Sunday, 29 April 2012

Just back from Kashmir....

Stand by for my candid views on the ground situation in the world's most complex valley....!!

Monday, 23 April 2012

India, Japan to talk on cooperation in Asia-Pacific

The Shinmaywa US-2 amphibious aircraft, which Japan wants to sell India. Japan's constitution bans the sale of military equipment, but this aircraft would be sold under the rubric of humanitarian relief and search and rescue

By Ajai Shukla
Business Standard, 23rd Apr 12

This Monday, and then again on Monday the 30th, Japanese and Indian officials will meet to impart momentum to what is arguably New Delhi’s most important partnership in Asia, but one that has consistently underperformed.

These meetings seek to take forward a relationship that has the economic and military weight to balance China, and which enjoys broad political acceptance within both countries. For decades, the two sides remained aloof, first due to the Cold War, and then because of Japan’s reflexive opposition to India’s nuclear quest. In 2000, however, with China rising, the two established a “Global Partnership” and upgraded that to a “Strategic and Global Partnership” during Prime Minister Manmohan Singh’s path breaking meetings in 2006 with his Japanese counterpart, Shinzo Abe.

On Monday, Tokyo will host the second India-Japan-US trilateral dialogue, the first such meeting after Washington announced its strategic shift to the Asia-Pacific in Jan 12. Officials say the participants will share their perceptions on China; discuss the regional security architecture, particularly maritime security; and the prospects for co-operating in keeping open sea lanes of communications in the face of Chinese claims.

Officials say they will also discuss ways of cooperating in the East Asia Summit, an increasingly powerful regional body. In 2005, Japan had lobbied successfully for including India in the East Asia Summit. Last year, the US (and Russia) also joined the summit for the first time.

Meanwhile, defence is emerging as an important area of India-Japan cooperation, with Tokyo exploring ways of working around a pacifist constitution, Article 9 of which prohibits Japan from maintaining a military and for settling disputes through force. Japan’s military exists as a “self defence force (SDF)”, of which soldiers, sailors and airmen are “members.” But Tokyo felt vulnerable after 2005, when Beijing was suspected of engineering violent anti-Japan riots across China, to signal its disapproval of any move to grant Japan permanent membership in the UN Security Council.

“That convinced Tokyo that China actively harboured a strong historical grievance. There are three drivers of Tokyo’s decisive turn towards New Delhi: India’s economic rise; India’s growing ties with the US; and Japan’s fear of a rising China,” says Hemant Kumar Singh, formerly India’s ambassador to Japan and now a professor with ICRIER.

With Japan’s defence spending traditionally capped at 1% of its GDP (it is still more than India’s defence budget) India is emerging as a key partner for Tokyo. The two countries signed a “Joint Declaration on Security Cooperation” in 2008 and there are regular meetings and joint exercises between the two militaries. With Tokyo realizing that its small military does not buy enough equipment to justify the development of expensive defence systems, Japan is formulating guidelines for joint collaboration in defence technologies, a major shift given its sensitivities.

“India could benefit enormously from defence technology cooperation with Japan,” acknowledge MoD sources. “But, so far, we have not started thinking about what we could cooperate on.”

What could be on the cards, though, is India’s first-ever aircraft procurement from Japan. The Indian Navy is evaluating the Shinmaywa US-2 amphibious aircraft; a short take-off and landing (STOL) amphibious aircraft that can take off from either land or from water with 18 tonnes of load. Its range of 4,700 kilometres reaches across vast tracts of ocean, performing multiple tasks: humanitarian aid, disaster relief, search and rescue, as well as military logistical activities.

The second meeting, on 30th April in New Delhi, is a “Ministerial Level Economic Dialogue.” Conceived in 2010, during the PM’s visit to Japan, this brings together cabinet ministers from both sides who holding economic portfolios, such as finance, commerce, industry, infrastructure and environment, in order to impart “strategic and long-term policy orientation to their bilateral economic engagement… and to coordinate economic issues of cross-cutting nature, including infrastructure development and financing.”

This ministerial dialogue complements the India-Japan Comprehensive Economic Partnership Agreement (CEPA), which came into force last August.

On the anvil are the Western Dedicated Freight Corridor; the Delhi-Mumbai Industrial Corridor (DMIC); cooperation in clean energy initiatives, particularly the Regional Energy Efficiency Centre (REEC).

Saturday, 21 April 2012

No intention to cap missile programme with Agni-5

By Ajai Shukla
Business Standard, 21st Apr 12

After the near-perfect debut of the Agni-5 long-range ballistic missile, which yesterday travelled 5000 kilometres to accurately strike a target in the southern Indian Ocean, Dr VK Saraswat, the Defence R&D Organisation chief, declared that the Agni programme would continue and that there was no question of capping India’s missile programme.

Addressing a press conference in New Delhi, Saraswat said, “Our development needs are based upon today’s threats, and also evolving threats…. So there is no question of capping any programme…. Today, in a short time, we have gone from Agni-4 (launched in Nov 11) to Agni-5, Obviously we have a threat profile which is evolving and I am not sure it will ever remain static. So we are going to continue to develop missiles to meet our future threats.”

The first big enhancement to the successful Agni-5 will involve creating the capability of hitting several different enemy targets with multiple warheads on a single missile. This technology, called multiple, independently targetable, re-entry vehicles (MIRVs) is already being developed by the DRDO.

Dr Avinash Chander, the DRDO’s chief controller of missiles, explained that such a missile would be “all-composite”. The Agni-5 has three stages, with the second and third stage built of composite materials. The next missile will have a composite first stage as well, making it lighter and, therefore, able to carry a heavier payload than the 1.5 tonne payload of the current Agni-5.

According to DRDO sources, an MIRV payload would be significantly heavier, since it would consist of several nuclear warheads, each of them weighing about 400 kilogrammes. A 5-warhead MIRV, therefore, would weigh two tonnes.

“The primary modules of MIRV are in an advanced stage of development. Realization and integration of them into a weapon is just a question of threat perceptions and the need as it arises,” said Chander.

Saraswat laid down a two-year time line for the Agni-5 to enter operational service. “We will do two more validation tests, which should take about 1½ years. After that, we will begin production (of the Agni-5) and we will start handing it over to the military. Once they have it, they will do some launches for their training as well. This will take about two years.”

The DRDO chief revealed that the missile was 80% indigenous, with just 20% consisting of “those components which are easily available as part of the electronics components industry.” He stated that the missile does not contain a single critical component that is under embargo.

Thursday, 19 April 2012

Perfect launch for the 5000-km range Agni-5 missile

By Ajai Shukla

Business Standard, 19th Apr 12

The tension sharpened at the launch area at Wheeler Island, on the Odisha coast, this morning as the massive, 50-tonne, 17.5 metre high Agni-5 missile was elevated into the vertical launch position, and the pre-launch checks began. The previous evening, exactly at this stage, lightening and thunder in the skies above had led to the launch being put off till morning.

