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Saturday, 26 July 2008

From Today's Papers - 26 Jul

DPP-2008 on 1st August: Offset banking okayed for 2 years

by Ajai Shukla

Business Standard, 24th July 08

Defence Minister AK Antony has confirmed that the long wait for the new Defence Procurement Policy of 2008 (DPP-2008) will finally end on 1st August. A keenly anticipated portion of DPP-2008 is the new defence offset policy, which will immediately govern offset proposals for a Rs 47,000 crores contract for fighter aircraft and, thereafter offsets for defence purchases worth Rs 300,000 crores over the next five years.

India’s offset policy mandates that defence contracts worth more than Rs 300 crores will place on vendors a “direct offset liability” of 30%, making them liable for investing 30% of the contract value in Indian defence companies, or sourcing defence goods or services worth an equivalent amount.

The new policy, Business Standard has learned, incorporates a key request of foreign defence companies; offset banking is now permitted. Foreign vendors can accumulate offset credits for two years preceding the award of a contract. Offsets can only be banked after permission from the government, which will examine all offset banking proposals to ensure that they benefit Indian defence industry.

This appears far short of the request from global arms corporations for a 10-year banking period. However, in the way the policy has been framed, the 2-year clearance would practically amount to far longer. As long as the vendor links the banked offsets to a government tender (a Request for Proposals, or RfP, as the MoD calls it) the banked offsets will remain alive until that contract is finalised.

A senior MoD official explains how this will be interpreted. Assume that Rs 4000 crores worth of offsets banked by a foreign vendor is lapsing on 1st January 2009. Over the next three months, i.e. before 31st March 2009, the vendor can link those Rs 4000 crores to an RfP to which that company is responding, e.g. the procurement of helicopters. Once the banked offsets get linked to the helicopter purchase, they do not lapse even if the evaluation and trials go on for another five years. In fact, if the vendor continues accumulating Rs 1000 crores worth of offsets credits each year, at the end of the 5-year period, i.e. on 1st January 2014, he will have Rs 9000 crores as banked offsets (Rs 4000 crores + Rs 5000 crores).

If that vendor wins the contract, his offsets liabilities would be immediately reduced to the extent of his banked offsets credit of Rs 9000 crores. If, however, he fails to win the contract, the entire amount would lapse, less offsets for the preceding two years, i.e. for 2013 and 2014.

The new offsets policy also waives the current requirement for a defence production licence for Indian private defence industry doing offsets business with foreign vendors. DPP-2006, the current policy, defines offsets as the purchase of products from “Defence Public Sector Undertakings, the Ordnance Factory Board, and any private defence industry manufacturing these products or components under an industrial licence granted for such manufacture. The new policy has quietly done away with the phrase “under an industrial licence granted for such manufacture”.

While this is an important liberalisation for the private sector, it appears to clash with the current Government of India policy, promulgated by the Department of Industrial Policy & Promotion, in the Ministry of Commerce & Industry. That policy specifies, in Press Note No 4 of 2001, (which has not yet been amended) that, “The defence industry sector is opened up to 100% for Indian private sector participation with FDI permissible up to 26%, both subject to licensing.” The new DPP 2008 does not clarify how this clash will be resolved.

Tribunal for jawans
Better discipline, better accountability

THE Union Cabinet’s clearance for a 31-member independent tribunal to hear the grievances of the armed forces personnel was long overdue. The jawans and officers have been deprived of speedy redressal of their grievances because of overburdened high courts and the Supreme Court. The new Armed Forces Tribunal will have a chairperson and 29 members at its principal bench in New Delhi and eight regional benches in Chandigarh, Lucknow, Jaipur, Kolkata, Mumbai, Guwahati, Chennai and Kochi. The Chandigarh Bench will have jurisdiction over Punjab, Haryana, Himachal Pradesh and Jammu and Kashmir. After the tribunal starts functioning, it will not only take up new cases but also adjudicate over 9,800 cases filed by the armed forces personnel relating to court martial and other service matters pending in various high courts and the Supreme Court. Significantly, the paramilitary forces will also be brought under its control.

