. • The agreement was signed by ITP’s subsidiary Tuberias Aeronauticas with the local and Raghu Vamsi firms. • The production output is planned to double in 2014 whereas the number of employees will be more than 100 people. Reliance • Reliance Industries Ltd. (RIL) and French Dassault Aviation SA have signed a NA Industries Ltd. preliminary agreement to explore defence projects in alliance. and Dassault • The two companies are yet to identify areas where they can collectively work. TTI, Inc. and • ► TTI entered an agreement with Radiant Corporation to supply interconnects, NA Radiant Corp electromechanical, and passive (IP&E) components. ► • Radiant manufactures its own requirements of composite cables and recently entered the field of aviation grade cable looms and wiring harnesses to participate in the growing offset business generated as a result of aircraft supply contracts to the Indian Armed Forces. Mahindra and • Mahindra & Mahindra announced its JV with Rafael that will focus on development NA Mahindra and and manufacturing of products such as Torpedo Defence Systems, Electronic Rafael Warfare Systems, Advanced Armour Solutions and Remotely Operated Weapon Stations for Futuristic Infantry Combat Vehicles (FICV). ► • A manufacturing facility is expected to be set up in Pune. Mahindra will own a 74% stake in the JV with Rafael and is expecting a turnover of US$500 million in the next 10 years. Larsen & Tubro • Larsen & Tubro signed an agreement with French defence products company Nexter NA and Nexter to jointly bid for the Indian army’s artillery gun programs. ► • Nexter is expected to transfer technology for its towed and mounted gun systems to L&T. The Indian company plans to assemble Nexter’s Caesar and Trajan guns in India. Eye on defence | 21
  • 22. Name of entities Nature of transaction ValueLarsen & Toubro • ► Larsen & Toubro Ltd. entered an agreement with South Korean defence products NAand Samsung company Samsung Techwin Co. to make howitzer guns in India.Techwin Co. • The companies have already submitted a bid to supply up to 100 guns to the Indian► army. Selex Galileo and • ► Selex Galileo and Data Patterns (India) Pvt. Ltd. will seek approval from the GoI to NA Data Patterns form a JV to make defence electronics products. The two companies will establish a Pvt. Ltd. new facility at Chennai. ► • Selex Galileo will hold a 26% stake in the planned joint ven-ture (JV) and plans to employ 100 people initially. ITT Exelis and • ITT Exelis and Tata Advanced Systems Limited have formed a strategic alliance to NA Tata Advanced support Generation (Gen) 3 night vision requirements in India. Systems (TASL) • ITT Exelis will provide TASL with the technology to build night vision devices in ► India, which will be followed by manufacture of high precision components and sub- assemblies of the devices by TASL. DHS Systems • ► DHS Systems International, manufacturer of shelters entered Indian market, NA and Bharat through a long term deal with Bharat Electronics Limited’s Navi Mumbai unit. Electronics • DHS Systems International aims to generate revenue of INR1billion in the next ► three years from the defence and health care sectors in India and also set up a manufactur-ing facility by 2015. DCNS and IIT • ► Naval Defence Company, DCNS entered an agreement with IIT Bombay for NA Bombay education and research programs in naval defence and energy. ► • According to the MoU, R&D programs will be carried out jointly by IIT Bombay and DCNS Research teams while training of DCNS personnel will be conducted by IIT Bombay. Eye on defence | 22
