BrahMos Aerospace has been asked to carry out performance security which is similar to the security deposit that means a financial guarantee that the company needs to furnish as the successful tenderer for the due performance of the contract that already has been carried out.

This is a landmark win for India’s Defence Industrial complex in a global competition. The Indian offer is supported by Russia, which has developed the 290-km missile with India and continues to supply key played parts, notably the engine which powers Brahmos to Mach 3, or three times the speed of sound. 

This will be amongst the most significant Indian exports of offensive military equipment to an ASEAN country and marks a big moment in India’s Act East Policy. This marks the success of Indian outreach efforts to countries similarly threatened by Chinese expansionism. 

Negotiated with the Government of India, it includes the delivery of three batteries, training for operators and maintainers as well as the necessary Integrated Logistics Support (ILS) package. Conceptualized as early as 2017, the Office of the President approved its inclusion in the Horizon 2 Priority Projects in 2020,” the Secretary stated.

“The Coastal Defense Regiment of the Philippine Marines will be the primary employer of this modern strategic defense capability of the Armed Forces of the Philippines,” Secretary Lorenzana added. There’s often been tension in the waters around Philippines because of aggressive Chinese naval presence and its territorial claims over the Spratly Islands.

BrahMos Aerospace, an India-Russian joint venture, produces the supersonic cruise missile that can be launched from submarines, ships, aircraft, or from land platforms. BrahMos missile flies at a speed of 2.8 Mach or almost three times the speed of sound.

Brahmos missile regiments are deployed by India close to the borders where it faces threat of external aggression. It is the world’s fastest cruise missile, which with its manoeuvre capability is virtually impossible to intercept. It’s high level of accuracy is also proven.

Protracted Negotiations

The contract is for the shore-based variant of the anti-ship missile system and it will bolster Philippines’ defence capability amid increasing Chinese aggression.

In November, Chinese coast guard ships blocked and used water cannons on two Philippines supply boats heading to a disputed shoal occupied by Filipino marines in the South China Sea. This led to a warning from the Philippines government that its vessels are covered under a mutual defence treaty with the United States.

Negotiations for BrahMos between India and the Philippines had been going on for the last few years, but hit a roadblock in December 2020, with Manila citing budgetary limitations caused by the Covid-19 pandemic. In March 2021, India signed a key enabling pact with the Philippines that had paved the way for government-to-government deals on defence equipment, including BrahMos.

Apart from the Philippines, Vietnam could be the next BrahMos export customer as talks between the two countries have progressed. India has offered BrahMos to countries that have been facing increasing Chinese maritime adventurism in areas of the South China Sea and Indian Ocean Region. Dr. Sudhir Kumar Mishra, former Chief Executive Officer and Managing Director of the BrahMos Aerospace Limited recently while speaking to the media had said that as per NATO’s studies only Two BrahMos hits can sink any big class of warships and smaller warships can be taken down by one BrahMos hit.

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In an order dated September 28, the defence ministry said: Government of India has decided to transfer, with effect from October 1, 2021, the management, control, operations and maintenance of these 41 production units and identified non-production units to seven government companies (wholly owned by the government of India).

According to the order, the name of the seven defence PSUs (also called DPSUs) are:

1. Munitions India Limited.
2. Armoured Vehicles Nigam Limited.
3. Advanced Weapons and Equipment India Limited.
4. Troop Comforts Limited.
5. Yantra India Limited.
6. India Optel Limited.
7. Gliders India Limited.
   The OFB is currently a defence ministry entity and supplies critical arms and ammunition to the three armed forces and the paramilitary.
   As part of the “Atmanirbhar Bharat” (self-reliant India) package, the central government had announced, on 16 May 2020, that it would improve autonomy, accountability and efficiency in ordnance supplies by corporatisation of the OFB.

Prime Minister’s Message

In a video address, on 1 October, to dedicate seven new defence companies to the nation, Prime Minister Narendra Modi, referring to the self-reliant India campaign, said the goal is to make the country the world’s biggest military power on its own.
He mentioned that the target should be that the companies not only establish expertise in their products but also become global brands. He urged that while competitive cost is India’s strength, quality and reliability should be its identity.

