$580-million tag for IAF's C-17 aircraft can be cut: Boeing

At Boeing's Long Beach facility, outside Los Angeles, where the C-17 Globemaster III is assembled.

A side view of the C-17... a photo does not adequately capture the size of the beast.

The F117 engine, a derivative of the commercial Pratt & Whitney PW2000 engine, that powers the Globemaster and allows it to reverse with the help of thrust deflectors.

By Ajai Shukla

Business Standard, 31st May 2010

Operation Cactus boosted India’s regional stature, when Russian-built IL-76 aircraft airlifted hundreds of paratroopers 2000 kilometers, non-stop, to the Maldives within 12 hours of a frantic SOS from that country’s coup-embattled president. With India’s fleet of 24 IL-76 aircraft now obsolescent, Indian planners have decided to buy Boeing’s C-17 Globemaster III, widely acknowledged as the world’s most versatile military transport aircraft.

The downside: at over half a billion dollars apiece, the Globemaster is also the world’s most expensive air-lifter. With criticism rising of India’s US $5.8 billion purchase of ten Globemasters, Boeing now says that India could actually pay far less.

Responding to a question from Business Standard about the Globemaster’s high cost, Vivek Lall, the India chief of Boeing Defence Space & Security (BDS), has clarified by email that the US $5.8 billion, “is on higher side of what the actual cost could be…. India may not need all the services and items that the US Air Force is offering them. The final cost will be determined by the actual requirements of the Indian Air Force and after negotiations are held.”

In accordance with US law, the US Congress was notified on 23rd April that India wanted to buy ten C-17 Globemaster III aircraft directly from the US government (under the Foreign Military Sale, or FMS, programme) for an estimated US $580 million per aircraft. In contrast, the IL-76, can be bought for less than one-tenth that price: about US $50 million per aircraft.

The US $580 million tag could become even bigger if India buys secure communications (COMSEC) and Global Positioning System (GPS) navigation aids, by signing two safeguard agreements that US law demands but New Delhi has so far rejected: the Communications Interoperability and Security Memorandum of Agreement (CISMOA); and the Basic Exchange and Cooperation Agreement for Geo-spatial Cooperation (BECA). The recent Congress notification indicates that India’s C-17s will not be fitted with COMSEC equipment; GPS security devices; and certain “Government Furnished equipment”.

The BDS chief, Vivek Lall, indicated that Boeing would provide alternatives to the COMSEC and GPS, but said, “We do not discuss detailed aircraft components as the deal is a foreign military sale and is between the two Governments.”

Business Standard has examined requests, placed to the US Congress over several years, for C-17 sales to NATO, Canada, Australia, UAE and Oman to determine how Boeing’s ex-factory price of US $200-220 million for each unfitted C-17 Globemaster escalates to US $580 million for each of the fully-kitted military aircraft that India is buying.

The data indicates that the basic military aircraft, built at Boeing’s Long Beach facility outside Los Angeles, California, costs about US $350 million. An additional US $150 million per aircraft goes on spare engines, maintenance spares, electronic protection systems, and logistics. Finally, Boeing’s global maintenance network for the C-17 --- called the Globemaster III Sustainment Partnership, or GSP --- charges US $75 million every three years --- i.e. US $25 million per year --- to ensure that each aircraft covered in this plan remains flying, functional and available almost 90% of the time.

Boeing has confirmed that India is joining the GSP and that the notification to the US Congress includes that cost.

Once India’s planned procurement of 10 Globemaster IIIs is completed, it will be the largest C-17 user outside the US, which operates 198 Globemasters. Other users are the UK (6 aircraft); Australia and Canada (4 aircraft); Qatar (2 aircraft) and NATO (3 aircraft).

Operating from short, mud-paved landing strips such as those on India’s borders, the C-17 can lift 75-tonne payloads to anywhere in China, Central Asia, the Gulf countries and much of south-east Asia, without refuelling. Capable of carrying 188 passengers, or 102 fully kitted paratroopers, Globemasters have brought out as many as 300 refugees during humanitarian missions from disaster zones like Haiti.

The C-17 can also transport a battle-loaded Arjun or T-90 tank, or a Chinook helicopter with its rotors dismantled.

Buy Indian: DRDO chief to military

DRDO missile scientist, Sudhir Mishra, being awarded by the PM. DRDO chief, Dr VK Saraswat (left) revealed that the military bought Rs 68,000 crores worth of DRDO equipment this decade

By Ajai Shukla

Business Standard, 27th May 10

The Defence R&D Organisation is delivering, and it must be supported by the military: that was the message from DRDO chief, Dr VK Saraswat, to a high-powered audience in Delhi today, which included Prime Minister Manmohan Singh, Defence Minister AK Antony, the National Security Advisor and the three service chiefs.

Dr Saraswat, a blunt-talking missile expert who earned a name while successfully steering a raft of missile projects, was speaking at a ceremony to award DRDO achievers. Seizing the moment, he drew the PM’s and Antony’s attention to the military’s preference for foreign weaponry, and the reluctance of the Ministry of Defence (MoD) to lay down the line on indigenization.

The DRDO chief stated, “The Services also must understand that while the temptation may be overwhelming, to field proven, state-of-art imported systems, they too have a role to play in the economic and industrial growth of the country. No foreign system can be customized to completely address our long-term requirement.”

Dr Saraswat pointed out, “(The) DRDO has long been held responsible for the level of self reliance in defence systems, but the responsibility for self reliance should be shared by all stake-holders of MoD and cannot be placed on DRDO alone, which neither has the power to impose its products on its customer (the military) nor the mandate or capacity to produce the developed systems all by themselves.”