At 8.07 a.m. the countdown went 5… 4… 3… 2… 1… Now… and a giant ball of fire leapt out as the missile’s first stage ignited. As the Agni-5 rose smoothly off the launch pad, scientists checked off the health of its systems on the public address system, their voices calm, measured, almost surreal given the tension amongst the viewers. After 90 seconds, the first stage burnt out and separated. The missile was travelling at exactly the speed it should have been. Then, on schedule, the second stage burnt out and separated, an all-new composite stage that had performed exquisitely. By now there was already the sense that this would be a perfect test.

Within minutes, the Agni-5 was in space, streaking southwards for 2,000 kilometres until it crossed the equator. Then it hurtled along for another 3000-kilometers, re-entering the atmosphere over the Tropic of Capricorn and splashing down between the southern tip of Africa and Australia. From launch to splash-down, just 20 minutes had elapsed.

“Indian naval vessels tracked the missile all along its course, including at the terminal stage. The accuracy of the missile was exactly as expected,” said the DRDO’s spokesperson.

For Dr Saraswat, the Defence R&D Organisation chief after a lifetime of working in the DRDO’s ballistic missile programme, this was the sweetest of moments.

“Any launch is tense, even after testing a hundred missiles; and this was the first launch of the Agni-5,” Saraswat told Business Standard soon after the test. “Over the last 3-4 days, the team had gone through the complete launch process, with each activity and system being put through our scanners: the propulsion system, navigation system, everything. By yesterday I was completely confident of a successful launch.”

At the launch pad with Saraswat were Avinash Chander, the DRDO’s chief controller of missiles, a man of few words and big achievements; VG Sekaran, the laconic, wry-humoured boss of Advanced Systems Laboratory, the home of the Akash programme; Tessy Thomas, the self-effacing “missile woman”, who handled the Agni-4 project; and Dr Gupta, the Project Director for this test.

“For us, the Agni-5 success is the culmination of 30 years of work that began in earnest in 1983,” said Dr Saraswat.

Defence Minister, AK Antony, congratulated the team for “the immaculate success” of the Agni-5, hailing the efforts of “numerous unsung scientists of DRDO who have worked relentlessly years together to bring the nation to this threshold.”

In fact, the success of the Agni-5 was almost a foregone conclusion. Last November, several challenging new technologies that this missile incorporates were validated in an unannounced launch of the surprise Agni-4 missile. That new 3,500 kilometre range missile successfully tested a new composite rocket motor, made of lightweight composite materials instead of the heavier “maraging steel” that earlier rocket motors were fabricated from. The other brand-new technologies that the Agni-4 tested included: a highly accurate “ring-laser gyroscope based inertial navigation system (RINS)”; a “micro-navigation system (MINGS)”; and a powerful new onboard computer. By testing all these technologies in the Agni-4 the DRDO minimised the technology risks of today’s Agni-5 test.

The DRDO chief told Business Standard that the Agni-5 was not just a long-range rocket. “This missile incorporates unique technologies that will allow us to have multiple variants. We can achieve short ranges, higher ranges… all with the same missile,” he said.

Although the DRDO calls the Agni-5 an intercontinental ballistic missile (ICBM), its range of 5000 kilometres puts it --- by most conventional measures --- in the class of intermediate range ballistic missiles (IRBMs), which have ranges of 3,000-5,500 kilometres. The Agni-5’s range is carefully calibrated; it can reach targets anywhere except for America and Australia. This would allow it to strike all India’s potential adversaries, even as friendly capitals in Western Europe and the US stay out of range. DRDO sources say that, in case of need, the Agni-5 could easily be ramped up into an intercontinental ballistic missile (ICBM), with a range of more than 5500 kilometres.

For now, more testing lies ahead, says the DRDO chief. “We will have two more test launches of the Agni-5, and then productionise it for induction into field service with the Strategic Forces Command. We will also start working on different variants of the Agni-5, including MIRVs (multiple independently targetable re-entry vehicles), anti satellite systems, and on making the Agni-5 capable of launching military satellites on demand,” says Saraswat.

A distinctive feature of the Agni-5 is its “canisterisation”. Immediately after its manufacture, the missile is hermetically sealed into an airtight canister. Mounted on a flatbed truck, the missile can be easily transported to a launch site; and fired quickly by hydraulically raising the canister into the vertical firing position. The canister is made of maraging steel, allowing it to absorb the enormous stresses of firing, when 300-400 tonnes of thrust is generated to eject the 50-ton missile. The hermitically sealed atmosphere inside the canister allows the missile be stored safely for years.

The DRDO claims that the Agni-5’s advanced navigation system would permit the use of smaller nuclear weapons. Speaking earlier to Business Standard, Avinash Chander said, “Megaton warheads were used when accuracies were low. Now we talk of [accuracy of] a few hundred metres. That allows a smaller warhead, perhaps 150-250 kilotons, to cause substantial damage. We don’t want to cause wanton damage [with unnecessarily large warheads].”

India successfully tests the Agni-5 Intermediate Range Ballistic Missile

A short video clip of the Agni-5 test, which was conducted from Wheeler Island, Odisha, this morning

India pushes for membership of export control regimes

Foreign Secretary Ranjan Mathai, in a major foreign policy speech in New Delhi, argued for membership of four strategic export control regimes

by Ajai Shukla
Business Standard, 19th Apr 12

Three weeks after the Prime Minister suggested to world leaders at a nuclear summit in Seoul that India should get membership in the worlds’ four major export control regimes, Foreign Secretary Ranjan Mathai today fleshed out that statement into a detailed case. Addressing a gathering of diplomats and proliferation experts in New Delhi today, Mathai described the export control safeguards that India had instituted in recent years, which qualified it for membership of the Nuclear Suppliers Group (NSG), Australia Group (AG), Wassenaar Arrangement (WA) and the Missile Technology Control Regime (MTCR).

Mathai said that India’s “law based export system, covering about nine different legislations,” was not just “in line with the highest international standards,” but also, in some cases, “extends beyond the controls of the multilateral regimes.”

The foreign secretary chose to make his case at the Institute for Defence Studies and Analyses (IDSA), a defence ministry-affiliated think tank, but his audience was clearly global. In his opening remarks he welcomed “members of the diplomatic corps, in particular representatives of countries currently chairing the various multilateral export control regimes.”

These regimes include the NSG (46 member-countries), which was created after India’s “peaceful nuclear experiment” in 1974 to strictly regulate the international transfer of nuclear technologies and materials. The MTCR (39 member-countries), collectively seeks to block the proliferation of missiles that could deliver weapons of mass destruction. The Wassenaar Arrangement (41 member-countries) promotes transparency in the trade in conventional arms and dual use goods and technologies. The Australia Group (40 countries and the European Commission) seeks to ensure that exports do not lead to the development of chemical or biological weapons.