  • 23. Country-level deals and initiativesCountry Nature of transaction Additional detailsUS For the first time in Indo-US war games, the Americans Apart from fielding three tanks, the US will also deploy will deploy their tanks in the company-level Exercise around 200 men accompanied by armored personnel Yudhabhyas scheduled to be held in the Mahajan field carriers for the war games. firing ranges in the Rajasthan desert in March. India will file its Russian-origin BMPs along with tanks for the war game.Russia The MoD plans to purchase six Mi-17 V-5 heli-copters Through the purchase, the Ministry will assist its forces from Russia to be used by the Union Home Ministry. engaged in internal security duties. These helicopters are being built by Russian Helicopters’ Kazan Helicopter Factory (KVZ) subsidiary. Currently, the defence ministry is negotiating purchase of 59 Mi-17 s after its first order of 80 such helicopters to the Russian company.Brazil The talks between the Defence ministers of India and Other key areas on the agenda included talks on(Defence talks) Brazil were held in India in February 2012. partnerships between Brazilian and Indian armies to establish research centers for development of defence Topics of discussion revolved around cooperation in the equipment that meet the future needs such as the naval sector to build aircraft carriers and submarines of Border Monitoring System (Sisfron), talks related to their the Scorpene class, expansion of the existing vacancies respective air forces, exchanges between schools of for exchange of military officers, and courses of higher pilots, aerospace medicine, search and rescue operations education offered by the military schools of both and parachuting. countries.Australia The Society of Indian Aerospace and Technol-ogies The agreement has signaled a new level of cooperation (SIATI) and Aviation Aerospace Australia (AAA) have and the collaboration is likely to help both the forayed into a long-term pact to jointly develop the organizations to share knowledge, develop domain aerospace industry in both the countries. expertise and transfer skills.Singapore Air Chief Marshal NAK Browne, Chief of the Air Staff, The discussion issues revolved around the ongoing went on a four day Defence Cooperation visit to defence cooperation between the two countries toward Singapore. expanding the already robust bilateral military-to-military ties and also a visit the Singapore Air Show.Sri Lanka Inaugural defence dialog has taken place be-tween the Regional security situation including issues of maritime Defence Secretaries of India and Sri Lanka. security in the Indian Ocean region were the key themes at the inaugural annual defence dialog.Japan Japanese delegation led by Admiral Hisayasu Suzuki, The five-day visit, was in pursuance of the Memorandum the Commandant, Japan Coast Guard (JCG), for the XI of Cooperation (MoC), signed between the two Coast High Level Meeting and Combined Exercises met with the Guards on 24 November 2006, which stipulates that the Indian Coast Guard (ICG). heads of the two organizations meet alternately in India and Japan, to discuss maritime issues of mutual concerns and formulate a cooperative approach to address these.Saudi Arabia The Indian and Saudi armed forces are likely to conduct The joint committee will also prepare a draft agreement joint exercises involving Saudi and Indian ship visits from that will be endorsed by both sides in the field of both sides and to work closely to combat sea piracy. hydography. The two sides intend to discuss the details of their future defence cooperation, including the details of an agreement in the defence sector. Eye on defence | 23
