Wednesday, 31 January 2018

UK offers India finance for buying Hawk jets: New Delhi not sure about deal

London offers India financing to get past capital budget shortfall in landing 20-aircraft deal for IAF aerobatics team

By Ajai Shukla
Business Standard, 31st Jan 18

With the proposed purchase of 20 Hawk trainer aircraft for the Indian Air Force (IAF) stalled for years, apparently because of a shortfall of money, British vendor BAE Systems and the UK government have offered New Delhi a line of funding to land a contract for the aircraft, worth an estimated Rs 2,000-2,500 crore (Rs 20-25 billion).

Over the preceding decades, New Delhi has shied away from defence aid, choosing to pay itself for weaponry and defence equipment needed for national defence. In parliament, the government has stated it is currently a net donor of foreign aid, and that “aid from the UK has fallen steadily from an inflow of Rs 1,710 crore in 2008-09 to a net outflow of 25 lakhs to the UK in 2016-17.”

But now, with numerous defence purchases held up by capital budget shortfalls, and thousands of crores in unspent money reappropriated each year from the defence ministry, London has proposed to finance a Hawk deal through the UK Export Finance organisation.

UK Export Finance says on its website that its mission is “to ensure no viable UK export fails for lack of finance or insurance, while operating at no net cost to the taxpayer.”

Under its Direct Lending Facility, UK Export Finance provides loans up to 3 billion pounds to overseas buyers, enabling them to purchase capital goods from UK exporters and, thereby, support employment in the UK. Over the last five years, UKEF has provided 14 billion pounds in support for US exporters.

The UK Export Finance rules permit financing up to 85 per cent of the cost of a procurement. However, it is not clear how much finance was offered in the proposal that was made in a bi-annual dialogue between the two defence ministries.

Defence ministry sources say New Delhi has not yet accepted the offer.

India has earlier signed two contracts with BAE Systems for Hawk trainers: Batch 1 was for 66 trainers in 2004; and Batch 2 for 57 trainers was signed in 2008.

Held up for several years now is Batch 3, for 20 aircraft to equip the IAF’s Surya Kiran aerobatics team.

The British High Commission declined to confirm this development. However, David Woolf, who oversees defence exports for the High Commission in New Delhi stated: “If the Indian government was interested in financing the purchase of Hawk trainers, the UK government would be happy to explore the possibility of financing it through the United Kingdom Export Finance organisation.”

Hindustan Aeronautics Ltd (HAL), which would build the 20 Hawks in Bengaluru, BAE Systems, which is the primary vendor, and the defence ministry declined to comment.

India’s defence cooperation with the UK, while not as intense as with the US, has grown steadily. In April, the UK Secretary of State for Defence Sir Michael Fallon visited India for the India-UK Strategic Defence Dialogue, which facilitates cooperation between the two militaries and defence industries.

In November 2015, the two countries agreed on a Defence and International Security Partnership (DISP). New Delhi and London also cooperate in several Defence Consultative Groups (DCGs).

BAE Systems, which features each year amongst the world’s five biggest defence firms, has done good business in India. Besides the sale of 123 Hawks, the US arm of the company, which is called BAE Inc., bagged a $737 million (Rs 4,700 crore) contract in November 2016 for supplying 145 ultralight M-777 howitzers to the army.

Sunday, 28 January 2018

Pakistan Army chief General Bajwa backs talks, even as India hangs tough

Indian and Pakistani DGMOs meet at Wagah on Dec 24, 2013. Maj Gen Aamer Riaz now commands Lahore corps (see below)

By Ajai Shukla
Business Standard, 28th Jan 18

Sources close to the Pakistani military say New Delhi is missing an opportunity to engage Islamabad in dialogue that would have the full backing of Pakistan’s powerful army chief, General Qamar Javed Bajwa.

The sources say India is under-reading two unambiguously positive signals that Bajwa has choreographed in recent months. Instead, New Delhi, especially the Indian Army, is focusing on tactical aspects like ceasefire violations on the Line of Control (LoC) and infiltration of militants, which have little to do with strategic issues like dialogue resumption.

Restarting dialogue, point out these sources, would automatically calm the LoC and reduce armed militancy in Kashmir.

A senior Pakistani officer with direct knowledge of his army chief’s thinking says: “The Pakistan Army would be willing to re-start negotiations around the so-called Four-Point Formula that was negotiated [between the representatives of Prime Minister Manmohan Singh and President Pervez Musharraf] in 2005-07.”

The Four-Point Formula, which looked beyond both sides’ claims to all of pre-1947 Jammu & Kashmir (J&K), ruled out redrawing borders or amending constitutions. Instead, it sought to make the existing boundary irrelevant by enabling commerce and contacts between Kashmiris on both sides of the LoC.

Across India’s political spectrum, the Four-Point Formula, or a variation of it, might be the only acceptable solution to the Kashmir dispute.

Pakistani signalling

On December 19, General Bajwa first signalled that the Pakistan Army did not oppose dialogue with India. Briefing a joint sitting of both houses of Pakistan’s parliament on “national security affairs”, Bajwa conveyed the point that he would support any civilian government initiative on opening talks with India.

