Wednesday, 18 July 2018

MoD plans standard price lists for public sector undertakings

Whether for fighters, warships or land systems, production in the public sector costs far more than direct import

By Ajai Shukla
Business Standard, 18th July 18

The defence ministry has traditionally bestowed lucrative contracts upon defence public sector undertakings (DPSUs) and ordnance factories (OFs) without competitive tendering. Now, however, it is taking steps to make them reduce prices.

A senior defence ministry official says DPSUs and OFs could soon be ordered to make public a price list of the equipment and weaponry they build. They would be required to hold those prices for a specified period and then raise them only by a reasonable amount.

If the military demands a deviation from the baseline standard that the DPSU or OF has priced, the cost of delivering that deviation would be added to the standard price.

This follows Defence Minister Nirmala Sitharaman’s statement on Friday that a defence ministry committee is examining (she said a report is expected within 60 days) why equipment from the defence public sector is costlier.

The ministry has concluded that, in the name of indigenisation, it is paying unreasonably high prices for equipment made by the public sector.

A standard price list would reveal that each Sukhoi-30MKI fighter built in Russia costs the Indian Air Force (IAF) about Rs 330 crore, while Hindustan Aeronautics Ltd (HAL) builds the same fighter in Nashik for Rs 417 crore – 26 per cent costlier.

Also that Mazagon Dock Ltd, Mumbai (MDL) is building six Scorpene submarines at a significant mark-up from the cost of the same submarine built in France.

And, as reported by Business Standard on Monday (“Frigate purchase from Russia hit by high cost of warship building”)two Krivak III frigates planned to be built in Goa Shipyard Ltd will cost the navy far more than two identical frigates built in Russia.

Sitharaman said the IAF has specifically asked for the costing of Tejas fighters to be examined. HAL charged the IAF about Rs 116 crore for each of the first 20 Tejas fighters it ordered in 2006. The price rose to Rs 162 crore for the next 20 Tejas that HAL will build. For the admittedly more sophisticated Tejas Mark 1A, which was tendered last December, HAL is pegging the price at over Rs 400 crore each.

A senior defence ministry official complains that each time a DPSU or OF quotes a price, years of protracted negotiation follow between the ministry and one of its own production units. “It is bizarre that the ministry spends years negotiating with itself. Having standard prices would eliminate this nonsense,” he says.

However, reducing prices might not be so easy, say defence industry experts. It is well-known in the international defence trade that buying weaponry over-the-counter from large international “original equipment manufacturers” (OEMs) is invariably cheaper than building the same equipment in the buyer country. That is because the OEM has already set up a production line and partially or completely amortized the development costs. However, the buyer country would additionally have to pay for technology transfer, establishing a production line, transhipping raw materials and the time and effort needed to establish production in India.

The even more expensive path is to design and develop a platform indigenously, since that requires expensive R&D in addition to production line costs. However, indigenous development often works out cheaper in the long term, since it equips a country to sustain the platform through its service life-span, which involves costs like spares, maintenance, training aids and simulators, overhauls and mid-life upgrades.

Sunday, 15 July 2018

Frigate purchase from Russia runs into high cost of Indian warship building

INS Trikand, one of the six Krivak III frigates bought by the Indian Navy, which is negotiating for four more

By Ajai Shukla
Business Standard, 16th July 18

A contract with Russia for four Grigorivitch-class frigates, urgently needed by the Indian Navy, is being delayed by the high cost of building two of them in Goa Shipyard Ltd (GSL), as the defence ministry insists.

New Delhi and Moscow have agreed terms for the first two frigates, which are lying almost fully built in Yantar Shipyard in Kaliningrad, Russia. For those, New Delhi has negotiated an attractive price of under $1 billion (Rs 6,850 crore) – or Rs 3,425 crore each.

Those two frigates could be delivered quickly to India, as soon as they are fitted with Ukrainian Zorya gas turbine engines. After Russia annexed the Crimea in 2014, Ukraine cut off defence supplies to Moscow, but has agreed to route the Zorya turbines via India.

But delivery of those two frigates is held up by prolonged negotiations over the high cost of building the remaining two vessels in Goa. Like all foreign weaponry built in India, this will add on costs such as technology transfer, transhipping raw materials and systems from Russia to Goa, establishing building infrastructure in GSL and indigenising parts of the warship.