  • 24. Industry buzzStronger role of private sector Government extends support onin Defence Defence PSU JV’sThe private sector’s role in the Defence The official guidelines on formation of a JVsector is likely to get strengthened, under by Defence PSU’s are an attempt toward athe “Armed Forces Long-term Integrated fair and transparent framework to enablePerspective Plan” soon to be made public by such tie-ups. A case in point is the recentthe Union Government. Under the 15-year controversy around the JV by Mazagonplan, the private sector will have a greater Dock Ltd., a shipbuilder under the Ministryrole in meeting the requirements of the of Defence, with the privately promotedarmed forces, in terms of investment and Pipavav Shipyard for constructing warshipsin research and development of technology for the Navy. The GoI is responding to thesesuch as electronic warfare. concerns, with the guidelines containing provisions on selection of JV partners by the(Source: “Greater role for private parties in Defence PSUs.Defence sector,” The Hindu, 23 February2012, via Factiva, © 2012 Kasturi & Sons (Source: “In defence of joint ventures,”Ltd.) Business Line (The Hindu), 13 February 2012, via Factiva, 2012 The Hindu Business Line.) Electronic warfare proposition Indian records success in missileattractive for India test fireIndia could soon get access to electronic India has achieved another defencewarfare (EW), the science of electronically milestone by successfully flight-testing onedodging and attacking the enemy, with an of its sophisticated in-terceptor missilesINR250 billion business proposition awaiting from Wheeler Island in Orissa’s Bhadrakthe country’s public and private sectors. district. The interceptor named AdvancedThe country’s military labs were equipping Air Defence (AAD), destroyed a targetthe three forces with futuristic EW or missile. The test was part of a coordinatedintelligent devices, including radar warners, air defence exercise, which featured twomissile warners, electronic and leak-proof missiles — an interceptor and a targetcommunication intelligence, jammers and missile.detectors. These will be fitted on groundvehicles, ships and also on unmanned (Source: “Advanced interceptor missile test-combat air vehicles, fighter planes and even fired successfully,” The Times of India, 12future satellites to enhance the military’s February 2012, via Factiva, 2012 The Times”seeing and hearing” ranges. Currently, of India Group.) Bharat Electronics Ltd, (BEL) is a majorprovider of EW hardware and solutions tothe military.(Source: “Electronic warfare offers Rs25,000-cr biz for India Inc.,” Business Line(The Hindu), 22 February 2012, via Factiva,2012 The Hindu Business Line.)Eye on defence | 24
  • 25. Ministry of Defence debars firms Hatsoff simulator receives Level Delivery of six ScorpeneThe Ministry of Defence has debarred six D certification submarines delayedfirms — M/s Singapore Technologies Kinetics A JV of HAL and CAE, Helicopter Academy The delivery of six Scorpene submarines,Ltd. (STK), M/s Israel Military Industries Ltd., to Train by Simulation of Flying (Hatsoff) being constructed at the Mazagon DockM/s Rheinmetall Air Defence, Zurich, M/s recently announced that one of its simulator Limited (MDL), Mumbai, under Project-75Corporation Defence, Russia, M/s TS Kisan & cockpits has received a certification of has been delayed. The delivery scheduleCo. Pvt. Ltd., New Delhi and M/s RK Machine Level D. Level D is the highest qualification of the first submarine has been revised toTools Ltd., Ludhiana — from further business for flight simulators and Hatsoff has got June 2015 and that of the last submarinedealings with the Ordnance Factory Board, the certification for Eurocopter AS365 to September 2018. The original deliveryDepartment of Defence Production, MoD, N3 Dauphin helicopter. India’s Directorate schedule for the first submarine wasfor a period of ten years. The firms have General of Civil Aviation and the European December 2012 and the remaining were tobeen blacklisted by the CBI on the evidence Aviation Safety Agency (EASA) have given be delivered with a gap of one year each.collected