"You [the parliament] will devise all policies including defence and foreign affairs, whereas, we [the army] will abide by [the policies],” said Bajwa, according to the respected Pakistani news daily, Dawn, which quoted a parliamentarian who attended the briefing.

Bajwa was accompanied in parliament by a senior team of generals, signalling the army’s resolve to crackdown on terrorist groups. These included the Inter-Services Intelligence (ISI) chief, Lieutenant General Naveed Mukhtar; the army’s public relations chief, Major General Asif Ghafoor; and military operations chief, Major General Sahir Shamshad Mirza, who gave a detailed briefing on the anti-terror Operation Radd-ul-Fasaad (End of Discord), launched last February.

While the focus was on “anti-Pakistan” groups like the Tehrik-e-Taliban Pakistan (TTP), with little emphasis on “strategic assets” like the Lashkar-e-Toiba (LeT) that function as deniable instruments of the Pakistan Army, Bajwa had backed the arrest of LeT chief, Hafiz Saeed, last January and his detention until a court-ordered release in November.

It is rare for Pakistan’s army chief to report to the elected legislature. The last time it happened was in 2011, when General Ashfaq Kayani and his ISI chief, Lieutenant General Shuja Pasha briefed parliament on the killing of Osama bin Laden in Abbottabad, by US Special Forces who humiliatingly penetrated deep into Pakistani territory to carry out a unilateral operation.

Pakistani sources say Bajwa’s visit to parliament was also intended to telegraph the message that the confrontation with the ruling Pakistan Muslim League (Nawaz), or PML(N), was over with the ouster of former prime minister, Nawaz Sharif, in July after the Supreme Court banned him from holding public office for life. Bajwa was signalling that the army fully backed Sharif’s successor, Shahid Khaqan Abbasi, and that civil-military relations were again on an even keel.

Bajwa had already signalled an end to confrontation with the PML(N). This was done on September 28, with the posting of the trusted Lieutenant General Aamer Riaz, as the commander of the Lahore-based 4 Corps. Riaz also happens to be close to Shehbaz Sharif, Nawaz Sharif’s brother, who is the Lahore-based chief minister of Punjab. With Riaz as interface between the PML(N) and the army, political confrontation between the two was clearly over.

Since November 2016 when Nawaz Sharif appointed him Chief of Army Staff (COAS), Bajwa has, more unambiguously than any army chief since Musharraf after 2003, signalled that the Pakistan Army would back a peace process with India.

As this newspaper reported soon after Bajwa’s appointment (January 11, 2017, Is Pak Army preparing to turn on LeT and Jaish?), he told the Pakistan army that the country’s interests lay in ending confrontation with India, without compromising Pakistan’s self-respect. This was a bold move, coming soon after India’s “surgical strikes” in September 2016 on Pakistani targets across the LoC.

Pakistan army folklore recounts a visit by the newly appointed chief to a forward LoC post, where a unit commander, wanting to appear aggressive and effective, described to Bajwa what mayhem he had caused in the Indian Army posts in front of him. After hearing him out, Bajwa quietly asked: “So have you brought azaadi (independence) to Kashmir?”

A pragmatist with both feet on the ground, Bajwa is aware that talk of Kashmir’s azaadi is more political than practical. He has noted the signs posted in shops in Muzaffarabad, the bustling capital of Pakistan Occupied Kashmir, which read: “No credit, until Kashmiri azaadi”.

Clearly no shopkeeper believes azaadi is nigh.

Bajwa moved to remove his army’s Kashmir obsession, replacing a hawkish ISI and public relations chiefs with more moderate officers. In the 14 months since, he has appointed corps commanders who shared his views, easing out hardliners appointed by his predecessor, General Raheel Sharif. The appointment of General Sharif to command the Saudi Arabia-inspired, 39-nation, Islamic Military Alliance to Fight Terrorism (IMAFT) has allowed Bajwa space to shape the all-important caucus of corps commanders in his own image.

“Over the last year, Bajwa has created the environment to support bold moves on India. The ball is in India’s court”, says a senior Pakistan military officer.

India’s tough response

New Delhi has either missed Bajwa’s signals, or else has decided that, at least for now, confrontation with Pakistan rather than dialogue is the way forward.

Pakistani sources point out that India’s ministry of external affairs (MEA) has conditionally welcomed Bajwa’s reported comments in parliament supporting dialogue and good relations with India. In contrast, Indian army chief, General Bipin Rawat, has answered Bajwa’s conciliation with hard-line statements.

On December 22, at the conclusion of a large military exercise in the Thar Desert, Rawat underlined Pakistan’s continuing support for terrorists [in J&K] to argue that it did not really want peace. “Only [if Pakistan stops supporting terrorists] can we say that peace talks should take place,” he told reporters in Barmer.

