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Monday, 10 February 2014

From Today's Papers - 10 Feb 2014

 US, Israel ready to sell anti-tank missiles
Have made competing offers to India for joint production, co-development
Ajay Banerjee
Tribune News Service

New Delhi, February 9
The American and Israeli governments have made separate competing offers to India on joint production and co-development of specialised anti-tank missiles. The Indian Army is looking to have an inventory of 20,000 pieces of anti-tank guided missiles (ATGMs) to equip its 355 infantry units besides the mechanised infantry units. These can be shoulder-fired or be mounted on armoured platforms such as BMPs. The contract may end up being worth $ 4 billion (Rs 24,000 crore).

The US delegation at the ongoing Defexpo confirmed this yesterday, while sources said the Israeli offer was near-identical.

India is set to split the order into two, sources on the Indian side told the Tribune. US Raytheon’s ATGM ‘Javelin’ and Israeli Rafale’s ‘Spike’ are on display at the Defexpo.

For New Delhi, it indicates a strategic shift, away from the till-now used Russian built ‘Konkurs-M’ and the French ‘Milan’ ATGMs.

The US and Israeli missiles are a generation ahead of the existing lot used by the Army, an Indian official said.

In the past four years, new inductions to Indian Air Force’s fleet of strategic planes and the Navy reconnaissance planes have been of US origin, ending a virtual Soviet/Russian monopoly over the market.

Several of the radars in the Indian inventory, including the Phalcon mounted on the Russian IL-76, are of Israeli origin.

Backing the US bid is the fact that US Deputy Secretary Defence Ashton Carter has proposed this under the Defence Technology Trade Initiative (DTTI). He co-chairs the DTTI with National Security Adviser Shiv Shankar Menon.

“The US offers India joint development of the next generation of the Javelin under the DTTI,” said Steve Schultz of Raytheon.

On the Israeli side the delegation is led by a Director-General rank official from their Defence Ministry. An Israeli source said: “We are ready for a government-to-government deal with India”. The “Spike” is used in 28 countries, including in Europe.

It is possible that the Israeli “Spike” could be used as a vehicle-mounted weapon, while the “Javelin” could be used in a shoulder-fired version.

Indian Army proposes to buy 321 “Spike” missile launchers, 8,356 missiles and 15 training simulators and associated accessories, along with transfer of technology. It is also looking at buying 6,000 pieces of the “Javelin” and with repeat orders running into thousands.

Boosting firepower

    The Indian Army is looking to have an inventory of 20,000 anti-tank guided missiles
    US Raytheon's missile 'Javelin' and Israeli Rafale's 'Spike' are on display the Defexpo
    These missiles are a generation ahead of the existing lot used by the Army
    India is set to book orders for both missiles
 India, China to discuss boundary issues today
Ashok Tuteja
Tribune News Service

New Delhi, February 9
New Delhi is looking positively at “encouraging” comments made by Beijing on the complex relationship between India and China on the eve of the 17th round of talks between their Special Representatives (SRs) on the boundary dispute.

National Security Adviser Shivshankar Menon will host Chinese State Councillor Yang Jiechi, a former Foreign Minister, at the two-day meeting that will begin on Monday.

The Chinese Foreign Ministry spokesperson said Beijing wanted to make the India-China boundary a bridge to facilitate exchanges and increase friendship between people of the two countries.

“It’s a positive statement...hopefully, the meeting between the two SRs will lead to progress in resolving the boundary question,” a source said.

This will be the last meeting between the SRs of the two countries before the Lok Sabha elections. Menon will be assisted by senior officials of the External Affairs and Defence Ministries.

The visiting Chinese leader is expected to call on Prime Minister Manmohan Singh at the end of the talks.

He will also be inaugurating the “Year of India-China Friendly Exchanges” at a function here on Tuesday.

It is learnt that the two SRs will hold discussions on a framework for a resolution of the boundary question, which constitutes the second step of a three-stage process.

In the last round, the two sides had discussed the maintenance of peace and tranquillity along the border, including ways and means to strengthen existing mechanisms for consultation and coordination on border affairs and methodology to enhance the efficiency of communication between the two sides.

The last round was held in June last year, days after a tense three-week standoff between troops of the two countries in Ladakh region, following incursion by the People’s Liberation Army (PLA) into the Indian territory.

