Eye on defence
     July 2012




                                                         Dear readers,
•	   Indian market assessment:                      02
                                                                                It is widely believed that in future the wars and battles will be fought
     command, control,communications,
     computer intelligence, surveillance,                                       more on the digital battlefield than the conventional battlefields
     reconnaissance (C4 ISR)                                                    of the plains, mountains and deserts. The winning army, will be
                                                                                the one who would take over the entire gamut of the enemy’s
•	   Foreign direct investment in defence:          10
     Indian scenario and concerns                                               communications and ensure that there is simply no capability
                                                                                or resource that enables the enemy to respond to the threat in
•	   Offsets in defence and MSMEs                   17
                                                                                a coordinated and suitable manner. This will leave the enemy in
•	   Request for information (RFIs)                 21                          complete disarray. A somewhat similar scenario was visible in the
•	   Request for proposal (RFPs)                    22   second US-Iraq war. Taking this into cognizance, we have tried to ascertain the C4ISR
•	   List of industrial licenses (ILs) filed from   23   market in India and also dwelled, to some extent, on its various constituents.
     01/04/2012 TO 29/02/2012
                                                         There has been an increasing debate in various government, public and private forums over
•	   New projects/investments/contracts             24   the pros and cons of permitting FDI in excess of the currently stipulated 26% in the defense
•	   Joint ventures and alliances                   27   manufacturing sector. We have tried to put up the arguments of both sides and also for the
•	   Country-level deals and initiatives            28   interest of our readers, have included most, if not all, of the joint-ventures,; agreements;
•	   Industry buzz                                  29
                                                         etc that have been signed in the Indian defense  sector till date.

•	   Sources                                        33   We have been expecting the revised Defense Offset Policy to be released for sometime
                                                         now. In the previous issues of the Eye on Defense we have maintained our focus on certain
                                                         significant aspects that we feel needs to be addressed in the revised policy. In continuance
                                                         of this effort, we take up the cause of the MSME sector’s participation in the defense
                                                         manufacturing and services space. We have tried to highlight the impending need for the
                                                         Government to provide the requisite assistance and opportunity to the constituents of
                                                         this sector enabling them to have their rightful place and also contribute towards building
                                                         indigenous strategic manufacturing capabilities.

                                                         If you have any suggestions on any of the articles or require any further information on the
                                                         same, please feel free to get in touch.




                                                         K. Ganesh Raj	
                                                         Partner and Leader	
                                                         Aerospace and Defence Practice
(C4 ISR) Indian market
assessment
Command, control, communications, computer
intelligence, surveillance, reconnaissance

Introduction
To operate in an era of information warfare (IW)/network centric warfare (NCW), in 	
complex geopolitical environment, decision makers and war fighters need quality
intelligence. Accurate and timely information is mission-critical to address complex
battlefield and peacekeeping requirements. Intelligence, Surveil-lance, Reconnaissance
(ISR) refers to “integrated capabilities to collect, process, exploit and dis-seminate 	
accurate and timely information that provides the battle space awareness necessary 	
to successfully plan and conduct operations.”

This requires the seamless integration of sensors, command and control, and advanced
information systems, network-centric ISR solutions to deliver actionable intelligence in real
time. The given figure depicts a typical ISR-based NCW battlefield scenario. Most of the ISR
resources utilize either airborne platforms or are used by air power.




                                                                               Tier 3
                                                                           Satellite Based




                                                                                 Tier 2
                                                                            Airborne Based




                                                                                 Tier 1
                                                                             Ground Based




Source: Q-Tech Synergy.
                                   Source: Q-Tech Synergy




Eye on defence | 2
Typical elements of a C4ISTAR set up




                     UAVs and
                     aerostats

                                        Night
                                        vision
        Radars                          devices
          and
        sensors

                         Surveillance
                         equipment




In terms of function, , the airborne ISR market can be classified into four major segments,
based on role, apart from in addition to the C4 (command, control, communications and
computer):

•	   Airborne early warning (AEW)
•	   Airborne ground surveillance (AGS)
•	   Maritime patrol (MP)
•	   SIGNIT

Global market size
The C4 market (command, control, communications, computer, intelligence), consisting of
land space, naval and airborne systems, was valued at about US$53.2 billion in 2011. It is
expected to touch US$63.7billion approximately in 2012. The C4ISR constitutes 5% of the
global defence spending. The global airborne ISR market, including new acquisitions and
upgrades, is estimated to be worth US$17.3 billion in 2011, increasing at a CAGR of 2.5%.
Currently, the US is the principal market for ISR systems, but as emerging economies such
as China and India seek to improve their military capabilities, they will necessarily focus on
this aspect of modern warfare.    


Global projected C4 and C4ISR market for 2011


   ISR                                               ISR
US$17.3bn                                         US$17.3bn
   25%                                              25%




                                              C4                                  C4
                                           US$53.2bn                           US$53.2bn
                                              75%                                75%
Source: Q-Tech Synergy




Eye on defence | 3
The tactical command, control, communication and information system (TAC C3I), which is
essentially the mainstay of the Army’s C4ISR, is plodding along. The TAC C3I comprises the
artillery command, control and communication system (ACCCS), air defence control and
reporting system (ADC&RS), battlefield surveillance system (BSS), battlefield management
system (BMS), all of which are in various stages of development.

The IAF plans to put in place five integrated air command and control systems (IACCS)
through an indi-genous route, which when fully developed, are expected to put all
sensor platforms and weapon systems on a common grid, interlinking its five operational
commands in a fully networked architecture. The Air Force Network (AFNET) is at the heart
of the air force’s communication network. It is a dedicated IAF fiber-optics network that
offers up to 500 MBPS encrypted, unjammable bandwidth. A military satellite is expected
to be launched next year, inter alia, to streamline the massive data flow.

The Navy, among all the three defence services, is the most advanced service in deploying
C4I2 and air-borne ISR components. It is already in the process of implementing concepts
such as network-centric warfare, integrated command and control, system of systems and
global information grid. The Indian Space Research Organization (ISRO) is to launch an
indigenously built geo-stationary satellite for the Navy. The dedicated satellite is aimed at
bolstering the C4ISR capabilities of the Indian Navy. This would also help unify the scattered
assets of the Navy at different geographical locations. The procurement of more UAVs,
maritime patrol aircraft, sonars and radars is in the pipeline through indigenous and foreign
procurements, which will further strengthen its ISR capability. However, within its three
services, there exists an issue on integration to leverage a wide array of ISR capability.




Eye on defence | 4
Given below are some of the major indigenous and foreign ISR systems with the defence
services:

 Airborne early         Airborne ground surveillance (AGS)
 warning (AEW)
 DRDO’s Airawat         Radar/ Sensors                  UAV               Opto electronic
 Phalcon AWACS*
 Kamov Ka-31*
                        Swordfish Long Range            Rustom            (Indigenous
                        Tracking Radar                  Akashdeep         +Foreign
                        INDRA series of 2D radars                         Procurements)
                                                        Gagan
                        Rajendra Radar 3D            Nirbhay              Night Vision
                        Central Acquisition Radar                         Devices
                                                     Netra,
                        (3D-CAR) planar array track-                      Night Sights
                                                     Nishant
                        ing radar                                         Thermal Imagers
                                                     Lakshya
                        3D AESA Long Range
                        Tracking Radar               Heron I, II*

                        Low Level Lightweight Ra-    Harop*
                        dar(LLLR)                       Searcher I, II*
                        Medium Power Radar 3d           Harpy II*
                        Active Phased Array Radar
                        Revathi 3D Naval 	
                        Surveil-lance Radar
                        EL/M-2070*
                        GS-100*
                        EL/M-2238 STAR*
                        EL/M-2083 APR*
                        RAN-30X*
                        RAN-40L*
                        DA-05*
                        LW-08*
                        DA-08*
                        Fregat/Top Plate*
                        Garpun/Plank Shave*
                        EL/M-2075 Phalcon*
 Maritime patrol (MP)   Signals intelligence (SIGINT)
 EL/M-2022*             DO228-201 (ELINT)*
 Tupolev TU-142M*       Mig 21 MRS*
 AN/APY-10*             Mig 23 BNS*
 P8I*                   B707*
 IIyushin IL-38*
 Note: (*) are foreign procurements




Eye on defence | 5
Current market size of C4ISR systems in India
Garnering the power of C4ISR systems, Indian defence establishments are moving from
platform-centric operations to net-centric operations and gearing up for new and improved
C4ISR technologies, the new thrust area, with an average spend of 5% allocation. It is
apprehended that India procured US$2.76 billion ISR systems from 2007 to 2011, majorly
comprising surveillance systems — UAVs, radars, AEW aircrafts and choppers from abroad.

Aniticipated share of C4ISR in Indian       Indian imports including C4ISR
Defence expenditure                         (2007–2011) (in US$ million)

   Land                         Other                                      Land (1275, 9%)
   15%                           25%
                                                                                Missiles (958, 6%)

Naval
15%
                                                                               ISR (2768, 19%)
   R&D                           Air
   10%                           30%                                         Ships (361, 2%)

                                          Aircraft
               C4ISR                    (9031, 60%)                    Engines (238, 2%)
                5%                                        Air Defence (294, 2%)

Source: Q-Tech Synergy.                     Source: Compiled from SIPRI.




Eye on defence | 6
Market potential
During the period 2012–2020, it is anticipated that India will be spending a whopping
US$19.6 billion ap-proximately on C4ISR systems and US$16.77 on ISR systems alone.
With an emphasis on the defence services becoming network-centric, more indigenous and
foreign procurements will be in the pipeline.

Market size of ISR submarkets (2012–2020)
Amount in $ billion




                         3.7           5.6                   4.45                  3




                       AEW&C     Airborne Ground     Maritime Patrol           SIGINT (ELINT
                                    surveillance                                  Aircraft)


Market size of ISR systems in India (2012–2020)


                                                                                    US$37.35
                      Aircraft
                                                                                      38%


                        Ships                                       US$26.53
                                                                      27%

                                                   US$17.22
Ground Vehicle
                                                     18%

                                                   US$16.7
                          ISR
                                                     17%




The market for ISR systems will definitely be growing at a robust rate year-by-year, offering
lucrative op-portunities to local and foreign vendors. While AGS dominates, Maritime
Patrol is forecast to experience robust growth throughout the reporting period, followed by
AEW&C Systems.




Eye on defence | 7
Manned systems lead even as unmanned systems rise
Projections indicate that India will spend about US$11.15 billion during 2012–2020
on acquisition of manned ISR platforms, while as for the unmanned ISR platforms; it is
expected to spend approximately US$2 billion during 2012–2020.

The below given table shows some of the major future acquisitions in these segments
during 2012–2020

 Manned ISR platforms                        Unmanned ISR platforms
 Maritime patrol acquisitions       Nos.     UAVs/UAS acquisitions                  Nos.
 Medium-range maritime              9+6      Mini and macro UAV for Army            500
 reconnaissance (MRMR) aircraft
                                             High-altitude long endurance (Hale)    ---
                                             UAV for the Indian Army
 Long-range maritime                4+12     UAV mission simulator for the Indian ---
 reconnaissance (LRMR) 	                     Army
 aircraft/P8 I
 Amphibious aircraft                9        Mini UAV for Army                      ---
 MPA                                6        Aerostat systems for the Army          12
 AWACS acquisitions                 Nos.     Unmanned combat aerial vehicles        ---
                                             for IAF
 Phalcon AWACS                      2+5      Micro unmanned aerial systems for      95
                                             IAF and IN
 Indigenous AWACS – India           2+4      Small VTOL MINI UAS for IAF            ---
 Carrier-based airborne early       4        Aerostat systems for IAF               3
 warning and control (AEW and C)
 aircraft for the Indian Navy
 SIGINT (ELINT aircraft)            Nos.     High-altitude long endurance UAV       ---
 acquisitions                                (HALE UAV) for the Navy
 ELINT aircraft with 	              9        Naval Rotary Wing UAV                  3
 SIGNIT capability


Manned versus unmanned ISR platforms
The ISR market primarily comprises both highly valuable manned surveillance platforms
as well as increasingly popular and numerous unmanned surveillance platforms along with
the ISR radars/sensors they employ. The manned platform encompasses a vast range of
systems from large airliner-based AEW&C and AWACS systems to maritime patrol aircraft
and ELINT aircraft and airships. Unmanned plat-forms largely entail unmanned aerial
vehicles or systems (UAVs/UAS), which are gaining popularity, keeping in view the future
NCW battlefield in mind, which will push more of using such systems. As far as the Indian
ISR market is concerned, as of now, manned systems in ISR continue to account for the
majority of ISR spending, with unmanned systems also demonstrating strong growth.

Further, large global foreign manufacturers govern the Indian ISR market. Thales, IAI,
ST-Engineering, Raytheon, EADS, Northrop Grumman, Boeing and Lockheed Martin are
among the main companies of-fering C4ISR solutions for Indian Armed Forces. As far as the
Indian companies are concerned, there are no significant players from the private sector.
BEL, DRDO and its Laboratories are the only players that have been in volved in developing
ISR capabilities.



Eye on defence | 8
Challenges
Indian defence services need to be overcome the challenges of security architecture,
connectivity matrix and points of exchange of information, integration, legacy systems,
standards and protocols, functionalities and procedures, time sensitivity, human resource
issues, training of users and management of trained manpower. Roadmaps of information
and communication must converge into an integrated information communication
technology roadmap, which is yet to take off. In addition, services need to focus on
spectrum management and technology to telescope bandwidth.


References
“Indian Army and Space: Sky is not the limit,” IRGA press release, http://irgamag.
com/?page=spacearms_20120202, 31 January 2012
“The C2/C4ISR Systems Market 2011-2021,” Vision Gain website, http://www.visiongain.com/
Report/565/The-C2-C4ISR-Systems-Market-2011-2021, January 2011
“The C2/C4ISR Systems Market 2011-2021,” Slide share website, http://www.slideshare.net/
ReportLinker/the-c2c4isr-systems-market-20112021, January 2011
“The Industry Review,” Industry Review website, http://industryreviewstore.blogspot.in/2012/03/
global-c2c4isr-market-20112021.html, 1 March 2012
“The Global C2/C4ISR Market 2011–2021,”PR newswire press release, http://www.bizjournals.com/
prnewswire/press_releases/2012/02/09/SP50639, 9 February 2012




Eye on defence | 9
Foreign direct investment
in defence:
Indian scenario and concerns
Manned Vs Unmanned ISR Platforms                    The production of defence equipment in India
                                                    was, until 2001, entirely a government function.
                      20                            The Indus-trial Policy Resolution, 1948,
                      18                            restricted the entry of the private sector into this
                      16
Amount in $ billion




                                                    industry. The defence in-dustry was opened to
                      14
                      12     2.004                  the private sector in May 2001 (Press note 4 of
                      10                 Unmanned   the 2001 series) when the Govern-ment of India
                       8                 Manned     (GOI) permitted 100% equity with a maximum of
                       6     11.15                  26% foreign direct investment (FDI) com-ponent,
                       4                            subject to licensing.
                       2
                       0                   Today, India ranks among the world’s top ten
                           2012 - 2020     nations in terms of defence expenditure. It is
one of the world’s largest importers of defence equipment. Despite India continuing to rely
heavily on imports for its defence requirements (which approximately is 70% of its total
military equipment and system needs) and having a poor defence-industrial-base (DIB), the
MoD has not shifted its stance on the 26% FDI.

The policy of a 26% cap on FDI in defence production has failed to attract any substantive
FDI in the sector, with only approximately INR176.8 million flowing in the form of FDI
between 2001 and January 2012. Many large international defence players have gone
on record, stating that although India is one of the largest defence markets, the cap of
26% foreign investment is stopping them from bringing in the manufacturing technology
of its “crown jewels” to India. Some of the players comprehend the security concerns of
allowing FDI of more than 50% in Indian JVs, but insist that to transfer significantly valuable
technology, a minimum equity participation of 49% should be permitted in order to provide
them with an encouraging revenue stream.

It is often argued that the revision of the FDI policy by increasing the limit on FDI would
provide the requisite momentum to the defence sector, while enabling India to achieve its
target of a 70% level of self sufficiency in defence procurements, but the same has always
been a debatable issue. The moot question at this point is whether an innovative, robust
and sustainable indigenous defence industry could be built by lifting the cap on FDI.

In the recent past, there have been frequent calls by various industry bodies such as the
ASSOCHAM and CII to raise the FDI cap from 26% to 49%. Notwithstanding these demands,
the MoD has unequivo-cally stated its view that as defence is a strategic sector, the foreign
investment in joint ventures in the defence sector would be limited to 26%. Any FDI beyond
26% would be considered on a case-by-case basis only. In some exceptions, such as the joint
venture with Russia to manufacture the multi-role trans-port aircraft, the MoD obtained
dispensations from the Cabinet for 50% foreign equity. BrahMos’ missiles are manufactured
with a 50% Russian equity, while the MoD has also permitted HAL and the French company




Eye on defence | 10
Snecma to form a 50-50 partnership for manufacturing aircraft engines. However, in
the recent past, the MoD has rejected proposals for 49% foreign equity in joint ventures
between Mahindra Defence Systems and the UK-based BAE systems and the one between
L&T and European EADS.  

There is no denying the fact that increases in FDI in the defence sector are indeed essential,
considering the following aspects:
•	   I
     	ndia currently lacks the advanced state-of-the-art technology, which is used in most 	
     ►
       of the de-fence products/equipment.
•	   T
     	 he current FDI cap of 26% does not provide enough motivation to original equipment
     ►
       manufac-turers (OEMs) to bring in proprietary technology to the Indian joint venture
       partners.
•	   W
     	 ith the growth in the defence sector, India’s reliance on the import of defence
     ►
       equipment would reduce, which in turn would result in noteworthy savings in 	
     foreign exchange.
•	   M
     	 anufacturing within the country through foreign capital with a full transfer of 	
     ►
       modern technology is a far-better option than importing the equipment from abroad.
•	   I
     	n order to develop a domestic industrial base, it is necessary to encourage 	
     ►
       technology transfers and curb large-scale imports.
However, there is a flipside to allowing higher FDI in the defence sector, which makes
increasing FDI in the defence sector difficult, considering the following road blocks:
•	   I
     	t is often apprehended that allowing foreign companies to exercise control over Indian
     ►
       defence companies would compromise with the Indian defence and security apparatus.   
•	   T
     	 he issue of possibly passing on critical equipment plans, design or source code to
     ►
       other players, particularly to countries not aligned with Indian interests is a 	
       major deterrent.
•	   C
     	 oncerns also revolve around the capability of defence public sector undertakings
     ►
       (PSUs) and the ordinance factories to be able to factor in competition, due to increased
       foreign participation in the defence sector and the consequent damage to the nascent
       domestic defence industry.
•	   C
     	 oncerns regarding illegal arms trade have led to greater reluctance on raising the cap.
     ►
Industry experts however believe that the aforesaid concerns can be tackled by
strengthening the existing regulatory framework of addressing security issues through
extensive verification, clearance procedures and controls. The government could reserve
the right to inspect or control the production and dispatches in facilities through the
deployment of necessary security agencies.
An increase in the FDI ceiling limit will allow foreign firms a larger share of the risks and
profits and the confidence to transfer sensitive technology to joint ventures in India,
resulting in indigenous capability building. Larger Indian firms seeking to diversify into
defence production would also benefit as it would help them mitigate commercial risks in
the highly fraught development environment of defence produc-tion. The example of the
automobile industry may be relevant here. There are also instances of countries such as the
US, the UK and other European countries, which allowed unrestricted FDI in the defence
sec-tor without compromising on control, security and secrecy.




Eye on defence | 11
Offsets policy
There are diverse perspectives on using the offsets policy as a tool to attract the latest
technology without compromising the national security interests. The offsets policy obliges
every foreign company winning a defence contract to invest a certain portion of the
contract value back into the home country. However, for the policy to succeed, the foreign
vendor should want to operate in a country where it actually derives commercial benefits
from partnering with locals.
It would however be presumptuous to assume that the level of technology required by
the country can be achieved within the existing FDI limits, merely by offsets. Considering
that India does not have the indus-trial capacities and knowhow to absorb the offsets
obligations, there is a risk that foreign vendors, faced with significant offsets obligations,
would then be forced to seek non-commercial and artificial offsets trades with Indian
businesses for low technology components with a minimal technology value addition simply
to discharge its offsets obligations.


