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Monday, 2 June 2014

From Today's Papers - 02 Jun 2014

 Pay panel starts online survey on salary revision
Vijay Mohan
Tribune News Service

Chandigarh, June 1
In perhaps the first initiative of its kind, the Seventh Pay Commission has introduced an online survey to elicit the view and opinions of government employees across the board on issues relating to pay scale revision and service conditions.

A link to the survey has been set up on the commission’s website and those desiring to participate in the survey would first have to fill in their personal, service and contact details before they can proceed to the questionnaire. The survey would be open up to June 15.

The survey consists of 42 questions categorised under 15 sections that include pay scales, allowances, increments, performance, attracting talent, pension, training, regulatory bodies and system of governance. Participants would have to give detailed answers for each question, though there is a word limit.

There is a separate section for the defence forces that seeks opinions on the considerations for fixing their salaries and the kind of parity that needs to be evolved with the civil services, rationalising or streamlining the present types of allowances and the manner in which concessions and facilities should be taken into account for determining the salary structure.

This section also seeks to elicit views on the option available for addressing the increasing expenditure on defence pensions, reviewing the present benefits for disabled soldiers and war widows as a measure of special recognition.

In fact, the college of Defence Management at Secundrabad, is undertaking a holistic study on pay, allowances and service conditions of armed forces personnel, that would be used by the Service Headquarters to give their inputs and opinions to the Commission. The College had earlier circulated a questionnaire and serving and retired personnel in this regard.

The commission, constituted in February, is headed by Justice AK Mathur, former judge of the Supreme Court and Chairman of the Armed Forces Tribunal and has been mandated to submit its report within 18 months. A large number of employees associations and unions have already submitted numerous memorandums and demands to the commission regarding pay revision.
Energy trade with Pakistan
It is the single most effective confidence-building measure
Davinder Kumar Madaan
Recently, a draft of the Memorandum of Understanding (MoU) was handed over by Pakistan to India for a deal to buy 500 MW electricity from India for which an inter-grid connection will be built between Amritsar and Lahore via the Wagah border. Earlier, on January 20, 2014, the Pakistani Cabinet had approved the signing of the MOU. Both countries have constituted a joint working committee to resolve matters related to the technical, commercial, construction and regulatory issues of this deal. If all goes well, electricity trade between the two countries can start by the end of 2014 at a tariff of around Rs 8 per unit. Cross-border trading will be through high voltage direct current, which will ensure that both the grids operate independently. It will be economical to transfer power through Amritsar as Lahore has complete transmission lines and grids, and is near the grid in the Indian Punjab. The project requires 45 km of 220 KV transmission lines on both sides of the border -- 25 km in India and 20 km in Pakistan -- within six months following the signing of a formal agreement. Earlier, the World Bank funded the feasibility study and worked out the imported cost at 10-11 US cents per unit. It offered to provide $300-400 million for installing 220 KV transmission lines to import a total 1200 MW of power from India.

Currently, electricity production in Pakistan is about 15430 MW against an installed capacity of 22797 MW because of poor infrastructure, old plants and theft of electricity. The inefficient transmission and distribution system is costing the taxpayers Rs 1.7 per unit over and above the cost of generation - averaging around Rs 7.3 per unit. Power theft alone amounts to Rs 8,500 crore per annum. Pakistan is producing 36% of electricity from oil, 30% from hydel, 29% each from gas and 5% from nuclear plants. A sharp decline in the share of gas in energy production from 52% in 2005 to 29% in 2014 has increased the cost of power in Pakistan. The country faces 7,000 MW power deficits. This turns out to be 31 per cent of the total annual demand. The decision of the International Court of Arbitration (ICA) at The Hague in February 2013 is likely to hurt its 980 MW Neelum-Jhelum Hydro-Power Project being set up in occupied Kashmir, as the ICA allowed India to divert water from the Kishanganga river (called Neelum in Pakistan) to its 330 MW Kishanganga Hydro-Electric Project on the Jhelum river basin in Kashmir. Given Pakistan's internal energy situation, the total 1200 MW power imports from India will be acute and cannot simply be replaced by other sources. In this way, Pakistan will be more dependent on India for its electricity needs. The country imports 35 MW of power from Iran, and is considering to import another 1000 MW from Tajikistan by 2016. In recent times, China has agreed to invest US$20 billion in Pakistan's energy infrastructure, and in return, it will take ownership of coal plants.