He said the world saw the strength of India’s ordnance factories at the time of World War I and that they used to have better resources and world-class skills, but the companies were ignored in the post-Independence period, leading to the country’s dependence on foreign supplies.

“After Independence, we needed to upgrade these factories, adopt new-age technology. But it was not given much attention. Over time, India became dependent on foreign countries for its strategic needs. These new seven defence companies will play a big role in bringing change in this situation,” he said in his video address.

“Today, there is more transparency, trust, and technology-driven approach in the defence sector of the country than ever before. For the first time after Independence, so many major reforms are happening in our defence sector and instead of stagnant policies, a single-window system has been arranged,” he said.

“These seven defence companies will play a major role in changing this situation,” he said.

The prime minister hoped that the new companies would play an important role in import substitution. An order book of more than Rs 65,000 crore reflects the increasing confidence of the country in these companies, he added.

Noting that the decision on reform of the OFB was pending for the last 15-20 years, Modi said works stuck for decades are being completed and India is taking new resolutions to build a new future. “In the 21st century, whether a country or a company, its growth and brand value is determined by its research and innovation. From software to the space sector, India’s growth, India’s new identity is the biggest example of this,” he said.

“Therefore, I also make a special request to all the seven companies that research and innovation should be a part of your work culture….You not only have to match the world’s biggest companies, but also take the lead in future technology,” he added.

Modi said the government has given full functional autonomy along with giving a better production environment to all the companies, adding it has also been ensured that the interests of the workers of these factories are fully protected.

Service Conditions

Defence Minister Rajnath Singh and representatives from the defence industry associations were present on the occasion. Singh has already clarified that there will be no change in service conditions of nearly 70,000 employees of the erstwhile organisation and the decision to corporatise the OFB is driven by efforts to boost India’s defence manufacturing sector.
Each of the new DPSUs is required to frame rules and regulations related to service conditions of the absorbed employees, the order noted.

Each of the DPSUs should also seek an option for permanent absorption from the employees on deemed deputation to that respective DPSU, within a period of two years, it stated.

The service conditions of the absorbed employees would not be inferior to the existing ones. A committee would be constituted by DDP (Department of Defence Production) for guiding the new DPSUs in this regard so that the absorption package given is attractive, the order mentioned.

All the employees of OFB (Groups A, B, and C), belonging to the production units and also the identified non-production units, are to be transferred en masse to the new DPSUs on terms of foreign service. They will, however, not be provided with any deputation allowance (deemed deputation) initially for a period of two years from the appointed date, an official order stated.
The MoD has set a target of achieving a turnover of Rs 1,75,000 crore in aerospace and defence goods and services by 2024. This includes exports worth Rs 35,000 crore. The new companies will take over the existing OFB orders to the tune of Rs 65,000 crore.

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In a major boost to Defence Production under the ‘Make in India’ initiative and towards achieving self-reliance in the critical field of Defence equipment, Goa Shipyard has placed a maiden order on Bharat Heavy Electricals Limited (BHEL) for supply of an upgraded Super Rapid Gun Mount (SRGM), the Main gun onboard most Warships of the Indian Navy.

The order envisages supply, installation and commissioning of the entire system – Upgraded SRGM and accessories for Triput Class Frigates of the Indian Navy, which will be manufactured by the Haridwar unit of BHEL.

The upgraded SRGM is a state-of-the-art weapon system having additional features such as capability to manage different types of ammunition to engage fast, manoeuvring and non-manoeuvring, radio controlled targets. The upgraded SRGM has the capability to fire advanced Ammunition with higher range and programmable ammunition.

BHEL has been a reliable supplier of critical equipment and services in the Defence and Aerospace sector for over three decades with the aim of making a major contribution towards self-reliance in these sectors.

Towards this, BHEL has established dedicated, intricate manufacturing and inspection facilities at its manufacturing plants, for production, installation & commissioning and lifecycle support of various products and components. The initiatives taken by BHEL will be a driving force towards the AatmaNirbhar Bharat Abhiyan of the Government of India.

