Saturday, 28 November 2009

The LCA's great engine dilemma...!

I've posted an update on the competition for selecting the LCA's new engine. But are there other options... besides the Eurojet EJ200 and General Electric's F-414?

If you have a view, post it. Let your voices carry to those who make the decisions.

Thursday, 26 November 2009

NEWS FLASH... PV-5 Tejas twin-seater makes a successful 30 minute flight!!

Air Marshall Tyagi (centre) with Dr D Banerjee (DRDO, CC Aerospace). Rohit Verma is next to Tyagi, while Gp Capt Tyagi flanks Banerjee.

PV-5 takes off from the HAL airfield in Bangalore. The twin-seater has not yet been painted... the yellow is the colour of the composites from which most of the skin is made

This is the DRDO release, issued at 18:30 hours today:


Two seater (Trainer) version of Tejas (PV-5) made its maiden flight on 26 Nov 09. The flight took off from HAL,Airport at 1300 hrs. The successful maiden flight covered an altitude of 9km and Mach number 0.85. The prototype was flown by Gp Capt Ritu Raj Tyagi of the National Flight Test Centre (NFTC). Air Cmde Rohit Varma, Project Director (Flight Test) flew in the rear cockpit. Wg Cdr (Retd) PK Raveendran, Group Director (Flight Test) was the Test Director. Extensive preparatory work that has gone in resulted in the first flight profile being executed with clock work precision. All the objectives set out for the flight were achieved and all the systems on board the new prototype performed well through out the sortie.

Successful flight of Tejas trainer is a major milestone for Tejas programme and a significant achievement for all the stake holders in the programme, which include ADA, HAL, NAL, ADE, CEMILAC, DGAQA, Indian Air Force and Indian Navy. With the Tejas scheduled to be cleared for Initial Operations with the Indian Air Force by end 2010, successful maiden flight of Tejas trainer has given a fillip to the programme. The trainer when fully developed will have the full operational capability from the rear cockpit as well. As Tejas Trainer has a lot of commonality with Tejas Naval version, even Tejas Navy programme would see accelerated progress as a result of the successful first flight.

As the first flight coincided with the programme review by the Air Force, the historic event was witnessed by Air Mshl NV Tyagi, AVSM, VM, VSM, who was the Chairman of the Review Committee along with Mr Ashok Nayak, Chairman, HAL, Chief Controller, DRDO Dr D Banerjee and Mr PS Subramanyam, Programme Director (Combat Aircraft) & Director, ADA.

D-Day for PV-5: Tejas twin-seat trainer to fly today

Photo: courtesy Ajai Shukla

The Tejas twin-seat trainer being assembled at HAL Bangalore some months ago. This same prototype (PV-5) has its first flight test today.

by Ajai Shukla
Business Standard, 26th Nov 09

On Thursday morning the first prototype twin-seater, trainer version of the Tejas Light Combat Aircraft (LCA) will taxi out to the runway in Bangalore. With its design team watching tensely from the sidelines, the two test pilots will rev up the engine, race down the runway and, if all goes according to plan, lift the twin-seat Tejas into the sky for its first ever flight.

In the cockpit will be two of the IAF’s most skilled test pilots, now a part of the National Flight Test Centre (NFTC), which handles all Tejas test flying. Air Commodore Rohit Verma, a MiG-21 ace will be the commander; behind him will be Group Captain RR Tyagi, a veteran Jaguar pilot.

Over the last few days the first twin-seat Tejas, called Prototype Version 5 (PV-5) has been carrying “high-speed taxi trials”. In these, the Tejas PV-5 has been speeding down the runway at speeds of over 200 kilometers/hour, applying the brakes just short of take-off speed. But on Thursday the pilot will not brake; keeping the throttle pressed he will pull back the joystick and make history as the trainer actually takes off.

The first flight of the twin-seat Tejas is a crucial landmark in the LCA programme. With the first squadron of the single-engine, single-seat Tejas already ordered by the IAF, and the order for the second squadron being processed, twin-seat trainers are urgently needed for training the IAF pilots who will man these two squadrons. Every IAF squadron is authorised 18 single-seat fighters and 2 twin-seat trainers.

The twin-seat Tejas is also important for the Indian Navy. The naval version of the Tejas, which will operate off aircraft carriers, will be based on the Tejas trainer; it’s higher cockpit allows the pilot a view of the carrier landing deck while descending steeply to land. In the naval Tejas there is no second cockpit; its place is taken by an extra fuel tank and some avionics.

Single-seat Tejas prototypes have completed about 1200 test flights, but the first flight of the twin-seat trainer is almost like testing a new aircraft. Though the trainer’s engine and fuselage is the same as the single-seater’s, internal systems have been extensively re-engineered to create space for a second cockpit, complete with a second set of controls, for the trainee pilot. Flight-testing will determine whether this new configuration works perfectly.

The twin-seat Tejas’ first flight comes almost 6 months later than originally planned, because the agency developing the Tejas --- the Aeronautical Development Agency --- wants to minimise the chances of a failed test. The ADA chief, PS Subramaniam, told Business Standard in Bangalore in August that caution in flight-testing was one of the drawbacks in the Tejas programme, but was understandable given that India was testing and certifying a modern fighter for the first time.

European aerospace consortium, EADS, which has been appointed consultant for the air force Tejas programme, is expected to advise on how to cut down on flight-testing without compromising safety. Reducing flight-testing by a year, believes Subramaniam, would save Rs 1000 crores in costs and bring the Tejas into operational service early.

In the absence of major hiccups, the twin-seat Tejas trainer is expected to complete testing and certification by 2014 and start being delivered to the IAF by 2015.

Wednesday, 25 November 2009

Offsets gather momentum: time to go from banking to trading

by Ajai Shukla
Business Standard, 25th Nov 09

With India’s defence offset policy finally taking off, Prime Minister Manmohan Singh’s call for increased Indo-US collaboration in defence production portends well for offset-based foreign investment. A foreign boost to India’s moribund defence industry has been a government priority since 2005, when the Defence Offset Policy first mandated a 30% plough back into Indian defence industry of every foreign defence sale worth more than Rs 300 crores.