With GSL never having built a warship as large and complex as a frigate, the time it will take to build two frigates would almost certainly escalate the cost further.

New Delhi officially recognised this problem on Friday, when Defence Minister Nirmala Sitharaman revealed that a defence ministry committee is examining why defence public sector undertakings (DPSUs) charge so much for their products.

Asked by Business Standard about building the Grigorivitch-class in Goa, Sitharaman admitted that GSL’s cost of production would be significantly higher than Yantar’s. 

To compare, the Indian Navy will pay Mazagon Dock Ltd, Mumbai (MDL) and Garden Reach Shipbuilders & Engineers, Kolkata (GRSE) about Rs 6,483 crore for each of seven Project 17-A frigates that will soon go into production. That is almost double Yantar’s Rs 3,425 crore price for each Grigorivich-class vessel.

To be sure, the 4,000-tonne Grigorivich-class frigates – also known internationally as the Krivak III class, and in Russia as Project 1135.6 – are smaller than the 5,600 tonne frigates of Project 17-A, and therefore cheaper to build. But they are as heavily armed and will carry the same BrahMos anti-ship missiles, AK 630 close in weapon system and heavy torpedo tubes supplied by Indian firm, Larsen & Toubro.

With four Grigorivich-class vessels lying fully, or partially, built in Yantar shipyard, there are questions over why India is accepting both delay and a significantly higher price, by stipulating the building of two frigates in India.

Indian admirals point out that the navy is making do with just 132 warships against the requirement of 198 vessels spelt out in its Maritime Capability Perspective Plan. Even more worryingly, the navy has just 15 frigates in service against the 24 it calculates it needs.

Modern frigates are multi-role warships in the 3,500-6,000 tonne range that can engage targets underwater, on the surface, inland and in the air. “Frigates are a navy’s workhorses. To fulfil the Indian Navy’s operational roles of anti-piracy, area domination and port visits, we simply cannot afford to be nine frigates short,” says a senior naval planner.

The navy already operates six Project 1135.6 frigates, which it calls the Talwar-class after the lead vessel, INS Talwar. Inducted into service between 2003-13, these were the navy’s first ships built with a stealthy design and equipped with a vertical launch system for missiles.

Naval officers praise the Talwar-class frigate. “Its space utilisation is outstanding, packing a large amount of weaponry into a relatively small warship,” says a serving officer.

Over the years, Russian vendors have supplied over $100 million worth of spare parts and back-up support for the first six Krivak-class vessels: INS Talwar, Trishul, Tabar, Teg, Tarkash and Trikand.

India ordered the first three frigates in the late 1990s, when the Russian economy had flat-lined, the bankrupt Russian military was placing no orders, and the shipbuilding industry was dying. It was an infusion of capital that revived Russian shipbuilding.

The current negotiations for four frigates follows an inter-governmental agreement signed in March 2016. In March 2017, New Delhi decided that the first two vessels would be built in Yantar and GSL would build the remaining two.

Invariably, Make in India will have a cost and the navy will have to bear that if it insists on building indigenously. “Russia would be happy to provide all four frigates fully built for under $2 billion,” says an industry expert in Russia.

Saturday, 14 July 2018

Good news and bad for Russia: S-400 deal is on, while FGFA is dead

Sources say Modi-Putin summit in October will see S-400 announcement

By Ajai Shukla
Business Standard, 14th July 18

On Friday, Defence Minister Nirmala Sitharaman had both good news and bad for Moscow.

On the one hand, she solidly affirmed India would go ahead and buy the Russian S-400 air defence missile system, despite Washington’s opposition. On the other hand, she officially confirmed the Indo-Russian proposal to co-develop the so-called fifth generation fighter aircraft (FGFA) was dead.

“We are at the conclusive stage of negotiations for the S-400 now. When the deal will be ready for signing, I cannot say,” she said.

However, well-informed defence ministry sources say that a scheduled summit meeting in October between Prime Minister Narendra Modi and Russia’s President Vladimir Putin will see some form of announcement of the agreement to sell India five units of the S-400 missile system.

A key reason is because, with India pressing for delivery of the first S-400 units by 2020, the order must be placed at the latest in October.