India has been canvassing for membership of these four regimes to gain legitimacy as a mainstream decision-maker, overcoming its status as a nuclear pariah due to its non-signature of the Nuclear Non-Proliferation Agreement (NPA). This was partly achieved in 2008, when the NSG unanimously approved a US proposal to drop a ban on trade with India. Now, with the US heading the NSG, India sees an opportunity.

“While we wish to move forward in tandem on all the four regimes, our engagement with NSG is seen by observers as the most important,” said Mathai.

The foreign secretary highlighted four key legislations that backstop India’s export controls: the Foreign Trade Development and Regulation Act (or FTDR) of 1992; the Atomic Energy Act of 1962; the Customs Act of 1962; and the Weapons of Mass Destruction (WMD) Act of 2005. The WMD Act, said Mathai, “incorporated into national legislation key international standards in export controls.”

Besides these laws, India had notified, under the Foreign Trade Act in 1995, a detailed list of “dual use” items called SMET (Special Material, Equipment and Technology). This list was revised in 1999, 2005 and 2007 and is now called the SCOMET (Special Chemicals, Organisms, Material, Equipment and Technology) list. In 2008, India’s SCOMET controls were harmonized with the NSG and MTCR.

India’s desire for membership of the four multilateral export control regimes is also driven by commercial considerations. India’s high technology trade, said Mathai, could only be boosted if there were credible export controls. As India integrated into global supply chains and became “an important hub of manufacturing and export of high technology items” it would be essential to assure commercial partners that sensitive materials, products and technologies would not be diverted.

“High technology companies would invest in India confident that apart from favourable commercial returns, access to a huge market and skilled workforce and protection of IPR, there would be no risk of unauthorized diversion or re-exports,” said Mathai.

Unusually for a foreign secretary, Mathai detailed the specific measures that India had taken to secure the export of controlled items. The SCOMET regulations “outline the procedure, process and factors relating to the licensing of controlled items.” India has created strict mechanisms to prevent, detect and penalise unauthorised exports. Indian industry, including SMEs, were being approached to “enhance understanding about export controls among producers and exporters of controlled items (and) also share best practices in internal control systems for due diligence. Besides, CII is working on a voluntary “Code of Conduct” on export controls, which can guide companies in strengthening their internal compliance systems.

“Mathai has put together multiple developments in order to paint a big picture and to send out a message to the international community,” says a former MEA official with extensive experience in non-proliferation.

Tuesday, 17 April 2012

Some of the Indian Army's lions being presented with gallantry awards by their Commander-in-Chief

Lance Naik Chandan Singh, Shaurya Chakra

Lt Abhinav Tripathi, Shaurya Chakra

Lt Col Kamaldeep Singh, Kirti Chakra

Captain Ashutosh Kumar, Kirti Chakra

Of lions, deer and military leadership

A cosy conversation at the inauguration of the Army Commanders' Conference 2012 in New Delhi on Monday, 16th April

by Ajai Shukla
Business Standard, 17th Apr 12

On Sunday the army chief, General V K Singh, raised an intriguing question while talking to schoolchildren in Jaipur. “An army of deer led by a lion is to be feared more than [an] army of lions led by a deer,” said the general.

My first thought as I mulled over this profundity was: can a deer that has served all his life in an army full of deer suddenly transform into a lion at the top? Alternatively, could a lion serving in an army full of deer be promoted somehow to the top slot?

Common sense would rule out both eventualities. An army full of deer would only promote a deer to the top, just as an army of lions would always have a lion in command. But the Indian Army presents a paradoxical third alternative. The numerous lions in this excellent army serve up to a certain rank. Then, around the time they become colonels or brigadiers, something strange happens: the lions start turning into deer!

The General V K Singh affair illuminates the generals in a harsh and unforgiving light. The generals emerge as riven with infighting; they undermine meritocracy by promoting loyalists; and, perhaps most worryingly, they compromise the army’s readiness for war by meekly acquiescing in crippling shortfalls of equipment and ammunition.

Over a drink, ask any junior or mid-ranking officer, and you will find disillusionment with senior commanders and with a working environment that rewards the safe and predictable rather than the bold and unexpected. Recent controversies have exacerbated murmurs that generals only think about themselves. Talk to the generals, on the other hand, and they express disappointment over the “poor quality” of young officers. There is a clear disconnect between the two ends of the rank pyramid, between the lions and the deer.

This observation is fraught with personal danger, since my army batch-mates have just been evaluated, and many of them cleared, for promotion to major general! Knowing these gentlemen as intimately as a course-mate, comrade and friend of many years does, I acknowledge with some satisfaction that the army has homed in on the high achievers. But identifying good lions is of little use if they begin turning into deer.

At a time when many soldiers – serving and retired – bitterly regard themselves as under attack from the defence ministry, the media, and even the judiciary, it is time for India’s finest and most resilient institution to look within rather than without. What are the systemic flaws in the army structure that disempowers its leaders and binds them in mental shackles?

The first is a growing culture of conformity: an intolerance of alternative viewpoints that is the natural attribute of under-confident commanders. This causes the boss’ viewpoint (itself springing from what he thinks his boss’ viewpoint might be) to become the viewpoint of everyone down the chain — effectively killing any prospect of internal reform. The system cannot be challenged from within, since any discussion about alternative leadership models presupposes that the existing model might be less than perfect.

It is nobody’s case that the army should encourage dissent; no military does. But great armies tolerate, and actively encourage, non-conformism. This is essential, not just for operational innovativeness that would keep the enemy guessing in war, but also for throwing up essential bottom-up challenges to the status quo. Totalitarian Conformism, as today’s army leadership style might be termed, reduces the landscape of professional and personal creativity to a dull wasteland where the fabled “dashing young officer” is marked not by flashes of innovative genius but by his quickness in agreeing with the boss.

Young officers allow themselves to be bound by these shackles because of the army’s insularity. Segregated from the world outside, and with little realisation of their actual worth, junior officers are reluctant to buck the system. Given the conviction that promotion is the only measure of success, they toe the line rather than risk professional hara-kiri by setting out to change the system. Their outlook can only change with exposure. Sending out junior officers on secondments and deputations – with academic institutions; successful government enterprises; media organisations; the police forces – will enrich the military’s bloodline with external leadership and decision-making cultures. It will also provide officers with the confidence that is required to challenge the status quo and to create a bottom-up dynamic that forces the generals to respond like lions rather than continue like deer.

Will the generals permit such a change? Most probably not since empowering junior officers and encouraging non-conformism are threatening prospects. Good reasons are ready at hand to shoot down such “unworkable” and “impractical” ideas: a shortage of officers; inter-se seniority issues during secondment; and so on. It would, therefore, be necessary for the government to intervene. We’re waiting for Godot.


The phrase “lions led by donkeys” was used by the Germans to describe the British army during World War I. It encapsulated their impression of incompetent generals letting down the brave and dedicated British soldier.