That the policy is beginning to yield results is evident from figures released last week by the MoD. Since 2007, when offsets took effect, foreign vendors have tied up production agreements worth Rs 8000 crores, almost entirely with domestic aerospace manufacturers. But, given that India’s foreign defence purchases currently generate an offset liability of about Rs 15,000 crores annually, this is only a beginning.

The success of India’s defence offset policy should not be measured in agreements signed, or goods manufactured. An offset policy is successful only in so far as it generates long-term industrial partnerships, which function even after the vendor has discharged his offset liabilities. For this the partnership must benefit both vendor and buyer. The challenge for India is to develop the domestic defence industry, both public and private sector, to create an eco-system of potential partners for foreign vendors. This is not difficult; India’s auto component manufacturers have already demonstrated domestic capabilities in high-tech manufacture and cutting-edge R&D. These are precisely the qualities that global arms corporations seek in offset partners in India.

Where mutual benefits are not available, arms vendors simply treat offsets as an imposition, a cost of doing business. They fulfil their offset obligations superficially and add the costs to their bill. That this is happening in India’s civil aviation sector (where, as in defence, vendors are liable for offsets) was evident from what former Civil Aviation Secretary, Ajay Prasad, told a gathering in Delhi last week. Revealing that Kingfisher Airlines had paid US $50 million less than Indian Airlines for similar Airbus aircraft, Mr Prasad explained that was because offsets were mandatory in the purchases by the government carrier. Evidently, the costs of those offsets were added on to Indian Airlines’ bill.

Such subterfuge can be minimised through responsive policymaking, creating benefits for India’s defence economy without unduly taxing vendors. The MoD’s first offset policy, promulgated in the Defence Procurement Policy of 2005 (DPP-2005), has gradually evolved, mainly at the instance of Indian and foreign defence suppliers. The most far-reaching change is the introduction of “offset banking” last year, allowing vendors to accumulate offset credits towards a future liability. But South Block has been less than responsive in the justifiable demand for “offset trading”, which would allow accumulated credits to be sold by vendors who may not have a use for them at that time.

As foreign vendors struggle to find offset partners for their mounting offset liabilities, there is a rising clamour --- particularly from US companies --- for allowing “indirect offsets”, or the discharge of offset obligations through investment in non-defence fields like infrastructure, health, housing, etc. The MoD, focused on building up domestic defence industry, considers “indirect offsets” a potential turf infringement. But unless a well-conceived policy and regulatory framework is created for handling billions of dollars of offsets liabilities each year, New Delhi may have to allow some of that money to spill over into non-defence fields.

Tuesday, 24 November 2009

Search for Tejas engine nears its end: decision likely before March 2010, price will determine winner

Photo: One of the LCA prototypes at HAL Bangalore, fitted with fuel drop tanks

By Ajai Shukla
Business Standard, 24th Nov 09

For two years, the Aeronautical Development Agency --- the agency developing the Tejas Light Combat Aircraft (LCA) --- has searched for an engine to boost the performance of India’s homegrown fighter. With bids for two engines --- the General Electric F-414, and the Eurojet EJ200 --- submitted on 12th October, Business Standard has learned that ADA will select one before March 2010.

The GE F-404, one of fighter history’s iconic engines, currently powers the Tejas. But its 82-85 kilonewtons (KN) of thrust does not provide the acceleration or the sustained turning ability needed by the Tejas in air-to-air combat. ADA wants the Tejas to have 90-95 KN of thrust, which both the EJ200 and the GE F-414 provide. And so the F-404 will power only the first two Tejas squadrons; all subsequent LCAs, including the naval version, will fly with either the F-414 or the EJ200.

Dr Dipankar Banerjee, the DRDO’s Chief Controller of Aeronautics, says two crucial factors will determine the winner: which engine fits into the Tejas with minimal re-engineering; and which one works out cheaper (acquisition cost + operating cost).

The DRDO officer, who guides the Tejas programme, debunked the long-held belief that the Tejas would require major re-engineering for fitting the new engine. “We have evaluated both engines and we believe only minor changes will be needed in the fuselage of the Tejas”, said Dr Banerjee. “Which engine is selected will be largely determined by its cost.”

Both engines, however, need minor design modifications by their vendors to meet the specific requirements of the Tejas. According to Dr Banerjee, “The Eurofighter Typhoon is powered by two EJ200 engines, but the LCA has just a single engine. For safety reasons, it must have a re-ignition system to restart the engine automatically if it goes off in mid-flight.”

And since the selected engine will also power the naval Tejas, the EJ200 needs to be protected against the corrosive salt-water naval environment.

The EJ200’s rival, the GE F-414, has neither of these concerns; it already powers the single-engine Gripen fighter, as well as the F/A-18 Super Hornet, which the US Navy operates off aircraft carriers. But there are two other concerns over the F-414. Firstly, it needs to be tweaked to provide greater thrust during some periods of a flight, when it appears to deliver less power. And, since it is an American engine, export controls are potentially troublesome.

Eurojet, however, insists that re-ignite software is an integral part of the EJ200. Hartmut Tenter, Managing Director of Eurojet, explained to Business Standard, “If the EJ200 goes off in mid-flight, the aircraft decelerates sharply. The engine software recognizes that and automatically initiates the re-ignite procedure. It’s automatic; the pilot has to do nothing.”

Both Eurojet and General Electric consider this engine contract as vital. The order for 99 engines (plus options for another 49) is worth an estimated US $750 million. But, far more importantly, both see this contract as a way of getting a foot in the door for the US $11 billion Medium Fighter contract. Eurojet EJ200 engines power the Eurofighter Typhoon, while GE F-414s power both the F/A-18 and the Gripen NG. Getting a contract for the engine is seen as a giant first step towards getting a contract for the aircraft as well.

Fighter pilots say that a world-class engine makes a world-class fighter. Whenever two fighters face off in a dogfight, as pilots term an aerial duel, the one with the better engines almost always wins. In the old days, better engine power allowed a pilot to twist and turn sharply, to get behind the enemy, and then shoot him down with a burst of cannon fire.