   Conclusion
   Similar apprehensions and objections were expressed at a time when the government
   reformed the tele-communications and insurance sectors. However, with time, foreign
   investment has transformed the technological sophistication, generated employment,
   built local expertise and improved the reach and effectiveness of the services.
   A careful analysis of the pros and cons of increasing the FDI limit reveals that the
   benefits arising from heightened investment and technological advancement have
   outweighed the associated concerns that may anyway be overcome by strong
   government regulation.
   The government should demonstrate a bold vision to realize India’s potential to
   become self reliant in defence equipment manufacturing in the near future. India’s
   cap on FDI is stunting the progress of its defence industry and would have to give way,
   sooner or later, since it is a cap that the country cannot afford. This is fine.




Eye on defence | 12
Aerospace and defence joint ventures and MoUs
A & D joint ventures
Name of JV           Foreign OEM           Indian lead          Other Indian        Other         Main area of business                           Year
company                                    partner              partners            global 	
                                                                                    partners
Hindustan Aeronautics Limited
                         SAAB AB           HAL                                                    Airborne electronic warfare systems             2011
Fifth Generation         United Aircraft   HAL                                                    FGFA                                            2010
Fighter Aircraft         Corporation of
Program                  Russia
International            Rolls Royce       HAL                                                    Manufacturing compressor rings, turbine         2010
Aerospace                                                                                         blades and nozzle guide vanes
Manufacturing Pvt.
Ltd.
Multirole Transport      UAC &             HAL                                                    Co-design/develop and co-produce multirole      2009
Aircraft Ltd.            Rosonboron                                                               transport aircraft
HATSOFF Helicopter       CAE               HAL                                                    Military and civil helicopter pilot training    2009
Training Pvt. Ltd.                                                                                services through operation of flight training
                                                                                                  devices
Tata HAL Technologies                      HAL                  TATA                              Work packages related to engineering design 2008
Ltd.                                                                                              services in aero structures as well as the
                                                                                                  captive offshore and onsite workload from
                                                                                                  OEMs, including the offset program
HALBIT Avionics Pvt.     ELBIT             HAL                  Merlin Hawk                       Design, development and marketing               2007
Ltd.                                                                                              of aircraft simulators and all related
                                                                                                  applications for Indian and international
                                                                                                  markets. Integrated logistics support and
                                                                                                  maintenance services throughout the life
                                                                                                  cycle of products
HAL Edgewood             EDGEWOOD          HAL                  EDGEWOOD                          Application through development /acquisition 2007
Technologies Pvt. Ltd.   Ventures, USA                          Technologies Pvt.                 of cutting- edge technologies. Phase I 3D
                                                                Ltd. India                        technology for: i) Memory modules ii) System
                                                                                                  in package modules iii) DC/DC converters IV)
                                                                                                  Charge-coupled device (CCD)/cameras for
                                                                                                  space application
Infotech HAL Ltd.                          HAL                  INFOTECH                          Design/Software development for aero            2007
                                                                                                  engines, technical publications and
                                                                                                  anticipated work from various OEMs under
                                                                                                  the offset program
MRO facility in          Pratt and Whitney HAL of India                                           A unit for static parts of aircraft engines     2006
Bangalore                of Canada                                                                in Bangalore and another in Koraput for
                                                                                                  rotating parts
Samtel Hal Display                         Samtel               HAL                               Manufacturing MFD/HUD/HMDS for aircraft         2006
System Ltd.                                                                                       of Indian defence services
Snecma HAL               SNECMA            HAL                                                    Production of precision aero engine             2005
Aerospace  Pvt. Ltd.                                                                              components and assemblies
Indo Russian Aviation    RAC-MiG           HAL                  ICICI Bank          Ryazan	      Supply of all types of aircraft (Russian origin) 1994
Ltd.                                                                                Aviazapchast engines, accessories, aggregates, systems
                                                                                                 and spares
BaeHAL Software Ltd.     Bae Systems UK    HAL                  BAE HAL                           Design, develop and market software,            1993
                                                                Employees Trust                   firmware and computer programs and
                                                                                                  systems, incorporating them and to provide
                                                                                                  consultancy in the field of computer
                                                                                                  technology
Bharat Electronics Limited
                         SAAB              BEL                                                    Coastal surveillance radars                     2011
                         ELTA              BEL                                                    Radars                                          2011
                         DHS Systems       BEL                                                    Soft shelters                                   2009


                                                    Eye on defence | 13
BEL                 Astra Microwave    Design, development and manufacture of         2009
                                                                                  BEL's microwave intensive products
                        Elbit Systems      BEL                                    Development, production and marketing          2007
                        Electro Optics                                            of thermal imaging cameras and forward
                        ELOP Ltd                                                  looking infra red (FLIRs)
Tata Group Companies
                        ITT Exelis         TASL                                   Gen 3 NVDs                                     2012
Tata Lockheed Martin    Lockheed Martin    TASL                                   Aerostructures of the C-130J platform          2011
Aerostructures
Indian Rotocraft        Augusta Westland TASL                                     Integration and assembly of the AW119          2010
                                                                                  platform
HELA                    ELTA               TASL                                   Radar, electronic warfare and surveillance     2010
                                                                                  systems
Tata Sikorsky           Sikorsky           TASL                                   S-92 helicopter cabins                         2009
Aerostructures
Nova Integrated Ltd.    IAI                Tata                                   EW, missiles and radars                        2008
                        Boeing             Tata Industries                        Manufacturing military components for          2008
                                           Ltd.                                   the F-18 Super Hornet fighter, the CH-47
                                                                                  Chinook helicopter and the P-8 Maritime
                                                                                  Patrol Aircraft
Aeronautical Design     SAAB               TCS                                    Engineering design                             2008
and Development
Center (ADDC)
Larsen & Toubro
                        Samsung Techwin    L&T                                    155mm 52 cal SP Howitzer                       2012
                        NEXTER             L&T                                    Manufacturing and integrating platforms for    2011
                                                                                  the 155mm / 52 cal towed gun
L & T Cassadian Ltd.    Cassadian          L&T                                    Manufacturing, designing, engineering,         2011
                        Electronics                                               distributing and marketing in the fields of
                                                                                  electronic warfare, radars, avionics and
                                                                                  mobile systems for military applications
HCL Technologies
Aerospace Network       Boeing             HCL                 Indian Institute   Wireless and other network technologies        2008
Research Consortium                                            of Science and
                                                               Wipro
                        Circor Aerospace   HCL                                    Develop software for fluid controls, landing   2008
                        Inc                                                       gear for aerospace and defence applications
Development Centre      Smith Aerospace    HCL                                    Software solutions for aircraft                2007
Wipro
                        CAE                Wipro                                  Simulation-based training for areas such as    2010
                                                                                  war gaming and C4ISR
                        GE Security        Wipro                                  Jointly produce and market physical security   2009
                                                                                  solutions for the Indian defence forces
Network Centric         Lockheed Martin    Wipro                                  This lab will develop, demonstrate and         2007
Operations Centre:                                                                experiment with emerging network-enabled
Amber Jyoti in                                                                    capabilities and applications.
Gurgaon
Mahindra Satyam
Saab India Technology   SAAB               Mahindra Satyam                        Technology center                              2011
Centre in Hyderabad
Mahindra Defense
Systems
                        Rafael             Mahindra &                             Develop and manufacture products such as       2012
                                           Mahindra                               anti torpedo defence systems, electronic
                                                                                  warfare systems, advanced armoring
                                                                                  solutions and remotely operated weapon
                                                                                  stations for futuristic infantry combat
                                                                                  vehicles (FICV)


                                                   Eye on defence | 14
Telephonics (a        Mahindra                                                IFF and electronic systems                  2012
                        unit of US-based      Defense Systems
                        diversified Griffon
                        Corp)
Defense Land Systems    BAE Systems UK        Mahindra                                                Land systems for defence and security       2009
India                                         Defense Systems                                         purposes
Government-owned departments
Cargo ammunition        IMI of Israel         OFB (At                                                 Production of 130mm and 155mm cargo         2004
facility                                      Khamaria and at                                         projectiles, 122mm grad cargo rockets,
                                              Nalanda)                                                125mm advanced tank ammunition and
                                                                                                      120mm cargo mortars
Mayawi Project ($100    Elisra Group,      Defence Avionics                                           EW  systems  for combat  aircraft           2006
million)                Bene Beraq, Israel Research
                        (30%)              Establishment
                                           Banagalore of
                                           DRDO
Maitri Project (US$     MBDA of France        Defence            Bharat Dynamics
$500 million)           (Technology           Research and       Limited
                        Transfer)             Development  
                                              Laboratory
                                              (DRDL),  
                                              Hyderabad
Electronic and                                Development of 2007
Radar Development                             new  generation
Organisation (Radars)                         Low  Level  Quick  
                                              Reaction Missile  
                                              (LLQRM) system
                                              named  as Maitiri
Sagarika Project        Rafael  of Israel     Defence            The Research        IAI of Israel    Development of Sagarika Cruise Missile      2005
                                              Research and       Centre Imarat
                                              Development        (RCI),  Hyderabad,
                                              Laboratory         Aerospace  
                                              [DRDL},            Systems  Limited,  
                                              Hyderabad          Hyderabad  and
                                                                 Defence Avionics
                                                                 Research
                                                                 Establishment
                                                                 (DARE),
                                                                 Bangalore ,
                                                                 Electronics
                                                                 and Radar
                                                                 Development
                                                                 Establishment
                                                                 (LRDE)
                                                                 Bangalore, Naval
                                                                 Physical and
                                                                 Oceanographic
                                                                 Laboratory
                                                                 (NOPL) in Kochi  

Barak Missile Project   Rafael  of Israel     DRDL of                                 IAI of Israel   Development of  the  Barak  extended  range   2007
($350 Mn)                                     Hyderabad                                               surface to air missile
Other companies
Track System India      Diehl Remschied       India Forge                                             Diehl System Tracks for several applications, 2012
Limited                 Gmbh                                                                          such as the infantry combat vehicles BMP1/2
                                                                                                      as well as the T-family of vehicles (e.g. T72,
                                                                                                      T90)
Reginson India          ITA, Spain            Raghu Vamsi        Reginson, UK                         Aero-engine components                      2012
                                              Machine Tools




                                                     Eye on defence | 15
Dassault             Reliance                                             Participate in the MMRCA delivery program    2012
                                             Aerospace
                        Chemring             Ashok Leyland                                        Pyrotechnics                                 2012
                                             Defense Systems
                                             Pipav Shipyard       MDL                             Vessels of war                               2012
                        Selex Galalieo UK    Data Patterns                                        Defense electronics                          2012
Kineco Kaman            Kaman                Kineco                                               Advanced composite parts                     2012
Composites
Samtel Thales Avionics Thales                Samtel                                               Avionics                                     2011
                        Compania             Wipro                                                Manufacture actuators, control systems,      2011
                        Espanola             Infrastructure                                       precision engineering components
                        De Sistemas          Engineering
                        Aeronauticos SA
                        (CEPA), an arm of
                        EADS
Vyoneeshrosebank        Rosebank             Vyoneesh                                             MRO for aerospace and land systems           2011
Technologies
Jubilant Aeronautics    Aeronautics          Jubilant Bhartia                                     UAVs and aerostats                           2011
                        Defense Systems
MASGMR Aerospace        Malaysia's MAE       GMR India                                            Aircraft MRO                                 2011
Engineering
                        Thales               Axis Aerospace                                       Flight simulators training center            2011
                                             and technologies
AeroEuro Engineering    GECI                 PL Engineering                                       Product design and engineering services      2010
India                                                                                             company providing product design,
                                                                                                  engineering and R&D services in the
                                                                                                  aerospace domain
                                             Ashok Leyland        Paramount Group                 Mine-protected Vehicles                      2010
                        Dassault Systèmes KPIT Cummins                                            Joint solution and business development on   2009
                                          Infosystems                                             the ENOVIA platform
Saertex - Kemrock       Saertex              Kemrock                                              Components for the aeronautical industry     2009
India Limited
Spares Support          Airlogic Ltd         Airspace                               Airbus        Maintain an inventory of rotable components 2009
Solutions India, Pvt.                        Infrastructure                                       used on all types of airbus commercial,
Ltd.                                                                                              aircraft by operators in India for outright
                                                                                                  sale, exchange and customized pooling
                                                                                                  arrangements
Project 71 Air Defense Italian Fincantieri   Directorate of                         Russian NDB   Aircraft carrier                             2008
Ships                  (propulsion           naval design                           (Aviation
                       system)                                                      Technology)
Aerospace Processing    Magallen             QuEST
India Pvt. Ltd.
                        Aerospace            Global
Global                                                            Approved          2008          Approved aero-space surface treatments       2008
                                                                  aerospace surface
                                                                  treatments
Rolta Thales Ltd.       Thales               Rolta                                                C4ISTAR                                      2007
Project 75 Scorpene     DCNS, France         Mazagaon Docks                         Aramis,       Scorpene Submarines                          2005
Submarine                                    Ltd.                                   Thales
BRAHMOS Aerospace       NPO                  DRDO India                                           BRAHMOS Cruise Missile                       1998
Private Limited ($250   Mashinostroyenia
million)                of Russia




                                                      Eye on defence | 16
Offsets in defence and MSMEs
Small enterprises exist in the form of factories, workshops, trading and service
organizations and range from the most modern to simple and traditional units. The
operational range varies from independent en-terprises to ancillaries, sub-contractors and
vendors engaged in catering to the needs of the markets, extending from the domestic
to the global horizon. These enterprises exist in various forms such as proprietorship,
partnership, companies or co-operatives. While the main objectives of small enterprises are
almost the same, they are defined and viewed differently across countries.
Micro, small and medium enterprises (MSMEs) are recognized as engines of economic
growth worldwide. In India, MSMEs manufacture products ranging from handloom sarees,
carpets and soaps to machine parts for large industries. Not only do MSMEs generate the
highest employment per capita investment, they are also an important factor in checking
the rural to urban migration by providing villagers and people living in small towns and
                                                   isolated areas a sustainable source of
                                                   employment. MSMEs often act as ancillary
                                                   industries for the large-scale industries
                                                   providing them with raw materials, vital
                                                   components and backward linkages.
                                                  Ever since the announcement of the
                                                  Industrial Policy resolution in 1948,
                                                  small-scale industries have oc-cupied a
                                                  prominent place in the overall strategy
                                                  of industrial development in India.
                                                  Successive five-year plans have allocated
                                                  increasing resources for the development
                                                  of small industries. In view of the abun-
                                                  dance of labor, scarcity of capital and
                                                  the rural nature of the economy, the
                                                  preference of small industries is natural.
                                                  They are heterogeneous, dispersed
                                                  and mostly unorganized. Due to the
                                                  unorganized nature of the sector,
                                                  entrepreneurs and artisans/workers
                                                  face difficulties in accessing government
                                                  schemes. Con-sequently, those workers
engaged in the MSME sector, and these are vulnerable and poor, have little bargaining
power and are exploited by middlemen, unit owners and large business houses. Unable to
take up aggressive marketing, similar to large industries, they cannot find markets despite
good quality and competitive prices.
It is no surprise then that MSMEs do not play a significant role in the defence sector. The
defence sector has always been a holy cow, shredded in secrecy and ruled by the large,
influential and famous. Recent-ly, a defense public sector undertaking (DPSU) formed
a JV with a private Indian entity. The JV did not find favor with some large domestic
industrial houses in the country. This forced the government to issue guidelines for JVs
between DPSUs and private Indian entities. While all this may have been for a good cause,
one cannot help but wonder if any MSME could have ever brought about the same result.




Eye on defence | 17
The issue is “who is batting for the cause of the MSMEs”? They do not have a CEO or
a chairman who can address their concerns directly at the office of the Prime Minister.
Their concerns are not even heard ade-quately in industry meetings, since large industries
dominate such forums. A quick check to find out about the companies that are heading the
defence committees in the various industry chambers will prove the point. Even the media
bats for the large industrial houses, leaving the MSMEs to fend for themselves. No wonder
then, the large domestic competitors continue to fight for a Raksha Udyog Ratna (RUR)
status to become more equal than the rest of the equals. In such a scenario, what is then
the fate of the MSMEs in our country?
The offset policy was formulated in the year 2005 and detailed offset guidelines were
promulgated in September 2006 by the MoD as a part of the DPP 2006. The entire exercise
was undertaken by the ministry, with a view to plough back at least 30% of the FE (foreign
exchange) outgo and also develop and broaden the defence industrial base. If the aim of
the policy was to develop the defence industrial base, so be it, let this happen. Why is the
MoD shying away from inclusive growth? A policy that is designed to favor the large and
influential will create more disparity in the country than address inclusive growth. The
policy framework instead must cater to the development of the MSMEs for 	
real development.  
In this particular area of development of the MSMEs, the MoD has done little, which is in
itself in-excusable. This is allowed to happen just because MSMEs do not have the reach and
connect within the higher echelons of the ministries to make their voice heard and their
woes addressed. What then is the solution? How do we integrate MSMEs into this game of
the affluent and the influential?
Small and medium enterprises account for approximately 80% of the private sector
industrial workers and therefore occupy an important position in the industrial structure of
Japan. The employment-generating capacity of the small and medium enterprises in Japan
has been seen to be larger than that in Germany or the US. Small and medium enterprises
play an extraordinarily important role as muscles for regional economic development. In
the development of sparsely populated areas such as the Hokkaido Island in the north,
they have been a valuable tool for development. In the early 1960s, small and medium
enterprises accounted for more than 50% of Japanese exports. Such business was mostly
labor intensive and not dependent on imports/raw materials. As such, its net contribution
to foreign exchange was very high.
The Indian economy is a developing economy. Its vast resources are either unutilized or
underutilized. A major section of man-power is lying idle. The per capita income is low.
Capital is scarce and investment is lean. Production is traditional and techniques are
outdated. The output is insufficient and the basic needs of the people remain unfulfilled.
Industrialization is the only answer to the current disrupted economic state. The problem
is of the approach, which should be direct, utilitarian and pragmatic. Such industries do
not require huge capital and are therefore suitable for a country such as India. Small-scale
industries have a talent of “dispersal.” They can be accessible to the remote rural areas of
the country and do not lead to regional imbalances and concentration of industries at one
place, which is responsible for many economic resources such as entrepreneurship and
capital. Planners and economists in India took recourse to small-scale industries because
most of these industries existed in the traditional form, which symbolize our heritage.
These still serve as the backbone of our economy, which is mostly rural.
The Ashok Mitra Committee also pointed out that SSI (small scale industries) play an
important role in combating poverty alleviation in the country — more incentives to SSI,
lesser is the poverty. While the committee has highlighted the government’s negligence




Eye on defence | 18
toward the infringement of laws relating to SSI, it has also pointed out that the SSI sector
is not receiving adequate attention by the government. The committee also suggested the
need for an active protectionist role by the government.
Where is the protection provided by the government in the case of the opportunity provided
by the offsets in MoD? While the government may be thinking of incentivization of OEMs
through a system of multipliers to exercise its choice around MSMEs, there is no real
protectionist role. Is the MoD not aware that their DPSUs and OFB are supported actively by
more than 25,000 SMEs in the country? When you pick up the supply chain of any of the
DPSUs or the OFB, they have cultivated a huge supply chain often boasting of numbers in
excess of a few thousands. If that is true, then, why has the MoD not addressed this aspect
in the offsets policy?MSMEs generate high employment next only to the agricultural sector.
They are labor intensive and therefore promise wider employment possibilities. They are
suitable as a supplementary source of em-ployment for Indian farmers who are out of work
during the lean season and to the educated and unem-ployed youth in urban areas to be
employed gainfully. They have a widely disbursed entrepreneurial base and can be easily
set up anywhere in the country. They have a relatively low capital investment and en-sure
regional balanced development. If MSMEs can dominate in the export of sports goods,
readymade garments, woolen garments, knitwear and plastic products, then why not
defence goods and services? This has not happened because the government has not hand-
held them ever, What then is the solu-tion?
Offsets implementation provides for the best possible opportunity for MSMEs, more than
any other. If the MSMEs were to tie up with OEMs and allowed a direct access to their name
(as an Indian offset partner, IOP to Dassault Rafale), it straight away ushers in twin benefits,
one a sense of doing business with a foreign company (boost in self-esteem) and second
the OEM now handholds the MSME with the best practices followed and therefore brings
in the best industry culture for greater efficiency. This is a game-changer for the MSME
sector. MSMEs must be encouraged by the MoD to have direct tie-ups with foreign OEMs
as an Indian offsets partner. Should it be necessary, the government must also fund them
appropriately, with systems for such funding in place. There was a concept of an offset fund
in the name of the Indian rising fund, which was formed with single-minded investment into
the SME sector alone, from among the approved list of the MoD. However, the MoD did not
consider this initiative favorably. While OEMs were keen to be a part of this fund, MoD had
many apprehensions, mostly, ill-founded and based on presumptions and not facts.
MoD must incentivize OEMs with multipliers for choice of IOP from among the MSMEs. In
addition, the MoD must place a mandate on OEMs to source at least 20% (or to begin with
10% or any percentage deemed fair, so as to be in sync with the national policy on growth
of MSMEs) of the offsets from the MSME sector.
The Union Cabinet has approved a procurement policy asking government departments
and public sector undertakings (PSUs) to give preference to micro and small entrepreneurs
(MSEs), including those be-longing to SC/ST entrepreneurs, while making purchases.
According to the Public Procurement Policy for goods produced and services rendered
by MSEs by the central ministries/departments/PSUs to be noti-fied under Section 11 of
the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, all central
ministries and PSUs will have to ensure that a minimum 20% of all their total annual
purchases of products or services are from MSEs. Within this limit, 4% of the orders should
be placed to the SC/ST entrepreneurs. This has been promulgated through a gazette
notification on 23 March 2012.