Questioned about the time lines for supply of the S-400, Sitharaman stated: “The contract will be executed by Russia in 2½ to 4 years from signing”

Emphasising the need to announce the S-400 contract during the Modi-Putin summit, sources in Moscow explained: “Otherwise, delivery by 2020 will not be possible for Russia. There is a huge order book for the S-400 and deliveries have to be made to customers like Turkey and China. Those are pre-committed orders. A bunch of West Asian countries are also expressing interest.”

The defence minister dismissed the notion that US sanctions on Russia – as legislated through last year’s “Countering America’s Adversaries Through Sanctions Act” (CAATSA) – forces India to choose between America and Russia.

CAATSA binds Washington to impose sanctions against countries that engage in “significant transactions” with Russian, Iranian and North Korean defence and intelligence entities. It is expected that the S-400 sale would fall in this category.

However, indicating a modus vivendi between New Delhi and Washington on CAATSA, Sitharaman stated: “CAATSA is an American legislation Both the US secretary of defence and secretary of state have displayed understanding [of Indian interests].”

There is particular concern in Washington, as visiting US Congressman and chairman of the US House Armed Services Committee William Thornberry said on a visit toNew Delhi in May, that an Indian purchase of the S-400 system would complicate US-India interoperability.

Brushing aside those concerns, Sitharaman stated: “The S-400 procurement is not something that has come up today. It has been negotiated for several years. If the US has some objections on technical issues, we are willing to explain why those objections might not be relevant.”

The S-400 Triumf (NATO designation: SA-21 Growler) is a versatile missile defence system that can detect an incoming ballistic missile 600 kilometres away and shoot it down when it is still 230 km away, and 185 km above the earth. Enemy fighter aircraft can be shot down while they are still 400 km away.

In 2015, the Defence Acquisition Council (DAC) had cleared the purchase of five S-400 units for an indicative price of about Rs 30,000 crore ($4.5 billion). However, the ministry is silent on the price finally agreed. 

On the fifth generation fighter aircraft (FGFA), Sitharaman has officially confirmed what Business Standard first reported (April 20, $8.63 billion advanced fighter aircraft project with Russia put on ice”): that the Indian Air Force was no longer interested in co-developing the fighter with Russia.

“In February, it was conveyed to the Russians that they could go ahead with developing the fighter without us. But the option remains and we could well go back at a later stage and ask to buy the fighter,” she said. 

Sitharaman claims MoD “alive and kicking” after “getting the weeds out”

Sitharaman accepted the NDA government too had underspent its capital budget in its early years

By Ajai Shukla
Business Standard, 14th July 18

Defence Minister Nirmala Sitharaman has mounted a robust defence of her ministry’s performance since 2014, when the National Democratic Alliance (NDA) formed the government.

Talking to journalists in New Delhi on Friday, Sitharaman said: “This is an alive and kicking ministry, which is no longer held back by policy paralysis. Things are moving and the military is fit and ready.”

Contrasting her decision-making with that of the United Progressive Alliance (UPA) till 2014, she said: “Many procurements are happening now, we are moving quickly.”

Asked how the NDA was claiming greater and quicker procurement, when capital allocations to defence had risen only in the low single digits, Sitharaman again took a swipe at the UPA, stating: “You can have huge allocations, but not spend the money. It is more important to make sure the allocations are spent.”

Sitharaman accepted that the NDA government too had underspent its capital budget in its early years. “In earlier years, we were getting the weeds out. Then, in 2016-17 and 2017-18, we utilised our budget fully,” said Sitharaman, suggesting that the NDA surrendered funds earlier because an enabling policy framework was not yet in place.”

The defence minister also claimed credit for holding more frequent meetings of the Defence Acquisition Council (DAC), thus ensuring timely decision-making on procurements. Unlike earlier, when the DAC met once a quarter or so, Sitharaman ensures monthly, and sometimes fortnightly meetings. “The DAC of late has just one or two agenda points when it meets. Earlier, there were seven-eight items on the agenda. Now, we have cleared the backlog and are on top of things”, she claimed.

Pressed on why orders are not yet flowing to the private sector, which the NDA had vowed to develop as a much larger player in defence production, Sitharaman argued that setting policy was a “time consuming” task. “Transparency is needed in decision-making, but there is now a realisation that it (decision-making) can be simplified without compromising on transparency”, said Sitharaman.

The minister was also questioned about the lack of movement on the “strategic partner” (SP) programme, in which capable and deep-pocketed private sector firms are identified to build specified categories of weaponry – initially fighter aircraft, helicopters, submarines and armoured vehicles – with technology provided by chosen international defence firms.