Pakistan has also been negotiating the import of 200 million cubic feet (MCF) Liquefied Natural Gas (LNG) per day from India. The latter proposed to lay 110-km pipeline from Jalandhar to the Wagah border via Amritsar. LNG will be imported through ports in Gujarat and moved through the Gas Authority of India Limited (GAIL)'s existing pipeline network up to Jalandhar. The cost of LNG imports to India is US$ 13.5 per million british thermal units (mbtu). After including the customs duty, transportation charges and local taxes, the delivery price works out close to US$ 21 per mbtu. Pakistan wants India to exempt LNG from taxes so that the delivery price does not exceed US$16 mbtu. India is likely to waive the duty on the proposed export. However, in case of sudden termination of the contract, GAIL has sought letters of credit from Pakistan for US$ 415 million to cover the estimated value of LNG supply for three months and a bank guarantee for $100 million. It will be a win-win situation for both countries to do gas trade, as India will earn a significant profit and Pakistan will get the commodity at lower prices as compared to the international import price of US$ 19 per mbtu. Moreover, the existing gas reserves in Pakistan are expected to last only 18 years.

This gas deal will be a test case for the feasibility of the Turkmenistan-Afghanistan- Pakistan-India (TAPI) natural gas pipeline, which is being developed under the guidance of the Asian Development Bank and expected to be completed by 2017. The inter-governmental agreement on this pipeline was signed on December 11, 2010, in Ashgabat (Turkmenistan). This pipeline will transport Caspian Sea natural gas from Turkmenistan through Afghanistan into Pakistan and then to India, covering a distance of 1680 km. It is being constructed via Herat-Kandahar (Afghanistan)-Quetta-Multan (Pakistan) to Fazilka, Punjab (India). The estimated cost of this project is US$ 7.6 billion. Its capacity will be 90 million standard cubic meters per day (mcmd) of natural gas, of which 14 mcmd will be provided to Afghanistan and 38 mcmd to each Pakistan and India. India will pay a transit fee of US$ 0.5 per mbtu each to Afghanistan and Pakistan, and the delivery price will be around US$ 13 per mbtu. Unlike the Iran-Pakistan-India pipeline project signed in 1995, from which India backed out in 2007 under US pressure, the TAPI is supported by the US.

Pakistan also signed an MOU with the Indian firm Universal Biomass Energy on December 27, 2013, to set up a 15 MW biomass power plant within two years in Pakistani Punjab. The energy generated by it would be linked with a 132-KVA supply line.

Cross-border energy trade can lead to effective utilisation of natural resources. It will act as the single most effective confidence-building measure between India and Pakistan. During the post-SAFTA period (2006 onwards), the two countries have accelerated the process of mutual trade and gained due to their geographical proximity and contiguity of territories, which helped them in saving the transportation and transshipment costs. Their bilateral trade in goods increased from US$ 0.8 billion in 2005 to US$ 2.6 billion in 2013. The Wagah border is very important for exploiting the mutual trade potential, and accounts for more than one-third of the total trade.
360 cadets pass out from National Defence Academy : From Gentlemen to Officers
There was high-level discipline and synchronisation on display when 360 cadets of the country’s prime defence institute, National Defence Academy showed their skills at the passing out parade of the 126th course of NDA on Saturday. The parade was viewed by chief of Air Staff, Air Chief Marshal Arup Raha.
Commandant of NDA, Air Marshal KS Gill, Deputy Commandant Maj Gen Ashok Ambre, other senior officers and faculty were also present at the passing out parade which took place at Arun Khetrapal parade ground on Saturday.
Along with the disciplined parade of the cadets, the fly past by Sukhoi’s Jaguars, Chetak helicopters and Super Dimonas caught the attention of the audience.
Along with Indian cadets, 13 foreign cadets from friendly countries including Afghanistan, Bhutan, Maldives and Kazakhstan also passed out from NDA on Saturday. Among them, 245 cadets will be joining the Army, 38 cadets will be joining the Navy and 78 cadets will be joining the Air Force. While addressing the cadets after the parade, Air Chief Marshal Raha said, “ In the era of sub conventional warfare, the passing out cadets should convert every challenge into an opportunity and inspire others with their leadership.”

