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Friday, 27 February 2015

From Today's Papers - 27 Feb 2015















http://www.defensenews.com/story/defense/land/weapons/2015/02/26/india-israel-mrsam-missile-army-air-force-air-defense/24050363/
India, Israel To Build Missile Defense System
NEW DELHI — India and Israel agreed to jointly develop a medium-range surface-to-air missile (MRSAM) system for the Indian Army to replace Russian-made air defense systems, said a source in the Indian Defence Ministry.

The land version of MRSAM would be an extension of the ongoing Air Force MRSAM project, which is expected to begin induction by 2017, three years behind scheduled. The Army has an immediate need for one regiment (18 systems) of MRSAMs at a cost of $1.5 billion, but the total requirement for these systems is estimated to be more than $6 billion, said an Army official.

The agreement to jointly develop the land version of MRSAM, which will have a range of up to 70 kilometers, emerged during a Feb. 22 meeting here between visiting Israeli Defense Minister Moshe Ya'alon and his Indian counterpart, Manohar Parrikar, the source added.

Negotiations for developing the land version had been put on hold two years ago following delays in the Air Force project. However, several rounds of negotiations between Indian and Israeli officials during the last six months have finalized the joint development agreement for the land version, the source added.

The Army mobile MRSAM systems will be jointly developed by India's state-owned defense research agency, the Defence Research and Development Organization, and Rafael and Israel Aerospace Industries (IAI) of Israel. Both sides will develop subsystems although the details of that arrangement have yet to be finalized. The system will be produced by India's state-owned Bharat Dynamics Ltd., in participation with domestic private sector companies Tata Power SED and Larsen & Toubro, the source added.

IAI has declined to comment on the program.

An Indian Army official said the service has needed a new surface-to-air missile system for more than a decade to replace Russian-made Kvadrat and OSA-AKM systems bought between 1970 and 1980.

The Army wants to use the MRSAM to defend mechanized formations operating in the plains and desert regions of the country.

In 2008, an attempt to acquire MRSAMs from the global market failed because none of the bidders qualified under India's transfer of technology requirements.

In 2009, India and Israel agreed to jointly make the air version of MRSAM, but it is still under development despite a planned delivery time of 2013-14 because of unspecified technical snags in the initial tests of the prototype, the MoD source said. First delivery is now expected by 2017, the source added.


http://www.thehindubusinessline.com/companies/belrolta-consortium-bags-50000cr-defence-project/article6937669.ece
BEL-Rolta consortium bags ₹50,000-cr Defence project
 Bengaluru, February 26: 

A Bharat Electronics Ltd-Rolta India consortium has bagged the Ministry of Defence’s (MoD) development agency order for the Battlefield Management System (BMS) project, worth over ₹50,000 crore. The BMS project, categorised as a ‘Make in India’ programme under the DPP, will be one of the largest solutions to be indigenously manufactured for the Indian Army, a press statement from BEL said.

BMS is an awareness and visualisation system that aims to optimise the effectiveness of tactical units. BEL has been working on such battlefield systems and has established a test bed for continuous evaluation and implementation of user requirements.

“This prestigious project is meant to deliver command and control capabilities to personnel operating at the battlefront, at the battalion and combat group levels,” PC Jain, Director–Marketing, BEL, said. He added: “The BE-Rolta consortium is fully geared up to take on the challenge of developing the Battlefield Management System for our Defence forces. We also aim to maximise the indigenous content through in-house development of various sub-systems.”

The company has worked on several Tactical Command, Control, Communications and Intelligence (Tac C3I) systems for the Indian Army, in association with Defence Research and Development Organisation. BEL has the capability of developing and integrating Tac C3I systems and will lead the consortium.
Significant investment

Rolta has also invested significantly in BMS technologies. Over the years, the company has delivered cutting-edge Command, Control, Intelligence, Surveillance and Reconnaissance (C2ISR) systems to the Indian forces.