“Four sectors have been identified [for SPs to work in]. But it has taken time. We want to move forward quickly, we want to make initial strides… The SP model will happen soon,” said Sitharaman.

The Dhirendra Singh Committee proposed the SP policy in July 2015, but not a single contract has yet been awarded under this. When the Defence Procurement Procedure of 2016 (DPP-2016) was announced on March 28, 2016, there was a blank Chapter VI, which the SP policy was to fill. A year later, a sketchy SP policy was released, which needs further elaboration. The defence ministry is still working on that.

Sitharaman also revealed that a defence ministry committee, headed by the Director of Costs, has been constituted to examine how defence public sector undertakings (DPSUs) fix the sale price of equipment they sell the armed forces. 

The army, navy and air force have been complaining about DPSUs pricing their products exorbitantly – or “gold plating” prices, in defence production terminology.

“The Indian Air Force (IAF) has specifically asked for the pricing of the Tejas light combat aircraft (LCA) to be assessed”, said Sitharaman. The Committee will assess the price proposed by Hindustan Aeronautics Ltd (HAL), which builds the fighter.

Sitharman says a report is expected from the Committee within about 60 days.

The defence minister dismissed concerns that well-connected private sector players like the Anil Ambani-led Reliance Defence and the Adani Group, would be selected as SPs, even though they apparently fell short of the required financial criteria. “There are no subjectivities involved in assessing a company’s financial health. The parameters are clearly laid down… and no one person can decide [in favour of a company]. There is a whole group of people looking into whether a company meets the financial and technical criteria or not,” she said.

Sitharaman, who has been defence minister since September 2017, was preceded by Arun Jaitley (two tenures) and Manohar Parrikar during the NDA’s term in power.

Wednesday, 11 July 2018

In swift follow-up action, Indian warship visits Indonesia’s Sabang port

Delhi, Jakarta agreed in May to develop strategic port near Malacca

By Ajai Shukla
Business Standard, 11th July 18

On Wednesday, the Indian Navy patrol vessel, INS Sumitra, became the first-ever warship to sail into the Indonesian port of Sabang, strategically poised at the mouth of the Malacca Strait.

Underlining the importance New Delhi and Jakarta place on the visit, the vessel was welcomed to Sabang by traditional Indonesian dancers, Indonesian navy and air force officers, and Indian diplomats based in Jakarta, including the ambassador, PK Rawat.

This swift follow-up comes on the heels of the joint announcement by Prime Minister Narendra Modi and Indonesia’s President Joko Widodo, in Jakarta on May 30, that an Indian-Indonesian joint task force would “undertake projects for port related infrastructure in and around Sabang.”

A fortnight before that, Luhut Pandjaitan, Indonesia’s minister for maritime affairs, on a visit to New Delhi to negotiate the agreement, noted that the 40 feet-deep port at Sabang was suitable for both civilian and military vessels, “including submarines.”

India is already building up the Andaman & Nicobar Islands as a tri-service command to watch over the eastern Indian Ocean, especially the Malacca Strait, the prime international shipping route through which merchant and military vessels transit between the Indian Ocean and the South China Sea.

But Port Blair, the headquarters of India’s Andaman and Nicober Command, is 500 nautical miles – almost 1,000 kilometres – from Sabang, in Banda Aceh. To exercise control over the Malacca Strait, the navy has at least one warship always on patrol in those waters. Access to Sabang Port will allow the navy to dominate Malacca more effectively.

Indonesia shares Indian concerns about an aggressively rising China. During Modi’s visit last month, the two sides signed a Defence Cooperation Agreement. This will supplement a recently instituted “security dialogue”, a biennial dialogue between the defence ministers and a “joint defence cooperation committee” that will meet for the sixth time in August. The two armies train together in the Garuda Shakti exercises.

From May 24 to June 9, a navy corvette, INS Kulish, and a Dornier maritime patrol aircraft of the Andaman & Nicobar Command conducted the annual “India-Indonesia Coordinated Patrol” – where the two navies, in a gesture of friendship and cooperation, jointly sail along the maritime boundary between the two countries.

The Indian Navy also conducts coordinated patrols with the Bangladeshi and Thai navies. And last month, for the first time, the Indian and Vietnamese navies exercised together in the South China Sea.