against them. the certification. Further, its three simulator The delay in schedule is because of problems(Source: “MoD Debars Six Firms from cockpits-a Bell 412, a HAL civil/conventional in absorption of new technology, delay inBusiness Dealings for Ten Years,” Press Dhruv, and the Eurocopter AS365 N3 augmentation of industrial infrastructureInformation Bureau website, http://pib.nic. Dauphin-have been certified as Level 2 at MDL and delay in procurement of itemsin/newsite/AdvSearch.aspx, accessed 15 (JAR)/Level 6 (FAA) flight-training devices due to high cost as compared to the earlierMarch 2012.) when used as fixed-base, non-motion indicated cost. simulators in the docking station installed at the facility. (Source: “Delivery of Scorpene submarines delayed: Govt,” 19 March 2012, Press Trust (Source: ”Simulator gets regulators’ nod,” of India Limited, via Factiva, (c) 2012 AsiaIndian IT majors work hard to DNA - Daily News & Analysis, 13 January Pulse Pty Limited.)lure MNC defence players 2012, via Factiva, 2012 Diligent Media Corporation Ltd.)Indian IT companies are working hardto forge partnerships with aerospacemajors, as the country’s defence budget is Cochin Shipyard providesexpected to reach US$50 billion in the next platform supply vessels to SCIthree years. Software firms are exploring First batch of Mi-17V-5opportunities arising from offset obligations helicopters made operational in Indian shipbuilder, Cochin Shipyard Ltd.,of multinational defence companies as IT India has launched two platform supply vesselsadoption related to communication, human for water transport company Shippingand machine management in Armed Forces The first batch of Mi-17V-5s, delivered as Corporation of India (SCI). The ships, BY-85,is on the rise. According to the offset policy, per the contract signed in 2008, has been SCI Nalanda, and BY-86, SCI Yamuna, areforeign defence manufacturers have to made operational by the Indian Air Forces. platform supply vessels of the UT 755 CDbuy from local players or form JVs to pass A contract on 80 Mi-17V-5s had been type, designed by Rolls-Royce Marine AS,back 30% of the cost of the contract. A case signed in 2008. Around 20 helicopters Norway, a subsidiary of UK engineeringin example is the Wipro’s tie-up with an have already been delivered to India. These group Rolls-Royce Group plc.European organization for manufacturing vehicles are being produced by Kazan helicopter plant. All 80 helicopters are (Source: “Cochin Shipyard launches platformand global supply of actuators for landing supply ships for SCI,” SeeNews Shipping,gears. expected to be operational by 2014. 9 January 2012, via Factiva, © 2012(Source: “Software cos aggressive on (Source:” India puts first Mi-17V-5 SeeNews.)defence offset policy,” Financial Express, 14 helicopters into operation,” SKRINFebruary 2012, via Factiva, © 2012 Indian Newswire, 20 February 2012, via Factiva,Express Online Media Pvt. Ltd.) 2012 SKRIN.) Eye on defence | 25
  • 26. Police department will get Mahindra Aerospace likely to Indian firms to provide food andaccess to Electronic warfare set up plant abroad clothing for space missiontechnologies Mahindra Aerospace, the aerospace Two life science laboratories of the DefenceIndia is set to develop electronic warfare division of Mahindra & Mahindra Group is Research Development Organisation (DRDO)technologies to help paramilitary and police considering setting up plants for 8- to18- will provide food and clothing for thefight the Maoists and terrorists. Defence seater aircraft in the US, Canada, Latin Indian astronauts ( Vyomanauts), duringResearch and Development Organisation’s America and China. This is being done to the country’s first human space mission.