Quantifying, for the first time, the DRDO’s contribution to India’s defence, Dr Saraswat revealed that the DRDO’s research budget of Rs 3000 crores a year had given the military Rs 68,000 crores worth of DRDO-developed systems over the last decade. And recent breakthroughs in multiple DRDO systems --- including the nuclear submarine, INS Arihant; the nuclear capable Agni-III missile; an anti ballistic missile defence system; the Tejas Light Combat Aircraft (LCA); the Arjun tank; and many others --- meant that India’s “self-reliance index” would be greatly enhanced.

The DRDO chief also revealed, without divulging details, that “a major R&D programme on NBC [Nuclear, Biological and Chemical] defence has been recently sanctioned by the Cabinet Committee on Security.”

Dr Saraswat also detailed a major shift in the DRDO’s outlook, which has focused in the past on developing weapon systems that were also available in the global market. Henceforth, the focus would be on futuristic, guarded technologies that money cannot buy, including, “Space security, cyber security, hypersonic vehicles, directed energy weapons and technology development efforts in smart materials, composites and MEMS (micro-electro-mechanical) based sensors.”

For the first time, the DRDO announced a focus on the paramilitary forces that are combating insurgency, terrorism and Naxalism, and the need to familiarize them with products and technologies that they could use. The DRDO also plans new initiatives in surveillance, early detection and warning systems to equip the paramilitary forces for sub-conventional warfare.

The DRDO chief also became the first MoD insider to publicly urge a clear direction to the defence offset policy, which currently makes no distinction between an R&D collaboration and a low-tech manufacturing project. Dr Saraswat suggested that the offset policy “should be utilized to bring in high end technology and quality manufacturing processes into the country and must guard against the pressures of high volume low end build-to-print modules."

Dr Saraswat also announced that the DRDO, in partnership with FICCI, had initiated a “Technology Assessment & Commercialisation (ATAC)” program for transferring to industry certain civilian-use technologies developed by the DRDO. In the first phase of ATAC, 200 technologies from 26 DRDO labs are being considered. MoUs have been signed for 8 specific technologies in the first phase, while Expressions of Interest have been received from major industrial players for several other technologies.

US high-tech arms to India stumble on safeguards

(Photo: courtesy Ajai Shukla)

The P8A Poseidon MMA ready for flight testing at Boeing, Seattle. The Indian version, the P8I, could be delivered without crucial electronics if India does not sign the CISMOA

By Ajai Shukla

Business Standard, 25th May 10

India’s marked shift towards American weaponry is, paradoxically, leading towards a flashpoint between New Delhi and Washington. Over the next three months, key American military platforms --- including the AH-64 Apache attack helicopter; the C-17 Globemaster transport aircraft; and the M777 ultralight howitzer (ULH) --- come to India for user trials. But New Delhi’s reluctance to sign two technology safeguard agreements demanded by the US could lead to India paying top dollar for American equipment that is divested of the cutting-edge electronics that makes it special.

With neither side giving ground, negotiations have stalled. Before meeting last week in Washington, the US-India Defence Procurement and Production Group (DPPG) --- which coordinates equipment transfers between the US and India --- quietly removed from its agenda a long-running discussion on the two contentious safeguards: the Communications Interoperability and Security Memorandum of Agreement (CISMOA); and the Basic Exchange and Cooperation Agreement for Geo-spatial Cooperation (BECA).

Also threatened by this continuing stand-off is the transfer to India of crucial avionics, satellite navigation aids, and secure communications equipment that power two advanced American platforms that India has already bought: the P8I Poseidon multi-mission maritime aircraft (MMA); and the C-130J Super Hercules transport aircraft.

US law mandates that certain sensitive American electronics can only be transferred abroad after the recipient country signs the CISMOA and/or the BECA. But New Delhi treats all defence agreements with the US as political hot potatoes. Last year India reluctantly signed up for an End User Monitoring (EUM) Agreement with the US after extended negotiations that eventually kept American inspectors away from Indian military bases. Simultaneously, New Delhi flatly rejected a US proposal for a Logistics Support Agreement (LSA) that would have formally allowed US forces ready access to Indian logistics. The EUM agreement and the LSA faced vocal domestic opposition, notably from the Left.

Manohar Thyagaraj, a security analyst who studies the US-India strategic relationship, explains, "Foundation agreements such as CISMOA and BECA are required by US law for providing another country with the most advanced electronics on US weapons platforms. These agreements are common for all countries that receive US high technology and are not unique to India.”

The CISMOA signed between the US and Korea in October 2008 aims “to promote tactical systems interoperability” between the two armed forces by allowing the US Department of Defense to provide “Communications Security (COMSEC) Equipment” to protect sensitive data during communications. The Indian MoD is apprehensive about permitting the US to fit COMSEC equipment into the platforms that India buys.

If the stand-off over the CISMOA continues, India’s eight P8I Poseidon aircraft, which cost US $2.1 billion, will be delivered with a down-rated avionics suite, not the high-end electronics that make the P8I a leader in its class.

Talking to Business Standard, Egan Greenstein, Senior Manager for Business Development, Boeing Defence, explained, “The signing of the CISMOA would be essential for a high-tech system like the P8I. It is absolutely packed with sensitive technologies. The US wants to share these technologies with India but will make sure that they are suitably protected by the CISMOA.”

The growing distance between New Delhi and Washington on the CISMOA is causing frustration on both sides. A US official complains, “Both sides are just kicking the can down the road, hoping that someone, sometime will see the light and actually do something real about it.”

American vexation was officially conveyed during the visit of US Defence Secretary, Robert Gates, to Delhi in January when he urged Prime Minister Manmohan Singh; and Defence Minister, AK Antony; to sign the CISMOA and the LSA.