Subsequently, the two countries had signed a Border Defence Cooperation Agreement (BDCA) during the Indian PM’s visit to Beijing in October last year.
Reducing defence imports will boost manufacturing: Baba N Kalyani
The Kalyani group showcased a prototype howitzer at the Defence Expo last week. Chairman Baba N Kalyani says in an interview with Jyoti Mukul that the Pune-based manufacturing and engineering giant wants to place itself as a major player in the artillery business as India opens defence procurement to private players. Edited excerpts:

How do you view your growth in the defence business?

Our group has been in the segment for decades. We have been a regular supplier of many important items like the T-72 road wheels, ready-to-fill ammunition shells and wheel rims & axles.

A large amount of this equipment is supplied through other OEMs (original equipment manufacturers). Currently, it is less than a per cent of our group's turnover but in 10 years, we should be a major artillery house globally. For this, we first need to get a base in India.

And, the government needs to come out with RFPs (request for proposals) that are make-and-buy-Indian. Under our gun programme, we have come out with the howitzer in less than two years. Now, we need to get the product tested and approved. We are also working on an ultra-light howitzer.

Besides, there will be products like truck-mounted guns and other systems, the L72 gun, ammunition and mine-protected vehicles.

After your venture with Israel's Elbit, are you looking at more tie-ups?

We are looking at organic (increasing the business) and inorganic (through mergers & acquisitions) growth. For this, we are increasing our capability and also creating joint ventures that will allow modern technology to come into our business.

We have established a joint venture with Elbit Systems and are attempting a number of large programmes. We are hopeful this will add significantly to the growth.

There is also a collaboration with SAAB, the Swedish defence conglomerate, for some systems required by the Indian Army.

How will the business be structured between Kalyani Strategic Systems and joint ventures?

Kalyani Systems will be the holding company for the defence sector. Artillery will be under BF Elbit Systems. In future, there could be joint ventures in fields such as electronics and controls. These are areas where we do not have knowledge, so we have to find someone who has the capability. We are good at hardware. As more procurement decisions by the defence ministry happen, all these partnerships will come up.

In which areas in the defence segment do you see new opportunities?

We are focusing on land systems that includes major areas of artillery systems — armoured vehicle upgrades, air defence segments, protected vehicles and precision ammunition. Currently, we have come out with a prototype of a gun. We are not manufacturing right now but it has created huge capability in the company. Our philosophy is to innovate and also get technology.

Does India's defence procurement policy encourage better technology and private investment?

India imports three-fourths of its defence requirement but the new defence procurement policy lays stress on indigenisation. Major opportunities in engineering manufacturing in India lie in power, capital goods, automobiles, oil & gas, railways and defence.

We have a good policy framework but it needs to be operationalised. We also need to cut the length of the acquisition cycle. There are small operational issues with respect to licensing, foreign exchange rate variation and taxes & duties, which need resolution. Opening the defence sector for domestic industry and reducing imports will give a boost to the manufacturing sector in India. The technology that will come with this will have a multiplier effect and will add value to other sectors as well. It should be a strategic mission for this country.
Ashok Leyland looks to grab defence sector market
 Looking for a bigger play in the defence sector, Hinduja flagship firm Ashok Leyland is in talks for partnerships with global companies to participate in tenders for Indian military supplies as it expects the segment to grab a 10% share of total business within 4 years.

The company, which is expanding product lines and integrating global weapon systems with its mobility platforms as part of a two-pronged strategy, is also looking at global markets similar to India to export its defence products.

"Our aim for the defence segment is to contribute about 10% of the total business in the next three to four years, up from the current 6-7% ," Ashok Leyland Chairman Dheeraj Hinduja told PTI in an interview. In FY2012-13, the company had posted net sales of Rs 12,203.07 crore. In the April-December period this fiscal, its net sales stood at at Rs 6,714.78 crore. It has already participated in a tender to supply 6x6 trucks to the Army and is preparing itself for more. "We understand the requirements of the Army well," Hinduja said.  Leyland has supplied over 70,000 units of its Stallion trucks to the Indian Army, serving in key logistic operations.