The issue of a separate tribunal for armed forces has been hanging fire for over two decades. In 1982, the Supreme Court had suggested an independent tribunal after pointing out several deficiencies in the existing Acts in the Army, the Navy and the Air Force. It specifically pointed out the absence of remedy of appeal against the orders of courts martial and ruled that the courts martial must record reasons in support of their orders and inferences. Subsequently, the Law Commission, in its 169th report, recommended a separate tribunal for prompt disposal of cases challenging decisions of courts martial in the three services.

Unfortunately, the present grievance redressal machinery in the three services is faulty and the odds are heavily stacked against the complainants. Undue delay in adjudication causes stress, hardship and misery to the aggrieved soldier. This has led to either jawans committing suicide or killing their superiors. True, a jawan can go up to the Service Chief for justice, but he/she does not get fair treatment at the hands of the immediate boss who processes the complaint. Worse, the complainant is neither informed about the fate of his petition nor apprised of his seniors’ comments. Moreover, there is no independent judicial forum to review the executive decision. The new tribunal is expected to fix accountability and ensure greater discipline among the officers and, above all, enhance the morale of the defence personnel.

Women shown the highest respect in armed forces
by Lt-Gen (Retd) Harwant Singh

In the armed forces, there have been a few cases of lady officers facing what they term as sexual and mental harassment. Recently, a lady officer in the army’s supply corps has alleged physical and mental harassment by her superiors. The press has added the sexual harassment element into the case.

Though she has not come up with specifics, from what she has alleged so far, it appears to be a fall-out of normal pressure of military life of an officer. The service has a set work culture and performance parameters are related to timely execution of the job.

Officers and troops are often called upon to perform not so routine a duty at odd hours of the day and night, or move to another location at short notice. Such additional commitments and requirements add to the normal, stressful environment in the armed forces.

The military has its own channels and systems of checks and balances to deal with complaints and disciplinary cases. Therefore, intervention by the defence minister in this case by ordering an inquiry, short circuiting all channels of command, is not conducive to maintaining discipline in the army. The defence minister is expected to be alive to the needs of propriety and form before directly intervening in such matters.

Undoubtedly there have been a few teething problems the lady officers have faced in joining the military, but there is nothing abnormal or alarming in this situation. One of them had preferred a false TA/DA claim and had to face the wrath of military law. The presiding officer of the General Court Marshal in this case was a woman, of the rank of a brigadier.

Yet the accused and the press tried to bring in extraneous issues, little realising that a false TA/DA claim, of even a few rupees, in the defence services, can send the accused to prison, while the lady in point was merely dismissed from service.

Yet there was no end to malicious press coverage and twisting of the tale. An intrusive press is not conducive to discipline in the military. There is no gender bias what ever. Quite the contrary, women are shown the highest respect and deference in the armed forces.

While co-education in schools and colleges is a common feature, yet we know not of any institution in India where they have a common hostel and rooms are shared between boys and girls.

Perhaps we have to be ‘Westeranised’ much more and shed our age-old cultural inhibitions and social taboos before we are prepared to take steps which push our women to share fully the rough side of military life with men. Those who clamour for induction of women into the combat arms of the military should bear this aspect in mind.

So far, in the armed forces, women are offered only short service commission of five years, extendable by a few more years. As such, in this short period, they do not rise to high ranks, but their counter parts in the medical corps do attain ranks of general officers and they command respect and exercise authority as any male colleague.

So to contend that reporting to a women officer in the military hurts Indian male ego is baseless. The military have had female doctors and nursing staff for a long time and they have performed magnificently. Yet there have been administrative problems in the management of lady doctors in the army.

The DG Army Medical Corps once told me that he could not post lady doctors to remote areas where she would be the sole female, or to units deployed at difficult locations. Thus the load of field postings and to remote areas was borne entirely by male doctors and not equally shared by their female counterparts. Once married, they want to be posted along side their husbands, which very often is not possible.

Any one who is caught doing some thing wrong has the standard defence of being victimised and targeted. No one ever admits his wrong doings. Women officers in the armed forces are no exception and the allegation of sexual harassment is the additional powerful fusillade at their disposal.