Addressing the press after his meetings in New Delhi, a chagrined Robert Gates pointed out, “These agreements have been laying around for quite a while… this is not some new requirement that has just emerged. [These agreements] are preponderantly in India’s benefit, because they give high-tech systems additional high-tech capabilities… are enablers, if you will, to the very highest quality equipment in the Indian armed forces.”

Since the US Defence Secretary’s visit Washington has written back, using concrete examples --- including the P8I and the C-130J aircraft --- to illustrate to New Delhi what capabilities it will pass up by refusing to sign the CISMOA and BECA.

The next discussion on these safeguard agreements is likely during the inaugural US-India Strategic Dialogue from 1st to 4th June, when India’s Minister of External Affairs, SM Krishna, meets US Secretary of State, Hillary Clinton, in Washington.

Doing defence with Uncle Sam

A view of the tarmac at the US Navy base, Oceana, in Norfolk, Virginia. There are 16 squadrons of F/A-18s currently located in this base alone.

by Ajai Shukla

Business Standard, 18th May 10

I spent this last week travelling in the United States at the invitation of The Boeing Company’s defence arm, Boeing Defense, Space & Security (BDS). I visited Boeing’s rotorcraft facilities in Philadelphia; a US Navy aircraft carrier (USS Harry S Truman) and naval air base (Oceana) in Norfolk, Virginia; Boeing’s space division in Florida; and its C-17 transport aircraft plant in California. With the US-India defence relationship on a high-growth trajectory, here are my perceptions on what India is dealing with.

The most striking characteristic of the US defence industry is its primarily inward focus. About 85-90% of the combined revenue of US defence corporations accrues from sales to the US army, navy, air force, marine corps and coast guard; just 10-15% of their revenue comes from overseas. In contrast, non-US defence contractors --- including those in Russia, Europe, Canada, Brazil, Korea and Singapore --- need significant overseas business to cover their development costs. But the volume of sales to the US military amortises the development costs and renders overseas buyers like India peripheral in terms of market leverage.

India’s Ministry of Defence (MoD) likes to believe that its big arms purchases place it in the driving seat while tendering and contracting. In buying from non-US companies, this is indeed true. But, in buying from the US, New Delhi’s leverage is hardly impressive.

Take, for example, India’s proposed purchase of ten C-17 transport aircraft. The Boeing plant in Long Beach, California, has already delivered 200 C-17s to the US military and more are in the pipeline. 

Or consider India’s procurement of 126 medium multi-role combat aircraft (MMRCA), a deal that has generated so much hype that South Block might believe that this is the biggest fighter purchase ever. In fact Boeing, which is offering India the F/A-18 Super Hornet, has already sold the US Navy and Marine Corps over 900 F/A-18s (Hornets and Super Hornets); another 320 have been sold abroad. A single US Navy base at Oceana is home to 170 F/A-18s.

This commercial security allows US defence companies to walk away from contracts where New Delhi lays down conditions that are difficult to meet. Texas-based Bell Helicopters has already declined to participate in India’s tender for 197 Light Utility Helicopters (LuHs), citing unreasonable offset provisions. BAE Systems refused to offer its M777 gun in the Indian tender for ultra-light howitzers, apparently because the trial requirements were unreasonable.

Nor could New Delhi have missed the withdrawal by Lockheed Martin and Boeing from the tempting Indian contracts for consultancy assistance in developing the Tejas Light Combat Aircraft (LCA). The reason for the withdrawal: the State Department bureaucracy refused to allow US participation, apparently because the contract involved passing on sensitive technologies to India.

And that is my second big impression: that India is not yet a part of the high table. When one of America’s longstanding defence partners --- the UK or Australia or Japan --- make a request, whether for high technology, or early delivery of an important weapon system --- a quick wink from Foggy Bottom (the Washington neighbourhood where the US State Department is headquartered) gets the department’s notorious bureaucracy to crank out a quick “yes”.

But Washington’s new strategic partners, like India, do not benefit from such perks. Even during the second Bush presidency, at the high-water mark of the US-India relationship, New Delhi’s requests were never accorded the priority clearances that London, Canberra and Tokyo enjoy. New Delhi complains that the ground floor in Washington doesn’t know what the top floor is doing, but the answer --- according to Beltway insiders --- is that it will take years of relationship building before the American bureaucracy reacts to India with the Pavlovian positivity that is accorded to Washington’s three key defence partners.

The third issue that strikes a visitor is the care with which Washington safeguards its technological prowess. Technology is transferred overseas only after ensuring that the US defence forces retain a technological edge. For example, the AH-64 Apache helicopter, which will undergo trials in India this July, will be by any standards a cutting-edge weapons platform. But, even if India becomes the 12th international customer of the Apache, the US Army will fly a Block III version of the attack helicopter that will be equipped with technologies that no international customer will be given. And the reality of America’s technological dominance is that even the down-rated version of the Apache that international customers will operate might well be superior to its nearest competitor.

These are aspects of the US-India defence relationship that India must evaluate unsentimentally, shedding the rhetoric that creeps into discussions relating to the US. This is difficult, given the historical complexity of the relationship and the grudge that India nurses over Washington’s relationship with Islamabad. But, with America, what you see is what you get; it is up to India to cherry-pick and take what suits it.

A day to remember: MoD announces the purchase of 124 more Arjun tanks

It is an important, even historic, day for the MBT Arjun programme and a validation of Broadsword's reporting and opinion over the preceding three years, during which we put all the facts on the table. You have all followed, and usually cheered on, Broadsword's detailed reports on the Arjun's turnaround. In this, we, along with plenty of support from Shiv Aroor, have been lone voices in the media --- and that includes english, hindi, tv, print, whatever.