With the addition of a 10x10 variant of its Super Stallion, Ashok Leyland now has a range of defence vehicles starting from 4x4 configuration with wide ranging applications from troop carriers to weapons systems such as the multi barrel rocket launcher to electronic warfare systems and bridge launcher, among others.

Besides, the firm is working on tactical vehicles and has already developed a land mine protected vehicle. It is confident that its long experience in the sector will make it a preferred choice for foreign firms that are looking for local partners to participate in tenders for Indian defence forces.

"We are looking at partnerships with global firms and we are constantly in talks with various firms. These will be for tenders that we would participate," Hinduja said, adding the focus of the partnerships would be to meet tender requirements and not for new defence product development.

Last week, Ashok Leyland signed a partnership agreement with Swedish group SAAB to deliver high mobility vehicles for SAAB's BAMSE Short Range Surface to Air Missile (SRSAM) system to compete for the Indian Army SRSAM air defence programme. Commenting on the company's global ambition for the defence sector, Hinduja said: "We are looking not only at the Indian market for this sector. We are looking to market our products to other countries, where conditions are similar to India.
Pony Tales From the Chinese Border

Quit horsing around, seems to be the message when it comes to the Army’s pony express. The DRDO’s Defence Institute of High Altitude Research (DIHAR) laboratory in Leh has crossbreed Zanskar ponies which are native to the Zanskar valley in Ladakh region with the Austrian Halflinger male, a draught purpose breed.

The Indian Army is in the process of breeding some 10,000 crossbred Zanskar ponies to be supplied over a period of five years. These horses are said to be a more sturdy and disciplined lot than the mules presently used for ferrying ration, arms and ammunition for soldiers in high altitude zones not accessible by vehicle.

It was not an easy task as it took eight years for scientists at the Defence Research and Development Organisation (DRDO) to succeed in meeting the Indian Army’s requirement of ponies, which are lifeline for soldiers in the mountain region of Kashmir valley.

Following the successful trials of Zanskar ponies in Kargil region, DIHAR has now transferred the germplasm, which includes semen and other tissues that can be used for breeding, to the Army’s Remount Veterinary Corps (RVC) for further breeding of ponies to meet the demand of Indian Army.

“The difficult mountainous terrain of the Himalayan region poses a formidable challenge for military operations. The strategic importance of guarding them to prevent hostile infiltration requires huge deployment of troops along with logistic supply chain and ponies play a very important role in it,” said DIHAR Director Dr R B Srivastava.

The Indian Army has been using mules which are being bred and trained at sea levels and subsequently deployed in high altitude. But most of these mules, close to 10,000 are in use at present, suffered from lack of high altitude adaptability and succumbed to various maladies thus, affecting the operational efficiency and preparedness of units.

“It was also found that the mules lose their tracks and their weight carrying capacity was not much. So some seven-eight years back we were told to identify and propagate pack-animal for army transport which is more disciplined, resistant to high altitude related maladies and has more load carrying capacity,” he said.

DIHAR got an Austrian Halflinger male as the breed is known for its hardiness and crossbred with the Ladakhi Zanskar ponies. The progeny produced using artificial insemination was put to field trials with Ladakh Scouts and are found to be the best transport animals for military transport in this region.

“These crossbred ponies are sure-footed to negotiate narrow tracks and their weight carrying capacity is about 50-60 kilograms. They can also carry heavy artillery guns and ammunitions. They can survive on local feed and fodder and require less feed. In case of emergencies, they can be deployed without any acclimatisation,” said another scientist, who is part of the project. However, he refused to disclose the costs involved in the pony breeding project, which is part of their other animal breeding programmes.   

Equines have been playing significant role in defence forces since time immemorial. Even in today's era of modernisation, the equine draught power cannot be done away with in many strategic areas of the Kashmir valley.

“Their importance has been amply demonstrated during the India-Pakistan Kargil war in 1999, when mules were used to carry all logistics and ammunition supply,” the scientist said.
Run Up To India’s Defence Budget 2014-15: Challenges To Modernisation
– Analysis
By Laxman K Behera

In mid-February, the Finance Minister would present the Interim Budget 2014-15 to the Parliament in which he would seek Vote-On-Account (VOA) to enable the government to meet the essential expenditure till such time that a new government assumes power and present a regular budget. Although the VOA is of short-term relevance, the interim budget would nonetheless contain the estimates of both revenue receipts and expenditure for the full financial year. It is the prerogative of the next government to revise the estimates and present a regular budget as per its priorities it perceives. Defence being a major charge on the Union Budget, it is worthwhile to analyse the likely impact on it by the unfolding scenario. Some of the likely challenges that the defence ministry would likely to face are discussed as under.