Female officers in the military have to plough a lonely furrow, in a male dominated environment, and therefore must be shown special consideration. Their handling by seniors has to be with compassion and understanding. Though cases of harassment and such like treatment of female officers are far too few to cause an alarm, media often blows such incidents out of proportion and tries to sensationalise by injecting the sexual harassment element.

Comment: Restructuring the armed forces —Shaukat Qadir

Even in the aftermath of 9/11 and the experience gained since, the US politico-military establishment has not understood how to restructure itself against the new challenges that have emerged

All nations would like to structure their armed forces in accordance with the role(s) envisaged for them. There are, however, two provisos; firstly, that the political powers possess the wisdom, perception, and foresight to envisage the right role(s) for them and, secondly, that the nation has the means to structure them accordingly.

Let me clarify that this debate does not include Weapons of Mass Destruction; which have been debated separately by many an analyst, including this author.

I will cite the examples of only three countries to illustrate my point, though there are innumerable others available: the UK, the USA, and Israel. The first two are a product of a process of evolution, while Israeli armed forces were an immediate product of the perceived threat. Each example is singular in its own way.

Being an island and subjected to innumerable invasions in its early history, the UK adopted a defensive strategy, building castles to defend its shores and then a layered defence, with numerous castles, until London and beyond. It was during the times of Elizabeth I that it became a seafaring nation and, having defeated the mighty Spanish Armada, it then set forth to colonise the world.

In the aftermath of the Second World War, when the US assumed leadership of the ‘Free World’ and colonies began to claim independence, the UK realised the need to restructure its armed forces to the more modest international role that it now had.

Initially, during the Cold War era, the restructuring was governed by the requirements of NATO, but then, while conscious of its diminishing international role, the UK found itself in the throes of terrorist attacks by the IRA, which even penetrated London. This, coupled with the Falkland War, led to the assignment of new role(s) for UK’s armed forces and the manner of their restructuring.

If I were to attempt to state the current role of UK’s armed forces, it would be, ‘while retaining the minimal necessary seafaring capability, to structure all three services into a compact, mobile force, capable of swift reaction to meet any internal and/or external threat’.

While many movies have extolled the role of the American Special Forces, they are not a patch to the British Special Air Service, SAS; it may not be known to many readers that the British SAS is arguably the best organised and trained outfit for unconventional warfare, including terrorism. A battalion trained to deal specifically with the threat of hijacking, two battalions dedicated to dealing with the Irish problem, when it was at its zenith, and the remaining units for multiple roles, including terrorism. It was the SAS that played a crucial role in delaying the Argentinean forces during the Falkland war, so that it culminated in a British victory.

The US began its wars with the war for its independence. Thereafter it fought wars against the Spanish-Mexican forces and also fought a civil war. The advent of the First World War provided it the first opportunity to extend its military power overseas; in which it was successful. However, it was the Second World War that finally drove home to the US establishment that it no longer faced a threat to its own mainland, and that it was destined to play the role of the senior partner for the so-called ‘Free World’ during the Cold War and beyond.

Consequently, since it only envisaged extending its power overseas, it is most appropriately configured to that end. The service chiefs have only peacetime roles of training and administration; during operations, they are sidelined to insignificant positions. While the C-in-C, the US President, orders the operation, the military functions through the CJCSC to each of its three commands. Each command is configured with a combination of forces, including elements of all services, including marines. These commands, under the orders of the CJCSC then conduct the military operations in specified areas.

However, even in the aftermath of 9/11 and the experience gained since, the US politico-military establishment has not understood how to restructure itself against the new challenges that have emerged in the form of terrorism and continues to rely on the numerical and fire power superiority against an elusive enemy. They, like Pakistan, would do well to learn from the UK.

At its very inception, Israel was surrounded by enemies from all sides. Like Pakistan it suffered from a lack of depth. Fortunately, however, none of its enemies were well trained, organised, or imaginative; what is more, they were divided among themselves. The Israeli political leadership realised that it would be in its best interest if it were to pre-empt the enemy(ies) and not allow them to penetrate Israeli soil.