KK Singh, Chairman and Managing Director, Rolta India, said: “The selection of Rolta is a strong vindication of our strategy to invest in and build word-class IP indigenously. This IP has been indigenously developed by leveraging our deep domain knowledge of C2ISR and is already in wide use across various formations of the Indian Army.”


http://www.moneycontrol.com/news/business/tata-lt-consortium-shortlisted-for-mega-defence-project_1314651.html
Tata-L&T consortium shortlisted for mega defence project

In order to give a push to government’s defence programme, the ministry has awarded battlefield management system (BMS) development contracts to two consortiums. According to sources, one comprises of Tata Power SED and L&T Defence and the other consortium includes BEL and Rolta . The government will fund 80 percent of the prototype cost and partners will be expected to fork out the remaining 20 percent. The two consortiums are required to develop the prototype in 18-24 months. Speaking exclusively to CNBC-TV18, MV Kotwal of L&T said share of Tata Power and L&T is same in the consortium. He also added that the final order win will be between one of the two consortiums. Below is the transcript of MV Kotwal’s interview with Menaka Doshi, Anuj Singhal and Varinder Bansal on CNBC-TV18. Menaka: We have some preliminary details on this big defence order of the size of Rs 50,000 crore which we understand has been bagged by two different consortia. Around 70 percent of that order has gone to a consortium between BEL and Rolta and 30 percent of that order has come to you and Tata Power as the second consortia. What details can you share with us on this front? A: Actually, this needs a lot of clarification. First of all this is not an order, it is a programme called Battlefield Management System (BMS) which is part of a 'Make India’ programme. The part of the scheme is that they call companies interested in this which they did in last April and we submitted expression of interest and they have now shortlisted the top two. The scheme is that the top two companies or consortia will be given the chance to produce prototype systems which they would have to field and after they are fielded they would to go through a set of tests and then the chosen party will get the majority of this business. Today, there has been a short listing of the top two and that includes one, the consortia which you talked about between BEL and Rolta and a second is the consortium, which is between Tata Power SED and L&T; in this particular case led by Tatas. The share of both partners is almost equal and this is the consortium which is announced. The process of development of the prototype will then commence and 80 percent of the funding for development will be provided by the government of India where 20 percent would be provided by the concerned consortium. This is a normal process of the Make India programme where out of the interested parties the top two are selected, two parties are given 80 percent funding by the government to develop prototype systems and then finally after the due testing then the selected party gets the majority of business. Menaka: Is it like a prototype beauty pageant, if you win the beauty pageant you get the order, if you don’t, you don’t get the order? A: No it is not like that, for example there will be two systems developed and at the end of the development process which may itself take a few years and after that the one that is selected normally would get a larger portion of that business. Therefore, the total business as envisaged today is between Rs 40-50,000 crore. But it is not yet an order, this is like a selection for the development partner and there will be two selected partners. Menaka: Is the Swayamvar down to two? A: Yes. Menaka: Now you’ll compete, if you win you stand to gain from an order that sort of represents the majority of that Rs 30-40,000 crore business. It could be an order to the tune of Rs 20,000 crore or Rs 25,000 crore executable over 5-10 years. A: Yes, after the development process is over. And during the development process, 80 percent funding is provided by the government. Menaka: Only 20 percent comes out of your pocket over the period of time. Is that 20 percent material in any way that we should know about, will it show up in your financial earnings suddenly as a blip in some quarter in the next two years? A: The teams will now get together with the user agencies and then we will chalk out what exactly the details are involved in the development process and then we will get a better picture. The sums involved will be little more than Rs 500 crore for the development process itself but how much they will be, they will come out a little later. Menaka: It isn’t time yet to congratulate you in any fashion? A: First of all it is a very tough thing to get short listed among the top two. We similarly got short listed in the tactical communications system which was a first one and in that again the consortium that time was led by L&T and part of it is Tata Power. We got selected so in both these very major programmes of very great tactical communication systems and the BMS, both part have got involved and that is something which is really very difficulty to get as 14 parties were y called for the BMS and that is how the selection was done. Varinder: I wanted to know that 70-30 ratio which is being talked in the market, is it right to understand that going ahead after two years or 18 months, that will be the proportion which will be divided between two consortiums or is it too early to even discuss about that? A: It is a bit premature; the reason is very simple that these systems are very complex. It is not something which you just buy off what is available and so, the two parties will independently develop systems which meet customers or the end users requirement. The user will then get to test both of them and then pick and choose which are the features of which they would want in the final system. So, the composition of how much each consortium will share is rather premature to talk about. Menaka: Exactly what is it that this BMS entails? Can you talk about what it is that you are building as a prototype or is that classified? A: In short it is a command and control system. What happens in today’s warfare, the digitalised warfare as you call it, you need communication between the command centre and finally the soldier. So, it is a part of the whole process which is called OODA which is Observe, Orient, Decide and Act. That is the kind of loop which is normally used. This will be a unique system which will place the Indian army on a much higher pedestal because right from the command centre to the soldier who is on the field there will be a complete system which will gather information on what is happening and get back to the final decision on actual actions to be taken. It is a very complex encrypted system and therefore it will really place us amongst the top forces in the world once such a scheme is implemented. Varinder: What are the chances that after 18 or 24 months, even after developing the prototype, will it be final that these two consortiums will bag the final order or there could be a slip between the cup and the lip? A: No, that is absolutely certain. The whole foundation of ‘Make India’ programme - first of all why such a thing was required is because we are talking about systems which do not exist as readymade system hence have to be absolutely designed to suit our own requirements. It is a very secure system and is really good that apart from the traditional organisations like BEL other now organisations have also been given a chance. To even qualify or be selected we have to have a track record of having supplied various equipments over the years which have given confidence to the MoD that we can meet the requirements. Menaka: Will it be down to these two consortia to bag proportions of that order? A: Absolutely. Menaka: You keep referring to Make in India or Make India rather. That is the defence programme, right? You are not referring to the Modi government’s programme because you said you were called in April and at that point the government hadn’t even been elected. A: No, it is good you brought out this because there is often confusion. Make India is a categorisation of the procurement policy of the Government of India which has been announced sometime back. The first programme in that category was the tactical communication system which for some years back it has been done because there were some formalities because of which it has not yet got activated but it will soon get activated now we expect. The second programme is the Battlefield Management and there are several more major programmes which major programmes that are coming into this category. This is quite different from the Make in India which is a general term applicable across. So, Make India is basically a defence procurement category and this is exclusively meant for systems or equipments which do not readily exist. They have to be developed, designed and built and so there is lot of development, R&D involved. That is why it is quite exciting for us. Tata Power stock price On February 26, 2015, Tata Power Company closed at Rs 82.80, down Rs 0.2, or 0.24 percent. The 52-week high of the share was Rs 115.25 and the 52-week low was Rs 74.45. The company's trailing 12-month (TTM) EPS was at Rs 3.26 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 25.4. The latest book value of the company is Rs 52.69 per share. At current value, the price-to-book value of the company is 1.57.