Monday, 16 April 2012

Javelin missile, R&D coop to feature in US-India talks

A Javelin missile being launched by a two-man infantry team. Technology issues around the proposed Javelin sale to India will be discussed during Andrew Shapiro's meetings in Delhi today

Ajai Shukla
Business Standard, 16th Apr 12

As New Delhi looks to translate its relationship with the US into badly needed high technology, the government is readying for meetings tomorrow with America’s key gatekeeper of military technology, the visiting assistant secretary of state for political military affairs, Andrew Shapiro.

High on New Delhi’s technology agenda is Washington’s reluctance to transfer military knowhow, of the kind needed for building the FGM-148 Javelin anti-tank missile in India. The Army wants the Javelin for its ground forces, to enable two-man infantry teams to fire $40,000 missiles at $10 million enemy tanks 2,500 metres away and destroy them 95 per cent of the time. The Javelin sale, potentially a billion-dollar (Rs 5,000 crore) contract for US companies, Raytheon and Lockheed Martin, has been blocked by Shapiro’s office, the department of political military affairs. The technology, it has been deemed, is too sensitive to transfer.

Shapiro’s 10-person team will be discussing this issue with India’s defence and foreign ministries (MoD and MEA), which regard overly-strict US licensing and export controls as key obstacles in “operationalising”, or obtaining tangible benefits from the growing strategic convergence between the US and India.

In clearing any transfer of high technology like the Javelin, Shapiro’s primary consideration is strategic: would technologically enabling India enhance long-term US strategic interests, without threatening America’s lead in military technology. Growing pressure from American senators and representatives complicates Shapiro’s decision-making. Fearing the declining US defence budget will cause job losses in their constituencies, American legislators are willing to back technology transfer to India, if that is what it takes to get orders from the world’s biggest buyer of foreign weaponry.

A likely example of this is the Global Hawk Block 30, a high-altitude, long-endurance (HALE) unmanned aerial vehicle (UAV), which flies 36-hour unmanned missions to watch over vast expanses of territory or water. After the latest US defence budget cuts, the US Air Force has cancelled orders for Global Hawks, 13 of which have already been built or are close to completion by Northrop Grumman. The politically influential company, aided by US Congressmen in whose constituencies the UAV is built, are pressuring the US government to find alternative buyers. There are 13 Block 30 Global Hawks almost ready, which will now be mothballed.

Savvy bargaining by India could get it the Block 30 Global Hawk and perhaps even the technologies that go into it, believes Manohar Thyagaraj, an expert on US-India military relations.

“If India were to express interest, US Congressmen would mount pressure on Shapiro to share the technology. But India tends to engage only the US administration; it has put very little effort into building relationships on Capitol Hill. When Congress gets onto something, it acquires real momentum. New Delhi has not yet understood that engaging Congress is as important as engaging the administration,” says Thyagaraj.

India’s key technology player, the Defence R&D Organisation (DRDO), has figured out the opportunity that lies in declining Western defence budgets. DRDO chief V K Saraswat declared during the Defexpo India 2012 defence exhibition on March 31, “Global economic recession is leading to capacities and capabilities in the international market that we can exploit. So, it will be an era of US and European agencies coming and trying to work with us and we will exploit this.”

Shapiro’s department of political military relations must okay all such joint ventures. US defence giant Raytheon is learnt to be keen on working with DRDO for developing technologies that can detect improvised explosive devices (IEDs), the roadside bombs that took a heavy toll of US lives in Iraq and Afghanistan, and that are now being used to deadly effect by Maoist insurgents in India. With US government funding, Raytheon has already developed a technology called SAVI (Seismic Accoustic Vibration Imaging), which uses acoustic reflections to detect buried IEDs. But budgetary cuts have dried up Raytheon’s funding, and it is looking towards India for partnership in developing SAVI into a deployable military system.

“The DRDO’s funding and scientific base is ideal for reviving such a project; and both sides would profit from selling the SAVI system to the Indian military and abroad. If India comes to the table with money, it would be well placed to negotiate access,” says a top DRDO official.

The dialogue on Monday will be followed by a succession of others. The US-India-Japan trilateral is scheduled for April 22 in Tokyo, followed by the US-India Strategic Dialogue in Washington in May and the US-India Homeland Security dialogue in June.

Sunday, 15 April 2012

Pressure mounts for air force basic trainer aircraft

Korea Aerospace Industries' KT-1 "Woongbi" trainer in Turkish Air Force colours. The South Korean complaint gives the MoD an opportunity to make a strategic choice rather than having to go with the cheapest offer

by Ajai Shukla
Business Standard, 15th Apr 12

With Parliament’s standing committee on defence intensifying scrutiny into India’s defence preparedness, the Indian Air Force (IAF) will be highlighting its near-desperate need for a basic trainer aircraft for its rookie pilots. For 10 months, the defence ministry (MoD) has blocked the purchase of 75 Pilatus PC-7 Mark II basic trainers, a contract worth around Rs 1,800 crore. This after a South Korean rival protested an alleged procedural violation by Swiss company, Pilatus, which emerged the lowest bidder in the evaluation process last year.

The IAF’s urgency stems from the grounding of its entire fleet of HPT-32 Deepak basic trainers since July 31, 2009, after the death of two instructor pilots in a horrific crash took the Deepak’s death toll to 19 pilots in 17 crashes. Alongside measures to make the HPT-32 safer, MoD gave the go-ahead for buying 75 modern basic trainers from the global market; simultaneously, Hindustan Aeronautics Ltd (HAL) was to develop and build 106 basic trainers, dubbed the Hindustan Turbo Trainer – 40 (HTT-40).

But the purchase of 75 trainers has run into trouble. After the opening of tenders from three global vendors on May 16, 2011, Korea Aerospace Industries (KAI) protested that Pilatus’ had won by submitting an incomplete bid, which should disqualify it under the Defence Procurement Procedure of 2008 (DPP-2008). That would give KAI the contract, being the next-cheapest bidder and fully compliant with the DPP.

Despite sustained IAF pressure over the last 10 months to declare Pilatus the winner, defence minister Antony has dug in his heels, ordering that the Korean complaint be investigated fully. Antony insisted upon this even at a Cabinet committee on Security (CCS) meeting in January where the matter was discussed.

South Korea has used all the firepower at its command to seize the opportunity. After the Pilatus anomaly was detected, South Korea’s ambassador in New Delhi sent in a formal protest to MoD. A personal letter followed from South Korean defence minister, Kim Kwan-jin, requesting Antony for a “high-level review” of the “allegations on irregularity” in the deal. Sources familiar with Kim’s letter tell Business Standard, besides highlighting alleged irregularities in Pilatus’ quote, it also points out that the South Korean trainer is more contemporary than the Pilatus. It claims superior performance for the KT-1; and says that the Pilatus will get more expensive as the Swiss franc strengthens.