We had also reported, in detail, the Arjun's success in recent comparative trials, and the turnabout in army opinion on this vital project. Surprisingly, no mainstream newspaper or TV channel picked up our reports and took them forward.

A day of quiet triumph, though a long path still lies ahead for the Arjun. The Ministry of Defence press release (Note: MoD release, not DRDO) is attached below.

PRESS INFORMATION BUREAU (DEFENCE WING), GOVERNMENT OF INDIA

ARMY DECIDES TO TAKE 124 MORE MBT ARJUN

New Delhi:Vaisakha 27, 1932
May 17, 2010

The Army has decided to place fresh order for an additional home-built 124 Main Battle Tank (MBT) Arjun. This is over and above the existing order of 124 tanks. The development follows the success of the indigenous MBT Arjun in the recent gruelling desert trials.

The project for the design and development of the MBT Arjun was approved by the Government in 1974 with an aim to give the required indigenous cutting edge to our Mechanised Forces. After many years of trial and tribulation it has now proved its worth by its superb performance under various circumstances, such as driving cross-country over rugged sand dunes, detecting, observing and quickly engaging targets, accurately hitting targets – both stationary and moving, with pin pointed accuracy. Its superior fire-power is based on accurate and quick target acquisition capability during day and night in all types of weather and shortest possible reaction time during combat engagements.

Strategic Forces Command launches Agni-II: test firing meets mission parameters

The DRDO press release on the launch of the Agni-II on 16th May 2010 is placed below:

LONG RANGE AGNI-II MISSION SUCCESSFUL

The pencil like Long range Nuclear capable Ballistic AGNI-II Missile has been successfully launched by the Strategic Forces Command at 09:18 am on 17 May 2010 (Monday) from the Wheelers Island, in the Bay of Bengal off the coast of Odisha. The Missile is launched by Strategic Forces Command thereby crediting with the launching of long range A1, A2 and A3 Missiles within a time span of five months. Two down range ships from Indian Navy located near the target have tracked and witnessed the Missile reaching the target. The AGNI-II Missile has been tested for the full range and met all the mission objectives.

The two stage solid propellant based AGNI-II Missile has 2000 kms range with a pay load capability of one ton. The missile is equipped with a state of the art Navigation system with modern techniques for taking the Missile towards designated target very accurately. Number of Radars and electro-optical tracking systems, located along the coast of Odisha have monitored the path of the Missile and evaluated all the parameters in realtime. Strategic Forces Command has carried out the total launch operations guided by the DRDO scientists.

Sri Avinash Chander, Programme Director has monitored the overall pre-launch operations. Scientific Advisor to Raksha Mantri Dr. V.K. Saraswat has reviewed the total operations and witnessed the launch along with other senior officials from DRDO and top brass from Strategic Forces Command

Raksha Mantri Sri A.K. Antony congratulated all the DRDO Scientists and Armed Forces personnel for the successful AGNI-II Mission.

Isaac Newton’s apple tree travels in space shuttle Atlantis

My view of the launch of the space shuttle Atlantis from the Kennedy Space Centre in Cape Canaveral, Florida, on Friday.

By Ajai Shukla

Business Standard, 16th May 2010

Kennedy Space Centre, Florida

At 2.20 p.m. on Friday, exactly as planned, the space shuttle Atlantis thundered off its launch pad at the Kennedy Space Centre and set off on its 32nd --- and, perhaps, its last --- flight, carrying several tonnes of equipment to the International Space Centre (ISS). The space shuttle programme shuts down later this year.

We watched dry-mouthed from the viewing station as the countdown went, 3… 2… 1… 0… and, suddenly, the shuttle was bracketed in white smoke. Then, with a prolonged roar that hit thrillingly in the gut, the shuttle’s mammoth rockets lifted it off the launch pad, the blazing plume of exhaust gases dwarfing the afternoon sun.

“Shuttle launches must be experienced in person”, avow locals in Florida’s Cape Canaveral. “TV just doesn’t capture the earth shaking, the sound, the held-back breathes.”

As the shuttle ascended trailing a thick white plume, the spectacle overshadowed the technological wizardry that drove it. Powering the Atlantis were two enormous Solid Rocket Boosters (SRBs), strapped alongside a giant fuel tank. Each second the SRBs burnt ten tonnes of solid fuel, converting that into gas at almost the temperature of the sun. Surging from the nozzles at 10,000 kilometers a second, these jets drove the Atlantis with as much power as 4 lakh mid-sized cars.

In just two minutes, the still-visible Atlantis was 40 kilometers high and clapping broke out as the strap-on SRBs were jettisoned; now its own main engines were propelling the Atlantis, gulping cryogenic fuel --- liquid oxygen and liquid hydrogen at hundreds of degrees below zero. Nine minutes after launch, the shuttle was in space, hurtling at over 28,000 kmph towards its destination, the ISS.

Only then did the NASA and Boeing officials (who play a prime role in integrating the space shuttle) start breathing normally again. Nobody has forgotten that chilly morning in 1986 when the Challenger exploded seconds after lift-off from this very launch pad.

“You keep your fingers crossed because space flight is inherently dangerous”, says Kevin Hoshstrasser, Site Director, Florida Operations, Boeing Defence, Space & Security. “The shuttle today is as safe as it can get; but it still works at such extremes of pressure, temperature and speed that things can go spectacularly wrong very, very quickly.”

After twelve days in space, the Atlantis will return to the Kennedy Space Centre and be readied as a backup ship in case there is an emergency during the remaining two shuttle flights by the Discovery in September; and the Endeavour in November 2010. The scrapping of the shuttle programme has evoked strong sentiments within the team that runs it, evident from a radio exchange just prior to launch.