http://www.business-standard.com/article/economy-policy/spending-soars-yet-india-s-military-in-crisis-115022600295_1.html

Spending soars. Yet, India's military in crisis

India is expected to spend Rs 94,587.95 crore in 2014-15 as capital expenditure, a 20% increase from Rs 78,872.23 crore last year

 The defence budget of India—the world’s largest arms importer—has more than doubled over the past decade from Rs 80,500 crore to Rs 229,000 crore for the financial year 2014-15.

Yet, the defence forces are critically short of arms, and men and women at arms.

The army, navy and air force are short of officers by 17% (7,989), 17% (1,499) and 3% (357) respectively, according to latest data tabled in the Lok Sabha. Consider the arms deficits in the three services:

Read our full coverage on Union Budget
–The Indian Air Force (IAF) is short of 272-306 fighter aircraft (as this IndiaSpend report explains) and 56 medium transport aircraft.

–The Indian Army needs about 3,000 to 3,600 artillery guns, 66,0000 assault rifles, 2 lakh pairs of ankle leather boots and 66,000 rounds of armour-piercing ammunition for T-90 tanks.

–The navy needs 12 diesel-electric submarines, 6 nuclear attack submarines and 7 stealth frigates.

The three defence wings also collectively need more than 1,000 helicopters. This is an indicative list: The actual list of defence requirements and shortages is longer.