LCA-Mk2 to Roll Out Next Year

The configuration for the Light Combat Aircraft (LCA)-Mk2 has been frozen and steel cutting is expected to begin soon while configuration for the fifth-generation Advanced Medium Combat Aircraft (AMCA) has been frozen and preliminary design completed, Dr Girish S. Deodhare, Programme Director (Combat Aircraft) & Director, ADA, said at a seminar in New Delhi on 12 September.

“The detailed design is complete. In fact, we are in the critical design review stage and metal cutting should start very shortly. Roll-out of the aircraft (Mk2) is planned next year and the first flight in early 2023. We are well on track to achieve these goals,” Dr Deodhare said.

The aircraft features enhanced range and endurance including an onboard oxygen generation system, which is being integrated for the first time, Dr. Deodhare said.

Heavy weapons of the class of Scalp, Crystal Maze and Spice-2000 will also be integrated on the Mk2. The LCA-Mk2 will be a heavier and much more capable aircraft than the current LCA variants.

The Mk2 is 1,350 mm longer featuring canards and can carry a payload of 6,500 kg compared to 3,500 kg the LCA can carry.
In February, the Defence Ministry signed a Rs 48,000-crore deal with Hindustan Aeronautics Ltd. (HAL) to supply 83 LCA-Mk1A to the Indian Air Force. In August, the HAL signed a $716 million deal with GE Aviation of the U.S. for 99 F404 aircraft engines and support services to power the Mk-1A. The Mk2 will be powered by a more powerful GE-414 engine.

The Indian Air Force (IAF) has one squadron of the LCA in initial operational clearance and deliveries of the second squadron in final operational clearance configuration are under way.

The HAL has already set up a second assembly line to ramp up production from eight aircraft a year to 16. Order for 83 Mk-1A is expected to be completed by 2028-29, Dr. Deodhare said.

Preliminary Design Review of AMCA Completed

According to Dr Girish S. Deodhare, Programme Director (Combat Aircraft) & Director, ADA, the the configuration of the Advanced Medium Combat Aircraft (AMCA) had been frozen, preliminary service quality requirements finalised and preliminary design review completed. The initial design of the AMCA was started way back in 2009.

“We are moving to critical design review by the middle of next year with the roll-out planned in 2024 and first flight planned in 2025,” he said at a seminar on 12 September, in New Delhi.

The AMCA would be a twin engine stealth aircraft with an internal weapons bay and a diverterless supersonic intake, which has been developed for the first time for which the design is complete.

It will be a 25-tonne aircraft with internal carriage of 1,500 kg of payload and 5,500-kg external payload with 6,500 kg of internal fuel.

The AMCA will have stealth and non-stealth configuration and will be developed in two phases, AMCA Mk1 with existing GE414 engine and an AMCA Mk2 with an advanced, more powerful engine to be developed later along with a foreign partner, Dr. Deodhare added.

The manufacturing and production of the aircraft will be through a special purpose vehicle, which will also have participation of private industry.

Simultaneously, the project for development of a twin-engine deck-based fighter jet meant to fly from the Navy’s aircraft carriers is also making progress. On the various programmes under way, Dr. Deodhare said there was commonality of systems and technologies.

Aerostructures of Boeing’s F-15EX Eagle II to be Built in India

Aerospace major Boeing has awarded a contract to India-based Dynamatic Technologies for manufacturing assemblies for its tactical fighter ‘F-15EX Eagle II’. This is a first instance in which aerostructures for F-15EX Eagle II will be made in India. Besides, the contract will given a boost to the ‘Aatmanirbhar’ programme and strengthens US-India collaboration on aerospace and defence industrialisation.

Accordingly, Dynamatic Technologies will supply the F-15EX aerostructure assembly requirements from FY22. The company will manufacture these aerostructures from their manufacturing facility in Bengaluru, Karnataka.
According to Boeing India President Salil Gupte: “We see tremendous potential for India to contribute to the global aerospace industry as an industrial and technology partner.”

“The award of aerostructure assemblies for the latest and most advanced version of the F-15 aircraft family is a reflection of Boeing’s focus on Aatmanirbhar Bharat and a testimony to the world class capability of our industrial partners in India.”