Eye on defence | 19
But, given their unique nature, defence armament imports will not be included in computing
the 20% goal for the Ministry of Defence. In addition, defence equipment such as weapon
system remains out of the purview of such policy for reservation. Therefore, only defence
armament imports are excluded and cer-tain equipment such as missiles, weapon systems
are not under the purview of such a reservation. This actually means that the reminder of
military procurement such as IT, services and revenue purchases such as ration, food stuff,
fresh products, consumables, etc., do feature under the compulsory reservation system.
In this scenario, it may be a good idea for the MoD to provide a mandate to OEMs to exercise
adequate efforts to choose from the MSMEs for their offset obligations. In this regard, they
may be directed to approach National Small Scale Corporation (NSIC) a mini ratna profit-
making PSU for necessary facilitation. NSIC is a 55-year old Indian company, dedicatedly
bringing about transformational growth in the MSME sector. NSIC also has the bandwidth to
be able to infuse funds into the MSMEs when required. The licencing conditions are also met
worth by NSIC through their single-window registration mechanism, which happens after
thorough due-diligence and inspections.
DRDO could also play a very key role in the growth of SME sector through technology
infusion and filling in the gaps where necessary. An integrated approach with participation
in offsets, indigenization, participation under the “Buy Indian” category and duly
complemented by the existing tiered system will provide a boost to MSMEs and in turn to the
nations as a whole.




Eye on defence | 20
Request for Information (RFIs)

Date of issue   RFI details                                  Response date    Issued by                                    Service
11 April 2012   Air defence guns                             30 April 2012    Directorate General of Army Air Defence      Army
18 May 2012     Sniper rifle for infantry                    15 June 2012     Additional Directorate General of Weapons,   Army
                                                                              PMO FINSAS , Directorate General of
                                                                              Perspective Planning
22 May 2012     Mini unmanned air vehicle (UAV)              1 July 2012      Directorate General of Infantry -5,          Army
                                                                              Directorate General of Weapons and
                                                                              Equipment-9
22 May 2012     Fibrescope                                   10 July 2012     Directorate General of Infantry -5,          Army
                                                                              Directorate General of Weapons and
                                                                              Equipment-9
31 May 2012     Air conditioner with auxiliary power unit    20 Jun 2012      Dte Gen of Mech Forces                       Army
                (APU) in Tank T-90 S/SK
9 April 2012    COMJAM and SIGINT Aircraft                   24 May 2012      PD ASR (Room No 460) Air HQ (Vayu            Army	
                                                                              Bhawan), Rafi Marg                           Qty: 9
25 April 2012   Twin dome simulators for Hawk MK             25 May 2012      PD Projects Air HQ (Vayu Bhawan)             Indian Navy
                132 AJT
11 May 2012     Light strike vehicle (All Terrain Light      11 June 2012     Joint Dte of Garud Air HQ (Vayu Bhavan)      Indian Air Force
                Strike Vehicle)
29 May 2012     Universal ground power unit GPU(U)           20 June 2012     Dte of MT                                    Air Force
3 April 2012    Diver navigation system                      20 April 2012    Directorate of Special Ops & Diving          Navy	
                                                                                                                           Qty: 42
1 May 2012      Diving accessories — search lamp             30 May 2012      Directorate of Special Ops & Diving 	        Navy
                                                                              ‘A’ Block
1 May 2012      Underwater hydraulic tools                   30 May 2012      Directorate of Spl Ops and Diving            Navy
                                                                              Integrated Headquarters of MoD (Navy),
1 Jun 2012      Indigenous construction of survey            30 June 2012     Integrated Headquarters of Ministry of       Navy 	
                vessels                                                       Defence (Navy)                               Qty: 04
28 May 2012     Plasma nitrocarbuzing equipment              9  August 2012   Defence Research & Development               Defence Service	
                                                                              Laboratory                                   Qty: 01




                                            Eye on defence | 21
Request for proposal (RFPs)

Date of issue   RFP details/equipment              Response date   Issued by                         Remarks
10 April 2012   Holographic weapon sight           21 May 2012     Col GS Arty (A)	                  Army	
                for Rifle 47                                       For MG Arty                       Qty: 520
16 April 2012   Harness for bullet proof           30 May 2012     ACSFP CELL HQ, Northern           Army	
                patka                                              Command                           Qty: 18000
25 April 2012   Propellant NGB 204                 29 May 2012     Ordnance Factory Khamaria 	       For Army
                                                                   Jabalpur
10 April 2012   Holographic weapon sight           21 May 2012     GOC-in-C, Northern Command, 	     For Army
                for Rifle AK 47                                    C/o 56 APO
7 May 2012      Combat under water diving          5 July 2012                                       For Army
                equipment
11 May 2012     Armour piercing incendiary         8 June 2012     Ordnance Factory Khamaria - 	     For Army	
                bullet for 14.5 Mm AMMN.                           Jabalpur (MP)                     Qty:134130 Nos.
15 May 2012     VT Fuze for Pinaka (F)             25 June 2012    General Manager, Ordnance         For Army	
                                                                   Factory, Chanda                   Qty: 515 Sets.
16 May 2012     Divers vision system               14 July 2012    GOC-in-C, Northern Command,       For Army	
                                                                   C/o 56 APO                        Qty: 24 Nos.
28 May 2012     Propellant powder M-1 With         29 Jun 2012     Dy. General Manager, Ordnance     For Army	
                19 Holes for IM 212                                Factory Khamaria                  Qty: 37000 kg
30 May 2012     Propellant (Gun powder             1 July 2012     Dy. General Manager, Ordnance     For Army	
                5/7) for 23 mm SCHILKA                             Factory Khamaria                  Qty: 20000 kgs
                Ammn
13 June 2012    RDX/TNT 80/20 Hexolite             27 July 2012    Ordnance Factory Khamaria	        For Army	
                Type B                                             Jabalpur (MP)                     Qty: 94950 Kgs.
4 April 2012    Ammunition for shooting            18 May 2012     Directorate General, Border       For BSF  	
                competition                                        Security Force                    Qty: 882400 Rounds
2 April 2012    Rubberized inflatable Boats        15 May 2012     Directorate General, Border       For BSF	
                with 25 HP OBM                                     Security Force                    Qty: 75 No’s.  
May 2012        Global positioning system          5 June 2012     Office Of The DIGP/ Principal ,   For CRPF 	
                                                                   CTC , CRPF                        Qty 50: Nos.
25 May 2012     Bomb suit                          2 July 2012     Asstt. Inspector General/Prov.    For CISF	
                                                                                                     Qty: 5
25 May 2012     Waterjet disrupter                 3 July 2012     Asstt. Inspector General/Prov.    For CISF	
                                                                                                     Qty: 04
18 May 2012     Laser warning system               31 Aug 2012     Ordnance Factory Project, Yeddu   Defence service
                                                                   Mailaram, Medak
4 April 2012    Doppler radar system for           29 May 2012     Indian Ordnance Factories         Defence service
                the velocity measurement                           Ammunition Factory, Khadki
                of sub-sonic and super-
                sonic projectiles




                                     Eye on defence | 22
List of industrial licenses (ILs) filed from
01/04/2012 TO 29/02/2012
Application no. and date Name of the applicant                                                                                                                              Item of manufacture
11: 05/03/2012                                                                          Ray-Hans Technologies Pvt. Ltd.                                                     Military grade  electronics and communication products and
                                                                                                                                                                            assemblies designed for military use such as electronic counter
                                                                                                                                                                            measure and counter measure equipment surveillance and
                                                                                                                                                                            monitoring, data processing and signaling systems            
12: 12/03/2012                                                                                                                                    HBL Power Systems Ltd.    Nickel cadmium batteries and parts thereof        
13: 15/03/2012                                                                                        Premier Explosives Ltd.                                               Site mixed explosives  
14: 15/03/2012                                                                                        Premier Explosives Ltd.                                               Mob dispersion devices                            
15: 16/03/2012                                                        Machhar Industries Ltd.                                                                               Bulk explosives                                   
16: 20/03/2012                                                                                   Global Precision Pvt. Ltd.                                                 Parts and accessories for industrial machine        
17: 21/03/2012                              DCX Cable Assemblies Pvt. Ltd.                                                                                                  Electronic printed circuit board assemblies subassemblies, box
                                                                                                                                                                            build,  and  military wire harness for defence aerospace application
18: 28/03/2012                                                                                        Economic Explosives Ltd.                                              Energetic binders for propellants                 
19: 28/03/2012                                                                                 Kavveri Telecom Products Ltd.                                                Weapons and ammunition   
20: 09/04/2012                                                                                        Tech Mahindra Ltd.                                                    IT services and software development for defence
21: 09/04/2012                                                                          Sri Venkateswara Explosives Pvt. Ltd.                                                                    All kinds of detonators   
26: 19/04/2012                                                                                                              Raghu Vamsi Machine Tools Pvt. Ltd.                                                                          Aerospace components and defence equipment parts   
23: 16/04/2012                                                                          Pipavav Defence and Offshore                                                        Manufacturing missiles and rockets, torpedoes and autonomous
                                                                                        Engineering Co. Ltd.                                                                underwater    vehicles including sub-systems and ground/ship. etc.         
24: 18/04/2012                                                                          Taneja Aerospace & Aviation Ltd.                                         Manufacturing space craft, aircraft and their parts      
25: 19/04/2012                                                                Octania Aerostructure Group Pvt. Ltd.        Aircrafts and precision machined  aircraft components      
26: 19/04/2012                                                                          Raghu Vamsi Machine Tools Pvt. Ltd.                                                                       Aerospace components defence equipment parts      
27: 25/04/2012                                                                          Southern Electronics (Bangalore) 	                                                  Aircraft components maintenance,  repair and overhaul (MRO)
                                                                                        Pvt. Ltd.                                                                           activities                         
28: 26/04/2012                       Srinivasa Explochem Pvt. Ltd.                                                                              Detonating fuse                                   
29: 30/04/2012                                                                          Millennium Aero Dynamics Pvt. Ltd.                                                                       On-board oxygen generating system (OBOGS)




                                                                                                                                                      Eye on defence | 23
New projects/investments/contracts

    Name of entity        Project details                                                                               Value
        L&T, BEL, Tata    •	   The L&T-led consortium, in competition with BEL, was se-lected to develop a              INR80–100 billion
        Power SED and          prototype of the Tactical Communica-tions System — a telecommunication network
        HCL Infosystems        that can be rolled across battlefields on the fly.

                          •	   The L&T consortium will be formulated as a special purpose vehicle (SPV) that also
                               has Tata Power SED and HCL Info-systems as the other partners.

                          •	   This is the first project to be approved under the ‘Make’ cat-egory and is expected to
                               strengthen private participation in the defence sector.
    Sun Forest City       •	   GOI has signed contracts with M/s Thales, France and M/s Dassault Aviation, France,      INR100 billion
                               Sun Forest City Ventures Ltd., jointly promoted by the Gur-gaon-based Sun Group
                               and the UK-based Forest City Inter-national, proposes to set up an aerospace hub
                               near Banga-lore.

                          •	   The state government has given approval to the project and land for the project
                               has been identified and preliminary noti-fication has been issued to the farmers for
                               acquisition of their lands.
Boeing                    •	   Boeing is negotiating to sell its Apache AH-64D multirole combat helicopter to the       INR30.3 billion
                               Indian Air Force.
►
                          •	   The IAF is seeking 22 heavy attack helicopters. Boeing’s Apache is expected to be
                               the preferred choice over Russia’s Mi-28N Night Hunter.

                          •	   Apache has successfully conducted trials; the delivery is ex-pected to commence
                               within 36 months of signing the con-tract.
    Indian Air Force      •	   The Cabinet Committee on Security cleared the purchase of the 75-basic trainer           INR30 billion
                               aircraft.

                          •	   Pilatus’ aircraft will replace the 1988-vintage, single-piston-engine HPT-32s,
                               grounded in 2009, following a series of crashes.

                          •	   The first basic trainer would be inducted 15 months after the contract is signed. All
                               the 75 PC-7s will be acquired in a fly-away condition.
    BAE Systems           •	   The Defence Acquistion Council cleared a contract for 145 howitzer guns from BAE         INR28.2 billion
                               Systems (BAE’s M777 lightweight artillery guns).
    ►
                          •	   The howitzers, with a range of 30 km, will fortify India’s mountainous northern
                               borders with India and Pakistan. The guns will be built by the BAE division in the US.

                          •	   The deal awaits clearance from the CCS before it can be signed.
    Goa Shipyard Ltd.     •	   Goa Shipyard Ltd. will build six offshore patrol vessels (OPVs) under a contract from    INR18 billion
                               the Indian coastguard.

                          •	   Each of the 2,400-tonne vessels will be 105 m (344.5 ft) long and will feature an
                               integrated bridge system (IBS), quick re-sponse boats and a four-lane simulator.




                                                     Eye on defence | 24
Name of entity      Project details                                                                                Value
Hindustan 	         •	   HAL is investing in a facility spread over 40 acres at Chal-laghatta, Bangalore.          INR6 billion
Aero-nautics Ltd.
                    •	   The unit would undertake licensed production for the fourth-generation fighters
(HAL)
                         MMRCA for the Indian Air Force. HAL is creating two new divisions, one for aircraft
►                        assembly and the other for engine assembly and testing.

                    •	   The new facility is expected to potentially employ 1,200 people directly and another
                         3,600 by way of related services and outsourcing.
BEML                •	   BEML is setting up an aerospace manufacturing division at an SEZ park near the            INR4.55 billion
                         Bangalore International Airport, Deva-nahalli, in Bengaluru.

                    •	   The facility will manufacture aerospace components and parts, and assemble
                         aircraft and helicopters up to a height of 21 meters.

                    •	   The facility, spread over a 3,00,000 sq. ft. area, is expected to be ready by
                         September 2012.
Boeing              •	   B
                         	 oeing is setting up a transonic wind tunnel facility in Hyde-rabad, which is expected
                         ►                                                                                         INR3.1 billion
                           to come up in three to four years.

                    •	   The facility will be used by DRDO to test the aerodynamic features of various aircraft
                         shapes and space vehicles. A transonic tunnel is a high-speed tunnel, which can
                         generate a speed up to Mach 1.4 (Mach is the speed of sound).
Astra Microwave     •	   Astra Microwave Products Ltd. bagged the deal to supply critical radar sub-systems        INR3.1 billion
                         to one of its overseas customers.

                    •	   This is the first time the company has bagged such a con-tract and the company is
                         expected to reach revenues of INR2 billion this year.
Defence Avionics    •	   Ultra Electronics TCS was awarded an order for electronic warfare equipment to be         INR171.5 mil-lion
Research 	               delivered to the Defence Avionics Research Establishment (DARE) in Bangalore.
Establishment
                    •	   The complete system would be used in a test environment to evaluate aircraft EW
(DARE)
                         radar capability and provide an opportunity for pilots to assess the effectiveness of
                         countermeasure techniques.

                    •	   The EW system will be integrated into the ultra TCS facility in Ottawa and then
                         shipped to the DARE facility in Bangalore in late 2012.
Keltron             •	   The Kerala State Electronics Development Corp (Keltron) bagged a contract worth           INR60 million
                         INR60 million from the National Physical and Oceanographic Laboratory (NPOL).

                    •	   Keltron won the contract to manufacture and supply sonar simulators used for
                         training the Indian Navy’s submarine op-erators.

                    •	   Keltron’s Aroor unit would manufacture the electronic simu-lators, designed by the
                         NPOL, Defence Research and De-velopment Organization (DRDO) lab.




                                               Eye on defence | 25
Name of entity        Project details                                                                                  Value
 Altran 	              •	   French Aerospace Company, Altran Technologies plans to expand its India                     NA
 Technologies               operations by adding about 2,000 em-ployees over the next two years.

                       •	   The company is in discussions with HAL for weight reduction of a few military
                            aircraft manufactured by HAL.

                       •	   It is looking at acquisitions to strengthen its existing capabilities. It plans to open a
                            center of excellence in Bangalore.  
 Bell Helicopter       •	   Bell Helicopter opened a new office in New Delhi for its op-erations in India. It is        NA
                            seeking growth opportunities in sales and manufacturing.
 Mahindra and Ma-      •	   M&M plans to build unmanned coastal surveillance vessels to boost India’s coastal           NA
 hindra (M&M)               security.

                       •	   The company’s joint venture with Israel’s Rafael Advanced Defense Systems will
                            build unmanned patrol vessels (UPV) at a facility in Pune “in a phased manner” after
                            initially im-porting models from Rafael.
 Maini Precision       •	   The aerospace division of the Bangalore-based Maini Preci-sion Products signed a            NA
 Products                   contract with Airbus through global e-bidding.

                       •	   The contract is for the supply of standard bushes that would be used across the
                            various Airbus aircraft platforms.


 Bombardier            •	   Bombardier inaugurated its engineering service center at Bangalore to implement             NA
                            aerospace projects, which include aircraft design.

                       •	   The company plans to ramp up the headcount in the center to 50 by 2013. The
                            center would assist about 4,000 engi-neers, including 800 of Indian origin, who are
                            working at its main service center in Montreal.
 Centre for Asia-      •	   The global aviation consulting body, Centre for Asia Pacific Aviation (CAPA), will          NA
 Pacific Aviation           launch an aerospace park in Bangalore to promote high technology research and
 (CAPA)                     manufacturing in aviation.

                       •	   The park, being co-promoted by Vittal Innovation City (VIC), will form one of the
                            industry clusters at VIC.

                       •	   The proposed park will be spread across 750 acres and is located near the
                            Bangalore International Airport.
 Mahindra Satyam       •	   Mahindra Satyam set up a delivery center in Toulouse, France, dedicated to the              NA
                            aerospace and defence sector.

                       •	   The center will ramp up to 80 employees toward the end of this year and will offer
                            engineering, IT and communication services.

                       •	   The center will help in expanding its operations in France, generating jobs	
                             and utilizing local talent in the areas of aero-space engineering and 	
                            information technology.
*The values of the deals have been converted to Indian Rupees using the Oanda currency conversion tool.  
US$1 = INR50.44 (Average of the value from July 2011 to June 2012)



                                                    Eye on defence | 26
Joint ventures and alliances

    Name of entities   Nature of transaction                                                                                     Value
DCNS and Pipavav       •	   Pipavav Shipyard plans to enter into a strategic partnership with French-based DCNS                  INR8 billion
Shipyard                    Technologies to build submarines and other warships for the Indian Navy and Coast Guard.

►                      •	   D
                            	 CNS is manufacturing six Scorpene submarines for the In-dian Navy in partnership with
                            ►
                              MDL under Project 75. The partnership between the two companies will allow cost bene-fits
                              and timely manufacturing of vessels.
    Pipavav Defence    •	   M
                            	 DL selected Pipavav Defence and Offshore Engineering Co. Ltd. to form a JV that will build
                            ►                                                                                                    NA
    and Offshore              warships and submarines for the Indian Navy.
    Engineering Co.
                       •	   T
                            	 he newly formed entity Mazagon Dock Pipavav will imple-ment a part of the existing orders
                            ►
    Ltd. and Mazagon
                              of MDL as well as bid for future defense contracts in India.
    Dock Ltd. (MDL)
    Rolta India Ltd.   •	   Rolta India Ltd. signed an MoU to partner with GeoEye Inc., a provider of geospatial                 NA
    and GeoEye Inc.         information and insight.

