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Sunday, 2 September 2012

From Today's Papers - 02 Sep 2012
China-India defence ties set to get a major boost
Ajay Banerjee
Tribune News Service

New Delhi, September 1
A significant positive turn is being expected in defence relations between India and China in the coming days.

The Defence Ministers of the two Asian neighbours will be meeting each other here. They are, expectedly, looking to resume joint military exercises, besides agreeing on taking additional steps to maintain peace along the land border all along the Himalayas.

General Liang Guanglie, Minister of National Defence of China, will be on five-day official visit to India from September 2 to 6, the first such visit by a Chinese Defence Minister in eight years.

He will be accompanied by a 23-member delegation that will include high-ranking members of the Chinese defence and military establishment.

Indian Defence Minister AK Antony and his team of top civil and military officials will engage Guanglie at a ministerial-level discussion in New Delhi on September 4.

The two sides will discuss how to increase the number of measures to maintain peace along the border and the confidence-building measures between the armed forces of both countries.

The resumption of joint military exercises and enriching their content will be part of the confidence-building measures. Indian and Chinese forces had conducted two joint military exercises code-named “Hand-in-Hand” in Belgaum, Karnataka, in December 2008 and in Kunming, China, in 2007. Both exercises were on the theme of counter-terrorism.

This time, more elements of ground forces are likely to be included when the exercises resume.

Military relations had ebbed in 2009 after China refused a visa to a serving Indian General on the premise that he was posted in Jammu and Kashmir.

So, India snapped defence ties. But intervention from the top political leadership on either side improved matters and in December 2011, the fourth Annual Defence Dialogue was conducted in New Delhi where both sides agreed to increase defence exchanges and enrich their content.

The other aspect of the Antony-Guanglie discussion will be to build additional confidence-building measures along the Line of Actual Control (LAC). The LAC is 4,057km long and lies mainly in eastern Ladakh, parts of Uttarakhand, Sikkim and Arunachal Pradesh. Historically, there has never been a demarcated boundary. These are strategically vital portions which are contiguous with Tibet.

In January, the two countries established a working mechanism for consultation and coordination on the boundary issue to maintain peace along the LAC. When Antony meets his counterpart, the two will work to have a more real-time military interface to facilitate an intervention from the two foreign offices to prevent any flare-up.

A protocol is in place since 2005 to prevent gun-totting soldiers on either side from escalating matters, but that may not be enough in today’s scenario.

Differing perceptions about the disputed Line of Actual Control (LAC) between India and China means soldiers on either side have to be under strict protocol.

India and China do not agree on the LAC, hence soldiers on either side patrol up to the point they perceive as the LAC.

For a friendly neighbourhood

First such visit by a Chinese Defence Minister in eight years

Will be accompanied by a 23-member delegation

Antony will engage Guanglie in ministerial-level talks on September 4

Both nations likely to increase the number of measures to maintain peace along the border

The neighbours keen to resume military exercises as part of confidence-building measures between their armed forces.
Fire-fight between militants and the security forces ongoing in the Ganderbal region of Kashmir
The army sources reported a few hours ago that an encounter between the separatist militants and the security forces is ongoing at the Ganderbal district of Jammu and Kashmir.
One militant has been killed in the fighting, and the army claimed that they have so far suffered no casualties. The operation is being jointly carried out by the state police, and the Indian army units posted in Kashmir. Since the encounter is not over yet, the casualty figures are set to rise.

Local media reported that the army launched the counter-insurgency operation at around 5 am today, in the forested area of Kangan, located in the Ganderbal district. The region is some 25 miles to the north of the state capital of Srinagar. Kangan region is located close to the National Highway 1D, which connects Srinagar with the city of Leh in the Ladakh region.

Army officials claimed that the entire area has been cordoned off, and the operation won’t be called off until the remaining militants are either killed or surrendered. Local sources claimed that a total of eight militants are currently holed up in the remote and forested terrain of Kangan. Earlier, the reports had claimed that there were only four insurgents.

According to the Indian defence authorities, the current operation is concentrated in and around the villages of Chattergul, located in the Kangan forest. Troops from the 24 Rashtriya Rifles (24 RR) are conducting search and destroy missions, with the help from the Special Operation Group (SOG) of the Jammu and Kashmir police force. Lieutenant Colonel JS Brar of the 24 RR said that all of the insurgents seem to be foreigners, although he refused to reveal their nationality.

The district of Ganderbal was created in 2007, after carving out two tehsils from the district of Srinagar. The region was one of the hotbeds of militancy during the 1990s, although the situation has remained relatively calm for the past several years.|head
Mixed Reaction to India’s Offset Rules
NEW DELHI — Industry executives and analysts are lauding India’s move to allow overseas defense companies to fulfill their offset obligations by partnering with local companies, a step aimed at benefiting the indigenous firms and the original equipment manufacturers (OEMs).