Antony’s prime concern, say sources close to the minister, is his oft-repeated insistence on following the DPP to the letter. The defence minister is also taking note of India’s unfolding strategic convergence with South Korea. In September 2010, Antony became the first Indian defence minister to visit that country, including a visit to KAI’s aircraft assembly line at Sacheon. According to HAL officials, KAI has offered to work with the Bangalore-based company in developing the HTT-40, the Indian-built basic trainer, so that there is commonality between the two basic trainers that the IAF flies.

South Korea is also growing its profile as a partner to the Indian Navy. The MoD is close to inking a $500-million contract with South Korean warship builder, Kang Nam Private Ltd, for three minesweepers. A serious play in the land systems market is unfolding from Samsung Techwin, which has tied up with Larsen & Toubro to offer the Indian Army the K-9 Thunder 155-millimetre self-propelled artillery gun.

However, pressure is growing on the MoD to announce the contract immediately. The Public Accounts Committee (PAC) report on IAF pilots’ training, which was released on March 30, criticises “training mostly with outdated and ageing aircraft.” Even more worrisome are the compromises in training: rookie pilots are now doing just 25 hours of

basic training, as against 150 hours that are considered essential and which were provided earlier.

IAF is pressing hard for an early procurement. Last June, then IAF boss, Air Chief Marshal P V Naik, told the media that Pilatus was the lowest bidder, and that the PC-7 Mark II would enter IAF service within one to one and a half years. On January 17, current IAF chief, Air Chief Marshal N A K Browne publicly speculated that the CCS could clear the Pilatus contract that week. He said the first 12 Pilatus trainers would arrive in 2013 and that IAF rookie pilots would train in Switzerland until then.

The new basic trainer is expected to overcome the key shortfalls of the HPT-32, which did not even have an ejection system; in emergencies, pilots ejected manually. Poor instrumentation and avionics restricted training to good weather. The HPT-32 had no recording equipment, so instructors never knew when trainee pilots, flying solo, had violated flying procedures.

Friday, 13 April 2012

Readers' Poll:Which basic trainer should the IAF buy: Pilatus PC-7 Mk II; or Korea Aerospace Industries KT-1

Left: The South Korean KAI KT-1 (crtsy and Below: The Swiss Pilatus PC-7 Mark II (courtesy

What should the IAF buy: the lowest cost option? Or the option of a long-term strategic aerospace partnership with South Korea?

The lowest-bid (L-1) for the IAF Basic Trainer Aircraft (BTA) tender, which is for the off-the-shelf purchase of 75 trainers, has been submitted by Swiss company, Pilatus, for its PC-7 Mk II, which is essentially the Pilatus PC-9, with a derated engine to lower procurement and operating costs.

The second-lowest bid (L-2) has been submitted by Korea Aerospace Industries (KAI) for its KT-1 trainer, which is a more contemporary and more powerful aircraft. KAI has also offered to work with HAL in developing the HTT-40, an indigenous basic trainer which the IAF wants to buy 106 of.

Which do you think is the better option? Remember, the IAF finds both these aircraft suitable for its needs. The Pilatus PC-7 Mark II has been selected on the basis of its lower price.

Thursday, 12 April 2012

Standing Committee boss backs down! No official note so far to call service chiefs: House panel

by Ajai Shukla
Business Standard, 12th Apr 12

The confusion swirling around the issue of India’s defence readiness has deepened with the chairperson of Parliament’s standing committee on defence, Satpal Maharaj, issuing a press release on Wednesday that sought to deny earlier media reports on the summoning of the three service chiefs to brief the committee on India’s military preparedness.

The press release from the Congress party MP from Garhwal said the service chiefs had not been officially invited before the committee. According to the release, “it has been reported by the media that the three service chiefs of the Army, Navy and Air Force have been called by the standing committee on defence at their sitting to be held on April 20. It is clarified to the media that no official correspondence for calling the chiefs on the said date had so far been issued.”

Some members of the committee have stated they were not consulted before this statement was issued. Congress and non-Congress members alike expressed concern that this had been done under pressure from the Congress party.

It is learnt several committee members advised the chairperson to invite each of the service chiefs separately, rather than all three together.

“I will raise the issue with Satpal Maharaj tomorrow,” says a senior member of the committee.

On Monday, the Army’s number two, Lieutenant General S K Singh, had briefed the committee about serious shortages of ammunition. The next day, defence minister A K Antony referred to his testimony as “rumours”, declaring, “the country is fully prepared (and) is in much more strong position as compared to the past (sic).”

Antony’s statement also contradicts what the army chief, General V K Singh, told the prime minister in a letter last month that was leaked to the press. Singh wrote that the air defence network was “97 per cent obsolete” and that the army’s tanks were “devoid of critical ammunition to defeat enemy tanks”.

Satpal Maharaj could not be reached for comments.

The standing committee had begun playing a visible role in tackling the contradictions that swirl, unresolved, around the question of India’s defence readiness. Naresh Gujral (Rajya Sabha – Shiromani Akali Dal), who played a key role in the decision to ask for a briefing by the service chiefs, says, “There is clearly a problem between the MoD and the military; the last few months have made that clear. I believe the committee must play a larger role in resolving these issues, including the crucial question of whether the military is ready for war.”

Gujral complains that, “the MoD has all along denied us information, on the grounds that it is classified. The ministry wants to confine us to issues like married accommodation projects, land records, military uniforms and minor issues like that.”

Satpal Maharaj’s decision could threaten the committee’s new assertiveness. Manvendra Singh, a former Bharatiya Janata Party (BJP) member who was on the committee while in the previous Lok Sabha, says: “The effectiveness of the committee depends largely on the chairperson’s political clout and his knowledge of defence affairs. In the 14th Lok Sabha (2004-2009), Balasaheb Vikhe Patil (Lok Sabha – Congress) provided clout to the committee. But the current chairperson, Satpal Maharaj, has been a late starter. He is only now getting his act together. And, if he has bowed down to the party, the committee will be ineffective.”

The standing committee on Defence has 30 members. The 20 Lok Sabha members include Satpal Maharaj, Feroze Varun Gandhi, Asaduddin Owaisi and Manish Tewari. The 10 Rajya Sabha members include Mukut Mithi and Mukhtar Abbas Naqvi.

Saturday, 7 April 2012

The coup that wasn’t… The threat within?

Our civil-military relations are in ferment. Was the night of January 16 really a routine exercise or was the army chief playing mind games with the government?

By Ajai Shukla
Business Standard, 7th Apr 12

It is a question to which we might never know the answer. Did the army chief arrange for two military units to “practice mobilisation” on the outskirts of New Delhi as a warning to his boss, Defence Minister AK Antony, on 16th January? That was the day that General VK Singh took the unprecedented step of challenging the government in the Supreme Court.