Now, with missiles the primary air-to-air weapon, engine power is more important than ever. The enemy usually appears as a blip on the radar, which the pilot usually detects while “loitering” at low speeds to conserve fuel. He immediately guns his engine, accelerating hard towards the enemy, and launches his missile at nearly twice the speed of sound (Mach 2). As the missile screams towards the enemy fighter at around Mach 4, the pilot throws his fighter into a high-gravity U-turn to dodge the missile that his opponent would have launched by now. The pilot who can accelerate faster, launch first, and then turn away harder --- in other words, the pilot with the more powerful engine --- is usually the one who comes home alive.

Monday, 23 November 2009

IAF placing order for 2nd Tejas squadron: Dwindling MiG-21 numbers, growing China threat, speeds up Tejas induction

Photo: A Tejas LCA performing at the Aero India 09 at Bangalore in Feb 09

by Ajai Shukla
Business Standard, 23rd Nov 09

The Indian Air Force is taking a crucial step towards accepting the indigenous Tejas Light Combat Aircraft (LCA) as a replacement for its ageing MiG-21 fighters. Senior air force officers have told Business Standard that the IAF is ordering a second Tejas squadron (20 aircraft), in addition to the 20 fighters that are already on order.

Mr Ashok Nayak, the Chairman of Hindustan Aeronautics Limited, which will manufacture the Tejas, has confirmed this development. “The MoD tender for 20 additional Tejas fighters is on track”, he told Business Standard. “After it is issued, we will sit down with the MoD, and negotiate a price.”

The order for a second squadron is a vital expression of IAF confidence in the future of the long-running Tejas programme. So far, the IAF had insisted on evaluating the performance of the first squadron before ordering a second, by around 2015-2016. That would also allow the Tejas to be upgraded to the Tejas Mark II, which would have a new, more powerful, engine. But now, with its fighter fleet dwindling as the old MiG-21s are retired, the IAF is taking the Tejas as it is.

“The Tejas, even with its current GE-404 engine, is a better fighter than the MiG-21”, explains a senior IAF officer who is familiar with equipment policy; “by 2015, the first Tejas squadron will be ready for the IAF. HAL’s assembly line will be free; while the Tejas Mark II finishes testing, HAL can build a second squadron with the GE-404 engine.”

So far, the plan was to produce 12 twin-seater Tejas trainers after the first squadron was built. The new order will be for 18 single-seater and 2 twin-seater Tejas: exactly what equips a fighter squadron.

Here’s why the IAF urgently needs that second squadron: Against a sanctioned requirement of 39.5 squadrons (each squadron has 21 fighters), the IAF is now down to just 32 squadrons. By 2015, another six squadrons of MiG-21s and two squadrons of MiG-27s would have finished their service lives. Meanwhile, HAL is manufacturing Sukhoi-30MKIs, but the current production is just 14 per year. The mathematics is clear: by 2015, the IAF will have just 29 squadrons of fighters.

Making this shortfall even more worrisome, is the new requirement of five IAF squadrons for north-east India, as a result of an increased threat assessment from China. Senior IAF officers have recently declared that India actually needs 45 squadrons.

In this context that the IAF cannot wait to induct the Tejas as the next light fighter, a role that the MiG-21 has long performed. Medium fighters are as urgently needed, and the IAF is currently evaluating six aircraft for this role. But the new Medium Multi-Role Combat Aircraft (MMRCA), even if the contract is placed expeditiously, is unlikely to enter service before 2015-16. Only in the heavy fighter segment is the IAF well placed, with the superlative Sukhoi-30MKI steadily joining the fleet.

The Tejas is currently undergoing weapons trials to obtain its Initial Operational Clearance, most likely by early 2011. Then starts the two-year process for obtaining Final Operational Clearance, after which it can enter service in early 2013. Then, if HAL can deliver 10 Tejas fighters per year, the first squadron will be ready by end 2014. And, if all of that goes smoothly, the second Tejas squadron will join the IAF by end-2016.

The IAF has decided that No 45 Squadron, which operated MiG-21M fighters until they were recently retired, will be the first Tejas squadron. It will be based in Sulur, near Coimbatore. It is still unclear where the second Tejas squadron will be based.

Tomorrow:  Choosing the Tejas' next engine: how's the contest going?

Saturday, 21 November 2009

Defence offsets cross Rs 8000 crores

by Ajai Shukla
Business Standard, 21st Nov 09

Since 2005, when the Ministry of Defence mandated that every foreign defence purchase above Rs 300 crores would impose on the vendor an offset liability of 30% of the contract value, global arms majors have scurried to tie up partnerships with Indian defence manufacturers.

Today, for the first time, the MoD revealed exactly how much business the defence offsets policy has generated. Satyajeet Rajan, the chief of the Defence Offsets Facilitation Agency (DOFA) revealed that, since 2007, foreign vendors have signed up for offsets worth about Rs 8000 crores.

In 2007, a mere Rs 243 crores worth of offsets were firmed up. The figure rose tenfold to Rs 2598 crores in 2008. And in 2009, DOFA has already okayed Rs 4870 crores worth of offsets and counting.

These values are of planned production; actual production has still to begin in all but a handful of offset partnerships that were tied up over the last three years.

Interestingly, 94% of all planned offsets are in the aerospace sector; the remaining 6% covers the manufacture of naval systems. Apparently the MoD’s Rs 42,000 crore tender for the purchase of 126 medium fighters has been a major driver in encouraging offsets partnerships. Most of the six vendors competing in that contract have been identifying potential partners within India’s private sector, as well as with public sector aerospace giant, HAL.

Foreign vendors are currently permitted to discharge their offset obligations in three possible ways. Defence products, purchased from India’s defence manufacturers for export are eligible for offsets credits. So too are investments in India’s defence industry. Finally, investments made in Indian R&D facilities will be counted as offsets.

So far, the investment into Indian R&D has been negligible. And in choosing Indian partners, foreign arms vendors have preferred private companies to the public sector. So far, 40% of all offsets have gone to MoD-owned entities: factories of the Ordnance Factory Board and the eight defence PSUs. 33% of the offsets have gone to large private companies and a healthy 27% have gone to small and medium sized manufacturers.