Army Taps Tonbo Imaging for Specialised Sights

The Army has placed orders with with a Bengaluru-based firm – Tonbo Imaging – for specialised sights under emergency procurement to help some of its elite units operating in both urban warfare and at the borders. The order for two set of sights as part of a spate of emergency procurement being done was placed “recently”.

One contract is for about 600 pieces of multi-functional thermal imaging binoculars for target acquisition and the other is for multi mission-sight, which can be mounted on the helmet and also the weapon.

The contract value is for over Rs 100 crore and the procurement is being done by the Infantry Directorate, adding that while earlier the Northern Command had procured one of these sights for its soldiers in smaller batches, this time the Army Headquarters is doing it.

They also said that there would be a larger procurement order in play if the systems, which have to be delivered in 12 months, perform according to expectations.

The multi-mission sights are lighter and more tuned for close combat.

Tonbo Imaging is one of the few companies in the world to manufacture such systems. Some of their products are deployed at the Line of Actual Control (LAC) during the ongoing Ladakh standoff for surveillance operations.

When the company initially began commercial operations around 2012, it focused on the global market. Five countries were buying their products before India bought from Tonbo. Founder Arvind Lakshmikumar’s prior work with US’ DARPA (Defense Advanced Research Projects Agency) helped him get recognition of products early on in the US market.

Rolls-Royce, HAL Pact for Adour Engine Parts

Rolls-Royce and Hindustan Aeronautics Limited (HAL) signed a “Make in India” agreement, on 14 September, to manufacture parts for Rolls-Royce’s Adour engines that will support the UK-headquartered company’s international defence customer base.
Variants of the Adour engine power the Indian Air Force’s (IAF) Jaguar fighters as well as its fleet of Hawk advanced jet trainers (AJT). The IAF has the world’s largest serving fleets of both these aircraft. HAL has manufactured and supported Adour engine variants, under licence from Rolls-Roy­ce, over several decades.

However, Rolls-Royce now aims to strengthen the spares and maintenance eco­system for Adour engi­nes in India. Rolls-Royce and HAL signed a Memorandum of Understanding (MoU) during Aero India 2021, in February, to establish an Authorised Maintenance Centre for Adour at HAL to support international military customers and operators.

Rolls-Royce underscores a three-point aim in the current initiative. The first is to equip Indian manufacturers with the knowhow, pro­cesses and experience to build complex parts that require a lot of high-technology processes. That would en­hance current capabilities and serve to make India atmanirbhar (self-reliant). Secondly, exporting parts from India would enhance supply chain efficiency and benefit Rolls-Royce’s global operators. Thirdly, since the Adour engines will continue to fly in India for the longest time, a self-sufficient supply chain would be in place to support those older engines.

Thales to Provide Emerging Technologies for Armed Forces

Leading French defence major Thales Group is planning to focus significantly on addressing requirements of the Indian armed forces for new-age cyber security solutions, artificial intelligence and advanced capabilities in big data analytics.

Chairman and CEO of Thales Group Patrice Caine said the company has been looking at expanding its overall footprint in India, particularly in the areas of emerging technologies that will be crucial for the armed forces.

The Indian Army, the Navy and the Indian Air Force have been focusing on acquiring futuristic technologies like nanotechnology, quantum computing, artificial intelligence, swarm drones and robotic technologies to deal with future security challenges.

Thales Group is aiming at expanding its overall footprint in India in a number of segments, including in areas of cyber security, artificial intelligence and digital solutions.

India is expected to spend close to $300 billion in the next five years in procuring defence equipment and almost all major global defence firms are eyeing a slice of it.

India is now considered as a key country for sourcing various raw materials for the company’s global production line and it is going to double procurement from the country in the next five years.

Thales is part of the French firms that provided key components for the Rafale jets procured by India. As part of Thales’ offsets commitments under the Rafale deal, the company helped Bharat Electronics Ltd (BEL) in producing modules for the RBE2 radar.