The controversy broke as a news storm on Wednesday. Screaming, full-page banner headlines in The Indian Express, reported that political alarm bells had gone off in New Delhi on the foggy night of 16th January, when intelligence agencies detected an army battalion from the Hisar-based 33 Armoured Division and a Special Forces unit from the Agra-based 50 (Independent) Parachute Brigade moving unexpectedly towards the capital. According to the Express, the government reacted to this “unexpected” and “non-notified” military move by recalling the defence secretary, Shashi Kant Sharma, from Malaysia. Sharma arrived in Delhi and summoned the army’s Director General of Military Operations (DGMO), Lt Gen AK Choudhary to a late-night meeting in his MoD office to “explain what was going on.” The general “was told to send the units back immediately.” The report does not feature the word “coup”, but instead highlights “confusion and unease” within the top echelons of government at a time of a “strained… political-military relationship.”

The army’s outraged denials have been immediately challenged. Breaking ranks on Thursday, one of the army’s most upright and cerebral recent generals, Lieutenant General Harcharanjit Singh Panag who was an army commander till he retired in 2009, suggested on Twitter that General VK Singh had engineered the move to spook the government into believing that a coup was possible if the government tried to sack him. Since the move of the two units was a legitimate training activity, malevolent intent could credibly be denied, suggested Panag. And with the units being given only innocuous training orders, only a handful of people need know the real intent of the move.

In five linked tweets, Panag termed the move a “demonstration”, an action designed to “alter enemy decision-making.” Deniability was created through a “Cover Plan,” which Panag explained as “a credible cover to operations undertaken to deceived the enemy.” The troops that participate in a military demonstration “do not know the real aim,” but senior commanders do. Overall, said Panag, the move of the military units to New Delhi was “A Pre-emptive demonstration with a Cover Plan (sic),” which “implies acting before the enemy does to upstage him from implementing his strategy, plan or operations.”

The government, the military, and even the media are treading carefully around what, if Panag is correct, could be termed a near-coup experience. Public discourse has referred coyly to “the C-word” with even Shekhar Gupta, The Indian Express’ chief editor who also wrote the article, disingenuously telling a probing TV anchor, “I used the C-word but I call it curious, not coup.”

Much of India’s reluctance to intellectually confront and discuss the phenomenon of military coups appears to stem from the apprehension that public discussion might have a self-fulfilling effect, indirectly legitimising military interventionism and fuelling praetorian behaviour (the ancient Roman praetorian guard was an elite corps that eventually grabbed a political role).

Praveen Swamy, New Delhi Bureau Chief of The Hindu newspaper, regrets that this incident has ended up on the front page of a newspaper, generating fear and suspicion that will continue to cloud the minds of future army chiefs and PMs. “The reason why we have never had to fear a coup is not because of a piece of paper called our Constitution. It is because of a complex set of unstated understandings between key actors in our polity, which we call convention. Those convictions rest on trust. That trust has been the real casualty of this whole, sordid business,” points out Swamy.

Is this really a watershed event in the relationship between the government and the military? Will historians look back on 16th Jan as a key moment when VK Singh challenged the government’s processes in court; and simultaneously (if Panag is right) its steeliness and resolve on the highways to Delhi? For now it would appear that General VK Singh’s confrontation with the government is working well for the military. With sections of parliament baying for blood, MoD officials are in a flurry of activity, clearing policies, procurements and promotions that had needlessly languished, in some cases for years.

On 20th March, the MoD cleared the results of a promotion board for major generals, which it had obdurately blocked for the preceding six months. On 2nd April, the MoD cleared the long-delayed revision of the Defence Offset Policy. The same day, Defence Minister Antony reviewed equipment procurements, calling for quicker trials. Although finance has been a key instrument of civilian control over the armed forces, Antony suggested delegating greater financial powers to the services to catalyze speedier acquisition of equipment, platforms and systems. The military’s 15-year Long Term Integrated Perspective Plan (LTIPP), a crucial document that establishes a roadmap for indigenous development and procurement, could be cleared soon, say sources.

With the Naresh Chandra committee finalizing its recommendations on defence preparedness and the restructuring of the higher defence organisation, insiders have begun betting that the government might soon accept the long-standing suggestion, offered by multiple committees and even a Group of Ministers, to create a Chief of Defence Staff, a five-star general who will sit atop the tri-service pyramid.

For now, the army is flatly rejecting any link between the ongoing confrontation and the MoD’s new sensitivity. Serving generals are even more emphatic in dismissing accusations emerging from The Indian Express article that General VK Singh exerted illegitimate pressure on the government.

Officers currently serving in army headquarters emphasize that The Indian Express is wrong in saying that there are protocols and regulations that require army movement, at any time, in the NCR (National Capital Region) to be pre-notified to MoD. “Army units move every day of the week towards Delhi; into Delhi; and within Delhi. These include vehicle convoys of units going on firing or training exercises; as well as vehicle convoys of units that are moving on permanent transfer from one station to another, a journey that every combat unit makes every two or three years. These unit convoys often make administrative halts in Delhi,” says a brigadier who coordinates army movements.

Serving officers also question how the move of two units (physically, just 500-odd men) to Delhi could possibly be seen as a threat, when two frontline infantry brigades and an artillery brigade (over 10,000 combat soldiers) are permanently located in the capital. This permanent garrison in Delhi was supplemented during that period January by thousands of additional troops that had come to participate in the Army Day and Republic Day parades.

“Let’s assume for a moment that some crazy army chief was bent on a coup, and wanted even more troops than were already in Delhi. Why would he move troops from Hisar (165 km away in Haryana); and from Agra (204 km away in UP); when there is a full infantry division sitting in Meerut, just 70 kilometers away?” asks an officer.

A recently retired lieutenant general who wishes to remain anonymous because of the sensitivity of discussing even a hypothetical coup points out that, “any successful military coup would require the active support of all six geographical army commanders, and also the air force chief. If even one army commander were not on board --- and we would be foolish to assume that the incoming chief, Eastern Army Commander, Lt Gen Bikram Singh, would associate himself with a military coup --- an attempt could quickly degenerate into a fratricidal civil war between loyalists and rebels,” he says.

While a successful military coup may be hard to imagine in India, the issue that sparked the ongoing furore is not an actual coup attempt, but --- as General Panag suggests --- the suggestion of a putative attempt to arm twist a weakened government by the subtle application of military pressure. “It would be difficult, if not impossible, to determine conclusively the intention behind the move of these two units from Hisar and Agra. All that the paper trail will reveal is a chain of legitimate orders for a practice exercise. It is the intention behind this move that counts, and intentions lie in the mind,” says a former army chief.

Just as cerebral are the government’s perceptions that determine how it reacts at a particular moment. “I moved 3-4 complete divisions through Delhi at the time when we were pumping troops into Punjab to combat the insurgency,” says the former chief. “That did not create even a moment of tension with the civil administration. But relations between the army and the government were on even keel then, and there was no suspicion between us.”