Launch director, Mike Leinbach, to the strapped-in astronauts, minutes before launch: “I'd like to wish you all good luck and Godspeed and have some fun out there.”

Atlantis commander, Ken Ham’s response: “Thank you to the thousands of folks out there who have taken care of this bird for a long time…. If it's okay with you, we're going to take her out of the barn and take her for a few more laps around the planet.”

Another piece of history associated with the Atlantis is a sliver of wood, provided by the UK’s Royal Society, being carried by British-born astronaut Piers Sellers. This is from the apple tree under which Sir Isaac Newton is believed to have sat when a falling apple inspired him to conceive the law of gravity.

In an interview before the launch, Sellers noted, “While it’s up there, it will be experiencing no gravity, so if it had an apple on it, the apple wouldn’t fall. I’m pretty sure that Sir Isaac would have loved to see this, assuming he wasn’t spacesick, as it would have proved his first law of motion to be correct.”

Watching the launch live from viewing areas around the Kennedy Space Centre were an estimated 400,000 spectators, most of them ordinary Americans from across the country. Sitting next to me amidst camp chairs, rugs and the ubiquitous ice-box was 73-year-old Hal Kasprowicz who had driven more than a thousand kilometres from Pennsylvania. With him for the occasion were his son and grandson who had driven some 3000 kilometers from mid-west America.

“The space shuttle is all about America. This is an opportunity for all of us to have a family reunion and be a part of this event”, said Kasprowicz.

Also attending the launch were the usual slew of VIPs: US Defence Secretary Robert Gates, Russian Deputy PM Sergei Ivanov, talk show host David Letterman, TV star Lisa Edelstein and a host of US senators.

India asks US for help in manned space programme

By Ajai Shukla

Business Standard, 14th May 2010

Here at Cape Canaveral, Florida, the ongoing countdown to the 132nd space shuttle launch is also counting towards the end of this iconic space programme. Washington has decreed that the Atlanta, which is scheduled to blast off on Friday, will be the 3rd last shuttle mission ever. With a follow-on programme nowhere in sight, America’s space shuttle pioneers stare at an uncertain future.

President Obama has decided that it is wasteful and risky to continue using the space shuttle for transporting US astronauts and stores to and from the International Space Station (ISS); instead, this low-tech, “near-earth” task should be farmed out to commercial agencies. The cutting-edge capabilities of the National Aeronautics and Space Administration (NASA) should be directed towards new frontiers in outer space. But there is no new space policy that spells out an alternative task.

The US is now considering using cheap Russian launches for sending its astronauts to the ISS. Russia has warehouses full of decommissioned missile rockets called the RD-170; these are re-engineered into RD-180 rockets, which cost a tenth of America’s.

But, for the longer term, the US is eyeing a closer linkage with the Indian space programme, something that New Delhi has already suggested to Washington. In February, ISRO chief Dr K Radhakrishnan and KR Sridhara Murthi, MD of ISRO’s marketing arm, Antrix, met senior Boeing executives and suggested closer ties. Boeing is the OEM of the space shuttle. Senior Indian leaders and diplomats, including ambassador to the US, Meera Shankar, have persistently pressed for closer US-India space cooperation.

Now, senior executives from Boeing Defence, Space and Security (BDS) have divulged the details of cooperation that ISRO has sought for building up India’s capacity for manned space missions. Kevin Hoshstrasser, the head of Boeing’s operations at the Kennedy Space Centre in Orlando, Florida, reveals that ISRO has sought assistance in four specific areas:

• A launch escape system (LES) to enable astronauts to escape from a rocket that is undergoing catastrophic failure. Last week, Boeing successfully tested their latest escape vehicle.

• A life support and environmental control system, which creates an environment inside the space capsule in which astronauts can comfortably carry out their functions. This removes Carbon Dioxide and maintains humidity levels.

• Vehicle Health Monitoring System (VHMS), which keeps a constant check over key systems.

• Reusable space systems and composition cryogenic tanks. These tanks would be used to store fuel for India’s cryogenic motors.

Senior Boeing executives are in contact with ISRO and Boeing has prepared an internal white paper on US-India space cooperation. For discussing substantive, and potentially classified, issues with ISRO, Boeing has applied to the US government for a Technical Assistance Agreement (TAA).

Boeing’s Business Development Senior Manager for space systems, Sam Gunderson is emphatic that Boeing wishes to partner ISRO and in building Indian space systems. Brushing away concerns about US export licencing, Gunderson says, “Dual use restrictions (under the US law: International Traffic in Arms Regulations) in space cooperation would be significant, but we can find a way to work around those.”

Space partnership has gained momentum since the US-India nuclear pact. In 2009, ISRO invited Boeing to a conference in India on robotics. The moon mission, Chandrayaan-1, carried NASA sensors made by Boeing.

As the countdown continues at the Kennedy Space Centre, the excitement that suffuses a shuttle launch is tinged with disappointment at the impending closure of the shuttle programme. Scientists explain that no rocket in the world can send up 7 astronauts to the ISS for extended missions, and also carry 25 tonnes of bulky cargo. The space shuttle is made even more invaluable by its ability to bring back tonnes of cargo to earth from the space station, material that would otherwise be wasted.

At Cape Canaveral, Florida, for the launch of the space shuttle... stand by for despatches

Increase FDI in defence, says CII survey

By Ajai Shukla

Business Standard, 10th May 2010

With the government evaluating a decision on enhancing the current 26% Foreign Direct Investment (FDI) cap in defence production, a CII survey released today suggests that the Indian defence industry supports enhanced FDI levels, while opposing 100% FDI in the sector.