The potential value of offsets business is enormous. India currently buys foreign weaponry worth about Rs 50,000 crores annually, a figure that is rising. Taking the minimum offsets liability of 30%, about Rs 15,000 crores worth of offsets must be discharged annually. In fact, the figure is higher; the medium fighter tender specifies an offsets liability of 50%.

The global arms industry complains bitterly about offsets; the United States government officially frowns at offset demands, but allows its companies to meet the conditions of buyers. But India’s MoD insists that global defence contractors actually derive commercial benefits from partnering Indian companies in defence manufacture. The DOFA chief points out, “Offsets requirements force foreign vendors into looking for Indian companies to partner. But this is for the present; 10-15 years down the line, we will not need offsets at all to galvanise Indian defence manufacture.”

Offsets were first demanded by European countries in the late 1950s, when the US was arming NATO against the Soviet Union. But the practice gathered momentum only in the last two decades. In 1990 only 20 countries demanded offsets as a part of arms purchases. Today offsets are demanded by over 130 countries.

In India, defence offsets were first approved by the Defence Minister in 2004 and included in Defence Procurement Policy of 2005 (DPP-2005). This was amended in DPP-2008, which permitted “offset banking” and the waiving of offsets in “fast track” purchase. This year, DPP-2009 permitted a long-standing request by foreign vendors, allowing them to change offset partners.

Today, indicating that more changes could be legislated in DPP-2010, DOFA Chairman Satyajeet Rajan asked the private sector to suggest useful changes to the offsets policy.

Distribution of offsets

40% : Ordnance factories and DPSUs

33% : Large private industry

27% : Other private industry

Offsets business year-wise

2007 : Rs 243 crores

2008 : Rs 2598 crores

2009 : Rs 4870 crores

Friday, 20 November 2009

IAF slams HAL, political interference in procurement, bats for private sector

Photo: IAF Vice Chief, Air Marshall Pranab Kumar Barbora, who is setting the bar for plain-speaking by senior military officers

by Ajai Shukla
Business Standard, 20th Nov 09

Private sector companies engaged in aerospace manufacture and R&D now have an influential new supporter: The Indian Air Force (IAF). In New Delhi today, the IAF’s vice chief, Air Marshall Pranab Kumar Barbora forcefully called for government policy changes to encourage the private sector in aerospace production, to kickstart a sector that has long been dominated by public sector Hindustan Aeronautics Ltd (HAL).

Industry bodies like the Confederation of Indian Industry (CII) have pushed these measures earlier. But the military has so far toed the Ministry of Defence (MoD) line, which automatically grants Defence Public Sector Units (DPSUs) like HAL a predominant position, effectively confining private companies to the ancillary supply of aircraft sub-systems.

But Air Marshall Barbora, a blunt-speaking MiG-21 veteran with a reputation for plain speaking on controversial matters, contrasted the private sector’s success in modernising more than 50 airbases, with HAL’s dismal export performance.

Pointing out that even Pakistan had more defence exports than India, the IAF vice chief said, “I visited HAL a few days back. They are proud that they are making parts for Airbus. But a few days back, China produced the whole Airbus. We are happy producing a door here and something else there.”

Air Marshall Barbora listed out policy changes that the government urgently needed to implement to energise the private sector. These included:

  • Government must fund R&D and manufacture by private companies, like it has done for the DPSUs. “They (private sector) have to be part of the new structure. If you don’t give them finance, they won’t come up.”

  • Assuring firm orders (or Minimum Order Quantity) to private companies, which will allow them to recover the money they spend in developing a product. “If they know they have to produce 1,000 of this, they will be willing to invest.”

  • Removing government curbs on defence exports by the private sector, to allow them to recover investment costs. “Our own [defence] requirements are miniscule. If you don’t allow private companies to export, he will say, ‘you look after yourself, I’ll look after myself.’”

  • Addressing “the CVC syndrome”, in which “anyone can file an FIR and everything comes on hold”. The IAF deputy declared that procurement processes must go on without disruptions by motivated allegations of corruption.

  • Increase the Foreign Direct Investment limit, which is currently 26 per cent. “We have taken steps, but they are not bold enough. We have to be bolder, to invite more investment.”

The IAF deputy also slammed political parties for criticising and scanning defence contracts signed by the previous government, each time power changed hands. Air Marshall Barbora said, “The government becomes the opposition and the opposition becomes the government and blocks everything. That impinges very badly on defence.”

Pointing out that dependence on defence imports remained an Indian vulnerability, the IAF deputy slammed the US for placing sanctions on India after the Pokhran nuclear tests. Holding France up as a model to follow, Air Marshall Barbora said, “France said that, by so and so year, we will go fully indigenous. And they did that. [After that] France blasted all the nuclear devices that they wanted in the Pacific Ocean and nobody could do anything, because they had indigenised [defence production].”

According to a CII-Ernst and Young report, India has over 6,000 SMEs supplying DPSUs, Ordnance Factories, DRDO and the armed forces with 20–25 per cent of their total requirement of components and sub-assemblies. In addition, there are almost a hundred large private companies involved in defence manufacture.

These recommendations were made at a seminar on “Energising Indian Aerospace Industry” in New Delhi.

IAF Recommendations:
  • Fund R&D and manufacture by private sector
  • Assured orders to recover investments
  • Remove curbs on defence exports
  • Minimise disruption of procurement
  • Increase FDI limits from 26%

Sunday, 15 November 2009

No thanks, you’re blacklisted!

by Ajai Shukla
Business Standard, 17th Nov 09

Over this last decade, the Ministry of Defence (MoD) has “blacklisted” so many foreign arms corporations that the military’s modernisation plan has virtually stalled. The MoD “blacklist” is not a formal document; an arms vendor is mostly embargoed unofficially, when senior bureaucrats agree that it is playing dirty.