It is for this reason that a country’s civil-military relations must be based on well-established structures, procedures, and spheres of influence; rather than on the mood of the moment that could shift based on circumstances and events. There is unanimity on this issue amongst the established theoreticians of civil-military relations like Samuel Finer, Alfred Stepan and Charles Moskos, who have distilled lessons from praetorian behaviour by militaries worldwide, including in our immediate neighbourhood. In India, there is little understanding or public discussion of the demarcation between the government and the military and the responsibility and connections between the two.

Samuel Huntington’s masterpiece, his seminal 1957 book, The Soldier and the State, spells out the concept of “objective control” of the military. This model of civilian control, which is implemented in all successful modern democracies, allows the services full autonomy in their professional realm. A military that has ownership of its professional bailiwick, or so the “objective control” thesis postulates, does not involve itself in the political sphere. Civilian control, therefore, is asserted on broader political issues, rather than on day-to-day military functioning.

In contrast, “subjective control” neutralises the military’s influence through restrictive civilian controls, extending civilian oversight into spheres within the military’s internal domain. Subjective control is predicated on “civilianising the military”, while objective control aims at “militarising the military”, encouraging professionalism and responsibility within its realm.

Students and observers of the Indian military and the structure of its relationship with the defence ministry and the government of India unanimously agree that, over time, the boundaries of “objective control” have been breached. From long-term planning, to equipment procurement to promotions, to dates of birth of army officers, the influence of the civil bureaucracy is pervasive. Ask any military officer his key resentment and there is near-certainty that he will name “the babu”.

While a military coup in India is hardly impending and the structures of parliamentary democracy seem likely to endure, grievance and resentment have been simmering within the officer corps. Eric Nordlinger argues in another must-read masterpiece, Soldiers in Politics, Military Coups and Governments, that government failure is seldom more than a triggering condition for a coup. The actual causes of military intervention are civilian encroachment into what the military regards as its legitimate, four-fold sphere of corporate interests: adequate budgetary support; autonomy in managing internal affairs; preservation of its responsibilities in the face of encroachments from rival institutions; and the continuity of the military itself.

Is it time for a broader debate?

Friday, 6 April 2012

Army generals slam report on "non-notified" troop movement

Did the army chief arrange for two units to "practice mobilisation" towards Delhi as a warning to the MoD not to sack him for going to court on the date of birth issue? We might never know the answer!

by Ajai Shukla
Business Standard, 6th Apr 12

An army under effective gag orders is reacting with incredulousness and outrage to a The Indian Express report on Wednesday, under a banner headline, which recounted an “unexpected” and “non-notified” move of two army units towards Delhi on the day that army chief, General VK Singh, filed a writ petition in the Supreme Court against the government on a personal issue relating to his date of birth. The word “coup” does not feature in the report, which instead highlights “confusion and unease” within the top echelons of government at a time of a “strained… political-military relationship.”

Senior serving army generals, talking on the condition of anonymity to Business Standard because Ministry of Defence (MoD) orders prohibit them from speaking to the media, dismiss the idea of a threatened coup. They point out multiple inaccuracies in the Indian Express story, which they say has been “spiced up” without basis.

The Indian Express report suggests near panic in the government after central intelligence agencies detected, on the night of 16th Jan, army movement towards Delhi from the cantonments of Hisar (165 km away in Haryana); and from Agra (204 km away in UP). According to the Indian Express, the government recalled the defence secretary, Shashi Kant Sharma from Malaysia; he arrived in Delhi and summoned the Director General of Military Operations (DGMO), Lt Gen AK Choudhary to a late-night meeting in his MoD office to “explain what was going on.” Later, he “was told to send the units back immediately.”

Top generals flatly deny this. “It is completely false that the defence secretary summoned the DGMO and passed orders to him to send back the units. There was no meeting between the two, nor were any units ordered to return to their locations. The units had come out for training and they left on their own after completing that training,” says a senior army headquarters officer who was privy to events.

Business Standard has learnt that the unit that had come from Hisar was 20 Mechanised Infantry Battalion, a new arrival in that station that was undergoing its initial familiarisation. The “unit” from the Agra-based 50 (Independent) Parachute Brigade was actually a mix of small Special Forces teams.

Senior serving officers are emphatic that there are no protocols or regulations that require “any military movement, at any time, in the NCR (National Capital Region) to be pre-notified to MoD,” as the Indian Express story asserts.

“Army units move every day of the week towards Delhi; into Delhi; and within Delhi. These include vehicle convoys of units going on firing or training exercises; as well as vehicle convoys of units that are moving on permanent transfer from one station to another, a journey that every combat unit makes every two or three years. These unit convoys often make administrative halts in Delhi,” says a brigadier who coordinates army movements.

The army’s greatest irritation stems from the implicit suggestion in the Indian Express story that the move of two units to Delhi could be seen as a threat to the government. “There are two full infantry brigades and an artillery brigade permanently located in Delhi. That adds up to ten fully armed units in Delhi, 365 days of the year. That is the level of mutual trust between the government and the army. Mischievous news reports like (the Indian Express story) seek to undermine this trust,” points out an army lieutenant general.

These officers also say that the permanent army garrison in Delhi was supplemented during January by thousands of troops from the contingents that come to participate in the Army Day and Republic Day parades.

The army’s public relations interface, the Army Liaison Cell, has been approached for an official response, as also the MoD’s Directorate of Public Relations (DPR). So far, there has been no response.

Thursday, 5 April 2012

INS Chakra inducted into Navy's eastern fleet

The INS Chakra, minutes before it was inducted into the eastern fleet at Vishakhapatnam on 4th April 12

by Ajai Shukla
Business Standard, 5th Apr 12

A thin trumpet call wafted over the warm, humid air of the dock, heralding the arrival of defence minister A K Antony to induct into the Indian Navy its most recent and most potent submarine, the nuclear-powered INS Chakra. In late February, the Chakra, leased from Russia for 10 years at an estimated cost of $900 million, set off from snowy Vladivostok. After a 40-day underwater odyssey past Japan and through the disputed South China Sea, undetected by anyone, the Chakra reached sweltering Visakhapatnam on Saturday.

Key functionaries of the Chakra’s all-Indian crew lined up on its deck to welcome Antony. The 12,000-tonne Akula II class vessel is a shockingly large cigar-shaped cylinder, painted a drab black. The only splash of colour came from the gold braid on the officers’ shoulders and the fluttering tricolour. Like so many Russian weapon platforms, the Chakra conveys an understated menace — functionality without the frills.

There were brief speeches by the Russian ambassador to India, Alexander Kadakin, naval chief Admiral Nirmal Verma and Antony. Then, a band struck up the national anthem and the Chakra joined the navy’s Eastern Fleet. Kadakin termed this “a shining example of the very confidential strategic cooperation between India and Russia.” Antony took a crack at Kadakin, reminding him of the Russian promise to deliver the Russian aircraft carrier, INS Vikramaditya (formerly the Gorshkov) “on time”. The Vikramaditya is already three years late.