Consequently, Israeli forces were configured into compact, mobile, brigade sized groups that could respond swiftly in any direction, disengage and respond to a threat from another direction. The great advantage of its small size was that Israeli forces could never be overstretched logistically; and, of course, it relied heavily on its air support as well as a fairly strong naval arm.

Divided into such combat groups that might frequently be further subdivided, their initial training relied heavily on individual initiative. The only time they attempted a defensive role with the supposedly impenetrable ‘Bar Lev Line’, the Egyptians managed to penetrate it. It was this individual initiative and other imaginative tactics that made the Israeli armed forces such a formidable fighting force.

That it has deteriorated to a shadow of its original self as proven by its recent unsuccessful and aborted invasion of Lebanon, is again due to the fact that instead of encouraging initiative and imaginativeness, it has taken a leaf out of the American forces strategy, and has begun to increasingly rely on fire power to win its wars.

To effectively combat these terrorists, our forces need to be re-organised into smaller, self-contained, composite groups to improve their response capability

In Pakistan’s case we have never seriously considered structuring our armed forces in accordance with our own requirements; both because of lack of resources, and a complete lack of ability to envisage our military role(s). Our politico-military establishment chose to remain totally obsessed with India, while the Indian establishment also made no attempt to either reduce Pakistan’s obsession with India, or its own with Pakistan.

Despite the current turmoil in the country, we are faced with a unique opportunity which makes it possible for us to redefine our defensive operational strategy and undertake a meaningful reconstruction of the armed forces. This opportunity has been offered by America’s expressed desire to provide military assistance for our war against terrorism and the increasing dimensions of the threat on our western borders (while we appear to be making slow but steady progress towards peace with India).

While India must always remain a prime factor in our threat perception, it might be possible to evolve a more affordable defensive strategy that could simultaneously improve our ability to deal with the ongoing insurrection in our tribal areas, and the foreign support available to them.

With regard to India if, instead of the more ambitious desire of capturing Indian territory through a ‘riposte’ as advocated by Gen Beg in the late 1980s, we decide to fight a destruction-oriented strategy based on ‘counter offensive(s)’ within our own territory — where the PAF would operate under the protection of our ground-based air defence — we could, with two smaller more mobile reserves placed at two strategic locations, like a boxer, reach out to destroy one penetration, while delaying another, to be dealt with after the first; and so on.

Admittedly, Indian forces will capture some of our territories but if defensive forces were organised to fight in a manner that contained enemy penetrations in preparation for the planned ‘counter offensives’ by our reserves to destroy them, the war could be fought ensuring that we stave off defeat.

What is more, our vastly outnumbered air force could confine its operations in support of the ground forces to our own territory where, supported by ground based air defence systems, their capability to inflict damage on the numerically superior Indian air force would multiply. The PAF’s forays in Indian territory, where the Indian ground based air defence systems, coupled with the IAF could decimate them within days, would be reduced to the bare minimum necessary!

Were our military to adopt such a strategy, our intelligence requirements to locate Indian reserves would multiply. Estimating the time of their response would enable us to utilise our mobile strategic reserves while the window of opportunity referred to as a ‘vacuum’ in military parlance still exists; the existence of a vacuum has to be identified well before it occurs.

The reserves launched in self-contained, composite, smaller groups, moving towards the same location from multiple directions — that do not offer lucrative targets to the enemy’s air force as large cumbersome strategic forces would — could then swiftly destroy the enemy penetration(s), fall back and regroup while another group of reserves deals with another penetration.

Needless to say, the theory is far more easily stated than the implementation is likely to be. Our senior military commanders will need to not only be exceptionally well-trained and to be able to judge the exact timing for the employment of their reserve(s), but will also need the exceptional courage that is essential to take ‘calculated risks’ in war.

While I have written on this subject earlier, it is relevant to explain why I consider this an opportunity to undertake restructuring of the armed forces. The US is very keen to provide us military assistance for our role in the war against terrorism; it would, however, be extremely reluctant to provide us assistance that might be seen to bolster our offensive military capabilities vis-à-vis India.