The hit list reads like a Who’s Who of global weapons suppliers, including corporations with good records of delivering arms to India. Starting with Bofors in the late 1980s, the list grew to include Denel of South Africa; Israel Military Industries (IMI); Singapore Technologies Kinetic (STK); and now Thales of France. Earlier this year the world’s biggest defence contractor, Lockheed Martin, was on the blacklist. Now another global giant, BAE Systems, seems headed there after problems with setting up an assembly line in HAL Bangalore for the Hawk jet trainer.

It is hardly news that arms sales and corruption walk together. Arms vendors routinely bribe political leaders, bureaucrats and senior military officers, not just in India but worldwide. BAE Systems allegedly bribed Saudi Arabian royals with hundreds of millions of dollars in the infamous Al Yamamah contracts. Thales, credibly accused of bribing South African presidential hopeful, Jacob Zuma, is also being sued by Taiwan to recover US $590 million allegedly paid in kickbacks to win a deal for six warships. Most arms companies maintain multi-million dollar slush funds to ease the way for their giant deals.

But the Indian MoD is wholly wrong in behaving as if the problem is just one of predatory arms corporations. All those bribes are being paid to somebody; but no Indian MoD official is in jail for having accepted a bribe. Instead South Block’s vendor blacklists grow longer and longer.

These blacklists are now choking defence procurement. The Indian Army’s artillery firepower is grossly inadequate today because --- starting from the original Bofors scandal --- every time an artillery gun looks like it may be selected by the army, a cloud comes over its vendors. In recent years, the Bofors 155mm towed howitzer has been the standout candidate in repeated Indian trials. But the cloud over Bofors has never really lifted, even though it is now owned by the UK-headquartered BAE Systems.

In the procurement of tracked guns South African company, Denel, was to fit a gun turret on the Arjun tank chassis. That was scuttled in 2005 when Denel was unofficially blacklisted over bribery allegations, never proved, in another sale. That also blocked a crucial ammunition factory, being built in George Fernandes’ constituency, Nalanda, for which Denel was providing technology. In 2007, Israel Military Industries replaced Denel as technology partner; this June, after former Ordnance Factories Board (OFB) chairman, Sudipta Ghosh was arrested, IMI was prohibited as well. The Nalanda factory languishes.

Also ostracised after Ghosh’s arrest was Singapore Technologies Kinetic, whose Pegasus ultralight howitzer was the lone gun being evaluated for the army’s mountain divisions. Despite strong protests from the army (Business Standard, 18th July 09) that crucial procurement remains blocked. Two new mountain divisions for the Sino-Indian border are being starved of artillery.

“Today, anyone who wants to block an important Indian arms purchase has only to level an allegation against the vendor”, complains an Indian army officer furiously. “Anonymous letters, motivated charges, press reports, whatever… just kick-start an investigation and the MoD will kill the procurement. This is now routine business practice for rival arms dealers and, sooner or later, Pakistan and China will realise how easy it is to stop vital purchases from going through.”

Former OFB Chairman, Sudipta Ghosh, was granted bail in July after the CBI failed to file a charge sheet against him. But the seven arms companies (4 foreign and 3 Indian), which were blacklisted after his arrest, remain proscribed.

This situation, ironically, is rooted in Defence Minister AK Antony’s crusade against corruption. But his onslaught has entirely bypassed wrongdoing within his own ministry. And, increasingly, US companies are being let off the hook in situations where lesser mortals might have paid a heavier price. Lockheed Martin, discovered with classified information, was ordered to dispense with the services of its India CEO, Ambassador Douglas Hartwick (Business Standard, 13th July 09). But it remains in contention for the IAF’s lucrative medium fighter contract.

Similarly, even after the US Department of Justice revealed that the subsidiaries of two US companies, York Navy Systems and Textron, paid bribes to secure defence contracts in India, these companies face no blacklists or restrictions.

In a procurement environment characterised by paranoia, blacklists, and dwindling vendor options, India will inevitably drift towards sourcing most of its defence sales from the US, using the Foreign Military Sales (FMS) route. In this, New Delhi will provide Washington with its requirements; the Pentagon will nominate a vendor and negotiate a price; India will pay and and receive the equipment. This will be non-controversial in terms of corruption and kickbacks, but renew dependency on Washington in the crucial military arena.

Saturday, 14 November 2009

The Dalai Lama visit: New Delhi’s message to Tawang

Photos: courtesy Ajai Shukla

Sunrise over Tawang, looking towards the border with China

At the Bum La pass, with the Chinese and India flags visible at the Zero Point

By Ajai Shukla
Business Standard, 14th Nov 09

The ongoing visit of Tenzin Gyatso, the 14th Dalai Lama, to the disputed Tawang region of Arunachal Pradesh has speciously played out in the media as a three-sided event between New Delhi, Beijing and the Tibetan government in exile. In fact, there's a fourth side: the people of Tawang.

On Wednesday, at a public meeting in Tawang, the cameramen jostling for photos of the Dalai Lama only needed to turn about to film the actual exemplars of this high-stakes drama: the local Monpa tribal people who --- after centuries of domination by contemptuous Tibetan officials, and now eagerly coveted by China --- have decided unambiguously that they are Indians.

Tawang, after all, only became a part of India on 6th February 1951, when a Naga officer, Major Robert Kathing, leading a platoon of Assam Rifles, was welcomed by cheering Monpas after he crossed the Sela Pass and ordered the people of Tawang to stop paying taxes to the Tibetans. Until then, Tibetan officials had controlled the Tawang tract, a huge chunk of territory protruding south towards Tezpur.

And Tawang only remained a part of India after the Chinese People’s Liberation Army, which occupied Tawang for more than a month in 1962, got an unambiguous message from the Monpas: we don’t trust you; go back to China.

And Tawang will only remain a part of India if the Monpa people remain as staunchly patriotic as they are today. On 11th April 2005, India and China signed an agreement on the “Political Parameters and Guiding Principles for the Settlement of the India-China Boundary Question”, in which Article VII stipulates that, “In reaching a boundary settlement, the two sides shall safeguard due interests of their settled populations in the border areas.”

New Delhi was initially convinced that this implied status quo on Tawang, but Beijing now insists that this does not prejudice its claim over that border area. Chinese scholars argue that the Monpas’ interests would be better safeguarded with China, and that only the Monpas could decide their future. So Monpa perceptions and opinion of India remains important for the future of Tawang.