But the mechanics of how foreign firms will get credit hasn’t been determined, prompting some analysts to argue that increasing the foreign direct investment (FDI) limit would have done a better job of collaboratively boosting India’s defense industrial capabilities.

Leaving aside the desire to increase FDI, the offset rule changes have been received well, a U.S. industry source said. “No companies were complaining,” he said.

Offsets are industrial compensation in exchange for a defense purchase. Under Indian law, whenever a foreign company signs a deal with India that’s worth more than $60 million, at least 30 percent of the total amount of the deal must be in the form of offsets. The objective of the offsets is to boost India’s nascent domestic defense industry.

The Indian government, in its most recent defense offset policy ruling that went into effect Aug. 1, allowed offsets to be fulfilled through what’s called the non-equity participation route. This covers any participation in a joint venture and investment into Indian companies that does not involve actual transfer of cash. Such participation can be in the form of support, such as tooling or existing software.

Before the rule change, offset obligations could be fulfilled through partnerships between the overseas manufacturer and the Indian firm. The new wrinkle is the elimination of the requirement to transfer cash between the entities.

“The Indian entity benefits more than the OEM since the entity receives more than what it gives back. The capability that did not exist earlier is created in this Indian entity by such technology transfer. The OEM also benefits since they get some sort of multiplier for their efforts, but on a conditional buy back,” said K.V. Kuber, retired Indian Army colonel and CEO of Sugosha Consultancy Services.

However, since the clearances must be routed through the Indian Defence Ministry, fulfilling offset obligations through non-equity participation might actually become bogged down in bureaucratic delays, said Nitin Mehta, a New Delhi-based defense analyst.

Other changes announced recently included creating a multiplier on the value of high-end technology as weighed against offset obligations, placing caps on penalties for companies and extending the discharge timeframe for offsets to two years beyond the end of an acquisition contract.

Preference among analysts and industry here is for an increase in foreign direct investments from the current cap of 26 percent to 49 percent. Under foreign direct investment, if a foreign company strikes a deal with an Indian company, that foreign company could own up to a 26 percent stake in what the new entity generated. A rule change that would increase the cap to 49 percent is pending.

U.S. companies are wary of placing high-end technology in the hands of India-based companies in which they possess only a minority stake, a U.S. industry source said. At the same time the Indian Defence Ministry wants ownership to remain domestic.

“They want their own indigenous companies to develop the technology, but U.S. counterparts are not willing to hand over the crown jewels when they don’t have control over them,” he said.

Still, the rule changes that India has made have been met optimistically, even if other techniques might be preferable.

“Non-equity participation is fine but a better way would have been to keep it as equity participation but make [foreign direct investment] automatic. With [the non-equity participation] route opened up, there is a whole new requirement of development of capability at the government level to validate the non-equity participation. Until the time this capability gets developed and institutionalized, this route — while available to OEMs — may not find much success as little movement on approvals can be expected,” said Mahindra Singh, retired Indian Army major general.

Other Incentives

Under the new offset rules, OEMs that transfer technologies to small- and medium-scale enterprises — and also to the Defence Research and Development Organisation (DRDO) — will be eligible for offset credits three times greater than the money spent. So if technology worth $20 million is transferred to India, the overseas company gets an offset credit worth $60 million.

However, the technology transfer cannot carry any license fee, nor should there be any restriction on the production, sale or export of any goods or services that arise out of that technology; all drawings and documents pertaining to the technology must be transferred as well.

Indian analysts and industry officials weren’t the only ones who had hoped that India would go further in its offset rule changes.

Brinley Salzmann, the overseas and exports director at the U.K. defense and aerospace trade lobby group ADS, acknowledged that the Indian government is listening to criticism about its offset schemes, but they still have work to do to get it right.

“They are moving in the right direction but they have a way to go before it is perfect. It does show, though, that the Indian government is in listening mode over the scheme’s shortcomings,” he said.

“The changes do not tackle the issue of shortcomings in the

capacity and capability [of Indian industry] to absorb all this work. This is a structural change that won’t be solved overnight,” Salzmann said.

He added that the jury is still out on whether disbanding the Defence Offset Facilities Agency and replacing it with the Defence Offset Management Agency (DOMA) would be effective.

“We have yet to see how effective the new Ministry of Defence entity will be in overcoming the legendary bureaucracy which has proved a major cause of companies’ inability to get a decision from DOFA,” Salzmann said.

“Any evolution that helps joint development of work by Italy’s and India’s aerospace and defense industries is positive,” said an Italian industrial source. “Allowing an increase in foreign direct investments in firms above the limit of 26 percent would also be welcome.”