A day after visiting Jakarta, Modi also signed agreements with Singapore, including a logistics support agreement that allows Indian warships to replenish in Singapore. New Delhi’s defence relationship with Singapore is the closest it has with any ASEAN country.

On June 1, addressing the Shangri-La Dialogue in Singapore, also attended by key security managers including US Defence Secretary James Mattis, Modi declared that India would work with members of the Association of South East Asian Nations (ASEAN) to maintain a rules-based order in the Indo-Pacific.

In a signal that ASEAN is central to New Delhi’s Indo-Pacific strategy, India invited the heads of all ten ASEAN countries as guests of honour at the Republic Day parade in January.

According to the most recent data, about $3 trillion worth of cargo transits throught Malacca every year, in about 100,000 merchant vessels. Beijing’s concerns about this lifeline being cut – which strategists call China’s “Malacca Dilemma” – leads it to consider alternative routes that bypass Malacca, such as through Pakistan’s Gwadar port.

Beijing is watching the Indian Navy’s forays into Southeast Asian waters warily. In the English language on-line Chinese newspaper, Global Times, Liu Zongyi of the government-affiliated Shanghai Institute of Strategic Studies wrote:“After controlling the Sabang port, the Indian Navy can easily block the northern exit of the Strait of Malacca. Besides, the Indian Navy visited Vietnam and held a military exercise with the Vietnamese Navy before the dialogue… Despite Modi's recent softer stance, China needs to carefully watch New Delhi's diplomatic moves in the Indo-Pacific region.

Saturday, 7 July 2018

Game on, six vendors in contest to supply IAF with 110 fighters

Contract price will be about $10.66 bn for single-engine fighters, to $19.46 billion for twin-engine aircraft

By Ajai Shukla
Business Standard, 7th July 18

Six of the world’s premier fighter aircraft vendors – American companies Boeing and Lockheed Martin, Russian Aircraft Corporation, Dassault of France, Swedish firm Saab and European consortium, Eurofighter GmbH – have submitted responses to an Indian “request for information” (RFI), kicking off the purchase of 110 fighters for the Indian Air Force (IAF).

The IAF had put out a detailed, 73-page RFI on April 6, giving “original equipment manufacturers” (OEMs) and “government sponsored export agencies” three months to submit their responses. Friday was the last date.

There are four twin-engine aircraft in the fray: the F/A-18E/F Super Hornet, Block III, Eurofighter Typhoon, MiG-35 and Rafale. Two single-engine fighters have been offered: F-16 Block 70 and Gripen E.

The flyaway cost of single engine fighters is estimated to be between $80-90 million, with the larger, twin-engine fighters likely to be priced at $120-160 million, according to industry analysts. The RFI mandates that 85 per cent of the fighters must be built in India, and each of those would cost at least $20 million more.

That adds up to an overall contract price of $10.66 billion for the cheapest single-engine fighters, to $19.46 billion for the high-end, twin-engine fighters. The cost of weaponry, spares, base infrastructure and simulators would be over and above that.

The defence ministry will now process the acquisition under the provisions of the Defence Procurement Procedure of 2016 (DPP-2016). The RFI leaves the door open for an Indian private sector firm to co-manufacture the selected fighter in India.

The next stage of procurement will involve scrutinising OEMs’ responses to the RFI to assess the options available. Based on vendors’ responses, the IAF would draw up a short-list of vendors that would receive the IAF’s “request for proposals”, or formal tender, spelling out its precise requirements, the terms and conditions of supply, “Make in India” and offsets.

In response to the RFP, the OEMs will submit two simultaneous bids: First, a technical bid, with details of aircraft performance, terms of supply, technology transfer and “Make in India” proposals. Alongside that, OEMs would submit their commercial bids, which would indicate the cost the IAF would have to pay.

The RFP will indicate whether the commercial bids would be assessed on the basis of the upfront price, or through “life cycle costing” (LCC). The latter involves totting up the total cost of ownership, including the cost of flying and maintaining the fighter through its 3-4 decade-long service life. While LCC better indicates the real price the IAF will pay for a fighter, it is a complex calculation that led to disputes and the eventual abandonment in 2015 of the 2007 RFP for 126 medium, multi-role, combat aircraft (MMRCA). The RFP will indicate whether the IAF follows the same path.