Thales has been providing avionics and other equipment to the state-run aerospace behemoth Hindustan Aeronautics Limited for over four decades and is involved in supplying equipment for various other key military projects.

Present in India since 1953, Thales has offices in New Delhi, Gurgaon, Hyderabad, Bengaluru, Chennai and Mumbai, among others. Over 600 employees are working with Thales and its joint ventures in India.

The post Defence Industry News appeared first on IMR.

The Ministry of Defence (MoD) has formulated a draft Defence Production and Export Promotion Policy 2020 (DPEPP 2020). DPEPP 2020 is envisaged as an overarching guiding document of MoD to provide a focused, structured and significant thrust to defence production capabilities of the country for self-reliance and exports.

Objectives

The policy has laid out following goals and objectives:

•             To achieve a turnover of Rs 1,75,000 crore (US$ 25 bn) including export of Rs 35,000 crore (US$ 5 bn) in aerospace and defence goods and services by 2025.

•             To develop a dynamic, robust and competitive defence industry, including aerospace and naval shipbuilding industry to cater to the needs of armed forces with quality products.

•             To reduce dependence on imports and take forward “Make in India” initiatives through domestic design and development.

•             To promote export of defence products and become part of the global defence value chains.

•             To create an environment that encourages R&D, rewards innovation, creates Indian intellectual property (IP) ownership and promotes a robust and self-reliant defence industry.

Focus Areas

The Policy brings out multiple strategies under the following focus areas:

•             Procurement reforms.

•             Indigenization and support to micro, small & medium enterprises (MSMEs)/startups.

•             Optimize resource allocation.

•             Investment Promotion, foreign direct investment (FDI) & ease of doing business.

•             Innovation and R&D

•             Defence public sector undertakings (DPSUs) and Ordnance Factory Board (OFB).

•             Quality assurance & testing infrastructure.

•             Export promotion.

ALSO READ DEFENCE PRODUCTION: A Strategy to Boost Defence Exports

Highlights of the Draft

Procurement Reforms. Several reforms in the Defence Procurement Procedure have been proposed. A Project Management Unit (PMU), would be set up for the acquisition and facilitation process of the contracts, building military capabilities. It also aims to move away from licensed production to design, develop and produce indigenously. For this purpose, a Technology Assessment Cell (TAC) is made to assess the TRL levels in the country and to provide guidance for the initiation of acceptance of necessity (AON), in addition to the design, development and production. 

Indigenisation and support to MSMEs/ Start-ups. The indigenisation policy aims at establishing an industry ecosystem to facilitate the production of the imported components (including alloys and special materials) and sub-assemblies for defence equipment and platforms manufactured in India. 5,000 such items are proposed to be indigenised by 2025.

Optimise Resource Allocation. A target has been laid out by the Department of Defence Production to double the procurement from domestic industry, that is Rs. 70,000 crore to Rs. 1,40,000 crore by 2025. In addition to this, it aims to achieve a turnover of Rs.1,75,000 crores in Aerospace and Defence Goods & Services by 2025.

Investment Promotion and Ease of Doing Business. India is emerging as an attractive investment destination across the globe. Moreover, India has improved its ranking in the World Bank in its ‘Ease of Doing Business’ (EoDB) report. Investments in the aviation sector will be encouraged due to a large aerospace market with rising passenger traffic and increasing military expenditure. The Defence Corridors set up in Tamil Nadu and Uttar Pradesh will act as additional support and will also offer higher multipliers for offset discharge for investments flowing into the Defence Corridors.

Innovation and R&D. Innovations for Defence Excellence (iDEX) has been implemented to provide necessary incubation and infrastructure support to the start-ups in the defence area. More than 50 start-ups are currently developing new ‘fit-for-military-use’ technologies/products.Also, Mission Raksha Gyan Shakti was launched to promote innovation and technology development and to file patents in Defence PSUs and OFB. 

DPSUs and OFB. Department of Defence Production has set up production facilities over the years for defence equipment through the 15 Ordnance Factories and DPSUs. However, reforms are needed in this sector so that the productivity of these factories improve.