Yet, the Ministry of Defence ­accounts for the second-highest share of India’s budget, after the finance ministry.
The defence budget accounts for 1.78% of India’s Gross Domestic Product (GDP) and 12.76% of total central government expenditure, said Amit Cowshish, distinguished fellow at Institute for Defence Studies and Analyses (IDSA).
The revenue-to-capital ratio of the defence budget is 60:40. Revenue expenditure is for payment of salaries and maintenance of defence bases and equipment. Capital expenditure is for equipment purchases and modernisation.

India is expected to spend Rs 94,587.95 crore in 2014-15 as capital expenditure, a 20% increase from Rs 78,872.23 crore last year.
“The requirement of funds (for defence purchases) is directly related to carried-forward committed liabilities and signing of new contracts,” Cowshish said in an email interview with IndiaSpend. As a result, the forces could expect a similar increase in the 2015-16 budget “if – and this now seems to be a big if – new projects, such as the one for a new combat aircraft, go through”.

Let us now look at sector-wise allocations of the defence budget.
Among the three defence wings, the army has consistently cornered the highest funding. In 2014-2015, It accounted for Rs 92,601.32 crore, which is 40% of total expenditure,  followed by the air force and navy at Rs 20,506.84 crore (9%) and Rs 13,975.79 crore (6%), respectively.
The pension question

The budget allocation does not take defence pensions into account, as this is placed under a different budget head. The MoD allocated Rs 50,000 crore for defence pensions in 2014-2015, an increase of 9% from Rs 45,500 crore in 2013-14.

Last year’s budget earmarked Rs 1,000 crore for the one-rank-one-pension scheme for ex-servicemen. This might grow to an estimated Rs 8,000 crore this year, as the Times of India reported.

More than two million ex-servicemen in India have been demanding one-rank-one-pension, which ensures that the same pension is paid to personnel who have retired in the same rank with the same length of service, irrespective of retirement date.

Funding research and development

Investing in defence research and development (R&D) is expected to boost India’s indigenous arms industry and reduce its dependence on imports. The Indian government spent 42.7% of defence capital expenditure on arms imports in 2013-2014, according to data tabled in the Lok Sabha.

As we mentioned before, India is the world’s largest importer of arms as per Stockholm International Peace Research Institute (SIPRI), an independent international institute that researches conflicts, armaments, arms control and disarmament.

The MoD has almost doubled the capital expenditure for R&D to Rs 9,298.25 crore in 2014-2015 from Rs 5,257.60 crore in 2013-2014. Besides, the MoD has provided Rs 5,984.67 crore for salaries and maintenance of research centres.
Among the three defence wings, the army has consistently cornered the highest funding. In 2014-2015, It accounted for Rs 92,601.32 crore, which is 40% of total expenditure,  followed by the air force and navy at Rs 20,506.84 crore (9%) and Rs 13,975.79 crore (6%), respectively.
The pension question

The budget allocation does not take defence pensions into account, as this is placed under a different budget head. The MoD allocated Rs 50,000 crore for defence pensions in 2014-2015, an increase of 9% from Rs 45,500 crore in 2013-14.

Last year’s budget earmarked Rs 1,000 crore for the one-rank-one-pension scheme for ex-servicemen. This might grow to an estimated Rs 8,000 crore this year, as the Times of India reported.

More than two million ex-servicemen in India have been demanding one-rank-one-pension, which ensures that the same pension is paid to personnel who have retired in the same rank with the same length of service, irrespective of retirement date.

Funding research and development

Investing in defence research and development (R&D) is expected to boost India’s indigenous arms industry and reduce its dependence on imports. The Indian government spent 42.7% of defence capital expenditure on arms imports in 2013-2014, according to data tabled in the Lok Sabha.

As we mentioned before, India is the world’s largest importer of arms as per Stockholm International Peace Research Institute (SIPRI), an independent international institute that researches conflicts, armaments, arms control and disarmament.

The MoD has almost doubled the capital expenditure for R&D to Rs 9,298.25 crore in 2014-2015 from Rs 5,257.60 crore in 2013-2014. Besides, the MoD has provided Rs 5,984.67 crore for salaries and maintenance of research centres.

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