There is no disputing the fact that our intelligence gathering capabilities need enhancement for us to be effective against terrorists; in fact, the US is already assisting us in the provision of intelligence gathering capabilities and is even encouraging us to produce some indigenously, like drones.

To effectively combat these terrorists, our forces need to be re-organised into smaller, self-contained, composite groups to improve their response capability. Were we to seek assistance to this end, it is unlikely to be denied, particularly since, even in relation to India, it will only enhance our defensive capabilities.

I have deliberately refrained from discussing details of how the military could economise to comfortably reduce its annual expenses by 15 to 20 percent, which I believe they can without impairing their combat capabilities. These details would make for boring reading and concern only those politico-military leaders who might wish to take decisions in this regard.

Admittedly, even though this effort is titled ‘restructuring the armed forces’, it has dealt almost entirely with the army. Mention of the PAF has been only in passing, while the PN has been totally omitted. The reason for this is my realisation that while the effort for restructuring of the armed forces has to be a composite one, both the PAF and the PN deserve a detailed and more informed effort to support this concept; more informed than I could perhaps provide. I hope some representative of each will complement my effort by doing so.

The author is a retired brigadier. He is also former vice president and founder of the Islamabad Policy Research Institute (IPRI).

India opens re-bids for 197 military helicopters - deal valued at $750 million 25 July 2008

New Delhi: India on Thursday invited a re-bid, this time for 197 utility helicopters for its army and air force. The helicopters are expected to be inducted into service by 2010 in a deal valued at Rs3,000 crore ($750 million), according to official estimates.

Overall, the army and the air force require 312 helicopters between the services, but the size of the tender has been reduced after an assurance from state-owned Hindustan Aeronautics Ltd (HAL) that it would be in a position to develop and deliver 115 matching capability platforms over the next five to six years.

According to defence ministry officials, the request for proposal (RFP) is for 197 helicopters, with 133 for the army and 64 for the air force. These numbers are intended to replace ageing 1970s-vintage Chetak and Cheetah helicopters.

The Indian names refer to French designed, but HAL-constructed, Alouette helicopters. The Indian Army urgently needs to not only to replace its ageing fleet but also expand the Army Aviation Corps (AAC) to meet current and future rapid mobility battlefield requirements.

According to officials, potential vendors have been given three months time to respond to the RFP. A further period of three months will be taken up for purposes of scrutiny of bids. Thereafter, the army and the air force will jointly evaluate the contending helicopters.

Officials said the process is likely to be completed by the end of 2009.

Keeping the previous cancelled bid in mind there will be at least six contenders in the fray: the Eurocopter AS550-C3 manufactured by a four-nation European consortium, the American Bell-407 and the Boeing MD500, the Italian Agusta Westland and Kamov and Kazan from Russia.

Interestingly, defence officials said that there will be licensed transfer of technology to HAL but only for purposes of maintenance.

Defence: India turns to Israel & Italy

With India's defence relations with Russia, a one-time trusted ally running into rough weather over the Russian insistence on a higher price tag for its defence hardware as well as the tough time New Delhi has had in getting timely supply of reliable spares and components from this former Communist giant, the country has been on the outlook for alternate supply sources for defence hardware and allied services. In particular, India 's defense establishment is quite disturbed over the cost escalation and delay in retrofitting the aircraft carrier Admiral Gorshkov now known as INS Chandragupta.

Though the USA has been "overeager" to enter the action-packed, lucrative Indian defence market in a big way, the Indian defence set-up has been treading cautiously in so far as clinching defence deals with American defence contractors is concerned. Given the deeply rooted penchant of the American political leadership, cutting across the ideological barriers, to come out with "sanctions and trade embargos "plainly, implying the annulment of the arrangement for the supply of "spares and services' at the most critical juncture.

Asserted the Director of the Centre for Land Warfare Studies Brigadier Gurmeet Kanwal, "Overall it is best to diversify the supplier base and enter into technological collaboration with the best in different fields because we always face the risk of resumption of sanction. Against such a backdrop, India has been increasingly leaning towards Israel to meet the growing needs of its defence sector. Today, Israel is the country's second largest defence partner showing up the potential to replace Russia as the number one defence hardware supplier. However, the emergence of Italy is a modest way, as India 's trusted defence partner has not gone unnoticed.