A majority of Indian companies (57%) favours an increase in the FDI cap to 49% or higher; a minority of just 17% of Indian companies want to retain the status quo; while 26% say “maybe”.

The debate on raising FDI in defence has divided not just Indian defence companies, but also the government of India. While the Ministry of Commerce and Industry (MoC) has signalled its willingness to support 100% FDI in defence, the Ministry of Defence (MoD) has opposed any enhancement of the 26% FDI cap. 

Two applications for setting up JVs with 49% foreign holding --- the first between the Mahindra Group and UK-headquartered BAE Systems; and the second between L&T and European conglomerate, EADS --- have already been turned down by the MoD.

India’s MoC had allowed private industry into defence production in 2001, subject to government licensing and a 26% FDI cap. In the Defence Procurement Procedure of 2008 (DPP-2008), the MoD had permitted 49% FDI on a case-by-case basis. Last year’s Economic Survey had also suggested that 49% FDI would be allowed. And, since early this year, the MoCI’s Department of Industrial Policy and Promotion (DIPP) has been talking up allowing 100% FDI in defence in order to attract foreign technology and to position India as a global hub for defence production.

The CII survey suggests that the current 26% FDI levels have failed to attract global defence investment, pointing out that a mere Rs 70 lakhs have been invested as FDI in Indian defence production between April 2000 and February 2010.

But the survey also notes significant opposition to the argument for developing India as a “home market” for global defence giants. Reflecting the opinion of Indian corporates that have invested heavily into defence R&D and production, a viewpoint that the MoD highlights and supports, the survey notes the belief of these companies that permitting increased foreign control would hamstring the organic growth of the Indian defence industry.

Describing this viewpoint, the report says that, “…allowing greater levels of FDI, even below 49% levels, would increase the amount of control exercised by foreign partners and this in turn would reduce the actual level of indigenization and maintain the reliance on foreign suppliers. 

This notwithstanding, the majority belief in the Indian defence industry remains that the current 26% FDI cap must be increased, provided that the JVs being set up “should be engaged in R&D and the IPR should rest with JV” (sic), and that the foreign partner must bring in high technology that is not easily available, and it must ensure that the JV can access the global market. 

This compromise does not address the key issue of foreign reluctance to bring in high technology without a controlling interest in the company.

The survey, however, highlights the ongoing debate over whether the proposed FDI cap raise from 26% to 49% would be sufficient to attract foreign investment, since increasing the FDI cap from 26% to 49% does not provide any additional control over the company. The issue in question is whether the FDI cap should remain at 26% or be increased to 51% or higher.

Some of the recommendations for the way ahead, cited in the CII survey, are:

• Targeting key technologies by allowing enhanced FDI in specific spheres.

• Fiscal incentives like tax holidays to attract key technologies.

• While purchase guarantees by the government are difficult, a level playing field should be provided to all players. Public sector companies should not be granted preferential terms.

• Allowing FDI through technology transfer under the offsets route.

Border Roads turns 50; old traditions; new problems

Right: driving through the snow on a BRO road. This is actually a colour photo!

Below: With the family at Sela Pass en route to Tawang

by Ajai Shukla

Business Standard, 7th May 2010

Exactly 50 years ago, with war clouds gathering on the Sino-Indian border, Jawaharlal Nehru created the Border Roads Organisation (BRO), an inter-ministerial task force that has become an Indian exemplar of grit and fortitude. Thanks to over 48,000 kilometers of BRO roads, soldiers now drive to far-flung border picquets that earlier involved days of marching. But, even today on the BRO’s Golden Jubilee, an ambitious expansion of India’s border road network remains stymied by archaic state laws and a crippling lack of urgency.

The challenge before the BRO --- triggered by China’s dramatic expansion of road and rail links in Tibet --- is the Strategic Accelerated Road Development Programme (SARDP) planned by the Ministry of Road Transport and Highways. Under this, the BRO will build double-lane roads from each state capital in the northeast to each of that state’s district headquarters. That involves building 38 roads, approximately 2812 km long, within the next five years. In addition, the government has recently handed the BRO responsibility for the Arunachal Package, which involves building another 812 km of roads in the state that China calls “Southern Tibet”.

Holding back the BRO are two major obstacles. Firstly, the tribal structure of Arunachal Pradesh makes it difficult for the state government to acquire land for these roads. While the state government constitutionally owns non-private land, Itanagar goes by tribal tradition in which all land belongs to the local tribe. The acquisition of any land in Arunachal Pradesh involves extended negotiations with multiple tribal leaders who are increasingly aware of the value of their concurrence.

Admitting that land acquisition is a problem, the Director General of the BRO, Lt Gen MC Badhani, says, “Procedural delays (in land acquisition) have to be accepted. The locals bring forward their own concerns and aspirations and we try to take those on board. It is important to have local support.”

The other obstacle before the BRO is the requirement to provide each labourer with an Inner Line Permit (ILP) before entering Arunachal Pradesh, something that the state government implements strongly. Thousands of casual labourers from states across the country, especially Jharkhand and Bihar, are contracted for BRO projects in Arunachal; their employment is often held up while ILPs are issued.

“We will continue to enforce ILPs strictly in Arunachal”, promises a top bureaucrat in the Arunachal Pradesh state government. “Arunachal’s identity will be swamped by outsiders if we don’t keep a tight control on who enters the state. All kinds of trouble-makers can come into Arunachal pretending to be labourers; we will vet every single labourer and make the contractor responsible.”