That is why, amidst all the signalling that has attended this visit --- New Delhi’s signals to Beijing, Beijing’s signals to New Delhi, the Dalai Lama’s signals to Tibet, etc --- the most vitally important message is the one sent out by New Delhi to the Monpas. India has signalled clearly that Tawang will not be handed over to China.

Ever since India’s abandonment of this area in 1962, Tawang’s opinion-makers have doubted India’s staying power in the face of serious Chinese pressure. And New Delhi has not done itself any favours with its disregard for its image on its vulnerable frontiers.

“Take a look at the army’s temporary barracks”, says Karma Wangchu, a former IB operative and then MLA, pointing to the flimsy tin sheds in which soldiers live. “The government seems ready to pack up and leave Tawang again. If they plan to say, why do they not have permanent buildings?”

Visible from many places on the Indian side of the border are China’s well-built concrete barracks, with roads connecting many of their border outposts. The Indian Army’s ramshackle infrastructure makes a deeply unfavourable contrast.

“Why does India not come out strongly and say that Tawang will never be given to China?” asks Lhakpa Tsering, a road-building contractor who has travelled widely across India. “The Dalai Lama’s visit shows that India is learning how to defy China, but people in Tawang need to be reassured. They feel that New Delhi will barter them away in a border settlement.”

In Buddhist-predominant Tawang, where the Dalai Lama is a living God, China remains the Bad Guy, a country that persecuted the holiest of all Lamas. In that respect, Tibet’s Buddhist identity builds common cause with India. Politically, though, New Delhi and Lhasa never reached a settlement on Tawang. From 1947 until 1949, when Communist Chinese forces overran Tibet, Lhasa refused to acknowledge that Tawang was a part of India. Tibet’s historical control over Tawang underpins China’s claim today.

The Dalai Lama, himself, had long maintained a careful ambiguity about Tawang, rejecting Chinese claims over it, but never openly rejecting Tibet’s.

Friday, 13 November 2009

Offset policy inertia curbs Thales-Samtel JV

Photo: a Cobra helmet mounted display (HMD), which is now integrated with the Gripen

By Ajai Shukla
Business Standard, 13th Nov 09

India’s defence offsets policy mandates that foreign arms suppliers must buy goods from, or invest in, Indian defence manufacturers to the tune of 30% of the value of each contract that they sign with New Delhi. But grey areas in the policy are stymieing the development of successful offset partnerships.

An example of this is the joint venture between French multinational Thales and NCR-based Samtel Display Systems to manufacture Helmet Mounted Sight Displays (HMDs) for the MiG-29K fighters that will operate from India’s future aircraft carriers, such as the INS Vikramaditya, which is being built in Russia.

Called TopSight-I, this HMD projects before the pilot’s eyes the information needed for flying his aircraft; it also allows the pilot to aim a weapon merely by looking towards the target, saving valuable seconds that are the difference between life and death in an aerial duel. As the pilot moves his head, a magnetic sensor following his helmet, and sophisticated software calculates where he is looking and aims a missile in that direction.

HMDs like TopSight-I could now be manufactured for India’s range of fighter aircraft at Samtel Thales Avionics, the high-end facility near Ghaziabad that houses the JV between Thales and Samtel Display Systems (Thales 26%; Samtel 74%). Building in India would gain offset credits for Thales; while the IAF would be happy that product support is close at hand.

In fact, according to sources in India’s MoD, Thales is looking beyond the Indian fighter market, at manufacturing its entire global requirement of HMDs in Samtel Thales Avionics. It is even willing to transfer proprietary HMD technologies worth hundreds of millions of dollars to Samtel Thales Avionics, a JV in which it holds a mere 26%. But Thales wants South Block to clearly state that it will get offset credits for the entire volume of production of the JV.

Gaining offsets credits would be sufficient incentive for Thales to supply HMDs worldwide from Ghaziabad, rather than from the Thales production unit in France. But, while the MoD has permitted the “banking” of offsets, it is unwilling to clearly state that the entire production of Samtel Thales Avionics is eligible for offset credits.

“All displays produced in Samtel Thales Avionics are fully eligible for offsets under the Defence Procurement Policy of 2008 (DPP-2008)”, argues Puneet Kaura, Executive Director, Samtel Display Systems. “It is an Indian company and it value-adds more than 70% to whatever is supplied from Thales, France. But if offset credit is given only for products that are fitted onto Indian weapons platforms, Thales would hesitate to transfer sensitive technologies to a JV in which it holds only 26%.”

Samtel Thales Avionics will start with “Build to Print”, building HMDs according to blueprints provided by Thales. But Samtel intends to absorb Thales’ HMD technology quickly, by setting up a Centre of Excellence for this purpose.

“We will absorb end-to-end knowledge of the system, and develop design capabilities within two years”, explains Puneet Kaura. “Thales has agreed to this.”

Interestingly, all six aerospace giants competing in New Delhi’s tender for 126 medium multi-role fighters have signed MoUs with Samtel Display Systems for manufacturing cockpit displays in case their fighter is selected. While these are pure “Build to Print” arrangements, purely to meet offset obligations, those foreign vendors, too, would consider designing in India and sourcing globally from here, provided offset benefits were clearly attractive.

For now, Business Standard has learned, the MoD is hesitating to take any decisions relating to defence procurement. Even the Defence Procurement Policy of 2009 (DPP-2009), which the Defence Minister stated would be released on 1st November, remains under wraps.

Thursday, 12 November 2009

Samtel cockpit displays for Sukhoi-30MKI

(A two-part series on avionics manufacture in India)

Photos: Above, a Su-30 cockpit display and, Right, the Samtel display which will be fitted on the first six Su-30MKIs next month

By Ajai Shukla

Samtel Display Systems, Ghaziabad

Business Standard, 12th Nov 09

The Indian Air Force’s Sukhoi-30MKI fighter is a beast that is tamed only by technology. The aircraft’s giant AL-31FP turbofan engines, which allow manoeuvres that no other fighter can dream of, are monitored by its pilots on high-tech computer screens called Multi-Function Displays, or MFDs. A quick glance across the MFDs also provides information about on-board weapons and sensors, telling the pilots everything about how the aircraft is flying and fighting.