Another question hanging over the current fighter procurement is: with the IAF having rejected variants of four of the contending aircraft – the Super Hornet, F-16, Gripen C/D and MiG-35 – in flight trials carried out between 2009-2011 in the MMRCA tender, are the current contenders improved enough to pass flight trials conducted to the same standards? If not, the IAF would have to lower its performance bar during flight trials, or face the same outcome, in which only the Typhoon and Rafale were found technically eligible.


What the air force wants

110 multi-role fighters, capable of roles of air superiority, air defence, ground and maritime strike, reconnaissance and electronic warfare.

15% of the order to be supplied in flyaway condition and 85% made in India.

OEMs to transfer design, development, manufacturing and repair expertise to India.

OEMs to offer high-value technologies as part of the contract. Must specify scope, depth and range of technology transfer.

OEMs to indicate “Indigenisation Content” it would achieve while building fighter in India.

Flyaway fighters to be delivered 3-5 years from contract, Made in India in 5-12 years.

75% single-seat fighters and 25% twin seat variants.

OEM must provide “performance linked warranty” for aircraft to fly minimum 150 hours per year, for ten years.

Doors opened for Make in India by private sector, or by public sector (HAL)

Twin seat variant should have all the operational capabilities of single-seat variant



Friday, 6 July 2018

BHEL to partner Zorya of Ukraine in overhauling warship engines

INS Trikand, a Talwar-class frigate powered by Zorya gas turbines supplied by Ukraine

By Ajai Shukla
Business Standard, 6th July 18

With the Indian Navy increasingly choosing the Ukrainian Zorya gas turbine to power its warships, Bharat Heavy Electricals Ltd (BHEL) is setting up a joint venture (JV) in India with the manufacturer, Zorya Mashproekt, to overhaul the turbines in India.

The navy will soon have 34 warships driven by Zorya turbines, with four turbines per vessel, adding up to 136 in-service turbines. There will also be a stock of 6-8 spare turbines.

A turbine is overhauled after running 30,000 hours. This is currently a costly and time-consuming process since it involves sending the turbine back to Ukraine.

“Carrying out the overhaul in India would result in major cost savings, and reduce the downtime for warships, since we would no longer be transporting the turbines to Ukraine for overhaul. It will also reduce our dependence,” said a top navy admiral.

BHEL’s corporate communication chief, Jitender Das, confirmed the company is in talks with Zorya Mashproekt, but declined to reveal any figures or investments since negotiations are still under way.

“We already overhaul Siemens and General Electric gas turbines in our existing facilities at BHEL. So partnering Zorya will expand our portfolio”, said Das.

A propulsion package of four Zorya turbines powers each of the following Indian Navy warships: five Rajput-class destroyers, three Delhi-class destroyers and 16 fast missile corvettes of the 1241RE class. Six Russian-built Talwar-class 1135.6 frigates already field Zorya turbines, as will another four Talwar-class frigates that are currently being purchased.

Basic repair and maintenance of Zorya turbines, though not overhaul, is already being done at the Marine Gas Turbine Overhaul Centre (MGTOC) at INS Eksila, in Visakhapatnam. Now the BHEL-Zorya JV will entirely indigenise maintenance and service support to Zorya turbines.

The navy issimultaneously indigenising production and overhaul for another propulsion unit favoured by Indian warship planners – the General Electric (GE) LM2500 marine gas turbine. Already fitted in the indigenous aircraft carrier, INS Vikrant and in three Shivalik-class frigates, the navy has also chosen the LM2500 for seven more stealth frigates being built under Project 17A. 

In December 2016, GE announced that Hindustan Aeronautics Ltd (HAL) would assemble and test the gas turbines for Project 17A in Bengaluru, under license from GE.

Since warships using the LM2500 turbine are part of both the Eastern Fleet and the Western Fleet, turbine overhaul centres would be set up both in Naval Dockyard, Visakhapatnam; and in Naval Dockyard, Mumbai.

Zorya gas turbines is just one part of the growing India-Ukraine defence cooperation. Since significant parts of the former Soviet Union’s defence industry – such as transport aircraft, Antonov, which built the air force’s AN-32 workhorse transport aircraft – are located in the Ukraine, New Delhi signed a defence cooperation agreement with Kiev in 2005, which mandated that a joint working group from both defence ministries should meet annually. The most recent meeting was held in Kiev in early June.