Firsts among equals steal the show

It was a moment of pride not only for these three cadets and their parents but the entire staff of Rashtriya Indian Military College (RIMC) as all the three medal winning cadets at the passing out parade at National Defence Academy (NDA) are past students of RIMC.
There were three cadets who won prestigious medals for their excellent performance during the three years course. Interestingly, 17 other cadets who also passed out from NDA on Saturday, are also past students of RIMC.
Academy Cadet Adjutant Rahul Kadian who won the President gold medal hails from Bhiwani in Haryana. Speaking to dna, Rahul said that his father who served in the Indian coast guard was his biggest inspiration. “ I grew up watching my father and since childhood I had wanted to join the armed forces. RIMC was the first step towards achieving this dream and now I am very happy to complete the course from NDA,” he said. Rahul would be joining the Indian Navy after completing training at the Indian Naval Academy in Ezimala.
Vivek Yadav of Gorakhpur in UP who won the silver medal will be a second generation officer. Vivek’s father Colonel Rajendra Yadav is also serving in the Indian army and he is currently posted at Leh.
It was a proud moment for Thakur Mohan Singh who is with the Central Reserve Police Force in Srinagar when his son Surya Prakash won the bronze medal. Surya will be the first commissioned officer from his family. “I want to serve the county and there is no better option than joining the army to fulfill my dream.”
China slams US, Japan for 'provocative' remarks
SINGAPORE: China denounced Japanese Prime Minister Shinzo Abe and US defence secretary Chuck Hagel on Sunday for "provocative" remarks accusing Beijing of destabilizing actions in contested Asian waters.

Lieutenant General Wang Guanzhong, deputy chief of the general staff of the People's Liberation Army, told an Asian security forum in Singapore that strong comments made by Abe and Hagel at the conference were "unacceptable".

Abe had opened the Shangri-La Dialogue on Friday by urging countries to respect the rule of law — an apparent reference to what rivals consider aggressive Chinese behaviour over disputed areas in the South China Sea and East China Sea.

Hagel on Saturday warned China against "destabilizing actions" in the South China Sea and listed a number of alleged infractions, including against the Philippines and Vietnam, the two most vocal critics of Beijing's claims.

"The Chinese delegation ... have this feeling that the speeches of Abe and Hagel are a provocative action against China," Wang, dressed in full military uniform, said in an address to the forum.

Abe had left on Saturday and Hagel departed early on Sunday before Wang spoke.

The Pentagon said Hagel and Wang held a brief meeting on Saturday in which they "exchanged views about issues important to both the US and China, as well as to the region".
About midway into his prepared speech in which he said China "will never seek hegemony and foreign expansion", Wang diverted from the script. He accused Abe and Hagel of "coordinating" with each other to attack China. "This is simply unimaginable," said Wang, the highest ranking military official in the Chinese delegation, adding that the US and Japanese speeches were "unacceptable and not in the spirit of this Shangri-La Dialogue". "The speeches made by Abe and Hagel gave me the impression that they coordinated with each other, they supported each other, they encouraged each other and they took the advantage of speaking first ... and staged provocative actions and challenges against China," he said.

Hagel issued a blunt message to Beijing on Saturday, saying "China has undertaken destabilizing, unilateral actions asserting its claims in the South China Sea." He accused China of restricting the Philippines' access to Scarborough Shoal, putting pressure on Manila's long-standing presence in Second Thomas Shoal, beginning land reclamation at various locations and moving an oil rig into disputed waters with Vietnam. Hagel said that while Washington does not take sides on rival claims, "we firmly oppose any nation's use of intimidation, coercion, or the threat of force to assert these claims". "The United States will not look the other way when fundamental principles of the international order are being challenged," he warned.

Abe in turn pledged that his country would play a larger role in promoting peace in Asia as his administration moves to reshape the Japanese military's purely defensive stance. "Japan intends to play an even greater and more proactive role than it has until now in making peace in Asia and the world something more certain," Abe said. Beijing and Tokyo contest islands in the East China Sea. Wang, who stressed Beijing's historic rights to the seas, said he preferred Hagel's frankness by directly naming China, compared to Abe who did not mention any country but obviously targeted Beijing.