                       •	   R
                            	 olta is exploring opportunities to leverage GeoEye’s high resolution satellite imagery
                            ►
                              service, predictive analytics’ ex-perience and intelligent 3-D city solutions to develop defence
                              and homeland security solutions.
    Tata Motors and    •	   T
                            	 ata Motors Ltd. signed an agreement with a DRB-HICOM Berhad unit to market and sell light NA
                            ►
    DRB-HICOM                 trucks to Malaysia’s armed forces.

                       •	   T
                            	 he trucks include Tata’s 2.5 ton-5 ton trucks, including the LPTA 715 and the LPTA 1623.
                            ►
    Kaman Aerospace    •	   K
                            	 aman Aerospace Group, Inc., a subsidiary of Kaman Cor-poration entered into an
                            ►                                                                                                    NA
    Group and Kineco          agreement with Kineco Pvt. Ltd. to form a manufacturing company in India.
    Pvt. Ltd.
                       •	   T
                            	 he new venture, known as Kineco Kaman Composites, will be based in Goa and will
                            ►
    ►                         manufacture advanced composite structures for aerospace, medical and other industries.




                                                  Eye on defence | 27
Country-level deals and initiatives

Country   Nature of transaction                                      Additional details
US        •	   T
               	 he 2012 edition of the annual 10-day In-dia-US
               ►                                                     •	   T
                                                                          	 he US will field three tanks and dep-loy around 200 men
                                                                          ►
                 naval exercise, “Malabar,” was held in the Bay of          accompanied by armored personnel carriers for the war game.
                 Bengal from 7 April.
                                                                     •	   T
                                                                          	 he indigenously built guided missile frigate INS Satpura,
                                                                          ►
          •	   I
               	t involved the American and Indian naval forces.
               ►                                                            guided missile de-stroyers INS Ranvijay and INS Ranvir and
                                                                            fleet tanker INS Shakti together represented the Indian Navy.

                                                                     •	   T
                                                                          	 he center turned down an Air Force request to participate in
                                                                          ►
                                                                            the war games as it was wary of the hype surrounding the joint
                                                                            military exercises with the US.
US        •	   T
               	 he US Secretary of Defence, Mr. Leon Panetta
               ►                                                     •	   B
                                                                          	 oth sides exchanged views on the security situation in South
                                                                          ►
                 and Indian Defence Minister, Mr. A.K. Antony               Asia, West Asia and the Asia-Pacific region and on various
                 held defence discussions in 	                              global security challenges such as cyber security.
                 New Delhi.
                                                                     •	   T
                                                                          	 he Indian Defence Minister empha-sized on moving beyond
                                                                          ►
                                                                            the buyer-seller transactions and focusing on the transfer of
                                                                            technologies and partner-ships to build indigenous capabilities.
Japan     •	   T
               	 he first bilateral maritime exercise be-tween
               ►                                                     •	   T
                                                                          	 wo destroyers, one maritime patrol aircraft and a helicopter
                                                                          ►
                 India and Japan “JIMEX 12” (Japan India                    from Japa par-ticipated in the Japanese Maritime Self Defence
                 Maritime Exercise) was held off the coast of               Force (JMSDF). INS Rana, INS Shivalik, INS Karmukh and INS
                 Japan on 9 June 2012 and 	                                 Shakti are the Indian units, which parti-cipated in the exercise.
                 10 June 2012.
                                                                     •	   T
                                                                          	 he focus of these exercises was pri-marily maritime security
                                                                          ►
          •	   T
               	 he engagement between the navies of India
               ►                                                            cooperation. These include Humanitarian Aid & Dis-aster Relief
                 and Japan is part of the overall de-fence                  (HADR) operations and visit, board, search and seizure (VBSS)
                 cooperation between both countries.                        drills, which form a part of anti-piracy operations.




                                             Eye on defence | 28
Industry buzz
Large-scale modernization of                     Indian Government taking steps
defence shipyards                                being taken to curb corruption
The Government of India has undertaken           India imposed a penalty on the Israeli
the large-scale modernization of defence         Military Industries (IMI) for the breach of
shipyards. It has also taken distinct steps to   the “integrity pact” to es-tablish a plant for
encourage the participation of the private       manufacturing bi-modular charges for the
sector in these projects to reduce the time      Indian Army’s 155mm howitzers at the Na-
that is required for the construction of         landa Ordnance Factory in Bihar.
warships. Garden Reach Shipbuilders and
                                                 Defence minister AK Antony sternly warned
Engineers Ltd. (Kolkata), Mazagon Dock Ltd.
                                                 eight defence PSUs to maintain probity and
(Mumbai), Goa Shipyard Ltd. and Hindustan
                                                 transparency in all their dealings and set
Shipyard Ltd. (Andhra Pra-desh) are the
                                                 benchmarks in probity. He also ordered an
four shipyards that have initiated the major
                                                 inquiry over the role of the consultant hired
modernization program. The modernization
                                                 by Fimmeccanica to facilitate the chopper
pro-gram will be funded by pooling up
                                                 deal with India.  
resources from the project-based funding as
well as their internal ac-cruals.                (Source: “India penalises Israeli defence
                                                 firm for contract breach,” Indo-Asian News
(Source: “Govt takes up the modernization
                                                 Service, 16 April 2012, via Factiva, © 2012
of defence shipyards on large scale,” India
                                                 Indo-Asian News Service; “8 def PSUs
Public Sector News, 22 May 2012, via
                                                 warned to maintain probity,” 13 April 2012,
Factiva, © 2012 Contify.com.)
                                                 The Times of India - Ahmedabad Edition,
                                                 via Factiva, © 2012 Bennett, Coleman &
                                                 Co. Ltd.; “Def Min orders fresh inquiry after
                                                 questions over chopper deal,” Press Trust of
                                                 India, 25 April 2012, via Facti-va.)




Eye on defence | 29
Proposal for an alternate                     helicopter from its deck. INS Teg is the first   Coast Guard commissions
                                              of the three frigates being built in Russia
communication network for                     as a follow up order to the Talwar Class
                                                                                               hovercraft at Okha, Gujarat
defence forces                                frigates.                                        Indian Coast Guard commissioned the
The Ministry of Defence said that a                                                            Griffon 8000TD, UK hovercraft. The
                                              (Source: “Stealth Frigate INS Teg Inducted,”
proposal has been sent to the Ministry                                                         30-tonne air cushion vehicle would be
                                              DNA – Daily News & Analysis, 28 April
of Communication and Infor-mation                                                              deployed in shallow waters and inter-tidal
                                              2012, via Factiva,, 2012. Diligent Media
Technology to build an exclusive and                                                           zones along the coastline and would be 	
                                              Corporation Ltd)
dedicated telecommunication network                                                            used for pa-trolling the Gulf of Kutch. The
for defence services through BSNL. The                                                         vessel can undertake effective assault
government approved a budgetary support       Maiden flight of light combat                    operations and immobilize the ene-my with
of INR80.98 billion in December 2009                                                           its high speed.
                                              aircraft-navy
and a proposal is under process in the                                                         (Source: “Coast Guard commissions
Ministry of Communication and Information     The indigenously built light combat              hovercraft at Okha,” The Times of India, 13
Technology for the finan-cial approval of     aircraft (LCA) Tejas Navy NP1 made its           June 2012, via Factiva, © 2012 The Times
INR52.36 billion for the project.             maiden flight in Bangalore. During the           of India Group)   
                                              flight, the aircraft was put through various
 (Source: “Govt for alternate communication   maneuvers, including low-speed handling
network for defence forces,” Press Trust of
India, 9 May 2012, via Factiva.)
                                              and un-dertook a close formation flying at a     Coast Guard inducts Dornier
                                              slow speed with another aircraft.
                                                                                               aircraft
                                              (Source: “Maiden Flight of Light Combat
                                                                                               The Coast Guard inducted a new HAL-built
Russia completes India’s                      Aircraft-Navy (NP1),” 27 April 2012, Indian
                                                                                               Dornier aircraft equipped with advanced
submarine modernization                       Government News, via Factiva, © 2012 HT
                                                                                               navigational and communication sensors as
                                              Media Limited; “LCA ‘Tejas’ to be inducted
program                                       in Air Force this year: DRDO chief,” Press
                                                                                               well as equipment. Hindustan Aeronautics
                                                                                               Limited (HAL) built this aircraft, which
The two-year modernization of the Indian      Trust of India, 29 April 2012, via Factiva.)
                                                                                               can be configured into various roles such
Navy’s INS Sindhurakshak submarine was                                                         as pollution response, search and rescue,
completed at the Zvezdochka shipyard in                                                        maritime re-connaissance and armament
Severodvinsk, Russia. It has been equipped    Indian Navy seeks Midget
                                                                                               to meet the Coast Guard charter of duties,
with the tube-launched Club-S cruise          submarines for special                           including coastal security. The induction is
missiles effective against surface vessels    operations                                       part of the ongoing expansion plan of the
and submarines at a range of about 200                                                         Coast Guard to strengthen its fleet.
km. The submarine will be handed over         The Indian Navy plans to acquire 12 midget
to the Indian Navy later this year after      submarines for the special operations            (Source: “Coast Guard inducts Dornier
undergoing sea trials and firing tests.       forces. These would be used to transport         aircraft,” Indo-Asian News Service, 23 May
                                              arms and equipment from a larger                 2012, via Factiva.)
(Source: Vladimir Radyuhin, “Russia           submarine to an area of operation near
completes India’s submarine modernisation     coastal water. The midget submarines would
programme,” The Hindu, 24 June 2012, via      also be used to conduct covert surveillance      R&AW set to acquire
Factiva, © 2012 Kasturi & Sons Ltd.)          in shallow waters and extract commandos          Bombardier spy jets
                                              on completion of their mission. The global
                                              tender for midgets is likely to be sent to       Indian’s External intelligence Agency
Frigate INS Teg commissioned                  HDW of Germany, Navantia of Spain, DCNS          Research and Analysis Wing (R&AW) is
in the Indian Navy                            of France, Amur Shipyard of Russia and           set to acquire two Bom-bardier jets fitted
                                              Hyundai of South Korea.                          with Israel-based Multi-mission Airborne
The frigate INS Teg, built at the Yantar                                                       Reconnaissance and Surveillance Systems.
Shipyard in Kaliningrad, Russia, was          (Source: Vivek Raghuvanshi, “India Seeks         The aircraft will daily collect electronic
commissioned into the Indian Navy.            12 Midget Subs For Special Ops,” Defense         and ground intelligence 180 km inside the
It is armed with the 290-km BrahMos           News, 21 May 2012, via Factiva, © 2012           neighbors’ territories. The jets are expected
supersonic cruise missile and can operate     Army Times Publishing)
the anti-submarine and early-warning




                                              Eye on defence | 30
to be in service in the next two years and       The aircraft will be used for cargo/troop       (Source: “Brazil: Embraer competes in
will provide real-time information on troop      transportation and para-drop/air drop of        India tender for maritime patrol aircraft,”
and armor movements.                             supplies, including a low-altitude parachute    O Estado de São Paulo, 12 April 2012, via
                                                 extraction system. HAL will carry out the       Factiva, © 2012 AGÊNCIA ESTADO LTDA)
(Source: Shishir Gupta, “After 20 years,
                                                 design and development of its work share
R&AW upgrades to super spy jets,”
                                                 of the MTA at the Aircraft R&D Center
Hindustan Times, 3 May 2012, via Factiva,                                                        Bumar plans to renegotiate a
                                                 (ARDC) at Bangalore, while its Transport
© 2012 HT Media Limited.)
                                                 Aircraft Division (TAD) at Kanpur in Uttar      recovery vehicle contract
                                                 Pradesh will manufacture the prototypes
                                                 and subsequently the serial production will     Bumar had earlier signed a contract for the
Boeing extends the contract                                                                      delivery of 204 WZT-3 armored recovery
                                                 be at Kanpur, where dedicated facilities are
for subassemblies to Bharat                      being set up.                                   vehicles for India’s armored troops signed
Electronics Ltd.                                                                                 with BEML. It now plans to renegotiate the
                                                 (Source: Jay Menon, “Russia’s UAC Partners      contract or will terminate it for the ar-mored
Boeing extended the contract with Bharat         With India’s HAL on New Transport,” 30 May      vehicles contract. According to the new
Electronics Ltd. (BEL) for another year of       2012, Aero-space Daily & Defense Report,        President of Bumar’s management board,
work on F/A-18E/F Super Hornet cockpit           via Factiva, © 2012 McGraw-Hill, Inc.)          the contract is unfavorable for Bumar with
subassemblies. The subassembly provides                                                          unrealistic deadlines and would cause its
cockpit floodlighting compatible with the                                                        profits to decline.
aircraft’s Night Vision Imaging System           HAL to undergo restructuring                    (Source: “Polish company plans to
(NVIS). Boeing had awarded BEL an initial
contract in March 2011 for work on F/A-          An expert committee chaired by B.K.             renegotiate recovery vehicle contract with
18E/F Super Hornet cockpit subassemblies.        Chaturvedi, a member of India’s Planning        India,” 28 May 2012, BBC Monitoring
Boeing exercised the option to renew the         Commission, visited vari-ous facilities of      European, via Factiva, © 2012 The British
contract for another year.                       HAL. It would suggest measures to meet          Broadcasting Corporation.)
                                                 technological and HR recommendations
(Source: Jay Menon, “Boeing Extends              to be able to accomplish contracts such as
Contract For Indian-built Growler                Rafale. The new organization structure is       BEL receives the SCOPE
Subassemblies,” Aerospace Dai-ly &               likely to bring more ties with private-sector   Meritorious Award for R&D
Defense Report, 31 May 2012, via Factiva,        defense companies. HAL’s shares are
© 2012 McGraw-Hill, Inc.)                        expected to be floated in the market.           Bharat Electronics (BEL) received the
                                                                                                 SCOPE (Standing Conference of Public
                                                 (Source: Vivek Raghuvanshi, “Indian             Enterprises) Meritorious Award for R&D,
HAL partners with Russia’s                       Officials Have High Hopes for HAL Reorg,”       technology development and innovation
                                                 Defense News, 28 May 2012, via Factiva, ©       for the year 2010–2011. The award was
UAC for a multi-role transport                   2012 Army Times Publishing.)                    formally received by Anil Kumar, Chairman
aircraft                                                                                         and Managing Director, BEL from President
Russian firm, United Aircraft Corporation                                                        Pratibha Patil on 13 April 2012.
(UAC) and its JV, Multirole Transport
                                                 Embraer competes in the Indian
                                                                                                 (Source: “BEL receives SCOPE Meritorious
Aircraft Ltd. (MTA), signed a contract           tender for maritime patrol                      Award for R&D,” Accord Fintech, 14 April
with HAL to manufacture 205 multi-role           aircraft                                        2012, via Factiva.)
aircraft (MTA) in the 15–20 ton-class. The
project envi-sages making 100 aircraft for       Embraer Defesa is preparing to bid for a
                                                 tender called by the Government of India to
the Russian Air Force, 45 for the IAF and
                                                 purchase nine mari-time patrol aircraft at a
                                                                                                 Kaveri spin-off engine to power
the remaining 60 airplanes will be sold to
other countries. The project is likely to cost   cost of US$1.2 billion to US$1.5 billion. The   the unmanned combat air
between US$600 million and 	                     company already supplies Emb-145 AEW&C          vehicle program
US$700 million.                                  jets, designed and adapted for surveillance.
                                                 Embraer will compete in this tender with the    The modified version of Kaveri turbofan
The prototype’s first test flight is slated      EMB 145 MP designed for an anticipated          engine will power India’s unmanned combat
to be conducted in 2017, with regular            alert and a range of 3,000 km.                  air vehicle (UCAV) program. Currently, the
production expected to begin by 2019.                                                            Kaveri engine program is undergoing tests




                                                 Eye on defence | 31
at the Gromov Institute in Russia for a 	       Vajra corps conducted the                        India developing an anti-radiation
test extension to complete its 	
technological objectives.
                                                “Ashwamedh” exercise                             missile	
                                                The Vajra Corps, defenders of the Punjab         India is developing an anti-radiation missile
 (Source: “Kaveri Engine to Power India’s
                                                borders, conducted a military exercise           (ARM), which would multiply the strike
UCAV,” SP’s Aviation, 23 April 2012, via
                                                “Ashwamedh” in the western sector. The           capabilities by destroying the enemy’s
Factiva, © SP Guide Publications Pvt. Ltd.)  
                                                exercise saw unmanned aerial vehicles            advance warning system. The missile detects
                                                (UAV), attack helicopters and front-line         the radar by tracking its electro-magnetic
Brahmos missile to expand                       fighter aircraft carrying out battle drills in   radiation and pulses generated and can be
                                                synergy with the Army. The exercise includes     mounted on the Sukhoi fighter planes Su-30
fighter options                                 the movement of for-mations to the tactical      MKI.
Brahmos Aerospace plans to develop              battle area and launching an offensive. The
                                                                                                 (Source: “India developing radar-destroying
a lightweight anti-ship cruise missile          infantry, armored, artillery, air defence,
                                                                                                 Anti-Radiation Missile,” Samay Live, 29 April
BrahMos-3 deployable by light and               special forces, engineers, signals and
                                                                                                 2012, via Facti-va, © 2012 Sahara Samay.)
medium fighters. Tentatively called             logistics units participated in this exercise.
BrahMos-3, the company says that it is          (Source: “Vajra corps launches ‘Ashwamedh’
looking to address a large requirement for      exercise,” Press Trust of India, 25 May 2012,    Agni V to be equipped with
such weapons by the Indian Navy’s MiG-
29K and future fighter fleet as well as the
                                                via Factiva.)                                    multiple warheads
Indian Air Force’s (IAF) medium multirole                                                      Agni-V, with a strike range of more than
combat aircraft and sepecat jaguars.            CABS develops IFF Systems                      5,000 km is set to be equipped with multiple
                                                                                               warheads. The mis-siles known as multiple
(Source: “Light and Lethal; New BrahMos         The Centre for Air-Borne Systems (CABS),       independently targeted re-entry vehicles
missile version would expand fighter            a Defence Research and Development             (MIRVs) would be capable of carrying multiple
options,” 9 April 2012, via Factiva,            Organisation (DRDO) laboratory successfully warheads to destroy several targets. This
Aviation Week & Space Technology ISSN:          developed and processed an Identification      capability exists with a select few countries
0005-2175, Volume 174, Issue 13, via            Friend or Foe (IFF) system, IFF Mk-12 (S).     such as the US, Russia and China. MIRV
Factiva, © 2012 McGraw-Hill, Inc.)              Indigenous IFF is a requirement for AEW&C      missiles are equipped with small on-board
                                                Aircraft and Light Combat Aircraft, Tejas. The rocket motors and computerized inertial
                                                latest ver-sion of the warning system can be guidance systems, which maneuver warheads
Two Akash missiles test-fired                   fitted on platforms such as ships, unmanned to several different trajectories.
in Odisha                                       aerial vehicles (UAV) and missiles.
                                                                                               (Source: “Plans to equip Agni-V with multiple
India test-fired two surface-to-air anti-       (Source: “CABS develops IFF system,”           warheads: DRDO chief,” Press 	
aircraft “Akash” missiles from the              Deccan Herald, 24 May 2012, via 	              Trust of India, 10 May 2012, via Factiva.)
Integrated Test Range near Chandipur,           Factiva, © 2012 The Printers 	
achieving success in one, while the data        (Mysore) Private Ltd.)
of the second trial was being analyzed.
Each missile was aimed at intercepting a
floating object supported by a pilotless
target aircraft at a definite altitude over
the sea. After the launch, the assessment
was made with data retrieved from
telemetry stations and radars.

(Source: “Two Akash missiles test-fired
in Odisha, one successful,” Press Trust of
India, 28 May 2012, via Factiva.)