Beyond the banter, military planners are thrilled at this massive boost to India’s power and reach in the Indian Ocean region. While China enjoys military advantages on the land frontier, India’s ability to choke Chinese shipping at straits like Malacca and Hormuz constitutes a powerful strategic lever. And, nothing performs such “sea denial” missions as effectively as a nuclear attack submarine, known by its acronym, the SSN.

Making the SSN a game-changer is its ability to remain submerged indefinitely. Stealth is a key attribute in a ‘sea denial’ mission to shut down, for example, the Strait of Malacca. A submarine must slip undetected (which means underwater) into the patrol area and lurk in ambush for days on end, listening through its sonar for propeller sounds that give away the presence of a ship. Then, it must launch torpedoes to destroy the target and escape at high speed before the enemy can come and destroy her.

One great drawback of the conventional submarine is lack of endurance. Since its diesel engines cannot run underwater for lack of air, it can remain submerged for only as long as its on-board electric batteries provide power. When the batteries are drained, typically in eight-72 hours, depending on how fast it must move, the submarine must surface to run its diesel generators and recharge its batteries. A surfaced submarine with generators running is a sitting duck, inviting an attack by enemy aircraft, surface ships or submarines.

But a nuclear reactor can run underwater, allowing an SSN to remain submerged for as long as its food supplies last. While a conventional submarine moves slowly underwater, to conserve batteries, the Chakra can sprint for long durations at speeds of up to 33 knots (61 kilometres per hour), faster than most surface vessels.

The Chakra’s capabilities are provided by a 190-Mw nuclear reactor, powerful enough to light up a medium-sized city. It is armed with the versatile Russian Klub anti-surface missiles that can strike a ship almost 300 kilometres away. It also has four 533-mm and four 650-mm torpedo tubes.

Says P Asokan, INS Chakra’s first skipper, “I commanded a conventional submarine before this and we were restricted by battery power. But now, I have no restrictions. I can chase a vessel anywhere, overtake her, play games with her, and the nuclear plant never runs out of power.”

Across the water from INS Chakra is the Ship Building Centre, a gigantic hangar where the indigenous nuclear submarine, the INS Arihant, is being constructed. The Arihant is not an SSN like the Chakra; it does not engage in naval warfare. It is an SSBN, a nuclear powered underwater platform from which nuclear-tipped missiles can be launched. The Arihant and its successor vessels would form the third leg of India’s ‘nuclear triad’.

The INS Chakra could be followed by a second SSN from Russia, a proposal the navy has already raised. Questioned on the issue, Antony responded, “There is a proposal (about a second submarine), but we have not taken a decision about that.”

The Indian Navy has 14 conventional submarines in service. Also under construction are six Scorpene conventional submarines at Mazagon Dock, Mumbai, scheduled to enter service by 2018.

According to Antony, seven new warships, including submarines, would enter service with the Navy this year, while an average of five warships would be inducted each succeeding year.

Wednesday, 4 April 2012

The first pictures of INS Chakra

Defence ministry specifies aim of offset policy

By Ajai Shukla
Business Standard, 4th April 12

After months of delay, the defence ministry (MoD) has cleared long-awaited revisions to the defence offsets policy. These include permitting the transfer of technology (ToT) as offsets; incentivising vendors to transfer specified technologies to the Defence R&D Organisation (DRDO) by allowing offset credits worth 300% of the value of technology that they provide; extending by two years the period within which vendors must discharge offset obligations; and extending the validity of banked offset credits to seven years (it was earlier two years).

The revised Defence Offset Guidelines (DOG) were approved by the MoD’s apex Defence Acquisitions Council (DAC) at a meeting in New Delhi on Monday. Offsets were first made mandatory in the Defence Procurement Policy of 2006 (DPP-2006) and then revised periodically. The policy requires foreign vendors who win defence contracts worth Rs 300 crore or more to plough back at least 30% of the contract value into India in the form of defence orders, technology or infrastructure.

Crucially, the revised DOG provides clarity to the offset policy by explicitly stating its objectives. Its threefold purpose is “to leverage capital acquisitions to develop Indian defence industry by (i) fostering development of internationally competitive enterprises, (ii) augmenting capacity for Research, Design and Development related to defence products and services and (iii) encourage development of synergistic sectors like civil aerospace and internal security.”

Recognising ToT as eligible for discharge of offset obligations, the revised policy mandates that the ToT must be complete, including documentation, training and consultancy, but not civil infrastructure and equipment. The DOG specifies that “ToT should be provided without licence fee that there should be no restriction on domestic production, sale or export.”

This ensures that Indian industry would be free to market any equipment that is built using the technology transferred as offsets.

The revised policy permits a multiplier of up to 3 on technologies that are transferred to the DRDO, making offsets a viable route for obtaining key technologies that the DRDO has its eye on. In practical terms, if a vendor provides the DRDO with technology for a missile seeker head, which is agreed to be worth $200 million, the vendor would be deemed to have discharged $600 million worth of offsets.

The new policy clarifies that, in a complex contract where multiple sub-vendors incur offset liabilities, the sub-vendors can individually discharge their own liabilities, but the main vendor shall be responsible for ensuring that offsets are discharged in full. For example, in Dassault’s Rafale fighter, a significant share of the offsets (especially that relating to avionics) would be the responsibility of Thales, Dassault’s key sub-contractor for the Rafale’s avionics. While Thales is permitted to discharge its offset liabilities, by partnering Indian offset partners (IOP), the overall responsibility would remain that of Dassault, which is the prime contractor.

The new policy also clarifies that the offset agreements between the vendors and the IOP would be subject to the laws of India.

A key concession to foreign vendors is the extension of two years for discharging offset obligations. The earlier policy mandated that offset liabilities must be discharged alongside the main contract. Now, an extension of two years beyond the execution of the main contract has been allowed.

The revised offset regulations provide another welcome break for foreign vendors by making banked offset credits valid for seven years, as opposed to a two-year validity period that the superseded policy allowed. Now offset-linked credits that materialise in, say, 2012-13, can be used against offsets that arise between now and 2019-20.

Finally, the revised offset guidelines incentivise foreign vendors to select micro, small and medium enterprises (MSMEs) as their offset partners by introducing a multiplier of 1.5 for all offsets discharged through MSMEs. The latter shall be identified through the monetary guidelines specified by the Department of Micro, Small and Medium Enterprises of the government of India.

What the revised offset policy does not provide, though it was expected to, is clarity on which MoD arm --- the Department of Defence Production (DDP), or the Acquisitions Wing --- will monitor offsets.

“The absence of clarity on who which department will monitor offsets is a major weakness in India’s defence offset policy. The MoD needs to specify this and to equip the concerned department with technically competent manpower at the earliest,” says Laxman Behera of the Institute for Defence Studies and Analyses.