These issues around contract labour are exacerbated by a 15% shortfall in the BRO workforce as well. The BRO is authorised 42,646 uniformed personnel but the current strength is just 36,000. A concerned BRO has approached the Union Public Service Commission (UPSC) for allowing a one-time bulk recruitment of civilian BRO officers to fill all the existing vacancies. For the non-officer ranks, two Mobile Recruiting Centres have been set up in Tezpur and Rishikesh; another two are planned for Jharkhand and UP/Bihar.

Another contentious issue that has held up work on road projects --- environmental clearance --- has apparently been resolved. The BRO chief, Lt Gen Badhani, explains, “While environmental and wildlife clearances do take time, I must say that we are extremely happy with the way that officials are now clearing projects. Earlier, 60-70 roads were held up for environmental clearance; today just 8 are held up.

Despite all the hurdles, the BRO claims that the SARDP is largely on track. The 10 roads (1047 kilometers) that must be delivered by 2012 are about 40-45% completed. Work is also progressing on the Arunachal Package.

As roads push into more rugged and underdeveloped areas, the pace of construction slows because of the logistical difficulties of transporting labour, plant and materials. To speed up construction, the BRO has indented for Mi-17 medium lift helicopters that can lift loads of 4 tonnes and land at helipads as high as 18,000 feet. But the IAF’s fleet of 120 Mi-17s is fully committed in ferrying supplies to the Indian Army’s high-altitude posts and has declined assistance. Now the BRO is approaching Pawan Hans for five Mi-17s.

Since the time the BRO’s first chief, the dashing Major General Kartar Nath Dubey, pushed through the first roads to Tawang and Chushul in the early 1960s, the BRO has become a reassuring presence on India’s borders. Every spring, it cuts through walls of snow in high-altitude passes to clear 95 roads, like the Srinagar-Kargil highway. The BRO is overseeing the 8.8 km long Rohtang tunnel, which will allow traffic to Lahaul-Spiti to flow around the year. It has constructed 19 border airfields and 400 major bridges. It is currently working on 699 roads, a length of 28,000 km.

Pakistan Army: aal is not well

About 150,000 Pakistani soldiers are engaged in operations in Khyber Pakhtunkhwa. This includes formations that have long been deployed along the Indian border

by Ajai Shukla

Business Standard, 4th May 2010

India’s evident climb-down at Thimphu, and Islamabad’s barely-concealed glee at resuming a dialogue process that was never going anywhere, should not obscure the big picture. From the strategic perspective, Pakistan today remains exactly where the most hawkish Indian analysts would want it: diminished on the Indian border; and locked in bloody combat on its western reaches.

It is difficult to miss the irony: on the subcontinent’s northwestern frontier --- the gateway to India for Alexander, Timur, Ghor, Ghazni and Babar --- an alphabet soup of radical militants that ultimately threaten India are being held back by the Pakistan Army.

This stems not from any new love for India but from a long-delayed realisation amongst the generals, primarily army chief Ashfaq Kiyani, that the most immediate target in the militants’ cross hairs is the Pakistan Army, not India. The game has changed dramatically in the tribal areas of Khyber Pakhtunkhwa, as the North West Frontier Province (NWFP) was renamed last month. Rawalpindi’s traditional modus operandi since 2006 ---- rattling a few sabres while negotiating a truce with the militants --- is no longer an option. The Pakistan Army is now in a serious fight.

During earlier years, while Islamabad played faint-hearted footsie in the tribal areas with jehadi groups like the Tehrik-e-Taliban Pakistan (TTP), the world was carefully excluded from the tribal areas. With less to hide now, the Pakistan government has even dared to conduct a posse of Indian journalists through Khyber Pakhtunkhwa, where 150,000 Pakistani regulars beef up as many paramilitary scouts in manning 821 posts on the border with Afghanistan.

Given these circumstances, it is astonishing that anyone is buying into the ludicrous argument that things are going Pakistan’s way in Afghanistan and the tribal areas. The argument, which a beleaguered Pakistan Army is doing all it can to buttress, goes broadly as follows: with Obama looking to thin out forces substantially from Afghanistan before facing American voters in late 2012, the job of policing the AfPak badlands will fall into Islamabad’s lap. With a free hand to run the place, Pakistan’s Inter-Service Intelligence Agency (ISI) will carry the Taliban to power in Kabul and then douse the flames in its tribal areas by reorganising it into a terror factory from where it can direct jehad towards India and the west.

This monochromatic argument fails on many counts. Even if handing over Afghanistan to the Taliban were as simple as loading the Quetta Shoora into trucks and driving it to Kabul, Islamabad no longer desires an unfettered Taliban in total control of Afghanistan; when the Taliban ruled from 1996-2001, Islamabad’s relations with that prickly animal were far from smooth. Pakistan now sees greater benefit in a splintered Afghanistan where power is delicately distributed: a beholden Taliban in charge in the south; and a weakened Hamid Karzai in Kabul, dependent on Islamabad for key elements of power.

Islamabad’s wooing of Karzai has been under way for months and is yielding dividends. In March, on a visit to Pakistan, the Afghan president termed Pakistan a “twin brother” without whom peace could not be restored to Afghanistan. It was not a mere diplomatic flourish.

But even with the Taliban and Karzai willing to play ball, Islamabad realises that calibrating and maintaining a balance of power in Afghanistan will not be easy. Calling all the shots in Kabul is clearly unachievable; Pakistan’s more limited aims are to keep India out of Afghanistan, and to keep the lid on the Pashtunistan issue.