(DRDO) Chief Controller Research and establish its presence among these markets. The Mysore-based Defence Food ResearchDevelopment (Avionics) G. Elangovan said Mahindra has plans to increase its business Laboratory (DFRL) will provide ready-to-eatthat the agency has created a separate chief five-fold by selling approximately 100 food in space, the Defence Bioengineeringcontroller (R&D) for low intensity conflict aircraft annually by 2015. The company and Electromedical Laboratory (Debel) (bothto identify electronic warfare technologies is also looking for a potential technology under DRDO) will design and produce thethat can be customized to help paramilitary partner as well as a hanger to build its own space suits for the first vyomanaut’s of India.and police meet internal security needs. The aircraft in India by 2013–14. It also aims Bengaluru-based Debel, which has alreadyDRDO intends to involve the private sector to become a Tier I component supplier to developed Nuclear Biological and Chemicalin co-developing niche products required aircraft makers Airbus and Boeing as part (NBC) protection suits, flight clothing andfor low-intensity conflict with anti-national of the government’s US$10-billion offset protective equipment for air crew, has beenelements within the country. program. assigned to develop the highly complex space suits. It is the first time that space(Source: “Electronic warfare technologies (Source: Ketan Thakkar, “Mahindra Aero suits will be developed in India.to be developed for police,” Indo-Asian News Plans Aircraft Assembly Abroad,” 23 MarchService, 22 February 2012, via Factiva, 2012, via Factiva, © The Economic Times (Source: “Debel to develop suits for2012 Indo-Asian News Service.) – Bangalore Edition, © 2012. Bennett, astronauts,” DNA - Daily News & Analysis, Coleman & Co., Ltd.) 13 February 2012, via Factiva, © 2012 Diligent Media Corporation Ltd.) IBM’s security intelligence Tatas may make choppers ifplatform to fight cyber attacks DRDO launches explosive Sikorsky bags defence dealIBM’s QRadar Security Intelligence Platform detection kitsallows analysis of real-time data feeds Sikorsky Aircraft Co, a US-based aircraftfrom more than 400 different sources. The manufacturer is among the two companies DRDO launched the Explosive Detectioncompany mentioned that this platform helps shortlisted by the Ministry of Defence (MoD) Kit (EDK) at the Defence Expo – 2012.in identifying threats and hackers with real- to supply 16 multi-role helicopters to the It was chosen among more than 70time analysis of the traffic on the corporate Indian Navy in a US$1 billion deal. It is products and technologies developed forIT infrastructure. currently awaiting a license from the GoI defence applications with potential civilian to manufacture components and assemble applications that have been identified for(Source: “IBM’s ‘QRadar Security’ to fight helicopters for the Indian defence services. commercialization under the DRDO-FICCIagainst cyber attacks!,” EFYtimes.com, 23 ATAC (Accelerated Technology AssessmentFebruary 2012, via Factiva, © 2012 EFY Tata Sikorsky Aerostructures, joint-venture Commercialization) programme. TheEnterprises Pvt. Ltd.) with Tata Advanced Systems Ltd, is likely to Explosive Detection Kit (EDK), developed by benefit if Sikorsky bags the defence deal. Pune based High Energy Materials Research (Source: K V Ramana,”Tatas may make Laboratory, can quickly detect and identify choppers if Sikorsky bags defence deal,”4 even traces of explosives. April 2012, DNA Money, via Factiva, 2012. (Source: “DRDO to Launch Explosive Diligent Media Corporation Ltd.) Detection and Swine Flu Diagnostic Kits at DEFEXPO,” Press In-formation Bureau website, http://pib.nic.in/newsite/ AdvSearch.aspx, accessed 17 April 2012.) Eye on defence | 26