These avionics --- or aviation electronics --- are the most expensive part of a fighter, usually about 35% of its overall cost. Superior avionics provide a combat edge, helping a pilot harness his engines, airframe, sensors and weapons towards victory in aerial duels.

This month, the Su-30MKI will reach a major avionics landmark when NCR-based Samtel Display Systems supplies indigenous MFDs for six Su-30MKIs.

So far French giant, Thales, has supplied MFDs for the Su-30MKIs, which are manufactured by Hindustan Aeronautics Limited in Nashik. Now Samtel Display Systems, a part of the Samtel Group, will supply these significantly cheaper than Thales.

Signalling its technological confidence, Samtel Display Systems has gone it alone in developing the Su-30MKI MFDs, despite having a JV with Thales. Starting with Liquid Crystal Display (LCD) screens, commercially procured from Japan and Korea, Samtel has ruggedised them for use in military avionics. The display must be easily readable even in bright sunlight; it must be dim enough for the pilot to read at night without losing night vision; it must work at minus 40 degrees Centigrade when conventional LCD screens get frozen solid; and it must absorb the repeated violent impacts of landing on aircraft carriers.

It has taken Samtel five years to develop the MFDs and have them certified as “airworthy”, a mandatory evaluation for all military aviation systems, conducted by the DRDO’s Centre for Military Airworthiness and Certification (CEMILAC).

This success could garner more. Samtel Display Systems has joined hands with HAL, the country’s premier aircraft manufacturer, to form Samtel HAL Display Systems (SHDS), India’s first public-private venture in defence avionics. SHDS aims to indigenise cockpit display systems across the range of aircraft being built by HAL.

But cracking this high-risk market is difficult, even with the main buyer --- HAL --- as a JV partner. In response to SHDS’s offer to supply displays for HAL’s Intermediate Jet Trainer (IJT) at a price significantly cheaper than the current foreign suppliers, HAL has said: first show us how you perform in supplying MFDs for the Su-30MKI.

Interestingly, Samtel has leaped into cutting edge avionics from a relatively low-tech springboard. In 1998 Samtel --- then a major supplier of Cathode Ray Tube (CRT) television displays --- blundered in moving towards plasma display technology, rather than the Liquid Crystal Display (LCD) displays that many rivals chose. With global TV manufacturing majors backing LCD screens, plasma has been relegated to a sideshow.

Currently, TV sales worldwide are 200 million a year. Of these, LCD TVs comprise 105 million pieces, plasma TVs a mere 8 million pieces and the balance are CRT based sets, which sell mainly in India and China because they are cheaper and can work on batteries. In the medium term and beyond, however, even CRT will dry up as a revenue stream.

But Samtel intends to be the last man standing in the CRT market, embracing a strategy of “obsolescence management”. As CRT production lines close down across the world, Samtel continues to manufacture the CRT displays that remain fitted on many weapons platforms worldwide.

When Sony closed down its Trinitron CRT line, its customer, US avionics major Honeywell, came to Samtel for CRT displays. A Samtel company in Ulm, Germany --- purchased from Thales --- produces monochrome CRT tubes for users across NATO militaries. And the Samtel Thales JV will now produce and support the Mirage-2000 video display cards, which was hitherto being done by Thales.

Samtel’s global strength in CRT comes from economy of scale and backward integration. It is the world’s only display company that manufactures its own glass. A Samtel group company in Rajasthan just buys sand for making glass for its display tubes. Even as CRT lines shut down across the world, Samtel’s CAGR remains 10-12%, despite lowering its CRT prices 15% annually.

Meanwhile Samtel Display Systems has launched an ambitious technological leapfrog into Organic Light Emitting Diodes, or OLEDs, next-generation displays that are far more visible than LCDs. So far available only in sizes below 2 inches, they are already being employed on mobile phone screens and gaming controls.

“The OLED is the future of avionics displays”, says Puneet Kaura, Executive Director, Samtel Display Systems. “We have established a Centre of Excellence in IIT Kanpur, where we develop OLEDs in partnership with IIT Kanpur and the Department of Science and Technology. Some 20-30% of R&D costs are borne by Samtel.”

(Part II: Regulatory hurdles hinder the transfer of technology)

Saturday, 7 November 2009

Army warms up to indigenous Akash missile

Photos: the Akash missile on BMP-II and vehicle mountings. The newer version, being offered to the army, is mounted and fully integrated on T-72 tank chassis

by Ajai Shukla
Business Standard, 7th Nov 09
DRDO Missile Complex, Hyderabad

India’s long-criticised Akash anti-aircraft missile is now blazing towards success. Its counterparts in the DRDO’s Integrated Guided Missile Development Programme, the Prithvi and Agni ballistic missiles, were on target from the start; the anti-tank Nag missile will also enter service shortly; the Trishul short-range anti-aircraft missile was abandoned unceremoniously. Now, after years of rejection from the military, the Akash is being accepted as a world-class missile.

The IAF’s order last year for two Akash squadrons --- dismissed by sceptics as a face-saving burial for the Akash programme --- has just been doubled with a fresh IAF order for 16 more launchers that will be stationed in northeast India. And now, Business Standard has accessed even better news for the Akash programme: the Indian Army is considering ordering several Akash squadrons for its ground forces.

The DRDO’s Chief Controller for R&D, Dr Prahlada, has confirmed that the army is displaying fresh interest in the Akash. Asked for details, Dr Prahlada told Business Standard, “I cannot say whether the army is interested in the Akash for its strike corps, or for another role. In any case, the Akash is a mobile system that is suitable for various roles.”

But protecting fast-moving tank columns from enemy fighters is what the Akash does best. For years the DRDO laboured to fit the entire Akash system --- including radars, missile launchers and command centres --- into T-72 tanks. This provided the Akash with the cross-country mobility to advance deep into enemy territory along with Indian Army strike corps, shooting down enemy fighters at ranges as far out as 25 kilometers.