If Islamabad faces a tightrope walk in shaping Afghanistan’s political power structure, manipulating militancy presents an even thornier problem. Pakistan’s skill at organising purpose-built jehadi structures has resulted in chaos as the boundaries between militant groups effectively dissolve. Increasingly, a plethora of groups including the Pakistani Taliban; Afghan Taliban factions like the Haqqani group; foreign groups from Uzbekistan, Arabia and Chechnya; sectarian militias like the Lashkar-e-Jhangvi; and the erstwhile India-centric groups like the Jaish-e-Mohammad and the Lashkar-e-Toiba; all train, plan and even operate in coordination.

The Pakistan Army’s and the ISI’s growing isolation from these groups is evident from a series of fidayeen and suicide attacks on army targets, including the General Headquarters in October 2009. Two months later, militants stormed a Pakistan Army mosque killing dozens, including the young son of Lt Gen Mohammad Masood Aslam, the corps commander who oversaw operations in Khyber Pakhtunkhwa. Militant groups are increasingly attacking the ISI; coordinated attacks have been launched on ISI offices in three cities.

Longstanding linkages still remain between the Pakistan Army and the jehadis it midwifed. And, where both sides find a convergence of interests, they can still work together. But only in India does the belief still run strong that the Pakistani establishment controls and directs the jehadis in a meaningful way. In fact, so much blood has already flowed that the “ISI’s terror factory” thesis is simplistic and outdated.

Despite the Pakistan Army’s unenviable plight, it inexplicably believes its upbeat rhetoric about victory just ahead. But just as the J&K insurgency roiled on through years of upbeat Indian Army assessments, the Pakistan Army too will find itself embroiled in prolonged operations on its west. The Indian Army is large enough to contain multiple insurgencies while still retaining a formidable warfighting capability. That is not the case with Pakistan.

Aerospace, defence face hurdles in globalising

by Ajai Shukla

Business Standard, 3rd May 2010

With global aerospace and defence (A&D) majors positioning themselves to fulfil expected defence offsets obligations through partnerships with Indian A&D companies, consultancy firm PricewaterhouseCooper (PwC) has released a report that examines the opportunities and pitfalls in this globalising sector.

The defence offset obligation that global A&D corporations must meet in India require foreign vendors who sign contracts worth more than Rs 300 crores for supplying defence equipment to India to source from Indian companies at least 30% of the value of the contract. India’s current levels of defence spending could generate offsets worth Rs 15,000 crores annually.

The PwC report starts by establishing that the A&D sector is highly global in terms of sales, but only partially globalised from the viewpoint of supplies. For example, Canadian aerospace major, Bombardier, has customers in over 100 countries; but components and materials are sourced from just 40 countries.

The PwC report stipulates that an industry can be considered to be rapidly globalising when it meets three conditions. Firstly, when a high percentage of the total industry trade consists of import/export. A second qualifier would be established international supply chains based upon offshore production; and, thirdly, when crucial technology/R&D units are spread across the globe.

Judging by these parameters, the A&D industry is not as globalised as the computer, basic chemicals, pharmaceuticals, electronics, instruments, electrical machinery and automotive industries. (see chart)

Another indicator that the A&D industry is international, but not yet global, is the pattern of industry mergers and acquisitions over recent years: In 2009, 76% of all deals valued above US $50 million centred on North America, the UK and the Eurozone.

PwC also found that a mere 12% of more than 250 board members of the world’s top ten A&D majors were foreign nationals. Half of the executive boards did not have a single foreign member. In contrast, 27% of board members of pharmaceutical companies were foreign nationals.

Amongst the major issues that impede the globalisation of the A&D industry are: apprehensions about protecting IPR; tight export control limitations; and varying attitudes towards tackling fraud.

The urge to protect IPR remains the greatest hurdle, since expanding into foreign markets demands the transfer of protected technology and manufacturing know-how. The risk grows when the foreign partner has weak IP laws, courts and enforcement.

Countries like India, China and Poland present a Hobson’s choice to foreign investors. These three emerging economies, which are the most attractive for aerospace and defence investments, are considered to have below average IPR protection. Second-rung alternatives like Brazil, Turkey and Mexico have even weaker IP protection.

The PwC report recommends that IP transfer risks be accepted when they relate to non-critical technologies. Alternatively, long-established IP, with adequate patent protection, can be transferred offshore. However, R&D functions cannot safely be transferred to markets in which IP laws or enforcement is weak.

Export controls, the other major hurdle before globalisation, consist of tight restrictions worldwide on A&D exports, primarily for national security concerns.

While the need to control defence exports will remain, the PwC report points out that the increasing use of commercial off-the-shelf (COTS) equipment for defence applications also results in commercial A&D products becoming subject to export restrictions. The US International Traffic in Arms Regulations (ITAR), the world’s most comprehensive and stringent military export control regime, mandates that if a commercial airliner includes any restricted equipment, the entire airliner can be designated a defence article.

A well-known case is that of the commercial QRS-11 gyroscopic microchip, which became restricted when the US military used it in guided missiles. In 2003, after Airbus and Boeing used the same chip for airliner avionics, those civil aircraft became subject to the same restrictions as military platforms. Boeing was able to deliver an order of 737 airliners to China only after obtaining a last-minute presidential waiver.

Increasingly, companies are seeing ITAR compliance not as a business cost but as a strategic opportunity for creating a competitive advantage. Many European companies believe that demonstrating ITAR compliance is a good way to prise open the lucrative US market.

Finally, the PwC report highlights the varying national responses to fraud. The US has the strongest rules against fraud, notably the Foreign Corrupt Practices Act (FCPA) of 1977. This is also implemented most strongly: since 2005, the US has pursued more cases under the FCPA than during the preceding 28 years.

Other European countries like Norway, Germany and Switzerland enforced anti-corruption measures almost as enthusiastically as the US. But other culturally similar countries like the UK, France, Belgium resembled India and Russia in their less-than-vigorous response to employee fraud.