"If I am to compare the attitude of the two leaders, I would prefer the attitude of Mr Hagel. It is better to be more direct," he said. As the conference drew to a close, French defence minister Jean-Yves Le Drian joined a chorus of senior defence officials urging rival claimants to show restraint to prevent larger conflicts. Le Drian said a proposed agreement between China and the Association of Southeast Asian Nations (ASEAN) on a code of conduct to handle disputes in the South China Sea was "the only way to prevent incidents in that coveted area". Singapore defence minister Ng Eng Hen urged Asian states not to "backslide into a fractious environment, riven by confrontational nationalism and lack of mutual trust".
Boost public-private partnerships in Indian industry to make the most out of FDI in Defence
Last October India's flagship 'make' (high-tech systems) program under the Defence Procurement Procedure (DPP) -2011, the Tactical Communication System (TCS), finally got some momentum going when the Ministry of Defence (MOD) issued staff qualitative requirements to the previously down-selected competitors for this program. Though long overdue, forward movement on TCS marks the beginning of an era wherein synergistic public-private models will be pursued towards furthering indigenisation. For instance under the 'make' category, 80 percent of the cost of development and prototyping will be borne by the MOD while the remainder is to be put up by the developing agency (DA). Incidentally, over 150 new projects under the 'make' category are going be rolled out this year in order to both defray risks as well as augment capabilities. Other initiatives that include the sharing of government held intellectual property with private companies in order to raise their technological base and thereby free DRDO to focus more on cutting edge developments are also on the anvil. If these measures are pursued doggedly, a quantum jump in the size and quality of India's domestic military-industrial complex can be achieved before the end of the decade itself.

The two DA's in the fray for the TCS program are of course Bharat Electronics Limited and a special purpose vehicle set up jointly by private sector majors Larsen & Toubro (L&T), Tata Power SED and HCL Infosys. Either DA is currently expected to submit a detailed project report (DPR) by the end of January. Subsequent to which each of the contenders will have to build TCS prototypes for about Rs 300-350 crore that will then be trialed by the Indian Army's (IA's) Corps of Signals. TCS, readers would note is a critical modernization project for the IA's offensive posture given that it is intended to replace the existing Army Radio Engineering Network (AREN) used by advancing formations to communicate with each other. TCS prototypes will consist of a digitized communication network linking frontline troops to forward command and control (C&C) centres and will have the ability to leapfrog into enemy territory with advancing formations through both plain and mountainous terrain while continuing to channelize high quality and secure data. Obviously strike corps will depend in the future on a state of the art TCS to establish theatre supremacy.

Now, the strong private sector interest in a project of this nature is in itself a testament to the capabilities built up by them through partnering with DRDO on electronic warfare, missile and naval systems development. Indeed, the two key players in the private consortium competing for TCS i.e L&T and Tata have cut their teeth in the indigenous nuclear submarine and Samyukta electronic warfare projects respectively. Granted private firms are also on the lookout for international partners for TCS and other 'make' programs but there is no denying that their (i.e foreign collaborators) participation in many such projects will be limited to experience sharing and orchestrating certain component supply chains.

Today the top ranking private companies in the defence space in India are in a position to evaluate the actual operational performance of the wares supplied by foreign majors elsewhere with reference to a particular program. This aspect is obviously important because projects in the past have been known to get delayed due to inappropriate selection of international collaborators by domestic companies. Even more importantly Indian private companies today have the necessary clout to credibly effect such partnerships and that too can be attributed in no small measure to their own growing in-house capabilities.

Amidst all this talk of foreign direct investment (FDI) in the defence sector it is pertinent to remember what one gets from overseas is ultimately a function of their own strength. To find appropriate international adjuncts for domestic projects, Indian majors both private and public have no alternative to continue to create credible intellectual property of their own. Foreign collaborators are often known to create troubles mid-way within programmes alleging problems with technology absorption at the Indian end of things and demanding either higher service fees or even greater percentage of home (i.e foreign) sourcing. The only way to ensure that such tactics are not employed is by constantly looking to move up the value chain.