Planned as a replacement for the army’s obsolescent Russian SAM-6 Kvadrat, the heart of an Akash missile battery is the Hyderabad-developed Rajendra phased-array radar that tracks up to 64 enemy fighter aircraft simultaneously, in a radius of 60 kilometers. The mobile command centre selects up to four of the most threatening air targets, and two Akash missiles are fired at each from the T-72 based Akash launchers, which move alongside. The Rajendra radar continuously guides the missiles, eventually “flying” them smack into the enemy fighters.

Theoretically, a “ripple” of two Akash missiles has a 99% chance of shooting down a modern fighter aircraft. Practically, however, in 9 live Akash trials so far, all 9 missiles that were fired hit their targets. Videos of the firing trials, witnessed by Business Standard, show the Akash missiles smashing their targets into tiny fragments at ranges beyond 20 kilometers.

The DRDO has taken 20 years to develop the cross-country mobile, tank-mounted version of the Akash missile system that the army is now interested in. Criticism of this delay has been vocal, but the DRDO counters by pointing to the quality of its product: the Akash, says the DRDO, is the only system of its kind available globally.

A top DRDO scientist at the missile complex in Hyderabad points out, “Western countries like France, which make missiles in the technological league of the Akash, don’t mount the entire system on a tank, something that the Indian Army insists on. Only the Russians build tank-mounted missile systems, but their missile technology is far inferior to that of the Akash. All that the Russians can offer today is the next generation of the Kvadrat.”

The defence PSU, Bharat Electronics Limited, is the nodal production agency for the Akash missile system, supported by a broad consortium of Indian public and private sector manufacturers who contribute components and sub-systems. Bharat Dynamics Limited manufactures the solid-fuel, two-stage, ramjet Akash missile itself.

Tuesday, 3 November 2009

Contracting with the MoD: stealing lollipops from babies

The Hawk assembly line in Bangalore. HAL claims that BAE Systems has failed to provide drawings, jigs, and parts according to the agreed schedule. BAE Systems denies the charge.

by Ajai Shukla
Business Standard, 3rd Nov 09

If India’s military eventually plumps for primarily American equipment, a major reason will be: soldiers, sailors and airmen are completely sick of being gypped through poorly-framed acquisition contracts that entirely favour the foreign suppliers.

Take India’s contract with BAE Systems, UK, for 66 Hawk Advanced Jet Trainers (AJTs), a billion dollar procurement that took 18 years to finalise. That contract, it now emerges, was framed so poorly that today --- with HAL Bangalore blaming BAE Systems for failing to properly transfer technology --- India’s Ministry of Defence can do nothing to twist BAE Systems’ tail.

The MoD now finds that the Hawk contract contains no provisions for liquidated damages in case BAE Systems defaults on its obligations. And, in an act of inexplicable generosity, India’s MoD paid BAE Systems an unprecedented “up-front” amount of 30% of the contract value; such a payment seldom, if ever, exceeds 15%. Now, with more jet trainers needed and the production line facing delays, fresh inquiries have gone out to global manufacturers, restarting procurement afresh.

Why do such fiascos routinely occur? Astonishingly, because India’s MoD does not have the legal experts needed for negotiating and framing complex defence contracts. The MoD’s forlorn Legal Cell, manned by 10-12 lawyers on deputation from the Ministry of Law, comes up during the framing of every defence contract against a battery of specialised contracting experts, an integral part of the establishment of every global arms vendor.

This year, the Indian MoD’s beleaguered and inadequate legal team will oversee capital expenditure of more than Rs 50,000 crores. When the MoD finalises its choice of medium multi-role combat aircraft (MMRCA), these less-than-legal-eagles will have to negotiate and frame a single contract worth Rs 50,000 crores. Supplementary contracts will be needed governing offsets worth half that value again.

Within the MoD, alarm bells have long been sounding. The Solicitor General and the Attorney General have been approached for help in accessing top-class legal advice. But, so far, there has been no response.

The complexity of a defence contract is virtually unparalleled. A “standard contract” is rarely feasible because the usage of each piece of equipment is radically different. Being an international contract, reaching agreement on arbitration is always difficult, especially considering confidentiality and non-disclosure arrangements. Defining “force majeure” is extremely important, especially when governments can invoke national interest during the execution of a contract. The MoD’s civil servants deal routinely with such issues, but without the benefit of solid legal advice.

India’s military has long suffered from flawed and inconsistent contracting, especially with Russian suppliers. Since the early 1980s, India’s strike corps --- the tank units that would spearhead a thrust into Pakistan during war --- have faced frustrating shortages of on-board fitment equipment that an ethical defence vendor would supply as a part of the contract. In an instance that generated much resentment, India’s first T-72 tanks were supplied by Russia without the tarpaulin covers that keep out dust and rain. When the military asked for tarpaulins, Russia demanded a supplementary contract, eventually supplying them at highly inflated prices.

In some contracts, especially those involving the supply of “strategically important” equipment, the vendor has the leverage to ignore his contractual obligations. Russia’s shakedown of India over the cost of the Gorshkov is an example of the limitations of any contract. Linking the Gorshkov sale with the transfer of nuclear submarine technology, Russia dismissed the initial price as “unreal, a mistake”, and demanded a renegotiated price. But, in most defence procurements, a good contract guarantees satisfactory supply as well as a healthy buyer-seller relationship.

US defence companies are confident that the experience of contracting with them --- with no hidden costs, superb product support, and a “partnership” approach towards the Indian users --- will make a big impact on the Indian military. So far, contracting with the US has been relatively smooth, but it is still too early to tell.

The MoD’s lack of capability in defence contracting is just one, especially worrisome, dimension of a broad systemic incompetence in procuring defence equipment. As a Group of Ministers in April 2000, numerous committees and, most recently, an excellent CAG report pointed out, the MoD has failed to put in place a functionally specialised acquisition organisation to handle a task that is clearly far beyond current capabilities.

But instead of a coherent system, procurement continues under 13 different agencies, each reporting to a different functional head. Contracts, after they are concluded, are managed by four different agencies with very little co-ordination among them.