Despite the fact that India updates its defense procurement policy annually, the country continues to import nearly 70 percent of weapons and equipment. The domestic defense market is divided between the state-owned companies that contribute the bulk of equipment and the small- and medium-sized enterprises whose share of the $6 billion annual market is around $1 billion only.
Indian Army test launches Prithvi-II missile
The Indian Army's Strategic Forces Command (SFC) has successfully tested its nuclear-capable Prithvi-II surface-to-surface missile from launch complex-III of Integrated Test Range (ITR) at Chandipur, Orissa, India.

Monitored by the Defence Research and Development Organisation (DRDO) officials, the trial was part of a regular training exercise to validate the missile's effectiveness in real-time situations.

Launched from a road mobile launcher system, the missile followed the prescribed trajectory and reached the predefined target point in the Bay of Bengal with a very high accuracy of more than 10m, according to defence sources.

During the terminal phase of the test launch, the missile was tracked by the advanced radar and telemetry stations located along the coastline and two Indian Navy's ships stationed near the target point.

An unidentified army official was quoted by Press Trust of India as saying, "The whole exercise was aimed at studying the control and guidance system of the missile besides providing training to the Army, which happens to be the user."

ITR director MVKV Prasad said, "It was a perfect launch. All the mission objectives were accomplished during the trial."

Developed indigenously by DRDO under the Integrated Guided Missile Development (IGMD) programme, the Prithvi-II is a tactical surface-to-surface short-range ballistic missile (SRBM) designed to accurately intercept targets, located at a distance of 350km.

Using an advanced inertial guidance system with manoeuvring trajectory, the 9m-long single stage liquid propelled missile can carry both conventional and nuclear warheads from 500 to 1,000kg payload, and is also capable of deceiving any anti-ballistic missile threat.

Originally developed for use by the Indian Air force (IAF), the missile has also been inducted into operational service with the Indian Army.
New Army chief wields the broom, brings in generals he trusts
The most significant transfers effected by Gen Bikram Singh was that of former Director General Military Operations, Lt Gen AK Choudhury, to an insignificant, non-operational post as General Officer Commanding, Bengal Area, based in Kolkata [ Images ], reports RS Chauhan

Exactly three months after becoming India's [ Images ] Army chief, Gen Bikram Singh has effected a top-level reshuffle of his generals to bring in people he trusts.

The most significant among them was the transfer of former Director General Military Operations, Lt Gen AK Choudhury, to an insignificant, non-operational post as General Officer Commanding, Bengal Area, based in Kolkata.

The DGMO is among the seven or eight PSOs (Principal Staff Officers) posted at the Army Headquarters and is considered a high-pressure and high-profile job since he is the man who controls movements, operations and deployment of troops, liaises with his Pakistani counterpart on a weekly basis and is the hands-on man for the Army's involvement in aid to civil authority or humanitarian assistance.

Lt Gen Vinod Bhatia, who was posted as Director General Infantry -- DG, Infantry -- was brought in to replace Lt Gen Choudhury, while Lt Gen JS Bajwa, heading the Infantry School at Mhow, will replace Lt Gen Bhatia as the new DG Infantry.

Lt Gen AS Nandal, who was posted as GOC of the Nagrota (Jammu)-based 16 Corps, considered to be one of India's largest field formation in terms of troops deployed, will move to Mhow to take over from Lt Gen Bajwa.

Earlier, Lt Gen Ranbir Singh, who was posted as the Army's representative in the tri-services Strategic Forces Command, which handles India's nuclear weapons deployment, was sent to Shillong as DG, Assam Rifles, a paramilitary force primarily deployed in the north-east. His replacement at SFC, Lt. Gen DS Hooda (who was in the post for barely a fortnight), will take over the 16 Corps under Northern Command.

Apart from the DGMO, the most significant transfer is that of Lt Gen VK Pillai, heading the Delhi [ Images ] area, as GOC, of ATN&KK (Andhra Pradesh, Tamil Nadu, Karnataka [ Images ] and Kerala [ Images ]) area based in Chennai. Lt Gen S Mitra swaps his post with Lt Gen VK Pillai.

Delhi Area GoC is normally a handpicked man considered to be confidant of the Army chief. Lt. Gen VK Pillai, a Rajput Regiment [ Images ] officer, was chosen by Gen Bikram Singh's predecessor, Gen VK Singh [ Images ], to be in Delhi.

It is noteworthy that Lt Gens Vinod Bhatia, Ranbir Singh and JS Bajwa had worked closely under Gen Bikram Singh when he was Eastern Army Commander before taking over as Army chief on June 1.

Although all chiefs have the right and prerogative to choose their own team, normally PSOs -- even if appointed by previous chiefs -- normally serve out their time. But Gen Bikram Singh clearly has different ideas.

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