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Friday, 11 July 2014

From Today's Papers - 11 Jul 2014

 India, Pak Foreign Secys to meet soon

Islamabad, July 10
The Foreign Secretaries of India and Pakistan will meet soon to determine the process of dialogue between the two countries, the Foreign Office said here today.

A meeting between the Foreign Secretaries of the two countries was agreed upon when Pakistan Prime Minister Nawaz Sharif visited India in May to attend the oath-taking ceremony of Prime Minister Narendra Modi, Pakistan’s Foreign Office spokesperson Tasnim Aslam said.

“They (Sharif and Modi) directed the two Foreign Secretaries to meet and look at how the process of dialogue is to be taken forward. That meeting would take place in not very distant future, though I cannot give you the exact date. That meeting would give indication where this process is headed. So we won’t like to pass a judgment right now,” she said.

During their bilateral meeting, Modi and Sharif had agreed that the Foreign Secretaries would remain in touch and explore how to move forward. — PTI
Budget gives boost to India's defence capabilities
Finance Minister Arun Jaitley's maiden budget does address issues relating to the defence sector. India buys more defence equipment than any other country in the world. We also have the third-largest standing army in the world.

While modern warfare is mostly about improved technology, it is also important to ensure that the morale of the troops remains high. The decision to erect a war memorial and set  up a defence museum will definitely raise the morale of the armed forces. It will certainly be a welcome addition to the Amar Jawan Jyoti at New Delhi's India Gate. Again, the one rank one pension scheme, accepted earlier by the government, has been given a Budgetary allocation of Rs 1000 crore.

FULL COVERAGE: Union Budget A key Budget announcement was that 49 per cent foreign direct investment will be allowed in the defence manufacturing sector, up from 26 per cent today. This will induce more foreign companies to invest in India's defence manufacturing. It is also good news for domestic private sector players such as Mahindra & Mahindra Defense, Tata Power SED, or the Kalyani Group's defence arm which manufactures field guns and similar equipment. That in turn is healthy for India's defence procurement, which is dominated by either public sector undertakings or by foreign contractors.

The Budget outlay for defence too is up 12.4 per cent over 2013/14 to Rs 229,000 crore. This, combined with the upgrade plan for soldiers and the modernisation of the army, means well for Indian manufacturers who stand to benefit. The capital outlay for defence has been raised by Rs 5000 crore over last year. This will include a sum of Rs 1,000 crore to accelerate development of the railway system in border areas. China has been doing that in Tibet, by extending the Qinghai-Tibet railway line within a few hundred kilometers of the Indian border.

BUDGET SPEECH: Full text | Video A policy of integrating border policy in some ways with defence needs is also evident in the enhanced allocation of Rs 990 crore, a substantial sum, for the socio-economic development of villages along the border. This may mean economic improvement of those communities residing there. The Rs 150 crore earmarked for marine police stations, jetties and purchase of patrol boats holds out a similar indication.

However, the much needed fillip to developing indigenous defence capabilities in the country still seems to be missing. Due to prolonged exposure to defence sub-contracting, Indian firms are already quite good at'build-to-print' or 'build-to-spec' manufacture. Our ability to deliver small scale defence components is now comparable to that of mos t global suppliers. Where we are behind is in creating aggregated systems, where we put together components of various makes, and in creating from scratch our own technology that can be used to build products that are different from that of competitors. After all, the best defence is in keeping the enemy guessing on how a weapon works. In that direction, the Rs. 100 crore contribution seems small, especially given the government's keenness to kick-start things.

There is no dearth of money in defence, what remains to be seen is how the private sector and the army spends it. The best way would be to increase our capabilities using the opportunity and the increasing interest from foreign collaborators.

The major announcements:

1.    49% FDI in defence manufacture
2.    Outlay of Rs 2,29,000 crore for defence, up from 2,03,672 crore
3.    Upgrade plan for soldiers.
4.    Rs1000 crore to address pension disparity and implement the 'one rank one pension' scheme
5.    Proposal of increased capital outlay of Rs 5000 crore over the interim budget, including Rs 1000 crore for developing railways in           the border areas
6.    Streamlining the procurement process.
7.    A separate fund in 2011 to encourage private sector companies to support research and development of cutting edge technology. Proposal to set up Rs 100 crore to set up such a technology development fund.
India increases defence spending, invites foreign investment
India announced Thursday it would lift the cap on foreign direct investment in the defence sector to 49 percent and announced a 12-percent rise in military spending as part of efforts to modernise its armed forces.

NEW DELHI: India announced Thursday it would lift the cap on foreign direct investment in the defence sector to 49 percent and announced a 12-percent rise in military spending as part of efforts to modernise its armed forces.

In his first budget, Finance Minister Arun Jaitley raised defence spending for the current financial year to 2.29 trillion rupees ($38.3 billion), up from 2.03 trillion rupees budgeted in the 2013-2014 year.

Jaitley, who is also defence minister, said he planned to open up the military industry to foreign investment, lifting the limit from 26 percent to 49 percent, with Indian companies retaining management and overall control.

"There can be no compromise with the defence of our country," Jaitley told parliament.

"Modernisation of the armed forces is critical to enable them to play their role effectively in the defence of India's strategic interests."

Thursday's budget also included 10 billion rupees ($167 million) for railway lines in border areas that is expected to be targeted at areas neighbouring Pakistan and China.

India has eyed Chinese investment in railways near its border anxiously, with Beijing ploughing billions of dollars into infrastructure in Tibet.

India is one of the world's biggest arms importers, traditionally relying on Russia and in more recent years the United States for equipment and technology due to weaknesses with its own industry.

But slow procurement over decades and the collapse of a string of defence deals during the previous centre-left Congress party government's rule has left the military short of key equipment.

Jaitley said last month he aimed to speed up buying in the interests of "national security", while experts expect a more muscular foreign policy under the new adminstration.

Prime Minister Narendra Modi, a hardline nationalist, won landslide elections in May, pledging to reform and revive the economy which has slumped to a decade-low level.

India's military has grown increasingly frustrated at the state of its equipment as it looks to defend itself against an increasingly assertive China and from Pakistan.

Defence analyst Rahul Bedi said the new cap would fail to lure foreign companies because it was less than 50 percent and they feared losing rights to their sensitive technology.

"It doesn't matter if it's 26 percent or 49, it's not 51 percent which puts them in control, so foreign investors are going to look at this with scepticism," Bedi from IHS Jane's Defence Weekly told AFP.

India hiked its military spending by a huge 34 percent in 2009-2010 over the previous year after the 2008 attacks in Mumbai by Pakistan-based gunmen killed 166 people and revealed gaping holes in the country's security setup.

India overtook China to become the world's biggest importer of arms in 2010, according to the Stockholm International Peace Research Institute, which monitors the global arms trade.

The US has displaced Russia as India's biggest arms supplier, importing $1.9 billion of military kit from the US in 2013, according to research from IHS Jane's.

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