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Wednesday, 20 March 2013

From Today's Papers - 20 Mar 2013



China replaces UK as world’s fifth largest arms exporter

Tribune News Service

New Delhi, March 19

China has become the fifth largest exporter of conventional arms, replacing the United Kingdom, says a report released by the Stockholm International Peace Research Institute (SIPRI).


This is the first time that China has been ranked among the top five arms exporters since the end of the cold war. Overall, the volume of international transfers of major conventional weapons grew by 17 per cent between 2003-2007 and 2008-12.


This is the first time that the UK has not been in the top five since 1950, the earliest year covered by SIPRI data. China’s displacement of the UK is the first change in the composition of the top five arms exporters in past 20 years.


The five largest suppliers of major conventional weapons during the five-year period 2008-12 were the United States (30 per cent of global arms exports), Russia (26 per cent), Germany (7 per cent), France (6 per cent) and China (5 per cent). “The volume of Chinese exports of major conventional weapons rose by 162 per cent between 2003-2007 and 2008-2012, and its share of the volume of international arms exports increased from 2 to 5 per cent,” the report said.


“The rise of China has been driven primarily by large-scale arms acquisitions by Pakistan,” said Dr Paul Holtom, Director of the SIPRI Arms Transfers Programme. The report goes on to say that a number of recent deals indicate that China is establishing itself as a significant arms supplier to a growing number of important recipient states.


In New Delhi the report was released at the Observer Research Foundation where, ORF Director Sunjoy Joshi pointed out that all top five global suppliers of arms were also the permanent members of the UNSC that has failed to stop nuclear proliferation.

No wrongdoing, claims Agusta

Tribune News Service

New Delhi, March 19

Helicopter maker AgustaWestland, in its reply to the Ministry of Defence show-cause notice, today said it had not violated the integrity pact it signed with India in supplying 12 VVIP helicopters at a cost of around Rs 3,500 crore.


The company, a subsidiary of Italian aerospace major Finmeccanica, faces allegations of illegal payoffs of Rs 350 crore to bribe officials in India for securing the deal by changing tender specifications. An Italian court, on February 12, ordered the arrest of the Finmeccanica CEO.


This was the second show-cause notice the MoD had issued to the copter maker after rejecting its reply to the first notice a few weeks ago. The second notice was issued after a team of the MoD and the CBI obtained some documents from Italy. The authorities were reportedly not satisfied with Agusta’s reply and had confronted it with facts.


Agusta, in its reply today, said, “The company has not violated the integrity pact it signed with the MoD for the supply of 12 AW 101 helicopters.”


The ministry is examining the reply and its response will be known over the next few days. “The MoD response will be conveyed to Agusta in the next few days,” source said.


The MoD had asked the helicopter-maker to submit details about its transactions with Tunisia and Chandigarh-based firms, the IDS Infotech and the Aeromatrix, respectively. In response, the company has submitted audit papers of its financial transactions.

Defence expenditure

Going beyond the Budget

by Lt-Gen Nirbhay Sharma (retd)


The ongoing post-Budget debates are on expected lines. As in the past, all essential concerns are on the table excepting, of course, defence. The discourse predictably centres around the adequacy of the amount allocated. No mention is made of the vital issues — value for money and progress on self-reliance. The new budget's allocation of $ 37 billion (Rs 2.03 trillion) amounts to an increase of 14 per cent over the revised estimates of 2012-13. However, when you take into account the annualised inflation rate of around 6 per cent, the actual increase is almost nothing.


Recently delivering a lecture in New Delhi, the Finance Minister had spoken about shifting from a compartmentalised to a comprehensive approach to security — encompassing all of its dimensions. With an eye on the Budget, a direct relationship between economic growth and the expense on defence was also highlighted. While no one can argue with the premise, its complexities demand further deliberation.


Defence needs to be viewed as an integral part of national planning so as to comprehensively quantify the overall requirement to meet our legitimate security needs and strategic aspirations. A coordinating mechanism must ensure that all the relevant planning and decision-making instruments of the state are in harmony and do not come in the way of either economic growth or defence preparedness. Considering that building defence capabilities takes a long time requiring assured and sustained financial commitment, the yearly pronouncement in the Budget of “allotting more money if required for defence” must be reviewed. The allocations are nullified further by “giving with one hand and taking back by the other” through cuts at revised estimates. Within these parameters, the allocation of 1.79 per cent of the GDP for defence requires more debate. Also, the present allocation constitutes 12.23 per cent of our annual expenditure, and the taxpayers have a right to know the “whys and hows”.