What is more, most military modernization projects cannot be seen in isolation. Even as TCS is being executed, IA will move on to the at least five times larger by value Battlefield Management System (BMS) project which will replace the Army Static Switched Communication Network (ASCON). Since TCS and BMS will eventually be part of a seamless network for IA, the lead executor of the former will be well placed to be the same for the latter. It is therefore imperative that DAs down-selected for TCS choose their foreign collaborators well. Moreover, a lot of sub-contracting work can always take place between erstwhile competitors for a program as many instances from countries like the US indicate. The Indian defence industry is at the end of the day a single community where artificial distinctions such as public and private need to get blurred and the focus should be on timely execution and capability augmentation rather than on adversarial relationships that foreign parties may try to exploit. Competition need not be the same as conflict in the domestic context. For instance the success of BMS will be a key component of making DRDO's F-INSAS program, that will see large scale sub-contracting to private players, more effective. Clearly a consortia based long-term view will do more for indigenisation and bottom-lines than acrimonious posturing.

A stronger and wider defence industrial base both public and private is obviously a paramount domestic Indian interest. It is for this reason that DRDO has publicly stated that it wishes to move out of 'upgrades' altogether and leave it to industry which in now well equipped for the same. Indeed like Israeli companies before them Indian majors have developed a lot of in house expertise by participating in upgrades of Eastern bloc legacy systems ranging from air defence systems to artillery. Working with the military and DRDO on providing either new vehicular mounts or prime movers has provided India's automotive sector with invaluable experience in land warfare projects.

DRDO's present position on upgrades also comes in the wake of a recent government-industry interaction where it has been suggested that DRDO not sign exclusive IP sharing agreements with any particular company but allow public and private enterprises to build on a free license base for certain DRDO developed technologies to generate their own IP which can have proprietary claims. This proposal can be of immediate use in the biggest 'buy and make' program of them all - the future infantry combat vehicle(FICV) worth at least Rupees 50,000 crore to begin with and keenly contested by all of India's heavy engineering majors in association with foreign partners. Transfer of key DRDO developed technologies from the Abhay ICV tech-demonstrator program will not only allow all domestic participants to raise their game but also put them on a firmer footing in dealing with their proposed foreign technology partners. Once two DA's are down-selected for the final run-off more tech transfers can be effected. Upgrades after all need not only be in the sense of modifying existing systems but in terms of mark-2 variants of generic platforms.

Nevertheless, participation in even upgrade programs related to various Soviet era legacy systems has allowed Indian private industry to leverage their strengths in putting together packages based on conventional off the shelf technology (COTS) by ruggedizing the same for military use. Setting up domestic supply chains for electronic components and sourcing software indigenously is another arena where public-private partnerships need to be leveraged to increase the domestic component supplier base. Defence projects should therefore be coordinated with broader industrial policies to foster quicker growth. In this respect the request made last year by Indian industry associations to the government to allow small and medium defence enterprises to avail themselves of its technology development fund needs to be taken seriously. A bigger component supplier base, needless to say will only make it easier to compel foreign suppliers to meet their genuine offset requirements and help with localization clauses tied to FDI in defence.

The Indian private sector has realized that having a defence portfolio is a good way to buck recessionary trends. Moreover there are numerous commercial spinoffs from the technological and project experience garnered from working on defence programs. In fact given that defence programs both use and help spawn new commercial technology, it is imperative that any artificial public-private compartmentalization be dismantled and a consortia based approach be pursued for the sake of not just indigenisation but faster economic growth itself. Perhaps the Brahmos example can be studied more closely to evolve this approach.

At the end of the day, the need to move up the value chain cannot be emphasized enough. Arguments that suggest that majority stake holding by foreign majors be allowed in the Indian defence space to bring in technology and that they would do so on account of being 'lured' by India's large market completely miss the point. The military-industrial game is not about an Indian market opportunity for the next ten years. It is about future competition in the defence space. Military enterprise is one of the few arenas where western companies still hold industrial advantages. No western company or for that matter any other foreign company is going to part with its IP just for the sake of a 'market'. It would do so grudgingly however if the market it is tapping has credible domestic players of its own. Instead India should not make it clear that either foreign companies agree to fair terms on joint development or face another China like situation where reverse engineering is the norm.

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