Quality Assurance & Testing Infrastructure. Competitiveness of the defence industry depends on quality assurance. Thus, an IT platform with an industry interface will be developed to ensure quality assurance of the products being manufactured.

Export Promotion. In order to achieve the target of Rs. 35,000 crore of defence exports by 2025, the following strategies are proposed by the Department of Defence Production: 

•             Defence Attachés have been mandated and are supported to promote export of indigenous defence equipment abroad.

•             Domestically manufactured defence products will be promoted through Govt to Govt agreements and Lines of Credit/funding, subjected to strategic considerations. 

•             Export Promotion Cell has been set up to promote defence exports through coordinated action to support the industry. 

•             DPSUs and OFB would be mandated to have at least 25% of their revenue from exports. 

•             DDP would facilitate onboarding of Indian Offset Partners (IOPs) in the discharge of offset obligations by OEMs.

•             Defence Expo and Aero India will be positioned as major global events to showcase India’s capabilities in defence manufacturing and also to encourage exports. 

•             The end-to-end export clearance process in the Department of Defence Production would be further upgraded to make the process seamless and time-bound.

Recommendations

To achieve the objectives envisaged in the policy, time delays have to be reduced by reducing the stages for approvals and also ensuring that whatever is produced in country is not imported. The Negative list of items should be regularly augmented. A lot will depend on the efficient functioning of the ‘Technical Management Cell’ by incorporating the strength of the private sector in the technology upgrades.

Indigenization of items to 5,000 by 2025 will amount to adding 1000 items every year because a list of only 101 items has been issued till now.

To achieve an export target of Rs 35,000 crore by 2025 means improving from the current level of Rs 10,000 crore to Rs 11,000 crore. It is a very tall order and cannot be achieved till we lay down clear objectives with focus areas on what we want to do over a period of lime. The implementation team will have lo first identify a number of technologies which will have to be developed through domestic R&D and for this, the corporatization of OFB and DPSUs must be carried out at the earliest.

Efforts will have to be made to enmesh private industry in the Innovation and R&D by the DPSUs and OFB. They will have to do vendor development with the help of private industry and thus, it requires a combined effort of DPSUs, OFB and the private industry. To achieve the same, DPSUs will have to adopt the role of system integrator to absorb private industry into the manufacturing system. All this is easier said than done. There will be a lot of resistance from the public sector and therefore, a ‘Top Down Approach” will have to be adopted by the MoD to make them accept these changes. Unless this is done, the DPEPP objectives will not see the light of day. Achieving a production target of Rs 1,75,000 crore by 2025 from the current level of Rs 85,000 crore amounts to a jump of Rs 90,000 crore in 5 years or an addition of Rs 18,000 crore every year. Unless attitudinal conditioning of public sector is thrust upon lo accommodate the private sector and accountably of those responsible to implement this policy is fixed and regularly checked for efficacy, the DPEPP will only remain a policy on paper.

Hence, the first and foremost requirement is lo evolve policies on implementing the DPEPP on ground. Private sector in India has made very recognizable progress in areas of Bullet Proof Gears, 155mm Guns (Vajra, ATAGS and K9 Guns), Aakash Missiles, 3D Surveillance radars, Electronics & Communication systems and so on. There are international demands for these products and, thus, the private sector has to be considered a comrade in arms. The Government will have to give much more incentives and accord a level playing field to the private sector. Also accountability of bureaucracy must be fixed in promoting the parallel development of the private sector by giving them equal opportunities.

Government must evolve an Institutional forum for a feedback for the MoD. DPSUs/OFB have to accept that private industry has arrived and will play a major role. Implementation will be the key word for the success of DPEPP 2020.

Direct Offsets as Exports. The practical usage of Direct Offsets to boost exports have not been brought out, probably because the benefits of Direct Offsets are not fully understood or appreciated. The advantages of Direct Offsets with respect to promotion of exports are as follows:

•             Direct Offsets provide export orders directly from OEMs to industries, particularly MSMEs. Hence export turnover increases significantly. This is not so with respect to TOT, establishment of test facilities, etc., which are envisaged in the new offset policy under consideration. The latter do not provide exports orders. Hence Direct Offsets should be encouraged.