                                                Eye on defence | 32
Sources

1.	 “Aircraft component manufacturing unit in Bangalore; International Aerospace M1.	 “HAL
    to invest Rs 600 cr in new fighter plane unit,” Business Line (The Hindu), 9 June 2012, via
    Factiva, © 2012 The Hindu Business Line.    
2.	 “3,000cr deal for IAF trainer aircraft cleared,” 11 May 2012, The Times of India - Mumbai
    Edition, via Factiva, © 2012. Bennett, Coleman & Co. Ltd.
3.	 “M&M plans unmanned sea surveillance vessels,” Financial Express, 24 April 2012, via
    Factiva, © 2012 Indian Express Online Media Pvt. Ltd.   
4.	 “TN govt plans Integrated Aerospace Park,” Press Trust of India 2 May 2012, via Factiva.
5.	 Lijee Philip, “Maini Precision Products signs contract with Airbus for supply of standard
    bushes,” The Economic Times, 21 April 2012, via Factiva, © 2012 The Times of India Group.
6.	 “Bombardier inaugurates Bangalore engineering centre,” Project Monitor, 20 April 2012, via
    Fac-tiva, © 2012 Economic Research Pvt. Ltd.
7.	 Peerzada Abrar, “Astra Microwave wins Rs 310 crore defence contract,” The Economic
    Times , 26 April 2012, via Factiva, © 2012 The Times of India Group.
8.	 “Bell Office Opens New Office In New Delhi,” Defense Daily International, 26 April 2012, via
    Fac-tiva, © 2012 Access Intelligence, LLC.
9.	 “India, US close in on defense deals worth $8 billion,” The Financial Daily, 30 April 2012, via
    Fac-tiva.
10.	 “French aerospace firm eyes expansion,” 27 April 2012, DNA - Daily News & Analysis, via
     Facti-va, © 2012.  Diligent Media Corporation Ltd.
11.	 “New Delhi outlines scope of multimission aircraft buy,” Flight International, 1 May 2012,
     via Fac-tiva, © 2012. Reed Business Information Limited.  
12.	 “BEML is setting up an aerospace manufacturing division,” Project Monitor, 9 April 2012, via
     Fac-tiva, © 2012 Economic Research India Pvt. Ltd.
13.	 “Ultra Electronics, TCS receives $3.4-million order for Indian electronic warfare system,”
     eSource Canada Business News Network, 16 April 2012, via Factiva, © 2012 Business
     Information Group.  
14.	 “India places order for Electronic Warfare system with a Canadian company,” Press Trust of
     In-dia, 14 April 2012, via Factiva, © 2012.  NDTV Convergence Ltd.
15.	 “Sun Forest City to develop aerospace hub near Bangalore,” Project Monitor, 16 June 2012,
     via Factiva, © 2012 Economic Research India Pvt. Ltd.
16.	 “CAPA-VIC Aerospace City to Come Up near Bangalore,” New Indian Express, 14 June
     2012, via Factiva, © 2012 The New Indian Express Group.    
17.	 “M&M plans unmanned sea surveillance vessels,” Financial Express, 24 April 2012, via
     Factiva, © 2012 Indian Express Online Media Pvt. Ltd.   
18.	 “Keltron bags contract worth Rs 60 million from NPOL,” India Public Sector News, 28 May
     2012, via Factiva, © 2012. Contify.com.   
19.	 “Indian Goa Shipyard to build six patrol vessels for USD 338m – report,” SeeNews Shipping,
     10 May 2012, via Factiva.
20.	 Jay Menon, “India To Buy 75 Pilatus Trainers For Air Force,” The Weekly of Business
     Aviation, 28 May 2012, via Factiva, ©2012 McGraw-Hill, Inc.    
21.	 “Mahindra Satyam opens delivery centre in France for Aerospace,” Press Trust of India, 30
     May 2012, via Factiva.




Eye on defence | 33
22.	 Robin Pagnamenta, “India buys guns on the ground but not jets in the air; BAE Systems
     agrees deal for howitzers,” thetimes.co.uk, via Factiva, © 2012 Times Newspapers Ltd.
23.	 Jay Menon, “Boeing Expects Apache Deal With India By Year’s End,” Aerospace Daily &
     Defense Report, 28 May 2012, via Factiva, © (c) 2012 McGraw-Hill, Inc.   
24.	 M. Somasekhar, “Boeing to help set up transonic tunnel facility,” Business Line (The Hindu),
     24 April 2012, via Factiva, © 2012 The Hindu Business Line.
25.	 David Alexander, “Panetta calls for deep US-India defence ties, more arms trade,” Reuters
     News, 6 June 2012, via Factiva.
26.	 “India, Russia contract for supplying tank ammunition,” Press Trust of India, 9 April 2012,
     via Fac-tiva.   
27.	 Rajiv Ranjan Singh, “L & T team, BEL clear defence deal Stage I,” DNA Money, 23 June
     2012, via Factiva, © 2012. Diligent Media Corporation Ltd.   
28.	 “Pipavav Defence, Mazagon Dock to form JV to build warships, submarines for Indian Navy,”
     In-dia Investment News, 4 May 2012, via Factiva, © © 2012. Contify.com.
29.	 “Aerospace; Kaman and Kineco Announce Agreement to Form a Joint Venture in India,”
     Defense & Aerospace Week, 16 May 2012, via Factiva.
30.	 “Rolta India Ltd And GeoEye Inc Form Strategic Partnership To Develop Advanced Geospatial
     Solutions For Global Markets,” Reuters Significant Developments, 24 April 2012, via Factiva,
     © 2012 Reuters.
31.	 “DCNS to ink pact with Pipavav Shipyard,” Bureaucracy Today, 12 June 2012, via Factiva.
32.	 “Tata Motors Signs Cooperation Pact With DRB-HICOM’s Defence Technologies,” Dow Jones
     In-ternational News, 23 April 2012, via Factiva, © 2012 Dow Jones & Company, Inc.   
33.	 “India and US Hold Defence Talks Asia-Pacific Countries Should Settle Bilateral Disputes as
     Per International Law: Antony,” PIB website, http://pib.nic.in/newsite/AdvSearch.aspx, 6
     June 2012
34.	 “Naval exercise with U.S. begins tomorrow,” The Hindu, 6 April 2012, via Factiva, © 2012
     Kasturi & Sons Ltd.
35.	 “India and Japan to Conduct First Ever Naval Exercise,” PIB website, http://pib.nic.in/
     newsite/AdvSearch.aspx, 5 June 2012
36.	 “Delhi scales down US war games,” The Telegraph, 29 April 2012, via Factiva, © 2012. ABP
     Pvt. Ltd.




Eye on defence | 34
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Eye On Defense July 2012