India is today one of the world's largest importers of defence equipment. In the next five years, we are likely to spend around $50 billion on imports. It's indigenous purchase ratio is barely 30 per cent. China, so often quoted as our strategic rival, is not only nearly self- reliant, it meets a substantial portion of its defence expenditure through the export of arms and other defence hardware. No wonder its defence spending has risen by 200 per cent in the last decade to reach $119 billion in 2010 (compared to our $36 billion). Indigenisation then can also be the key to prudent fiscal management by offsetting the expense on defence as well.


Secondly, the defence procurement procedures, which have been under constant revision, still result in delays due to procedural bottlenecks. Lengthy processes continue to contribute towards cost overruns, technology backlog and even corrupt practices. There is the view that “no-questions-asked- safety” lies in procurement through defence public sector units (DPSUs) and ordnance factories (OFs) alone. This, in fact, has given these undertakings a monopoly status leading to systemic inefficiency, lack of corporate accountability and competition, high costs and outdated technologies. With notable exceptions, these establishments primarily operate as aggregators or assembly units sourcing components from private producers. Hi-tech components are either outsourced or acquired as transfer of technology, leaving behind a static technological base.


Progressive corporatisation and joint ventures with the private sector will bring in market-based accountability and competition in quality, price and sales. It could also provide a window to, and a level playing field for, the private sector. While the government has to open the sector for the large Indian commercial base, the corporate sector needs to bring more to the table and go global. Investments in R&D and advanced technology are vital and have long-term spinoffs. Looking at the aggression Indian private companies have shown in other sectors, it is time they make strategic acquisitions in the global defence industry.


That said, excessive barriers on foreign bidders will preclude judging the competitiveness of Indian bids, enable cartelisation and increase the costs.


Instead, a marginal price preference to domestic suppliers whose import content does not exceed a certain threshold should be examined. Also, technological and volume growth is only possible in global competition. The strategic implications of defence procurements and transfer of critical technologies need the fostering of long-term relationships. In this context, the armaments and equipment inventory has to be viewed through its life cycle with upgrades that go well beyond mere buyer-seller relations. Our dreams of indigenisation and self-reliance will remain stillborn without sovereign decisions.


Finally, defence preparedness and growth cannot occur in isolated silos. For example, as of now, projects for ship building and coastal infrastructure pass through nearly a dozen ministries/departments. Likewise, defence exports do not figure in the plans of the Ministries of Commerce, Industry and Foreign Trade. The line between internal and external security having blurred, the structures and processes should have been correspondingly altered. Instead, they continue to exist and grow on separate tracks.


On a parallel note, it is worthwhile to factor in that the armed forces and Central police forces both stand at a figure of 1.3 million each. The MoD and MHA must coordinate issues of procurement of armament, infrastructure, training and manpower. The military has nearly 60,000 personnel in the age group of 35-40 retiring every year. They possess a healthy blend of professional skills, relative youth and rich experience, which remains unutilised. No other country in the world is known to indulge in such a waste. It is a pity that despite recommendations by many high-powered committees, their lateral induction into the Central armed police and paramilitary forces has been stymied on some pretext or the other. If implemented, the overall bills of pay and pension of the security forces would be reduced substantially. Add to this the savings on avoidable cost of infrastructure and training. Likewise, a huge portion of weapons and other inventory of military rendered surplus due to constant upgrades can be passed on. This measure will also reduce expense under the revenue head and make more money available for capital acquisitions.


The competing demands on the national exchequer of “guns” over “butter” have to be contextualised by striking a judicious balance. There is a need to look at the security-related expenditure in totality. Also, the expenditure on defence should not be treated as an add-on liability, but be an integral part of the national fiscal plan. A bold and realistic drive is necessary to revamp and upgrade the DPSUs and ordnance factories, bring in more FDIs and JVs. It is only then that the huge existing defence infrastructure will shift gear, give us value for money and harness our national industrial strength.


The writer is a former member of the Union Public Service Commission and presently a Distinguished Fellow at the Obs|head

India Needs More Vehicles, But Spending Less



NEW DELHI — India’s spending on military vehicles has dropped slightly, despite the fact that defense forces have been urging faster vehicle procurement.


The budget allocation for military vehicles for the year 2013-14 is 20.8 billion rupees ($383 million) compared with an allocation of 22.6 billion rupees in 2012-13 and an actual spending of 23.5 billion rupees in 2011-12.


The drop in spending is even steeper when compared with the rupee’s declining value against the dollar. Three years ago, 48 rupees equaled $1, and now it takes 54 rupees.