  • 27. Ashok Leyland launches COLT Tata Motors showcases anti-range of defence vehicles terrorist combat vehicleAshok Leyland Defence Systems engaged in and launches Prahar missilethe manufacture of specialized tactical and launcher and armored vehiclesarmored vehicles unveiled the first of therange of COLT tactical vehicles - the Light at Defence Expo India 2012Tactical Vehicle (4x4) at the Defence Expo Tata Motors showcased a new Micro Bullet-– 2012. The Light Tactical Vehicle is being Proof Vehicle (MBPV) at DEFEXPO Indiadeveloped its strategic partnership with 2012, a mobile combat vehicle for indoorFrench-based, Panhard General Defense, combat inside airports, railway stationsFrance. and other such infrastructure. Tata Motors launched four other defence vehicles — the(Source: “Ashok Leyland Defence Systems Tata 12x12 Prahaar Missile Carrier, the Tataunveils the COLT range of tactical vehicle,” Light Armoured Vehicle, the Tata Mobile30 March 2012, ENP NewsWire, © 2012, Bunker and the Tata 6x6 7kl Refueler duringElectronic News Publishing.) the event. (Source: “Tata Motors showcases Anti- Terrorist Indoor Combat Vehicle concept at DEFEXPO India 2012; Launches Prahar missile launcher and armoured vehicles,” 30 March 2012, ENP Newswire, via Factiva, (c) 2012, Electronic News Publishing.) Eye on defence | 27
  • 28. Sources1. “Aircraft component manufacturing unit in Bangalore; International Aerospace Manufacturing is implementing an aircraft component manufacturing project in dist. Bangalore, Karnataka,” Domex New Engineering & Metallurgical Projects, 25 January 2012, via Dow Jones Factiva, © 2012 Domex Business Information Pvt Ltd. 2. “Indian Navy inducts INS Chakra,” Domain-B, 24 January 2012, via Factiva, © 2012 The Information Company Pvt. Ltd.3. “Indian govt planning two Ipos to raise funds,” Asia Pulse, 24 January 2012, via Factiva, © 2012 Asia Pulse Pty Limited. 4. “Expansion: ITP opens first parts plant in Asia,” Expansión, 24 January 2012, via Factiva, © 2012 AII Data Processing Ltd.5. “HHV to expand with a third plant around Bangalore,” Industry 2.0, 23 January 2012, via Factiva, © 2012 Nine Dot Nine Mediaworx Pvt. Ltd.6. “Obzerv Technologies gets Bharat Electronics contract,” Entertainment Close-Up, 23 January 2012, via Factiva, ©2012 Close-Up Media, Inc. 7. “Rs 10,030 crore plan to link India with choppers,” The Economic Times, 23 January 2012, via Factiva, © 2012 The Times of India Group.8. “Plan panel to allocate Rs 5k crore to develop civilian plane,” The Press Trust of India Limited, 22 January 2012, via Dow Jones Factiva, ©2012 Asia Pulse Pty Limited.9. “CCS to discuss Rs1850 crore proposal for 75 trainer aircraft,” The Press Trust of India Limited, 15 January 2012, via Factiva, © 2012 Asia Pulse Pty Limited.10. “MHA to buy 6 Mi-17 copters from Russia,” The Times of India, 4 February 2012, via Factiva, © 2012 Bennett, Coleman & Co., Ltd. 11. “Brazilian def min arrives here on Feb 4 on 5-day visit,” United News of India, 2 February 2012, via Factiva, © 2012 United News Of India. 12. “BrahMos missile to be integrated at BATL in two years, The Hindu, 2 February 2012, via Factiva, © 2012 Kasturi & Sons Ltd.13. ‘Bumar sells $300m vehicles to India,” Polish News Bulletin, 21 January 2012, via Factiva, © PNB Company Ltd. 2012.14. RIL, Dassault in talks for defence venture,” Indian Express, 14 February 2012, via Factiva, ©2012 Indian Express Online Media Pvt. Ltd. 15. “HAL prepares to manufacture Rafale combat jet in India,” Indo-Asian News Service, 13 February 2012, via Factiva, © 2012 Indo-Asian News Service. 16. “IAF Chief Leads Delegation to Singapore,” Press Information Bureau website, http://pib. nic.in/newsite/AdvSearch.aspx, accessed 15 March 2012.17. “India, Sri Lanka hold Inaugural Defence Dialogue,” Press Information Bureau website, http://pib.nic.in/newsite/AdvSearch.aspx, accessed 15 March 2012.18. “India, Japan Coast Guard Meeting and Combined Exercises Conclude,” Press Information Bureau website, http://pib.nic.in/newsite/AdvSearch.aspx, accessed 15 March 2012.19. “Opto to partner German firm to supply AEDs to aircraft makers,” The Press Trust of India Limited, 2 February 2012, ©2012 Asia Pulse Pty Limited.20. ‘Antony to inaugurate HAL unit in February,” The Hindu, 19 January 2012, via Factiva, ©2012 Kasturi & Sons Ltd. Eye on defence | 28