  • 1.
    Eye on defence July 2012 Dear readers, • Indian market assessment: 02 It is widely believed that in future the wars and battles will be fought command, control,communications, computer intelligence, surveillance, more on the digital battlefield than the conventional battlefields reconnaissance (C4 ISR) of the plains, mountains and deserts. The winning army, will be the one who would take over the entire gamut of the enemy’s • Foreign direct investment in defence: 10 Indian scenario and concerns communications and ensure that there is simply no capability or resource that enables the enemy to respond to the threat in • Offsets in defence and MSMEs 17 a coordinated and suitable manner. This will leave the enemy in • Request for information (RFIs) 21 complete disarray. A somewhat similar scenario was visible in the • Request for proposal (RFPs) 22 second US-Iraq war. Taking this into cognizance, we have tried to ascertain the C4ISR • List of industrial licenses (ILs) filed from 23 market in India and also dwelled, to some extent, on its various constituents. 01/04/2012 TO 29/02/2012 There has been an increasing debate in various government, public and private forums over • New projects/investments/contracts 24 the pros and cons of permitting FDI in excess of the currently stipulated 26% in the defense • Joint ventures and alliances 27 manufacturing sector. We have tried to put up the arguments of both sides and also for the • Country-level deals and initiatives 28 interest of our readers, have included most, if not all, of the joint-ventures,; agreements; • Industry buzz 29 etc that have been signed in the Indian defense sector till date. • Sources 33 We have been expecting the revised Defense Offset Policy to be released for sometime now. In the previous issues of the Eye on Defense we have maintained our focus on certain significant aspects that we feel needs to be addressed in the revised policy. In continuance of this effort, we take up the cause of the MSME sector’s participation in the defense manufacturing and services space. We have tried to highlight the impending need for the Government to provide the requisite assistance and opportunity to the constituents of this sector enabling them to have their rightful place and also contribute towards building indigenous strategic manufacturing capabilities. If you have any suggestions on any of the articles or require any further information on the same, please feel free to get in touch. K. Ganesh Raj Partner and Leader Aerospace and Defence Practice
  • 2.
    (C4 ISR) Indianmarket assessment Command, control, communications, computer intelligence, surveillance, reconnaissance Introduction To operate in an era of information warfare (IW)/network centric warfare (NCW), in complex geopolitical environment, decision makers and war fighters need quality intelligence. Accurate and timely information is mission-critical to address complex battlefield and peacekeeping requirements. Intelligence, Surveil-lance, Reconnaissance (ISR) refers to “integrated capabilities to collect, process, exploit and dis-seminate accurate and timely information that provides the battle space awareness necessary to successfully plan and conduct operations.” This requires the seamless integration of sensors, command and control, and advanced information systems, network-centric ISR solutions to deliver actionable intelligence in real time. The given figure depicts a typical ISR-based NCW battlefield scenario. Most of the ISR resources utilize either airborne platforms or are used by air power. Tier 3 Satellite Based Tier 2 Airborne Based Tier 1 Ground Based Source: Q-Tech Synergy. Source: Q-Tech Synergy Eye on defence | 2
  • 3.
    Typical elements ofa C4ISTAR set up UAVs and aerostats Night vision Radars devices and sensors Surveillance equipment In terms of function, , the airborne ISR market can be classified into four major segments, based on role, apart from in addition to the C4 (command, control, communications and computer): • Airborne early warning (AEW) • Airborne ground surveillance (AGS) • Maritime patrol (MP) • SIGNIT Global market size The C4 market (command, control, communications, computer, intelligence), consisting of land space, naval and airborne systems, was valued at about US$53.2 billion in 2011. It is expected to touch US$63.7billion approximately in 2012. The C4ISR constitutes 5% of the global defence spending. The global airborne ISR market, including new acquisitions and upgrades, is estimated to be worth US$17.3 billion in 2011, increasing at a CAGR of 2.5%. Currently, the US is the principal market for ISR systems, but as emerging economies such as China and India seek to improve their military capabilities, they will necessarily focus on this aspect of modern warfare. Global projected C4 and C4ISR market for 2011 ISR ISR US$17.3bn US$17.3bn 25% 25% C4 C4 US$53.2bn US$53.2bn 75% 75% Source: Q-Tech Synergy Eye on defence | 3
  • 4.
    The tactical command,control, communication and information system (TAC C3I), which is essentially the mainstay of the Army’s C4ISR, is plodding along. The TAC C3I comprises the artillery command, control and communication system (ACCCS), air defence control and reporting system (ADC&RS), battlefield surveillance system (BSS), battlefield management system (BMS), all of which are in various stages of development. The IAF plans to put in place five integrated air command and control systems (IACCS) through an indi-genous route, which when fully developed, are expected to put all sensor platforms and weapon systems on a common grid, interlinking its five operational commands in a fully networked architecture. The Air Force Network (AFNET) is at the heart of the air force’s communication network. It is a dedicated IAF fiber-optics network that offers up to 500 MBPS encrypted, unjammable bandwidth. A military satellite is expected to be launched next year, inter alia, to streamline the massive data flow. The Navy, among all the three defence services, is the most advanced service in deploying C4I2 and air-borne ISR components. It is already in the process of implementing concepts such as network-centric warfare, integrated command and control, system of systems and global information grid. The Indian Space Research Organization (ISRO) is to launch an indigenously built geo-stationary satellite for the Navy. The dedicated satellite is aimed at bolstering the C4ISR capabilities of the Indian Navy. This would also help unify the scattered assets of the Navy at different geographical locations. The procurement of more UAVs, maritime patrol aircraft, sonars and radars is in the pipeline through indigenous and foreign procurements, which will further strengthen its ISR capability. However, within its three services, there exists an issue on integration to leverage a wide array of ISR capability. Eye on defence | 4
  • 5.
    Given below aresome of the major indigenous and foreign ISR systems with the defence services: Airborne early Airborne ground surveillance (AGS) warning (AEW) DRDO’s Airawat Radar/ Sensors UAV Opto electronic Phalcon AWACS* Kamov Ka-31* Swordfish Long Range Rustom (Indigenous Tracking Radar Akashdeep +Foreign INDRA series of 2D radars Procurements) Gagan Rajendra Radar 3D Nirbhay Night Vision Central Acquisition Radar Devices Netra, (3D-CAR) planar array track- Night Sights Nishant ing radar Thermal Imagers Lakshya 3D AESA Long Range Tracking Radar Heron I, II* Low Level Lightweight Ra- Harop* dar(LLLR) Searcher I, II* Medium Power Radar 3d Harpy II* Active Phased Array Radar Revathi 3D Naval Surveil-lance Radar EL/M-2070* GS-100* EL/M-2238 STAR* EL/M-2083 APR* RAN-30X* RAN-40L* DA-05* LW-08* DA-08* Fregat/Top Plate* Garpun/Plank Shave* EL/M-2075 Phalcon* Maritime patrol (MP) Signals intelligence (SIGINT) EL/M-2022* DO228-201 (ELINT)* Tupolev TU-142M* Mig 21 MRS* AN/APY-10* Mig 23 BNS* P8I* B707* IIyushin IL-38* Note: (*) are foreign procurements Eye on defence | 5
  • 6.
    Current market sizeof C4ISR systems in India Garnering the power of C4ISR systems, Indian defence establishments are moving from platform-centric operations to net-centric operations and gearing up for new and improved C4ISR technologies, the new thrust area, with an average spend of 5% allocation. It is apprehended that India procured US$2.76 billion ISR systems from 2007 to 2011, majorly comprising surveillance systems — UAVs, radars, AEW aircrafts and choppers from abroad. Aniticipated share of C4ISR in Indian Indian imports including C4ISR Defence expenditure (2007–2011) (in US$ million) Land Other Land (1275, 9%) 15% 25% Missiles (958, 6%) Naval 15% ISR (2768, 19%) R&D Air 10% 30% Ships (361, 2%) Aircraft C4ISR (9031, 60%) Engines (238, 2%) 5% Air Defence (294, 2%) Source: Q-Tech Synergy. Source: Compiled from SIPRI. Eye on defence | 6
  • 7.
    Market potential During theperiod 2012–2020, it is anticipated that India will be spending a whopping US$19.6 billion ap-proximately on C4ISR systems and US$16.77 on ISR systems alone. With an emphasis on the defence services becoming network-centric, more indigenous and foreign procurements will be in the pipeline. Market size of ISR submarkets (2012–2020) Amount in $ billion 3.7 5.6 4.45 3 AEW&C Airborne Ground Maritime Patrol SIGINT (ELINT surveillance Aircraft) Market size of ISR systems in India (2012–2020) US$37.35 Aircraft 38% Ships US$26.53 27% US$17.22 Ground Vehicle 18% US$16.7 ISR 17% The market for ISR systems will definitely be growing at a robust rate year-by-year, offering lucrative op-portunities to local and foreign vendors. While AGS dominates, Maritime Patrol is forecast to experience robust growth throughout the reporting period, followed by AEW&C Systems. Eye on defence | 7
  • 8.
    Manned systems leadeven as unmanned systems rise Projections indicate that India will spend about US$11.15 billion during 2012–2020 on acquisition of manned ISR platforms, while as for the unmanned ISR platforms; it is expected to spend approximately US$2 billion during 2012–2020. The below given table shows some of the major future acquisitions in these segments during 2012–2020 Manned ISR platforms Unmanned ISR platforms Maritime patrol acquisitions Nos. UAVs/UAS acquisitions Nos. Medium-range maritime 9+6 Mini and macro UAV for Army 500 reconnaissance (MRMR) aircraft High-altitude long endurance (Hale) --- UAV for the Indian Army Long-range maritime 4+12 UAV mission simulator for the Indian --- reconnaissance (LRMR) Army aircraft/P8 I Amphibious aircraft 9 Mini UAV for Army --- MPA 6 Aerostat systems for the Army 12 AWACS acquisitions Nos. Unmanned combat aerial vehicles --- for IAF Phalcon AWACS 2+5 Micro unmanned aerial systems for 95 IAF and IN Indigenous AWACS – India 2+4 Small VTOL MINI UAS for IAF --- Carrier-based airborne early 4 Aerostat systems for IAF 3 warning and control (AEW and C) aircraft for the Indian Navy SIGINT (ELINT aircraft) Nos. High-altitude long endurance UAV --- acquisitions (HALE UAV) for the Navy ELINT aircraft with 9 Naval Rotary Wing UAV 3 SIGNIT capability Manned versus unmanned ISR platforms The ISR market primarily comprises both highly valuable manned surveillance platforms as well as increasingly popular and numerous unmanned surveillance platforms along with the ISR radars/sensors they employ. The manned platform encompasses a vast range of systems from large airliner-based AEW&C and AWACS systems to maritime patrol aircraft and ELINT aircraft and airships. Unmanned plat-forms largely entail unmanned aerial vehicles or systems (UAVs/UAS), which are gaining popularity, keeping in view the future NCW battlefield in mind, which will push more of using such systems. As far as the Indian ISR market is concerned, as of now, manned systems in ISR continue to account for the majority of ISR spending, with unmanned systems also demonstrating strong growth. Further, large global foreign manufacturers govern the Indian ISR market. Thales, IAI, ST-Engineering, Raytheon, EADS, Northrop Grumman, Boeing and Lockheed Martin are among the main companies of-fering C4ISR solutions for Indian Armed Forces. As far as the Indian companies are concerned, there are no significant players from the private sector. BEL, DRDO and its Laboratories are the only players that have been in volved in developing ISR capabilities. Eye on defence | 8
  • 9.
    Challenges Indian defence servicesneed to be overcome the challenges of security architecture, connectivity matrix and points of exchange of information, integration, legacy systems, standards and protocols, functionalities and procedures, time sensitivity, human resource issues, training of users and management of trained manpower. Roadmaps of information and communication must converge into an integrated information communication technology roadmap, which is yet to take off. In addition, services need to focus on spectrum management and technology to telescope bandwidth. References “Indian Army and Space: Sky is not the limit,” IRGA press release, http://irgamag. com/?page=spacearms_20120202, 31 January 2012 “The C2/C4ISR Systems Market 2011-2021,” Vision Gain website, http://www.visiongain.com/ Report/565/The-C2-C4ISR-Systems-Market-2011-2021, January 2011 “The C2/C4ISR Systems Market 2011-2021,” Slide share website, http://www.slideshare.net/ ReportLinker/the-c2c4isr-systems-market-20112021, January 2011 “The Industry Review,” Industry Review website, http://industryreviewstore.blogspot.in/2012/03/ global-c2c4isr-market-20112021.html, 1 March 2012 “The Global C2/C4ISR Market 2011–2021,”PR newswire press release, http://www.bizjournals.com/ prnewswire/press_releases/2012/02/09/SP50639, 9 February 2012 Eye on defence | 9
  • 10.
    Foreign direct investment indefence: Indian scenario and concerns Manned Vs Unmanned ISR Platforms The production of defence equipment in India was, until 2001, entirely a government function. 20 The Indus-trial Policy Resolution, 1948, 18 restricted the entry of the private sector into this 16 Amount in $ billion industry. The defence in-dustry was opened to 14 12 2.004 the private sector in May 2001 (Press note 4 of 10 Unmanned the 2001 series) when the Govern-ment of India 8 Manned (GOI) permitted 100% equity with a maximum of 6 11.15 26% foreign direct investment (FDI) com-ponent, 4 subject to licensing. 2 0 Today, India ranks among the world’s top ten 2012 - 2020 nations in terms of defence expenditure. It is one of the world’s largest importers of defence equipment. Despite India continuing to rely heavily on imports for its defence requirements (which approximately is 70% of its total military equipment and system needs) and having a poor defence-industrial-base (DIB), the MoD has not shifted its stance on the 26% FDI. The policy of a 26% cap on FDI in defence production has failed to attract any substantive FDI in the sector, with only approximately INR176.8 million flowing in the form of FDI between 2001 and January 2012. Many large international defence players have gone on record, stating that although India is one of the largest defence markets, the cap of 26% foreign investment is stopping them from bringing in the manufacturing technology of its “crown jewels” to India. Some of the players comprehend the security concerns of allowing FDI of more than 50% in Indian JVs, but insist that to transfer significantly valuable technology, a minimum equity participation of 49% should be permitted in order to provide them with an encouraging revenue stream. It is often argued that the revision of the FDI policy by increasing the limit on FDI would provide the requisite momentum to the defence sector, while enabling India to achieve its target of a 70% level of self sufficiency in defence procurements, but the same has always been a debatable issue. The moot question at this point is whether an innovative, robust and sustainable indigenous defence industry could be built by lifting the cap on FDI. In the recent past, there have been frequent calls by various industry bodies such as the ASSOCHAM and CII to raise the FDI cap from 26% to 49%. Notwithstanding these demands, the MoD has unequivo-cally stated its view that as defence is a strategic sector, the foreign investment in joint ventures in the defence sector would be limited to 26%. Any FDI beyond 26% would be considered on a case-by-case basis only. In some exceptions, such as the joint venture with Russia to manufacture the multi-role trans-port aircraft, the MoD obtained dispensations from the Cabinet for 50% foreign equity. BrahMos’ missiles are manufactured with a 50% Russian equity, while the MoD has also permitted HAL and the French company Eye on defence | 10
  • 11.
    Snecma to forma 50-50 partnership for manufacturing aircraft engines. However, in the recent past, the MoD has rejected proposals for 49% foreign equity in joint ventures between Mahindra Defence Systems and the UK-based BAE systems and the one between L&T and European EADS. There is no denying the fact that increases in FDI in the defence sector are indeed essential, considering the following aspects: • I ndia currently lacks the advanced state-of-the-art technology, which is used in most ► of the de-fence products/equipment. • T he current FDI cap of 26% does not provide enough motivation to original equipment ► manufac-turers (OEMs) to bring in proprietary technology to the Indian joint venture partners. • W ith the growth in the defence sector, India’s reliance on the import of defence ► equipment would reduce, which in turn would result in noteworthy savings in foreign exchange. • M anufacturing within the country through foreign capital with a full transfer of ► modern technology is a far-better option than importing the equipment from abroad. • I n order to develop a domestic industrial base, it is necessary to encourage ► technology transfers and curb large-scale imports. However, there is a flipside to allowing higher FDI in the defence sector, which makes increasing FDI in the defence sector difficult, considering the following road blocks: • I t is often apprehended that allowing foreign companies to exercise control over Indian ► defence companies would compromise with the Indian defence and security apparatus. • T he issue of possibly passing on critical equipment plans, design or source code to ► other players, particularly to countries not aligned with Indian interests is a major deterrent. • C oncerns also revolve around the capability of defence public sector undertakings ► (PSUs) and the ordinance factories to be able to factor in competition, due to increased foreign participation in the defence sector and the consequent damage to the nascent domestic defence industry. • C oncerns regarding illegal arms trade have led to greater reluctance on raising the cap. ► Industry experts however believe that the aforesaid concerns can be tackled by strengthening the existing regulatory framework of addressing security issues through extensive verification, clearance procedures and controls. The government could reserve the right to inspect or control the production and dispatches in facilities through the deployment of necessary security agencies. An increase in the FDI ceiling limit will allow foreign firms a larger share of the risks and profits and the confidence to transfer sensitive technology to joint ventures in India, resulting in indigenous capability building. Larger Indian firms seeking to diversify into defence production would also benefit as it would help them mitigate commercial risks in the highly fraught development environment of defence produc-tion. The example of the automobile industry may be relevant here. There are also instances of countries such as the US, the UK and other European countries, which allowed unrestricted FDI in the defence sec-tor without compromising on control, security and secrecy. Eye on defence | 11
  • 12.
    Offsets policy There arediverse perspectives on using the offsets policy as a tool to attract the latest technology without compromising the national security interests. The offsets policy obliges every foreign company winning a defence contract to invest a certain portion of the contract value back into the home country. However, for the policy to succeed, the foreign vendor should want to operate in a country where it actually derives commercial benefits from partnering with locals. It would however be presumptuous to assume that the level of technology required by the country can be achieved within the existing FDI limits, merely by offsets. Considering that India does not have the indus-trial capacities and knowhow to absorb the offsets obligations, there is a risk that foreign vendors, faced with significant offsets obligations, would then be forced to seek non-commercial and artificial offsets trades with Indian businesses for low technology components with a minimal technology value addition simply to discharge its offsets obligations. Conclusion Similar apprehensions and objections were expressed at a time when the government reformed the tele-communications and insurance sectors. However, with time, foreign investment has transformed the technological sophistication, generated employment, built local expertise and improved the reach and effectiveness of the services. A careful analysis of the pros and cons of increasing the FDI limit reveals that the benefits arising from heightened investment and technological advancement have outweighed the associated concerns that may anyway be overcome by strong government regulation. The government should demonstrate a bold vision to realize India’s potential to become self reliant in defence equipment manufacturing in the near future. India’s cap on FDI is stunting the progress of its defence industry and would have to give way, sooner or later, since it is a cap that the country cannot afford. This is fine. Eye on defence | 12
  • 13.
    Aerospace and defencejoint ventures and MoUs A & D joint ventures Name of JV Foreign OEM Indian lead Other Indian Other Main area of business Year company partner partners global partners Hindustan Aeronautics Limited SAAB AB HAL Airborne electronic warfare systems 2011 Fifth Generation United Aircraft HAL FGFA 2010 Fighter Aircraft Corporation of Program Russia International Rolls Royce HAL Manufacturing compressor rings, turbine 2010 Aerospace blades and nozzle guide vanes Manufacturing Pvt. Ltd. Multirole Transport UAC & HAL Co-design/develop and co-produce multirole 2009 Aircraft Ltd. Rosonboron transport aircraft HATSOFF Helicopter CAE HAL Military and civil helicopter pilot training 2009 Training Pvt. Ltd. services through operation of flight training devices Tata HAL Technologies HAL TATA Work packages related to engineering design 2008 Ltd. services in aero structures as well as the captive offshore and onsite workload from OEMs, including the offset program HALBIT Avionics Pvt. ELBIT HAL Merlin Hawk Design, development and marketing 2007 Ltd. of aircraft simulators and all related applications for Indian and international markets. Integrated logistics support and maintenance services throughout the life cycle of products HAL Edgewood EDGEWOOD HAL EDGEWOOD Application through development /acquisition 2007 Technologies Pvt. Ltd. Ventures, USA Technologies Pvt. of cutting- edge technologies. Phase I 3D Ltd. India technology for: i) Memory modules ii) System in package modules iii) DC/DC converters IV) Charge-coupled device (CCD)/cameras for space application Infotech HAL Ltd. HAL INFOTECH Design/Software development for aero 2007 engines, technical publications and anticipated work from various OEMs under the offset program MRO facility in Pratt and Whitney HAL of India A unit for static parts of aircraft engines 2006 Bangalore of Canada in Bangalore and another in Koraput for rotating parts Samtel Hal Display Samtel HAL Manufacturing MFD/HUD/HMDS for aircraft 2006 System Ltd. of Indian defence services Snecma HAL SNECMA HAL Production of precision aero engine 2005 Aerospace Pvt. Ltd. components and assemblies Indo Russian Aviation RAC-MiG HAL ICICI Bank Ryazan Supply of all types of aircraft (Russian origin) 1994 Ltd. Aviazapchast engines, accessories, aggregates, systems and spares BaeHAL Software Ltd. Bae Systems UK HAL BAE HAL Design, develop and market software, 1993 Employees Trust firmware and computer programs and systems, incorporating them and to provide consultancy in the field of computer technology Bharat Electronics Limited SAAB BEL Coastal surveillance radars 2011 ELTA BEL Radars 2011 DHS Systems BEL Soft shelters 2009 Eye on defence | 13
  • 14.
    BEL Astra Microwave Design, development and manufacture of 2009 BEL's microwave intensive products Elbit Systems BEL Development, production and marketing 2007 Electro Optics of thermal imaging cameras and forward ELOP Ltd looking infra red (FLIRs) Tata Group Companies ITT Exelis TASL Gen 3 NVDs 2012 Tata Lockheed Martin Lockheed Martin TASL Aerostructures of the C-130J platform 2011 Aerostructures Indian Rotocraft Augusta Westland TASL Integration and assembly of the AW119 2010 platform HELA ELTA TASL Radar, electronic warfare and surveillance 2010 systems Tata Sikorsky Sikorsky TASL S-92 helicopter cabins 2009 Aerostructures Nova Integrated Ltd. IAI Tata EW, missiles and radars 2008 Boeing Tata Industries Manufacturing military components for 2008 Ltd. the F-18 Super Hornet fighter, the CH-47 Chinook helicopter and the P-8 Maritime Patrol Aircraft Aeronautical Design SAAB TCS Engineering design 2008 and Development Center (ADDC) Larsen & Toubro Samsung Techwin L&T 155mm 52 cal SP Howitzer 2012 NEXTER L&T Manufacturing and integrating platforms for 2011 the 155mm / 52 cal towed gun L & T Cassadian Ltd. Cassadian L&T Manufacturing, designing, engineering, 2011 Electronics distributing and marketing in the fields of electronic warfare, radars, avionics and mobile systems for military applications HCL Technologies Aerospace Network Boeing HCL Indian Institute Wireless and other network technologies 2008 Research Consortium of Science and Wipro Circor Aerospace HCL Develop software for fluid controls, landing 2008 Inc gear for aerospace and defence applications Development Centre Smith Aerospace HCL Software solutions for aircraft 2007 Wipro CAE Wipro Simulation-based training for areas such as 2010 war gaming and C4ISR GE Security Wipro Jointly produce and market physical security 2009 solutions for the Indian defence forces Network Centric Lockheed Martin Wipro This lab will develop, demonstrate and 2007 Operations Centre: experiment with emerging network-enabled Amber Jyoti in capabilities and applications. Gurgaon Mahindra Satyam Saab India Technology SAAB Mahindra Satyam Technology center 2011 Centre in Hyderabad Mahindra Defense Systems Rafael Mahindra & Develop and manufacture products such as 2012 Mahindra anti torpedo defence systems, electronic warfare systems, advanced armoring solutions and remotely operated weapon stations for futuristic infantry combat vehicles (FICV) Eye on defence | 14
  • 15.