The Indian Army still has failed to finalize purchases of armored personnel carriers and strike vehicles, which, according to an Indian Defence Ministry source, is the reason for the “near stagnation” on spending. The Indian Army has not purchased about 100 personnel carriers, the tender for which was first floated in 2009.


Only Ukraine-based Ukraine Export had submitted bids, which were also sent to Russia’s Rosoboronexport, Poland’s Bumar, U.K.-based BAE Systems, Germany’s Rheinmetall and U.S.-based General Dynamics.


The Army seeks to secure personnel carriers for use by its specialized forces.


In addition, the Defence Acquisitions Council, the MoD’s highest authority on weapons purchases, in October approved $300 million to buy 3,000 light strike vehicles for the Army.


A request for information has been issued for the vehicles, which will be used by special operations forces and will be fitted with integrated firepower systems. The Army has sought a stable vehicle that can carry four soldiers in full-combat mode. The request has been sent to major domestic automobile contractors.


An Indian Army official said the service urgently needs a variety of military vehicles for speedy movement against terrorists and preparedness for a swift fight in the future, yet procurement delays by the MoD have slowed the purchase process.


The Army submitted its request for vehicles nearly five years ago, which included wheeled armored personal carriers, light strike vehicles, command post vehicles, light armored multipurpose vehicles and vehicle platforms for multibarrel rocket launchers, the Army source said.


Pressure from the domestic automobile industry to give tenders only to domestic firms — against the Army’s desire for international competitions — is the reason behind the MoD’s inability to move quickly, the MoD source said.

Abhishek Verma leaked details of most sensitive Army procurements

In an indication of the suspected deep inroads arms agents have made into the military establishment, new documents have come to light suggesting that details of some of the most sensitive Army procurements were allegedly leaked and shared with international armament companies by arms agent Abhishek Verma.


A fresh set of documents received last week by the defence ministry and the CBI, on Verma's dealings and his connections with small arms manufacturer Sig Sauer, contain a detailed fact-sheet prepared on February 28, 2011 for the then Army Chief Gen V K Singh, detailing 45 most-sensitive capital procurement cases, along with the progress in each of them.


The top-secret document, described as genuine by officials and other sources in the military establishment, gives precise details of the name, purpose, quantity and progress of the Army's most critical procurement projects.


The document was apparently leaked from Army HQ within weeks of being prepared and was allegedly mailed by Verma's associate to his then US-based escrow fund manager C Edmonds Allen.


The confidential document was sent in an email dated April 19, 2011, allegedly to be shown to international armament companies to highlight Verma's clout in the military establishment.


While The Indian Express has decided not to publish the contents of the document, officials said the details that have been leaked, specifically the exact quantity of critical ammunition the Army is short of, can have serious implications for national security.


The document also discusses in detail the required quantity of launchers and missiles, along with the project-update for the Army's next generation anti-tank guided missiles, the Army's requirement for 3-D radars, description of the Army's tactical and mobile communication systems, required quantities and updates of the four main personal infantry weapons projects and the total requirement of ammunition for various branches of the Army.

Aggression in Indian army

Indian Army chief Bikram Singh Recently warned Pakistan, that these soldiers would not remain quiet if Pakistan violated the ceasefire. Army Chief has repeatedly has shown his aggressive side after beheading of the Indian army jawans by Pakistani special forces and in a way also has given a free hand to the battalion commanders to reply to any Pakistani  aggression in the area .


Indian army in recent times is not shying away from giving out its peace of mind to its political masters in the centre and when they disagree with their political masters they make sure that the whole country through media knows about their concerns and their thinking. It can be said that it was Indian Army which forced PM Manmohan Singh to stay away from handing over a favourable deal on Siachen Glaciers to Pakistan.


Gone are the days when Indian army chief could shy away from media or repeat what their political master have in mind , Indian army seems to be showing a different kind of aggression . Pervious Army chief Vijay Kumar Singh was very vocal in criticising Center or issues related to Indian army.


Aggressive Army chief is a shift which is seen in Indian Army, but it also need of hour that we cannot ignore.  Once US Army is out of Afghanistan focus of attention will again shift back to Kashmir, Dozens of Terror outfits operating with or without Pakistani blessings have already shown their next Intentions after pressure of US army is gone, Kashmir will be the next battle ground for this terror outfits and Recent attack on CRPF Camp is just the beginning of the things to come in next few years. Instead of waiting for Political masters to show some nerves , Army should show the way in dealing with terror .


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