It is a tribute to the smooth running of the Indo-Italian defence ties that Italy has proposed that the two countries join hands for research and development in defence production. Incidentally, in 2003, India and Italy had signed a Memorandum of Understanding (MOU) on the transfer of defence equipment, technical assistance and defence industrial cooperation.

Both the Italian defence industry and India 's military establishment are convinced that the marriage of Italian expertise in the area of high tech weapons systems with India 's human resources skill make for a win-win combination. Moreover, the prevailing EU defence embargo against China implies that Italy would need to turn to India to promote its defence hardware and services. For India is looking at spending around US$50-billion over the next five years as part of an ambitious exercise to modernize and upgrade its military machine, which till recently was dependent on the Soviets and Russia weapons systems.

An Italian company is assisting the Government-owned Cochin Shipyard Ltd at Kochi in building India 's first indigenous aircraft carrier ADS (Air Defence Ship) at an estimated cost of Rs.20-billion. Also, the Italian firm has entered into two contractual deals with the Cochin Shipyard with a view to help India 's realize 38,000-tonne ADS by 2012. Like the Admiral Gorchakov aircraft carrier now being retrofitted and augmented by Russia for the Indian Navy, the ADS too will be armed by Mig-29 MTK combat aircraft.

Further, the Italian Defence Ministry has suggested that both the countries could very well join hands to develop combat systems for use onboard ADS. Earlier this year, the Indian navy also clinched an Rs.13,000-million deal with Italy for a new fleet tanker. This tanker to be delivered by around 2010 would boost the country's naval fleet's endurance in high seas by a substantial extent. On another front, the Italian FREMA stealth frigate is in the race for grabbing an Rs.30,0000m order for 7 warships for the use of the Indian navy. Additionally, the Italian company is also in the reckoning to supply 6 advanced offshore patrol vehicles to the Indian navy and Coast Guard.

It has already supplied an advanced oceanographic survey ship to the Indian Ministry of Science and Technology. No wonder then that Italy considers India to be a priority country. Meanwhile, Italy is also looking to bag a lucrative Indian order for the supply of 12 AW-101 VVIP helicopters for use by the President and Prime Minister. Each of these helicopters carrying a price tag of Rs.1100-million will be adequately augmented with advanced communications systems and self protection devices.

Indeed, the Indian Air Force (IAF) has been impressed by the performance of this triple engine Italian chopper, AW-101 during its extensive field trials. Everything going as planned, India and Italy are likely to sign this multi-million dollar contract sometime before the end of this year. According to defence experts, this could perhaps be the biggest and most prestigious Italian export to India . Clearly, the acquisition of the VVIP choppers could nudge Italian defence firms to expand their presence in the fast-growing defence aerospace market of India.

The Italian NH-90 helicopter too is aspiring to get the order for 16 anti-submarine warfare choppers for the use of Indian navy. Further, this Italian firm is in the race to provide 13 ATR turboprop maritime patrol aircraft to the Indian navy and the coast guard. Keen on getting a possibly bigger share of the Indian defence market, the Italian company has also offered its C-27J Spartan medium transport aircraft to the BSF, under the Home Ministry.

Significantly, another Italian firm, part of the Euro fighter consortium, is making vigorous efforts to get the mega Indian defence order for the supply of 126 medium, multi-role fighter aircraft for the IAF. Depending upon the type of the aircraft and the armament suite it carries, the value of this order is expected to touch US$10-billion. It has invited India to "become a member of the successful Euro fighter family" with the offer to allow it free access to all future technology enhancement featuring futuristic technological elements. In the ultimate, Italy has been slowly but surely emerging as India 's trusted defence partner. According to SIPRI Arms Transfer data base 1998-2007, Italy occupies 12th place among the countries that make available defence hardware and military services to India--and the sky is the limit.

Radhakrishna Rao, INFA

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