    Telephonics (a Mahindra IFF and electronic systems 2012 unit of US-based Defense Systems diversified Griffon Corp) Defense Land Systems BAE Systems UK Mahindra Land systems for defence and security 2009 India Defense Systems purposes Government-owned departments Cargo ammunition IMI of Israel OFB (At Production of 130mm and 155mm cargo 2004 facility Khamaria and at projectiles, 122mm grad cargo rockets, Nalanda) 125mm advanced tank ammunition and 120mm cargo mortars Mayawi Project ($100 Elisra Group, Defence Avionics EW systems for combat aircraft 2006 million) Bene Beraq, Israel Research (30%) Establishment Banagalore of DRDO Maitri Project (US$ MBDA of France Defence Bharat Dynamics $500 million) (Technology Research and Limited Transfer) Development Laboratory (DRDL), Hyderabad Electronic and Development of 2007 Radar Development new generation Organisation (Radars) Low Level Quick Reaction Missile (LLQRM) system named as Maitiri Sagarika Project Rafael of Israel Defence The Research IAI of Israel Development of Sagarika Cruise Missile 2005 Research and Centre Imarat Development (RCI), Hyderabad, Laboratory Aerospace [DRDL}, Systems Limited, Hyderabad Hyderabad and Defence Avionics Research Establishment (DARE), Bangalore , Electronics and Radar Development Establishment (LRDE) Bangalore, Naval Physical and Oceanographic Laboratory (NOPL) in Kochi Barak Missile Project Rafael of Israel DRDL of IAI of Israel Development of the Barak extended range 2007 ($350 Mn) Hyderabad surface to air missile Other companies Track System India Diehl Remschied India Forge Diehl System Tracks for several applications, 2012 Limited Gmbh such as the infantry combat vehicles BMP1/2 as well as the T-family of vehicles (e.g. T72, T90) Reginson India ITA, Spain Raghu Vamsi Reginson, UK Aero-engine components 2012 Machine Tools Eye on defence | 15
  • 16.
    Dassault Reliance Participate in the MMRCA delivery program 2012 Aerospace Chemring Ashok Leyland Pyrotechnics 2012 Defense Systems Pipav Shipyard MDL Vessels of war 2012 Selex Galalieo UK Data Patterns Defense electronics 2012 Kineco Kaman Kaman Kineco Advanced composite parts 2012 Composites Samtel Thales Avionics Thales Samtel Avionics 2011 Compania Wipro Manufacture actuators, control systems, 2011 Espanola Infrastructure precision engineering components De Sistemas Engineering Aeronauticos SA (CEPA), an arm of EADS Vyoneeshrosebank Rosebank Vyoneesh MRO for aerospace and land systems 2011 Technologies Jubilant Aeronautics Aeronautics Jubilant Bhartia UAVs and aerostats 2011 Defense Systems MASGMR Aerospace Malaysia's MAE GMR India Aircraft MRO 2011 Engineering Thales Axis Aerospace Flight simulators training center 2011 and technologies AeroEuro Engineering GECI PL Engineering Product design and engineering services 2010 India company providing product design, engineering and R&D services in the aerospace domain Ashok Leyland Paramount Group Mine-protected Vehicles 2010 Dassault Systèmes KPIT Cummins Joint solution and business development on 2009 Infosystems the ENOVIA platform Saertex - Kemrock Saertex Kemrock Components for the aeronautical industry 2009 India Limited Spares Support Airlogic Ltd Airspace Airbus Maintain an inventory of rotable components 2009 Solutions India, Pvt. Infrastructure used on all types of airbus commercial, Ltd. aircraft by operators in India for outright sale, exchange and customized pooling arrangements Project 71 Air Defense Italian Fincantieri Directorate of Russian NDB Aircraft carrier 2008 Ships (propulsion naval design (Aviation system) Technology) Aerospace Processing Magallen QuEST India Pvt. Ltd. Aerospace Global Global Approved 2008 Approved aero-space surface treatments 2008 aerospace surface treatments Rolta Thales Ltd. Thales Rolta C4ISTAR 2007 Project 75 Scorpene DCNS, France Mazagaon Docks Aramis, Scorpene Submarines 2005 Submarine Ltd. Thales BRAHMOS Aerospace NPO DRDO India BRAHMOS Cruise Missile 1998 Private Limited ($250 Mashinostroyenia million) of Russia Eye on defence | 16
  • 17.
    Offsets in defenceand MSMEs Small enterprises exist in the form of factories, workshops, trading and service organizations and range from the most modern to simple and traditional units. The operational range varies from independent en-terprises to ancillaries, sub-contractors and vendors engaged in catering to the needs of the markets, extending from the domestic to the global horizon. These enterprises exist in various forms such as proprietorship, partnership, companies or co-operatives. While the main objectives of small enterprises are almost the same, they are defined and viewed differently across countries. Micro, small and medium enterprises (MSMEs) are recognized as engines of economic growth worldwide. In India, MSMEs manufacture products ranging from handloom sarees, carpets and soaps to machine parts for large industries. Not only do MSMEs generate the highest employment per capita investment, they are also an important factor in checking the rural to urban migration by providing villagers and people living in small towns and isolated areas a sustainable source of employment. MSMEs often act as ancillary industries for the large-scale industries providing them with raw materials, vital components and backward linkages. Ever since the announcement of the Industrial Policy resolution in 1948, small-scale industries have oc-cupied a prominent place in the overall strategy of industrial development in India. Successive five-year plans have allocated increasing resources for the development of small industries. In view of the abun- dance of labor, scarcity of capital and the rural nature of the economy, the preference of small industries is natural. They are heterogeneous, dispersed and mostly unorganized. Due to the unorganized nature of the sector, entrepreneurs and artisans/workers face difficulties in accessing government schemes. Con-sequently, those workers engaged in the MSME sector, and these are vulnerable and poor, have little bargaining power and are exploited by middlemen, unit owners and large business houses. Unable to take up aggressive marketing, similar to large industries, they cannot find markets despite good quality and competitive prices. It is no surprise then that MSMEs do not play a significant role in the defence sector. The defence sector has always been a holy cow, shredded in secrecy and ruled by the large, influential and famous. Recent-ly, a defense public sector undertaking (DPSU) formed a JV with a private Indian entity. The JV did not find favor with some large domestic industrial houses in the country. This forced the government to issue guidelines for JVs between DPSUs and private Indian entities. While all this may have been for a good cause, one cannot help but wonder if any MSME could have ever brought about the same result. Eye on defence | 17
  • 18.
    The issue is“who is batting for the cause of the MSMEs”? They do not have a CEO or a chairman who can address their concerns directly at the office of the Prime Minister. Their concerns are not even heard ade-quately in industry meetings, since large industries dominate such forums. A quick check to find out about the companies that are heading the defence committees in the various industry chambers will prove the point. Even the media bats for the large industrial houses, leaving the MSMEs to fend for themselves. No wonder then, the large domestic competitors continue to fight for a Raksha Udyog Ratna (RUR) status to become more equal than the rest of the equals. In such a scenario, what is then the fate of the MSMEs in our country? The offset policy was formulated in the year 2005 and detailed offset guidelines were promulgated in September 2006 by the MoD as a part of the DPP 2006. The entire exercise was undertaken by the ministry, with a view to plough back at least 30% of the FE (foreign exchange) outgo and also develop and broaden the defence industrial base. If the aim of the policy was to develop the defence industrial base, so be it, let this happen. Why is the MoD shying away from inclusive growth? A policy that is designed to favor the large and influential will create more disparity in the country than address inclusive growth. The policy framework instead must cater to the development of the MSMEs for real development. In this particular area of development of the MSMEs, the MoD has done little, which is in itself in-excusable. This is allowed to happen just because MSMEs do not have the reach and connect within the higher echelons of the ministries to make their voice heard and their woes addressed. What then is the solution? How do we integrate MSMEs into this game of the affluent and the influential? Small and medium enterprises account for approximately 80% of the private sector industrial workers and therefore occupy an important position in the industrial structure of Japan. The employment-generating capacity of the small and medium enterprises in Japan has been seen to be larger than that in Germany or the US. Small and medium enterprises play an extraordinarily important role as muscles for regional economic development. In the development of sparsely populated areas such as the Hokkaido Island in the north, they have been a valuable tool for development. In the early 1960s, small and medium enterprises accounted for more than 50% of Japanese exports. Such business was mostly labor intensive and not dependent on imports/raw materials. As such, its net contribution to foreign exchange was very high. The Indian economy is a developing economy. Its vast resources are either unutilized or underutilized. A major section of man-power is lying idle. The per capita income is low. Capital is scarce and investment is lean. Production is traditional and techniques are outdated. The output is insufficient and the basic needs of the people remain unfulfilled. Industrialization is the only answer to the current disrupted economic state. The problem is of the approach, which should be direct, utilitarian and pragmatic. Such industries do not require huge capital and are therefore suitable for a country such as India. Small-scale industries have a talent of “dispersal.” They can be accessible to the remote rural areas of the country and do not lead to regional imbalances and concentration of industries at one place, which is responsible for many economic resources such as entrepreneurship and capital. Planners and economists in India took recourse to small-scale industries because most of these industries existed in the traditional form, which symbolize our heritage. These still serve as the backbone of our economy, which is mostly rural. The Ashok Mitra Committee also pointed out that SSI (small scale industries) play an important role in combating poverty alleviation in the country — more incentives to SSI, lesser is the poverty. While the committee has highlighted the government’s negligence Eye on defence | 18
  • 19.
    toward the infringementof laws relating to SSI, it has also pointed out that the SSI sector is not receiving adequate attention by the government. The committee also suggested the need for an active protectionist role by the government. Where is the protection provided by the government in the case of the opportunity provided by the offsets in MoD? While the government may be thinking of incentivization of OEMs through a system of multipliers to exercise its choice around MSMEs, there is no real protectionist role. Is the MoD not aware that their DPSUs and OFB are supported actively by more than 25,000 SMEs in the country? When you pick up the supply chain of any of the DPSUs or the OFB, they have cultivated a huge supply chain often boasting of numbers in excess of a few thousands. If that is true, then, why has the MoD not addressed this aspect in the offsets policy?MSMEs generate high employment next only to the agricultural sector. They are labor intensive and therefore promise wider employment possibilities. They are suitable as a supplementary source of em-ployment for Indian farmers who are out of work during the lean season and to the educated and unem-ployed youth in urban areas to be employed gainfully. They have a widely disbursed entrepreneurial base and can be easily set up anywhere in the country. They have a relatively low capital investment and en-sure regional balanced development. If MSMEs can dominate in the export of sports goods, readymade garments, woolen garments, knitwear and plastic products, then why not defence goods and services? This has not happened because the government has not hand- held them ever, What then is the solu-tion? Offsets implementation provides for the best possible opportunity for MSMEs, more than any other. If the MSMEs were to tie up with OEMs and allowed a direct access to their name (as an Indian offset partner, IOP to Dassault Rafale), it straight away ushers in twin benefits, one a sense of doing business with a foreign company (boost in self-esteem) and second the OEM now handholds the MSME with the best practices followed and therefore brings in the best industry culture for greater efficiency. This is a game-changer for the MSME sector. MSMEs must be encouraged by the MoD to have direct tie-ups with foreign OEMs as an Indian offsets partner. Should it be necessary, the government must also fund them appropriately, with systems for such funding in place. There was a concept of an offset fund in the name of the Indian rising fund, which was formed with single-minded investment into the SME sector alone, from among the approved list of the MoD. However, the MoD did not consider this initiative favorably. While OEMs were keen to be a part of this fund, MoD had many apprehensions, mostly, ill-founded and based on presumptions and not facts. MoD must incentivize OEMs with multipliers for choice of IOP from among the MSMEs. In addition, the MoD must place a mandate on OEMs to source at least 20% (or to begin with 10% or any percentage deemed fair, so as to be in sync with the national policy on growth of MSMEs) of the offsets from the MSME sector. The Union Cabinet has approved a procurement policy asking government departments and public sector undertakings (PSUs) to give preference to micro and small entrepreneurs (MSEs), including those be-longing to SC/ST entrepreneurs, while making purchases. According to the Public Procurement Policy for goods produced and services rendered by MSEs by the central ministries/departments/PSUs to be noti-fied under Section 11 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, all central ministries and PSUs will have to ensure that a minimum 20% of all their total annual purchases of products or services are from MSEs. Within this limit, 4% of the orders should be placed to the SC/ST entrepreneurs. This has been promulgated through a gazette notification on 23 March 2012. Eye on defence | 19
  • 20.
    But, given theirunique nature, defence armament imports will not be included in computing the 20% goal for the Ministry of Defence. In addition, defence equipment such as weapon system remains out of the purview of such policy for reservation. Therefore, only defence armament imports are excluded and cer-tain equipment such as missiles, weapon systems are not under the purview of such a reservation. This actually means that the reminder of military procurement such as IT, services and revenue purchases such as ration, food stuff, fresh products, consumables, etc., do feature under the compulsory reservation system. In this scenario, it may be a good idea for the MoD to provide a mandate to OEMs to exercise adequate efforts to choose from the MSMEs for their offset obligations. In this regard, they may be directed to approach National Small Scale Corporation (NSIC) a mini ratna profit- making PSU for necessary facilitation. NSIC is a 55-year old Indian company, dedicatedly bringing about transformational growth in the MSME sector. NSIC also has the bandwidth to be able to infuse funds into the MSMEs when required. The licencing conditions are also met worth by NSIC through their single-window registration mechanism, which happens after thorough due-diligence and inspections. DRDO could also play a very key role in the growth of SME sector through technology infusion and filling in the gaps where necessary. An integrated approach with participation in offsets, indigenization, participation under the “Buy Indian” category and duly complemented by the existing tiered system will provide a boost to MSMEs and in turn to the nations as a whole. Eye on defence | 20
  • 21.
    Request for Information(RFIs) Date of issue RFI details Response date Issued by Service 11 April 2012 Air defence guns 30 April 2012 Directorate General of Army Air Defence Army 18 May 2012 Sniper rifle for infantry 15 June 2012 Additional Directorate General of Weapons, Army PMO FINSAS , Directorate General of Perspective Planning 22 May 2012 Mini unmanned air vehicle (UAV) 1 July 2012 Directorate General of Infantry -5, Army Directorate General of Weapons and Equipment-9 22 May 2012 Fibrescope 10 July 2012 Directorate General of Infantry -5, Army Directorate General of Weapons and Equipment-9 31 May 2012 Air conditioner with auxiliary power unit 20 Jun 2012 Dte Gen of Mech Forces Army (APU) in Tank T-90 S/SK 9 April 2012 COMJAM and SIGINT Aircraft 24 May 2012 PD ASR (Room No 460) Air HQ (Vayu Army Bhawan), Rafi Marg Qty: 9 25 April 2012 Twin dome simulators for Hawk MK 25 May 2012 PD Projects Air HQ (Vayu Bhawan) Indian Navy 132 AJT 11 May 2012 Light strike vehicle (All Terrain Light 11 June 2012 Joint Dte of Garud Air HQ (Vayu Bhavan) Indian Air Force Strike Vehicle) 29 May 2012 Universal ground power unit GPU(U) 20 June 2012 Dte of MT Air Force 3 April 2012 Diver navigation system 20 April 2012 Directorate of Special Ops & Diving Navy Qty: 42 1 May 2012 Diving accessories — search lamp 30 May 2012 Directorate of Special Ops & Diving Navy ‘A’ Block 1 May 2012 Underwater hydraulic tools 30 May 2012 Directorate of Spl Ops and Diving Navy Integrated Headquarters of MoD (Navy), 1 Jun 2012 Indigenous construction of survey 30 June 2012 Integrated Headquarters of Ministry of Navy vessels Defence (Navy) Qty: 04 28 May 2012 Plasma nitrocarbuzing equipment 9 August 2012 Defence Research & Development Defence Service Laboratory Qty: 01 Eye on defence | 21
  • 22.
    Request for proposal(RFPs) Date of issue RFP details/equipment Response date Issued by Remarks 10 April 2012 Holographic weapon sight 21 May 2012 Col GS Arty (A) Army for Rifle 47 For MG Arty Qty: 520 16 April 2012 Harness for bullet proof 30 May 2012 ACSFP CELL HQ, Northern Army patka Command Qty: 18000 25 April 2012 Propellant NGB 204 29 May 2012 Ordnance Factory Khamaria For Army Jabalpur 10 April 2012 Holographic weapon sight 21 May 2012 GOC-in-C, Northern Command, For Army for Rifle AK 47 C/o 56 APO 7 May 2012 Combat under water diving 5 July 2012 For Army equipment 11 May 2012 Armour piercing incendiary 8 June 2012 Ordnance Factory Khamaria - For Army bullet for 14.5 Mm AMMN. Jabalpur (MP) Qty:134130 Nos. 15 May 2012 VT Fuze for Pinaka (F) 25 June 2012 General Manager, Ordnance For Army Factory, Chanda Qty: 515 Sets. 16 May 2012 Divers vision system 14 July 2012 GOC-in-C, Northern Command, For Army C/o 56 APO Qty: 24 Nos. 28 May 2012 Propellant powder M-1 With 29 Jun 2012 Dy. General Manager, Ordnance For Army 19 Holes for IM 212 Factory Khamaria Qty: 37000 kg 30 May 2012 Propellant (Gun powder 1 July 2012 Dy. General Manager, Ordnance For Army 5/7) for 23 mm SCHILKA Factory Khamaria Qty: 20000 kgs Ammn 13 June 2012 RDX/TNT 80/20 Hexolite 27 July 2012 Ordnance Factory Khamaria For Army Type B Jabalpur (MP) Qty: 94950 Kgs. 4 April 2012 Ammunition for shooting 18 May 2012 Directorate General, Border For BSF competition Security Force Qty: 882400 Rounds 2 April 2012 Rubberized inflatable Boats 15 May 2012 Directorate General, Border For BSF with 25 HP OBM Security Force Qty: 75 No’s. May 2012 Global positioning system 5 June 2012 Office Of The DIGP/ Principal , For CRPF CTC , CRPF Qty 50: Nos. 25 May 2012 Bomb suit 2 July 2012 Asstt. Inspector General/Prov. For CISF Qty: 5 25 May 2012 Waterjet disrupter 3 July 2012 Asstt. Inspector General/Prov. For CISF Qty: 04 18 May 2012 Laser warning system 31 Aug 2012 Ordnance Factory Project, Yeddu Defence service Mailaram, Medak 4 April 2012 Doppler radar system for 29 May 2012 Indian Ordnance Factories Defence service the velocity measurement Ammunition Factory, Khadki of sub-sonic and super- sonic projectiles Eye on defence | 22
  • 23.
    List of industriallicenses (ILs) filed from 01/04/2012 TO 29/02/2012 Application no. and date Name of the applicant Item of manufacture 11: 05/03/2012 Ray-Hans Technologies Pvt. Ltd. Military grade electronics and communication products and assemblies designed for military use such as electronic counter measure and counter measure equipment surveillance and monitoring, data processing and signaling systems 12: 12/03/2012 HBL Power Systems Ltd. Nickel cadmium batteries and parts thereof 13: 15/03/2012 Premier Explosives Ltd. Site mixed explosives 14: 15/03/2012 Premier Explosives Ltd. Mob dispersion devices 15: 16/03/2012 Machhar Industries Ltd. Bulk explosives 16: 20/03/2012 Global Precision Pvt. Ltd. Parts and accessories for industrial machine 17: 21/03/2012 DCX Cable Assemblies Pvt. Ltd. Electronic printed circuit board assemblies subassemblies, box build, and military wire harness for defence aerospace application 18: 28/03/2012 Economic Explosives Ltd. Energetic binders for propellants 19: 28/03/2012 Kavveri Telecom Products Ltd. Weapons and ammunition 20: 09/04/2012 Tech Mahindra Ltd. IT services and software development for defence 21: 09/04/2012 Sri Venkateswara Explosives Pvt. Ltd. All kinds of detonators 26: 19/04/2012 Raghu Vamsi Machine Tools Pvt. Ltd. Aerospace components and defence equipment parts 23: 16/04/2012 Pipavav Defence and Offshore Manufacturing missiles and rockets, torpedoes and autonomous Engineering Co. Ltd. underwater vehicles including sub-systems and ground/ship. etc. 24: 18/04/2012 Taneja Aerospace & Aviation Ltd. Manufacturing space craft, aircraft and their parts 25: 19/04/2012 Octania Aerostructure Group Pvt. Ltd. Aircrafts and precision machined aircraft components 26: 19/04/2012 Raghu Vamsi Machine Tools Pvt. Ltd. Aerospace components defence equipment parts 27: 25/04/2012 Southern Electronics (Bangalore) Aircraft components maintenance, repair and overhaul (MRO) Pvt. Ltd. activities 28: 26/04/2012 Srinivasa Explochem Pvt. Ltd. Detonating fuse 29: 30/04/2012 Millennium Aero Dynamics Pvt. Ltd. On-board oxygen generating system (OBOGS) Eye on defence | 23
  • 24.
    New projects/investments/contracts Name of entity Project details Value L&T, BEL, Tata • The L&T-led consortium, in competition with BEL, was se-lected to develop a INR80–100 billion Power SED and prototype of the Tactical Communica-tions System — a telecommunication network HCL Infosystems that can be rolled across battlefields on the fly. • The L&T consortium will be formulated as a special purpose vehicle (SPV) that also has Tata Power SED and HCL Info-systems as the other partners. • This is the first project to be approved under the ‘Make’ cat-egory and is expected to strengthen private participation in the defence sector. Sun Forest City • GOI has signed contracts with M/s Thales, France and M/s Dassault Aviation, France, INR100 billion Sun Forest City Ventures Ltd., jointly promoted by the Gur-gaon-based Sun Group and the UK-based Forest City Inter-national, proposes to set up an aerospace hub near Banga-lore. • The state government has given approval to the project and land for the project has been identified and preliminary noti-fication has been issued to the farmers for acquisition of their lands. Boeing • Boeing is negotiating to sell its Apache AH-64D multirole combat helicopter to the INR30.3 billion Indian Air Force. ► • The IAF is seeking 22 heavy attack helicopters. Boeing’s Apache is expected to be the preferred choice over Russia’s Mi-28N Night Hunter. • Apache has successfully conducted trials; the delivery is ex-pected to commence within 36 months of signing the con-tract. Indian Air Force • The Cabinet Committee on Security cleared the purchase of the 75-basic trainer INR30 billion aircraft. • Pilatus’ aircraft will replace the 1988-vintage, single-piston-engine HPT-32s, grounded in 2009, following a series of crashes. • The first basic trainer would be inducted 15 months after the contract is signed. All the 75 PC-7s will be acquired in a fly-away condition. BAE Systems • The Defence Acquistion Council cleared a contract for 145 howitzer guns from BAE INR28.2 billion Systems (BAE’s M777 lightweight artillery guns). ► • The howitzers, with a range of 30 km, will fortify India’s mountainous northern borders with India and Pakistan. The guns will be built by the BAE division in the US. • The deal awaits clearance from the CCS before it can be signed. Goa Shipyard Ltd. • Goa Shipyard Ltd. will build six offshore patrol vessels (OPVs) under a contract from INR18 billion the Indian coastguard. • Each of the 2,400-tonne vessels will be 105 m (344.5 ft) long and will feature an integrated bridge system (IBS), quick re-sponse boats and a four-lane simulator. Eye on defence | 24
  • 25.
    Name of entity Project details Value Hindustan • HAL is investing in a facility spread over 40 acres at Chal-laghatta, Bangalore. INR6 billion Aero-nautics Ltd. • The unit would undertake licensed production for the fourth-generation fighters (HAL) MMRCA for the Indian Air Force. HAL is creating two new divisions, one for aircraft ► assembly and the other for engine assembly and testing. • The new facility is expected to potentially employ 1,200 people directly and another 3,600 by way of related services and outsourcing. BEML • BEML is setting up an aerospace manufacturing division at an SEZ park near the INR4.55 billion Bangalore International Airport, Deva-nahalli, in Bengaluru. • The facility will manufacture aerospace components and parts, and assemble aircraft and helicopters up to a height of 21 meters. • The facility, spread over a 3,00,000 sq. ft. area, is expected to be ready by September 2012. Boeing • B oeing is setting up a transonic wind tunnel facility in Hyde-rabad, which is expected ► INR3.1 billion to come up in three to four years. • The facility will be used by DRDO to test the aerodynamic features of various aircraft shapes and space vehicles. A transonic tunnel is a high-speed tunnel, which can generate a speed up to Mach 1.4 (Mach is the speed of sound). Astra Microwave • Astra Microwave Products Ltd. bagged the deal to supply critical radar sub-systems INR3.1 billion to one of its overseas customers. • This is the first time the company has bagged such a con-tract and the company is expected to reach revenues of INR2 billion this year. Defence Avionics • Ultra Electronics TCS was awarded an order for electronic warfare equipment to be INR171.5 mil-lion Research delivered to the Defence Avionics Research Establishment (DARE) in Bangalore. Establishment • The complete system would be used in a test environment to evaluate aircraft EW (DARE) radar capability and provide an opportunity for pilots to assess the effectiveness of countermeasure techniques. • The EW system will be integrated into the ultra TCS facility in Ottawa and then shipped to the DARE facility in Bangalore in late 2012. Keltron • The Kerala State Electronics Development Corp (Keltron) bagged a contract worth INR60 million INR60 million from the National Physical and Oceanographic Laboratory (NPOL). • Keltron won the contract to manufacture and supply sonar simulators used for training the Indian Navy’s submarine op-erators. • Keltron’s Aroor unit would manufacture the electronic simu-lators, designed by the NPOL, Defence Research and De-velopment Organization (DRDO) lab. Eye on defence | 25