•             Through establishment of production facilities due to Direct Offsets, the capabilities of private industries, particularly MSMEs including improved QA standards, manufacturing processes, test methods, skill levels of tradesmen will result and products become more “exportable”.

•             During Direct Offsets, technical co-operation between Offset Partner and OEMs are established and the OEMs abroad generally appreciate the capability of Indian private sector industries, particularly, MSMEs (due to results shown on ground by private industries/MSMEs) and this has resulted in continuous flow of additional export orders directly (additional to Offset Orders) from OEMs to private industries, particularly MSMEs. Hence this has increased Exports from OIPs considerably.

•             Since the OEMs recognise the benefits of procuring the same /similar items from their lOPs (in terms of costs, QA, timely deliveries), OEMs and lOPs jointly undertake development of Mark II /III products both for Indian and international markets. This again increases export potential (through Direct Offsets).

•             Quite a few of the Direct Offsets projects through lOPs have resulted in establishment of JVCs with OEMs abroad, which again brings in FDI to Government of India.

•             It is to be accepted that OEMs have a better knowledge/ experience in exports as compared to Indian industries as they have been operating globally from their inception, while Indian industries have been more “inward looking” so far towards Indian market only. Hence, through the route of Direct Offsets and establishment of one-to-one relations with OEMs, lOPs can obtain more Export Orders through OEMs rather than directly exploring Export Markets by themselves at least, in the beginning.

Measures to increase FDI. Government of India have recently announced enhancement of FDI through “Automatic Route” from 49% to 74%. However, the follow-up steps are yet to be clarified. For eg:-

•             The present FDI policy clearly specifies that for a JVC to be called an “Indian Company”, it should satisfy twin conditions of FDI to be not more than 49% and control of JVC’s Board of Director to be in Indian hands.

•             It is quite evident that no OEM will invest more than 49% in JVC, if such JVCs are not considered Indian companies and, hence, debarred from participating in Indian RFPs.

Hence above defeats the purpose of increasing FDI to 74% through automatic route.

In addition, even in JVCs with 49% FDI, MoD has specifically instructed in RFP that “Pyramiding effect” will be considered and such JVCs whose Indian promoter has Fll on its equity are debarred from taking part in RFPs.

Hence, unless these aspects are clarified and corrected, JVC in India may not be successful in bringing in expected increase in FDI.

ALSO READ INDIA-CHINA: Turning a Border Dispute Into a Trade War

It is a known fact that the foreign OEMs will invest in Defence Corridors only when there are more incentives in the corridor. It is suggested to relook at para 5.8 of DAP 2020 and accord a higher multiplier of 3X in case IOP is in Defence Corridor. Else TOT acquisition will remain limited to regions like Bengaluru and Hyderabad, which already are advanced in aerospace & defence (as foreign OEMs will see no real incentive to provide TOT in Defence Corridors).

As per the aim of Draft DPP 2020 level playing field should be provided to private industry. However, Annex VII and Annex VIII to Appx D of DAP 2020 are restrictive in nature and putting private industry in disadvantageous position  vis-a-vis DRDO/ DPSUs/ OFB. It is recommended that TOT of technologies listed in Annex VII and VIII should be allowed to private industry with same multipliers. Moreover 5.13 and 5.14 should have higher multiplier of 4X and 5X respectively for Defence Corridor.

Negative List for DPSUs & OFB. There is a need to have a negative list for the DPSUs wherein low technology equipment or those which already have a reasonably large manufacturing base with the private industry should not be allowed to be manufactured by DPSUs/OFB.

Case in point is manufacturing of night  vision weapon sights  (thermal  imaging  &  image intensification based) wherein both BEL and OFB are manufacturing these. Manufacturing these by BEL/OFB was alright when the Indian industry was primarily trading and not manufacturing these devices. Now that manufacturing of these devices is being done by many Indian companies, BEL and OFB should start concentrating upon manufacturing the heat of these devices – the Image Intensification Tubes – which BEL is doing to an extent, the microbolometer and the DDC, all of which require much higher level of technology and a very large investment in infrastructure, plant and machinery, which is financially feasible to be done by a Government entity. Presently, all three of these component are being imported (by every company including BEL/DPSUs/OFB) and these form nearly 50% of the cost of the devices that they are fitted in. A scrutiny of all defence items being manufactured by these companies must be critically examined and compared against the current capabilities of the private sector which should lead to a negative list for the DPSUs/OFB.