The first and foremost challenge that the defence ministry would face is the impending general election and its likely impact on the union budget as a whole, and the defence budget in particular. It is commonly viewed that in an election year, the incumbent government is tempted to present a populist budget. In that scenario, the Ministry of Defence (MoD) would have reasons to be unhappy, particularly so when the modernisation requirement of the Indian armed forces has reached a stage which is now contingent upon substantial additional resources to remain on course. Nothing would perhaps describe the grave situation better than the overwhelming share of committed liability (arising out of contracts already singed) in the MoD’s total modernisation budget. By 2013-14, the committed liability has reached 96 per cent (in comparison to 92 per cent in the preceding year), meaning that only four per cent (or Rs 2,956 crore) of MoD’s total capital modernisation budget (of Rs 70,489 crore) is available for signing new contracts. Any further tightening on the modernisation budget in the coming financial year would definitely affect the on-going modernisation process.

Assuming that the government defies the common logic and provides ample resources to the defence ministry, there is still very little one can expect on the modernisation front. Since the number of days before a new government comes into power is limited, the incumbent government would unlikely to take decision on major armament programmes which have reached fairly a high stage of contract negotiation. Rather the responsibility to take decision on major acquisition proposals would be shifted to the new government which would also find it difficult to expedite the process given the various oversight concerns that often surround the defence procurement. Given this scenario, the year 2014-15 may well be a year of inaction, as far as modernisation of the Indian armed forces is concerned. Some of the modernisation programmes which are likely to be subjected to this inaction are: the ultra-light howitzers and javelin programmes of the Indian Army; and the medium multi-role combat aircraft (MMRCA), heavy lift and attack helicopters, and tanker aircraft of the Indian air force.

The second challenge that the defence establishment would likely to face is related to the growth prospect of the Indian economy. It is noteworthy to mention that the GDP growth for 2013-14 is expected to be around five per cent, which is lower than 6.1-6.7 per cent estimated by the government initially. The economic slowdown, combined with the tight fiscal situation has already led to tightening of the government purse. What is of more relevance is that the growth prospect in the coming years would also remain subdued although some improvement is expected. According to a recent UN report, the World Economic Situation and Prospects 2014, the Indian economy is likely to grow by 5.3 per cent and 5.7 per cent in 2014 and 2015, respectively. This is in stark contrast with the high annual growth rate of 8-9 per cent registered few years ago.

While the subdued growth prospect of the Indian economy in the coming years would limit the spending capacity of the government of the day, it would, at the same time, have a major consequence on the defence. It is to be noted that current phase defence modernisation, which is an offshoot of the armed forces’ long term integrated perspective plan (LTIPP) 2012-27 and the Five Year Capital Acquisition Plan, is premised on a high economic growth rate (7-8 per cent annually) and a larger share (around three per cent) of the GDP on defence. Compared to this optimism, the economy forecast is rather gloomy and, the share of defence in GDP is not expected to be drastically different from the current 1.76 percent. Given this, mismatch of a huge proportion is expected in the coming years between the expectation of the armed forces and what the government could actually provide to meet such expectations.

What is of significance to debate here is that the MoD does not have an institutional mechanism to address the challenges expected in the coming years and prioritise its modernisation plan accordingly. It is to be noted that the modernisation approach followed by the MoD so far is something like a ‘first come first serve’ (i.e., a service which succeeds in processing its procurement proposal first, gets the government approval. It does not give due importance to the needs of other service (s) which may be of greater significance but is struck in the bureaucratic process). This may serve the procurement requirement of a particular service, but may not be an ideal solution to address the modernisation issue holistically, keeping in view the resource constrain. Since the challenges, as discussed above, are serious, what the MoD needs now is to have an institutional capability to prioritise its modernisation plan keeping in view the likely shortage of funds and the vital security requirements of the country.

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