  • 26.
    Name of entity Project details Value Altran • French Aerospace Company, Altran Technologies plans to expand its India NA Technologies operations by adding about 2,000 em-ployees over the next two years. • The company is in discussions with HAL for weight reduction of a few military aircraft manufactured by HAL. • It is looking at acquisitions to strengthen its existing capabilities. It plans to open a center of excellence in Bangalore. Bell Helicopter • Bell Helicopter opened a new office in New Delhi for its op-erations in India. It is NA seeking growth opportunities in sales and manufacturing. Mahindra and Ma- • M&M plans to build unmanned coastal surveillance vessels to boost India’s coastal NA hindra (M&M) security. • The company’s joint venture with Israel’s Rafael Advanced Defense Systems will build unmanned patrol vessels (UPV) at a facility in Pune “in a phased manner” after initially im-porting models from Rafael. Maini Precision • The aerospace division of the Bangalore-based Maini Preci-sion Products signed a NA Products contract with Airbus through global e-bidding. • The contract is for the supply of standard bushes that would be used across the various Airbus aircraft platforms. Bombardier • Bombardier inaugurated its engineering service center at Bangalore to implement NA aerospace projects, which include aircraft design. • The company plans to ramp up the headcount in the center to 50 by 2013. The center would assist about 4,000 engi-neers, including 800 of Indian origin, who are working at its main service center in Montreal. Centre for Asia- • The global aviation consulting body, Centre for Asia Pacific Aviation (CAPA), will NA Pacific Aviation launch an aerospace park in Bangalore to promote high technology research and (CAPA) manufacturing in aviation. • The park, being co-promoted by Vittal Innovation City (VIC), will form one of the industry clusters at VIC. • The proposed park will be spread across 750 acres and is located near the Bangalore International Airport. Mahindra Satyam • Mahindra Satyam set up a delivery center in Toulouse, France, dedicated to the NA aerospace and defence sector. • The center will ramp up to 80 employees toward the end of this year and will offer engineering, IT and communication services. • The center will help in expanding its operations in France, generating jobs and utilizing local talent in the areas of aero-space engineering and information technology. *The values of the deals have been converted to Indian Rupees using the Oanda currency conversion tool. US$1 = INR50.44 (Average of the value from July 2011 to June 2012) Eye on defence | 26
  • 27.
    Joint ventures andalliances Name of entities Nature of transaction Value DCNS and Pipavav • Pipavav Shipyard plans to enter into a strategic partnership with French-based DCNS INR8 billion Shipyard Technologies to build submarines and other warships for the Indian Navy and Coast Guard. ► • D CNS is manufacturing six Scorpene submarines for the In-dian Navy in partnership with ► MDL under Project 75. The partnership between the two companies will allow cost bene-fits and timely manufacturing of vessels. Pipavav Defence • M DL selected Pipavav Defence and Offshore Engineering Co. Ltd. to form a JV that will build ► NA and Offshore warships and submarines for the Indian Navy. Engineering Co. • T he newly formed entity Mazagon Dock Pipavav will imple-ment a part of the existing orders ► Ltd. and Mazagon of MDL as well as bid for future defense contracts in India. Dock Ltd. (MDL) Rolta India Ltd. • Rolta India Ltd. signed an MoU to partner with GeoEye Inc., a provider of geospatial NA and GeoEye Inc. information and insight. • R olta is exploring opportunities to leverage GeoEye’s high resolution satellite imagery ► service, predictive analytics’ ex-perience and intelligent 3-D city solutions to develop defence and homeland security solutions. Tata Motors and • T ata Motors Ltd. signed an agreement with a DRB-HICOM Berhad unit to market and sell light NA ► DRB-HICOM trucks to Malaysia’s armed forces. • T he trucks include Tata’s 2.5 ton-5 ton trucks, including the LPTA 715 and the LPTA 1623. ► Kaman Aerospace • K aman Aerospace Group, Inc., a subsidiary of Kaman Cor-poration entered into an ► NA Group and Kineco agreement with Kineco Pvt. Ltd. to form a manufacturing company in India. Pvt. Ltd. • T he new venture, known as Kineco Kaman Composites, will be based in Goa and will ► ► manufacture advanced composite structures for aerospace, medical and other industries. Eye on defence | 27
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    Country-level deals andinitiatives Country Nature of transaction Additional details US • T he 2012 edition of the annual 10-day In-dia-US ► • T he US will field three tanks and dep-loy around 200 men ► naval exercise, “Malabar,” was held in the Bay of accompanied by armored personnel carriers for the war game. Bengal from 7 April. • T he indigenously built guided missile frigate INS Satpura, ► • I t involved the American and Indian naval forces. ► guided missile de-stroyers INS Ranvijay and INS Ranvir and fleet tanker INS Shakti together represented the Indian Navy. • T he center turned down an Air Force request to participate in ► the war games as it was wary of the hype surrounding the joint military exercises with the US. US • T he US Secretary of Defence, Mr. Leon Panetta ► • B oth sides exchanged views on the security situation in South ► and Indian Defence Minister, Mr. A.K. Antony Asia, West Asia and the Asia-Pacific region and on various held defence discussions in global security challenges such as cyber security. New Delhi. • T he Indian Defence Minister empha-sized on moving beyond ► the buyer-seller transactions and focusing on the transfer of technologies and partner-ships to build indigenous capabilities. Japan • T he first bilateral maritime exercise be-tween ► • T wo destroyers, one maritime patrol aircraft and a helicopter ► India and Japan “JIMEX 12” (Japan India from Japa par-ticipated in the Japanese Maritime Self Defence Maritime Exercise) was held off the coast of Force (JMSDF). INS Rana, INS Shivalik, INS Karmukh and INS Japan on 9 June 2012 and Shakti are the Indian units, which parti-cipated in the exercise. 10 June 2012. • T he focus of these exercises was pri-marily maritime security ► • T he engagement between the navies of India ► cooperation. These include Humanitarian Aid & Dis-aster Relief and Japan is part of the overall de-fence (HADR) operations and visit, board, search and seizure (VBSS) cooperation between both countries. drills, which form a part of anti-piracy operations. Eye on defence | 28
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    Industry buzz Large-scale modernizationof Indian Government taking steps defence shipyards being taken to curb corruption The Government of India has undertaken India imposed a penalty on the Israeli the large-scale modernization of defence Military Industries (IMI) for the breach of shipyards. It has also taken distinct steps to the “integrity pact” to es-tablish a plant for encourage the participation of the private manufacturing bi-modular charges for the sector in these projects to reduce the time Indian Army’s 155mm howitzers at the Na- that is required for the construction of landa Ordnance Factory in Bihar. warships. Garden Reach Shipbuilders and Defence minister AK Antony sternly warned Engineers Ltd. (Kolkata), Mazagon Dock Ltd. eight defence PSUs to maintain probity and (Mumbai), Goa Shipyard Ltd. and Hindustan transparency in all their dealings and set Shipyard Ltd. (Andhra Pra-desh) are the benchmarks in probity. He also ordered an four shipyards that have initiated the major inquiry over the role of the consultant hired modernization program. The modernization by Fimmeccanica to facilitate the chopper pro-gram will be funded by pooling up deal with India. resources from the project-based funding as well as their internal ac-cruals. (Source: “India penalises Israeli defence firm for contract breach,” Indo-Asian News (Source: “Govt takes up the modernization Service, 16 April 2012, via Factiva, © 2012 of defence shipyards on large scale,” India Indo-Asian News Service; “8 def PSUs Public Sector News, 22 May 2012, via warned to maintain probity,” 13 April 2012, Factiva, © 2012 Contify.com.) The Times of India - Ahmedabad Edition, via Factiva, © 2012 Bennett, Coleman & Co. Ltd.; “Def Min orders fresh inquiry after questions over chopper deal,” Press Trust of India, 25 April 2012, via Facti-va.) Eye on defence | 29
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    Proposal for analternate helicopter from its deck. INS Teg is the first Coast Guard commissions of the three frigates being built in Russia communication network for as a follow up order to the Talwar Class hovercraft at Okha, Gujarat defence forces frigates. Indian Coast Guard commissioned the The Ministry of Defence said that a Griffon 8000TD, UK hovercraft. The (Source: “Stealth Frigate INS Teg Inducted,” proposal has been sent to the Ministry 30-tonne air cushion vehicle would be DNA – Daily News & Analysis, 28 April of Communication and Infor-mation deployed in shallow waters and inter-tidal 2012, via Factiva,, 2012. Diligent Media Technology to build an exclusive and zones along the coastline and would be Corporation Ltd) dedicated telecommunication network used for pa-trolling the Gulf of Kutch. The for defence services through BSNL. The vessel can undertake effective assault government approved a budgetary support Maiden flight of light combat operations and immobilize the ene-my with of INR80.98 billion in December 2009 its high speed. aircraft-navy and a proposal is under process in the (Source: “Coast Guard commissions Ministry of Communication and Information The indigenously built light combat hovercraft at Okha,” The Times of India, 13 Technology for the finan-cial approval of aircraft (LCA) Tejas Navy NP1 made its June 2012, via Factiva, © 2012 The Times INR52.36 billion for the project. maiden flight in Bangalore. During the of India Group) flight, the aircraft was put through various (Source: “Govt for alternate communication maneuvers, including low-speed handling network for defence forces,” Press Trust of India, 9 May 2012, via Factiva.) and un-dertook a close formation flying at a Coast Guard inducts Dornier slow speed with another aircraft. aircraft (Source: “Maiden Flight of Light Combat The Coast Guard inducted a new HAL-built Russia completes India’s Aircraft-Navy (NP1),” 27 April 2012, Indian Dornier aircraft equipped with advanced submarine modernization Government News, via Factiva, © 2012 HT navigational and communication sensors as Media Limited; “LCA ‘Tejas’ to be inducted program in Air Force this year: DRDO chief,” Press well as equipment. Hindustan Aeronautics Limited (HAL) built this aircraft, which The two-year modernization of the Indian Trust of India, 29 April 2012, via Factiva.) can be configured into various roles such Navy’s INS Sindhurakshak submarine was as pollution response, search and rescue, completed at the Zvezdochka shipyard in maritime re-connaissance and armament Severodvinsk, Russia. It has been equipped Indian Navy seeks Midget to meet the Coast Guard charter of duties, with the tube-launched Club-S cruise submarines for special including coastal security. The induction is missiles effective against surface vessels operations part of the ongoing expansion plan of the and submarines at a range of about 200 Coast Guard to strengthen its fleet. km. The submarine will be handed over The Indian Navy plans to acquire 12 midget to the Indian Navy later this year after submarines for the special operations (Source: “Coast Guard inducts Dornier undergoing sea trials and firing tests. forces. These would be used to transport aircraft,” Indo-Asian News Service, 23 May arms and equipment from a larger 2012, via Factiva.) (Source: Vladimir Radyuhin, “Russia submarine to an area of operation near completes India’s submarine modernisation coastal water. The midget submarines would programme,” The Hindu, 24 June 2012, via also be used to conduct covert surveillance R&AW set to acquire Factiva, © 2012 Kasturi & Sons Ltd.) in shallow waters and extract commandos Bombardier spy jets on completion of their mission. The global tender for midgets is likely to be sent to Indian’s External intelligence Agency Frigate INS Teg commissioned HDW of Germany, Navantia of Spain, DCNS Research and Analysis Wing (R&AW) is in the Indian Navy of France, Amur Shipyard of Russia and set to acquire two Bom-bardier jets fitted Hyundai of South Korea. with Israel-based Multi-mission Airborne The frigate INS Teg, built at the Yantar Reconnaissance and Surveillance Systems. Shipyard in Kaliningrad, Russia, was (Source: Vivek Raghuvanshi, “India Seeks The aircraft will daily collect electronic commissioned into the Indian Navy. 12 Midget Subs For Special Ops,” Defense and ground intelligence 180 km inside the It is armed with the 290-km BrahMos News, 21 May 2012, via Factiva, © 2012 neighbors’ territories. The jets are expected supersonic cruise missile and can operate Army Times Publishing) the anti-submarine and early-warning Eye on defence | 30
  • 31.
    to be inservice in the next two years and The aircraft will be used for cargo/troop (Source: “Brazil: Embraer competes in will provide real-time information on troop transportation and para-drop/air drop of India tender for maritime patrol aircraft,” and armor movements. supplies, including a low-altitude parachute O Estado de São Paulo, 12 April 2012, via extraction system. HAL will carry out the Factiva, © 2012 AGÊNCIA ESTADO LTDA) (Source: Shishir Gupta, “After 20 years, design and development of its work share R&AW upgrades to super spy jets,” of the MTA at the Aircraft R&D Center Hindustan Times, 3 May 2012, via Factiva, Bumar plans to renegotiate a (ARDC) at Bangalore, while its Transport © 2012 HT Media Limited.) Aircraft Division (TAD) at Kanpur in Uttar recovery vehicle contract Pradesh will manufacture the prototypes and subsequently the serial production will Bumar had earlier signed a contract for the Boeing extends the contract delivery of 204 WZT-3 armored recovery be at Kanpur, where dedicated facilities are for subassemblies to Bharat being set up. vehicles for India’s armored troops signed Electronics Ltd. with BEML. It now plans to renegotiate the (Source: Jay Menon, “Russia’s UAC Partners contract or will terminate it for the ar-mored Boeing extended the contract with Bharat With India’s HAL on New Transport,” 30 May vehicles contract. According to the new Electronics Ltd. (BEL) for another year of 2012, Aero-space Daily & Defense Report, President of Bumar’s management board, work on F/A-18E/F Super Hornet cockpit via Factiva, © 2012 McGraw-Hill, Inc.) the contract is unfavorable for Bumar with subassemblies. The subassembly provides unrealistic deadlines and would cause its cockpit floodlighting compatible with the profits to decline. aircraft’s Night Vision Imaging System HAL to undergo restructuring (Source: “Polish company plans to (NVIS). Boeing had awarded BEL an initial contract in March 2011 for work on F/A- An expert committee chaired by B.K. renegotiate recovery vehicle contract with 18E/F Super Hornet cockpit subassemblies. Chaturvedi, a member of India’s Planning India,” 28 May 2012, BBC Monitoring Boeing exercised the option to renew the Commission, visited vari-ous facilities of European, via Factiva, © 2012 The British contract for another year. HAL. It would suggest measures to meet Broadcasting Corporation.) technological and HR recommendations (Source: Jay Menon, “Boeing Extends to be able to accomplish contracts such as Contract For Indian-built Growler Rafale. The new organization structure is BEL receives the SCOPE Subassemblies,” Aerospace Dai-ly & likely to bring more ties with private-sector Meritorious Award for R&D Defense Report, 31 May 2012, via Factiva, defense companies. HAL’s shares are © 2012 McGraw-Hill, Inc.) expected to be floated in the market. Bharat Electronics (BEL) received the SCOPE (Standing Conference of Public (Source: Vivek Raghuvanshi, “Indian Enterprises) Meritorious Award for R&D, HAL partners with Russia’s Officials Have High Hopes for HAL Reorg,” technology development and innovation Defense News, 28 May 2012, via Factiva, © for the year 2010–2011. The award was UAC for a multi-role transport 2012 Army Times Publishing.) formally received by Anil Kumar, Chairman aircraft and Managing Director, BEL from President Russian firm, United Aircraft Corporation Pratibha Patil on 13 April 2012. (UAC) and its JV, Multirole Transport Embraer competes in the Indian (Source: “BEL receives SCOPE Meritorious Aircraft Ltd. (MTA), signed a contract tender for maritime patrol Award for R&D,” Accord Fintech, 14 April with HAL to manufacture 205 multi-role aircraft 2012, via Factiva.) aircraft (MTA) in the 15–20 ton-class. The project envi-sages making 100 aircraft for Embraer Defesa is preparing to bid for a tender called by the Government of India to the Russian Air Force, 45 for the IAF and purchase nine mari-time patrol aircraft at a Kaveri spin-off engine to power the remaining 60 airplanes will be sold to other countries. The project is likely to cost cost of US$1.2 billion to US$1.5 billion. The the unmanned combat air between US$600 million and company already supplies Emb-145 AEW&C vehicle program US$700 million. jets, designed and adapted for surveillance. Embraer will compete in this tender with the The modified version of Kaveri turbofan The prototype’s first test flight is slated EMB 145 MP designed for an anticipated engine will power India’s unmanned combat to be conducted in 2017, with regular alert and a range of 3,000 km. air vehicle (UCAV) program. Currently, the production expected to begin by 2019. Kaveri engine program is undergoing tests Eye on defence | 31
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    at the GromovInstitute in Russia for a Vajra corps conducted the India developing an anti-radiation test extension to complete its technological objectives. “Ashwamedh” exercise missile The Vajra Corps, defenders of the Punjab India is developing an anti-radiation missile (Source: “Kaveri Engine to Power India’s borders, conducted a military exercise (ARM), which would multiply the strike UCAV,” SP’s Aviation, 23 April 2012, via “Ashwamedh” in the western sector. The capabilities by destroying the enemy’s Factiva, © SP Guide Publications Pvt. Ltd.) exercise saw unmanned aerial vehicles advance warning system. The missile detects (UAV), attack helicopters and front-line the radar by tracking its electro-magnetic Brahmos missile to expand fighter aircraft carrying out battle drills in radiation and pulses generated and can be synergy with the Army. The exercise includes mounted on the Sukhoi fighter planes Su-30 fighter options the movement of for-mations to the tactical MKI. Brahmos Aerospace plans to develop battle area and launching an offensive. The (Source: “India developing radar-destroying a lightweight anti-ship cruise missile infantry, armored, artillery, air defence, Anti-Radiation Missile,” Samay Live, 29 April BrahMos-3 deployable by light and special forces, engineers, signals and 2012, via Facti-va, © 2012 Sahara Samay.) medium fighters. Tentatively called logistics units participated in this exercise. BrahMos-3, the company says that it is (Source: “Vajra corps launches ‘Ashwamedh’ looking to address a large requirement for exercise,” Press Trust of India, 25 May 2012, Agni V to be equipped with such weapons by the Indian Navy’s MiG- 29K and future fighter fleet as well as the via Factiva.) multiple warheads Indian Air Force’s (IAF) medium multirole Agni-V, with a strike range of more than combat aircraft and sepecat jaguars. CABS develops IFF Systems 5,000 km is set to be equipped with multiple warheads. The mis-siles known as multiple (Source: “Light and Lethal; New BrahMos The Centre for Air-Borne Systems (CABS), independently targeted re-entry vehicles missile version would expand fighter a Defence Research and Development (MIRVs) would be capable of carrying multiple options,” 9 April 2012, via Factiva, Organisation (DRDO) laboratory successfully warheads to destroy several targets. This Aviation Week & Space Technology ISSN: developed and processed an Identification capability exists with a select few countries 0005-2175, Volume 174, Issue 13, via Friend or Foe (IFF) system, IFF Mk-12 (S). such as the US, Russia and China. MIRV Factiva, © 2012 McGraw-Hill, Inc.) Indigenous IFF is a requirement for AEW&C missiles are equipped with small on-board Aircraft and Light Combat Aircraft, Tejas. The rocket motors and computerized inertial latest ver-sion of the warning system can be guidance systems, which maneuver warheads Two Akash missiles test-fired fitted on platforms such as ships, unmanned to several different trajectories. in Odisha aerial vehicles (UAV) and missiles. (Source: “Plans to equip Agni-V with multiple India test-fired two surface-to-air anti- (Source: “CABS develops IFF system,” warheads: DRDO chief,” Press aircraft “Akash” missiles from the Deccan Herald, 24 May 2012, via Trust of India, 10 May 2012, via Factiva.) Integrated Test Range near Chandipur, Factiva, © 2012 The Printers achieving success in one, while the data (Mysore) Private Ltd.) of the second trial was being analyzed. Each missile was aimed at intercepting a floating object supported by a pilotless target aircraft at a definite altitude over the sea. After the launch, the assessment was made with data retrieved from telemetry stations and radars. (Source: “Two Akash missiles test-fired in Odisha, one successful,” Press Trust of India, 28 May 2012, via Factiva.) Eye on defence | 32
  • 33.
    Sources 1. “Aircraft componentmanufacturing unit in Bangalore; International Aerospace M1. “HAL to invest Rs 600 cr in new fighter plane unit,” Business Line (The Hindu), 9 June 2012, via Factiva, © 2012 The Hindu Business Line. 2. “3,000cr deal for IAF trainer aircraft cleared,” 11 May 2012, The Times of India - Mumbai Edition, via Factiva, © 2012. Bennett, Coleman & Co. Ltd. 3. “M&M plans unmanned sea surveillance vessels,” Financial Express, 24 April 2012, via Factiva, © 2012 Indian Express Online Media Pvt. Ltd. 4. “TN govt plans Integrated Aerospace Park,” Press Trust of India 2 May 2012, via Factiva. 5. Lijee Philip, “Maini Precision Products signs contract with Airbus for supply of standard bushes,” The Economic Times, 21 April 2012, via Factiva, © 2012 The Times of India Group. 6. “Bombardier inaugurates Bangalore engineering centre,” Project Monitor, 20 April 2012, via Fac-tiva, © 2012 Economic Research Pvt. Ltd. 7. Peerzada Abrar, “Astra Microwave wins Rs 310 crore defence contract,” The Economic Times , 26 April 2012, via Factiva, © 2012 The Times of India Group. 8. “Bell Office Opens New Office In New Delhi,” Defense Daily International, 26 April 2012, via Fac-tiva, © 2012 Access Intelligence, LLC. 9. “India, US close in on defense deals worth $8 billion,” The Financial Daily, 30 April 2012, via Fac-tiva. 10. “French aerospace firm eyes expansion,” 27 April 2012, DNA - Daily News & Analysis, via Facti-va, © 2012. Diligent Media Corporation Ltd. 11. “New Delhi outlines scope of multimission aircraft buy,” Flight International, 1 May 2012, via Fac-tiva, © 2012. Reed Business Information Limited. 12. “BEML is setting up an aerospace manufacturing division,” Project Monitor, 9 April 2012, via Fac-tiva, © 2012 Economic Research India Pvt. Ltd. 13. “Ultra Electronics, TCS receives $3.4-million order for Indian electronic warfare system,” eSource Canada Business News Network, 16 April 2012, via Factiva, © 2012 Business Information Group. 14. “India places order for Electronic Warfare system with a Canadian company,” Press Trust of In-dia, 14 April 2012, via Factiva, © 2012. NDTV Convergence Ltd. 15. “Sun Forest City to develop aerospace hub near Bangalore,” Project Monitor, 16 June 2012, via Factiva, © 2012 Economic Research India Pvt. Ltd. 16. “CAPA-VIC Aerospace City to Come Up near Bangalore,” New Indian Express, 14 June 2012, via Factiva, © 2012 The New Indian Express Group. 17. “M&M plans unmanned sea surveillance vessels,” Financial Express, 24 April 2012, via Factiva, © 2012 Indian Express Online Media Pvt. Ltd. 18. “Keltron bags contract worth Rs 60 million from NPOL,” India Public Sector News, 28 May 2012, via Factiva, © 2012. Contify.com. 19. “Indian Goa Shipyard to build six patrol vessels for USD 338m – report,” SeeNews Shipping, 10 May 2012, via Factiva. 20. Jay Menon, “India To Buy 75 Pilatus Trainers For Air Force,” The Weekly of Business Aviation, 28 May 2012, via Factiva, ©2012 McGraw-Hill, Inc. 21. “Mahindra Satyam opens delivery centre in France for Aerospace,” Press Trust of India, 30 May 2012, via Factiva. Eye on defence | 33
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    22. Robin Pagnamenta,“India buys guns on the ground but not jets in the air; BAE Systems agrees deal for howitzers,” thetimes.co.uk, via Factiva, © 2012 Times Newspapers Ltd. 23. Jay Menon, “Boeing Expects Apache Deal With India By Year’s End,” Aerospace Daily & Defense Report, 28 May 2012, via Factiva, © (c) 2012 McGraw-Hill, Inc. 24. M. Somasekhar, “Boeing to help set up transonic tunnel facility,” Business Line (The Hindu), 24 April 2012, via Factiva, © 2012 The Hindu Business Line. 25. David Alexander, “Panetta calls for deep US-India defence ties, more arms trade,” Reuters News, 6 June 2012, via Factiva. 26. “India, Russia contract for supplying tank ammunition,” Press Trust of India, 9 April 2012, via Fac-tiva. 27. Rajiv Ranjan Singh, “L & T team, BEL clear defence deal Stage I,” DNA Money, 23 June 2012, via Factiva, © 2012. Diligent Media Corporation Ltd. 28. “Pipavav Defence, Mazagon Dock to form JV to build warships, submarines for Indian Navy,” In-dia Investment News, 4 May 2012, via Factiva, © © 2012. Contify.com. 29. “Aerospace; Kaman and Kineco Announce Agreement to Form a Joint Venture in India,” Defense & Aerospace Week, 16 May 2012, via Factiva. 30. “Rolta India Ltd And GeoEye Inc Form Strategic Partnership To Develop Advanced Geospatial Solutions For Global Markets,” Reuters Significant Developments, 24 April 2012, via Factiva, © 2012 Reuters. 31. “DCNS to ink pact with Pipavav Shipyard,” Bureaucracy Today, 12 June 2012, via Factiva. 32. “Tata Motors Signs Cooperation Pact With DRB-HICOM’s Defence Technologies,” Dow Jones In-ternational News, 23 April 2012, via Factiva, © 2012 Dow Jones & Company, Inc. 33. “India and US Hold Defence Talks Asia-Pacific Countries Should Settle Bilateral Disputes as Per International Law: Antony,” PIB website, http://pib.nic.in/newsite/AdvSearch.aspx, 6 June 2012 34. “Naval exercise with U.S. begins tomorrow,” The Hindu, 6 April 2012, via Factiva, © 2012 Kasturi & Sons Ltd. 35. “India and Japan to Conduct First Ever Naval Exercise,” PIB website, http://pib.nic.in/ newsite/AdvSearch.aspx, 5 June 2012 36. “Delhi scales down US war games,” The Telegraph, 29 April 2012, via Factiva, © 2012. ABP Pvt. Ltd. Eye on defence | 34
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