The post Draft Defence Production and Export Promotion Policy 2020 appeared first on IMR.

Panic Buying

The sudden crisis in Ladakh saw us doing panic buying of defence equipment at a scale that makes nonsense of all our national security planning processes. The 15 -year Perspective Plans and Five-Year Defence Plans are simply derailed by our bureaucrats who are callously unconcerned about our defence preparedness.

Defence minister Rajnath Singh has announced a list of 101 defence items on which a complete and progressive ban will be imposed on their import. This step sounds far more concrete in terms of giving a level playing field to our vibrant private sector. The list of 101 embargoed items ranges from some types of ammunition, sonars and radars to artillery guns, assault rifles, corvettes, transport aircraft and light combat helicopters, among others. The proposal on artillery guns sounds most welcome because it provides an opportunity to our private sector to contribute in a major way in the here and now.

It is sad that right from the outset vested commercial interests have become so deeply mired in our arms acquisition process that they have made it dysfunctional. It took us over 30 years to get a replacement for our Bofors guns and 20 years to get the Rafales. Unless we have a death wish as a nation state we now need to rescue our arms acquisition process from this bureaucratic strangle hold – we simply have to make it work or perish. Autarky in key weapons systems can no longer be left to the tender mercies of the old Bureaucrat-Neta mafia. The joke of assembling semi-knocked down (SKD) and completely knocked down (CKD) kits in the name of self-reliance produced an optical illusion of self-sufficiency that has set us back by several decades.

This issue of the IMR takes a detailed and in-depth look at our latest initiative at reducing drastically our import dependency in defence and creating a viable military industrial complex in India that can not only meet our needs but produce for export to earn foreign exchange and produce economies of scale. To get this going we need to collaborate with countries like U.S., Israel, France, Japan and South Korea in a big way.

Taming China

Japan’s defence minsiter Taro Kano made a very significant declaration recently. He said, “The consensus in the international community is that China must be made to pay a very high price for its muscular revisionism in the South and East China Seas, in the Himalayas and Hong Kong.” We endorse this wholeheartedly. There is a dangerous degree of subjectivity in Chinese geo-strategic thinking. Chinese strategists have thrown all caution to the wind and are acting aggressive militarily and needlessly assertive in all directions, concurrently. This directly contravenes the tenets of China’s own strategic culture of having only one strategic direction at one time. Currently, this is towards China’s east coast, where its key cities and wealth creation centres are located. Yet it chose to activate the East China Sea, Taiwan and South China Sea and then the Indian front in the west at the same time. China’s dangerously theoretical military elite ,who have not seen combat in the last 42 years, are putting far too much store on posturing as a means to frighten all its adversaries into tame submission. Their desire to prevail without firing a shot is reaching infantile levels of subjectivity. This can only succeed if all its adversaries display plain cowardice.

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It is time to call Chinas bluff in a major way so that the costs and consequences of its needlessly aggressive behaviour are made plain to China. The latest statement by the Indian chief of defence staff (CDS) must, therefore, be seen in this light. He stated clearly that we are trying all peaceful methods to resolve issues with China by dialogue. However, should that not work, India is ready for military options. Frankly, India has a slight edge in the Himalayas in forward deployed troops – very proficient in mountain warfare and white-out operations. Our Air Force has the distinct edge locally and with the arrival of the Rafales and the rapid delivery of 30 Su-30s and MiG-29 fighters along with S-400s, it will be a great shot in the arm.

IMR prays for peace but we will not be surprised to see conflict break out in the South China Sea and the Himalayas in the coming months ahead. China is leaving the world with very little options. China cannot make the world sick and then decide to kick around all the nations on its periphery without expecting a push back at some stage. That time seems to be approaching rather fast.

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