  • 29. 21. “Russia will start supplying mig-29 to India under the contract of 2010 in 2012,” WPS: Defense & Security, 13 January 2012, via Factiva, ©2012 WPS Russian Media Monitoring Agency.22. “Joint team to prepare road map for Saudi-India defense cooperation,” Arab News, 15 February 2012, via Factiva, © 2012 Arab News.23. “M&M inks two defence JVs,” Hindustan Times, 31 March 2012, , via Factiva, © HT Media Limited.24. “Hyderabad to host missile production unit,” Bureaucracy Today, 20 March 2012, via Factiva.25. “Rs 7,000 cr to be invested to set up 9 defence units,” Business Line (The Hindu), 19 March 2012, via Factiva, © 2012 The Hindu Business Line.26. “TTI Announces Supply Agreement with Radiant Corporation India,”15 March 2012, ENP Newswire, via Factiva, © 2012 Electronic News Publishing)27. “M&M inks 2 defence JVs,” 31 March 2012, Hindustan Times, via Factiva, © 2012. HT Media Limited.28. “DCNS, Bombay IIT ink MoU for programs in naval defence, energy,” 31 Marc h 2012, The Press Trust of India Limited, via Factiva, © 2012 Asia Pulse Pty Limited. 29. “Larsen, Nexter Sign Pact To Bid For Indian Army’s Artillery Gun Programs,” 30 March 2012, Dow Jones Business News, via Factiva.30. Santanu Choudhury, “Finmeccanica Unit Selex Galileo, India’s Data Patterns Plan Defense Electronics JV,” 30 March 2012, Dow Jones International News, via Factiva, (c) 2012 Dow Jones & Company, Inc. 31. “Kalyani Group Executive: To Invest INR1 Bln To Develop Towed Artillery Gun,” 29 March 2012, Dow Jones International News, via Factiva.32. Nikhil Gulati, “Tata Motors May Invest $59 Million in New Factory,” 29 March 2012, The Wall Street Journal Online, © 2012 Dow Jones & Company.33. “DHS Systems signs MOU with Bharat Electronics,” India Infoline News Service, 29 March 2012, via Factiva.34. “BEML Puts up Aerospace Manufacturing Complex at SEZ, Bangalore,” 4 April 2012, Press Trust of India, via Factiva.35. “Indian Rotorcraft to set up copter facility at Hyderabad,” Project Monitor, 28 March 2012, via Factiva, © 2012 Economic Research India Pvt. Ltd.36. “Electronics Companies; Smiths Detection Wins $20M Indian Customs Contract,” Journal of India, 27 March 2012, via Factiva, © 2012 Journal of India via VerticalNews.com. 37. “Upgradation of Mirage aircraft,” Indian Government News, 26 March 2012, via Factiva, © 2012. HT Media Limited.38. “DCNS signs with SEC Industries a contract for the local manufacture of equipment for the Indian Scorpene submarines,” ENP Newswire, 26 March 2012, via Factiva, © 2012, Electronic News Pub-lishing.39. “Mahindra Aero Plans Aircraft Assembly Abroad,” The Economic Times - Bangalore Edition, 23 March 2012, via Factiva, © 2012, Bennett, Coleman & Co., Ltd. 40. “Radiola Aerospace lands plumb Indian contract,” Fuseworks Media, 21 March 2012, via Factiva, © 2012 Fuseworks Limited.41. Y. Mallikarjun, “Pratt & Whitney plans to invest $150 m,” 20 March 2012Eye on defence | 29
  • 30. Connect with usOur servicesAssurance, Tax, Transactions, AdvisoryA comprehensive range of high-quality services tohelp you navigate your next phase of growthRead more on www.ey.com/India/ServicesSector focusCenters of excellence for key sectorsOur sector practices ensure our work with you istuned in to the realities of your industryRead about our sector knowledge at ey.com/India/industriesStay connectedEasy access to our Webcasts and podcastsknowledge publications. http://webcast.ey.com/thoughtcenter/Any time.www.ey.com/subscription-form Follow us @EY_India Join the Business network from Ernst & YoungFor more information, visit www.ey.com/India
  • 31. Offices Ernst & Young Pvt. Ltd.Ahmedabad Mumbai2nd floor, Shivalik Ishaan 6th Floor Express Towers Assurance | Tax | Transactions | AdvisoryNear. C.N Vidhyalaya Nariman PointAmbawadi, Mumbai – 400 021 About Ernst & YoungAhmedabad – 380 015 Tel: + 91 22 6192 0000 Ernst & Young is a global leader in assurance, tax,Tel: + 91 79 6608 3800 Fax: + 91 22 6192 2000 transaction and advisory services. Worldwide, ourFax: + 91 79 6608 3900 152,000 people are united by our shared values 14th Floor, The Ruby and an unwavering commitment to quality. We makeBengaluru 29 Senapati Bapat Marg a difference by helping our people, our clients and12th & 13th floor Dadar (west) our wider communities achieve their potential.“U B City” Canberra Block Mumbai – 400 028No.24, Vittal Mallya Road Tel + 91 22 6192 0000 Ernst & Young refers to the global organization ofBengaluru – 560 001 Fax + 91 22 6192 1000 member firms of Ernst & Young Global Limited,Tel: + 91 80 4027 5000 each of which is a separate legal entity. Ernst & + 91 80 6727 5000 5th Floor Block B-2, Young Global Limited, a UK company limited byFax: + 91 80 2210 6000 (12th floor) Nirlon Knowledge Park guarantee, does not provide services to clients. ForFax: + 91 80 2224 0695 (13th floor) Off. Western Express Highway more information about our organization, please Goregaon (E) visit www.ey.com.Chandigarh Mumbai – 400 063 Ernst & Young Pvt. Ltd. is one of the Indian client serving member 1st Floor Tel: + 91 22 6192 0000 firms of EYGM Limited. For more information about our organization, SCO: 166-167 Fax: + 91 22 6192 3000 please visit www.ey.com/inSector 9-C, Madhya Marg Ernst & Young Pvt. Ltd. is a company registered under the CompaniesChandigarh – 160 009 NCR Act, 1956 having its registered office at 22 Camac Street, 3rd Floor,Tel: + 91 172 671 7800 Golf View Corporate Block C, Kolkata - 700016 Fax: + 91 172 671 7888 Tower – B © 2012 Ernst & Young Pvt. Ltd. Published in India. Near DLF Golf Course, All Rights Reserved.Chennai Sector 42Tidel Park, Gurgaon – 122 002 This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to6th & 7th Floor Tel: + 91 124 464 4000 be a substitute for detailed research or the exercise of professionalA Block (Module 601,701-702) Fax: + 91 124 464 4050 judgment. Neither EYGM Limited nor any other member of the globalNo.4, Rajiv Gandhi Salai Ernst & Young organization can accept any responsibility for lossTaramani 6th floor, HT House occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, referenceChennai – 600 113 18-20 Kasturba Gandhi Marg should be made to the appropriate advisor.Tel: + 91 44 6654 8100 New Delhi – 110 001 EYIN1205-043Fax: + 91 44 2254 0120 Tel: + 91 11 4363 3000 Fax: + 91 11 4363 3200HyderabadOval Office 4th & 5th Floor, Plot No 2B,18, iLabs Centre, Tower 2, Sector 126,Hitech City, Madhapur, Noida – 201 304Hyderabad – 500 081 Gautam Budh Nagar, U.P. IndiaTel: + 91 40 6736 2000 Tel: + 91 120 671 7000Fax: + 91 40 6736 2200 Fax: + 91 120 671 7171Kochi Pune9th Floor “ABAD Nucleus” C—401, 4th floorNH-49, Maradu PO, Panchshil Tech ParkKochi – 682 304 Yerwada (Near Don Bosco School)Tel: + 91 484 304 4000 Pune – 411 006Fax: + 91 484 270 5393 Tel: + 91 20 6603 6000 Fax: + 91 20 6601 5900Kolkata22, Camac Street3rd Floor, Block C” For more information , please contact:Kolkata – 700 016Tel: + 91 33 6615 3400Fax: + 91 33 2281 7750 K. Ganesh Raj Partner and Leader Aerospace and Defence Practice Ernst & Young Pvt. Ltd. Tel: + 91 120 671 7110 Email: ganesh.raj@in.ey.com Ankur Gupta Senior Consultant Aerospace & Defence, IIC- PI Ernst & Young Pvt. Ltd. Mob: + 91 98119 10666 Artwork by AGK Email: ankur4.gupta@in.ey.com

×