Unlike a Pakistani army chief, whose statements are as much political as military, Rawat’s outlook is tactical, his ire fanned by Pakistan’s continuing aggression on the LoC – through ceasefire violations (CFVs) and supporting militant infiltration into Kashmir. Apparently undeterred by the Indian Army’s “surgical strikes” of September 2016, there have been a reported 860 CFVs in 2017, thrice as many as the year before. Infiltration has climbed in proportion.

This has caused Rawat to actually concede – the first time an army chief has done so – that India was violating the ceasefire to punish Pakistani posts that support infiltration. On January 12, he stated: “Earlier, we were targeting only infiltrating militants. But these extremists are disposable commodities for Pakistan. Instead, the pain has to be felt by the Pakistan armed forces for supporting infiltration. So we have started targeting his (Pakistan’s) posts and I can assure you that, in these exchanges of fire, he has suffered three-four times the casualties. That is why we get repeated requests from Pakistan to take the ceasefire back to 2003 levels.”

In a snub to the Pakistan Army, Rawat said: “If we see a drop in infiltration along the LoC we are willing to call for a ceasefire, but not until we see a drop in infiltration levels. This is in full coordination with the government.”

Three days later, on January 15, Rawat stated: The Pakistan Army is helping infiltrators; if they provoke us further, we will take stronger action.”

During this same period, India reportedly spurned a Pakistani request for the two directors general of military operations (DGMOs) to meet and discuss de-escalation on the LoC. While the DGMOs speak on the telephone every week, a meeting is a special event. One last took place at Wagah in December 2013, and succeeded in de-escalating tension that had flared on the LoC after Pakistani troops killed seven Indian soldiers and mutilated the bodies of two.

The way ahead

With official dialogue closed, a back-channel dialogue track between the two national security advisors – Ajit Doval and Nasir Khan Janjua – is apparently the only real communication channel between the two countries. The MEA has portrayed this as a mechanism to hold Pakistan responsible for terrorism, but there are few buyers for this explanation.

Pakistani military officers tell Business Standard that Bajwa’s presence offers a rare opportunity for a regular political dialogue that has the full support of the army. “Bajwa is due to retire in November 2019, which provides an assured 22-month window. It is impossible to tell who will succeed him, or whether the next army chief would have the same mind set.”

However, New Delhi would remember that Kayani, who succeeded Musharraf in 2007, quickly scuttled his predecessor’s Four-Point Formula, bringing to naught the most promising peace initiative in the history of Indo-Pakistan relations and taking both countries back to the start line.

Friday, 26 January 2018

Lockheed Martin denies offering India fifth-generation F-35 fighter

Instead of F-35 (pictured above) Lockheed to stick with older F-16 in Indian “single-engine fighter” tender

By Ajai Shukla
Business Standard, 26th Jan 18

US aerospace giant, Lockheed Martin, has rebutted a report, widely published in the Indian media, that it had offered India its state-of-the-art F-35 Lightning II fighter. The F-35, a fifth-generation fighter that is only now entering service in significant numbers, is vastly superior to the F-16 Block 70 fighter that Lockheed Martin is offering India in its proposed purchase of an estimated 100 single-engine fighters.

But on Monday, Lockheed Martin spokesperson, Michael Friedman, stated: “The article referencing F-35 production in India was misreported and incorrect. The conversation was in regards to F-16 production”.

Further, Defence industry trade magazine, DefenseNews, quoted a Indian defence ministry official as stating: “There is no such plan, and no official proposal has come from US government and Lockheed Martin” to produce F-35s in India in the future.

The earlier report, originating from Press Trust of India (PTI) and carried by several Indian newspapers, stated: “Lockheed Martin has proposed to manufacture custom-built F-35 fighter jets in India, which its officials say will give Indian industry a unique opportunity to become part of the world's largest fighter aircraft ecosystem.”

The confusion stemmed from a long-running marketing effort by Lockheed Martin to burnish the older F-16 Block 70 by suggesting that it containes many advanced technologies developed for the firm’s two most advanced fighter aircraft – the F-22 Raptor and the F-35.

Vivek Lall of Lockheed Martin told PTI: “Many of the systems used on the India-specific platform (i.e. the F-16 Block 70) are derived from key lessons learned and technologies from Lockheed Martin's F-22 and the F-35, the world's only operational fifth generation fighters.

Lall, like several Lockheed Martin officials who have visited India in the preceding two years, said in New Delhi on Saturday that the F-16 Block 70 had fifth-generation capabilities. He said its key sensor – an APG-83 Active Electronically Scanned Array (AESA) radar – shared a high degree of commonality with the F-22 and F-35 radars.

Those who oppose buying the F-16 for the Indian Air Force (IAF) say it is not in the same technology class as the F-22 and F-35, which India has never been offered; that the F-16 Block 70 is hardly an exclusive offer to India since it is building an equally capable version for Bahrain; that the F-16 is based on a 1970s airframe, and that Pakistan has operated it for decades, learning its weaknesses and vulnerabilities.

Meanwhile, American officials and analysts who favour enhancing US-India relations suggest that Washington offer India the F-35, which it is supplying at least nine other countries. 

Rich Verma, formerly US ambassador to India and now vice president of strategic advisory, The Asia Group, has proposed that Washington formally undertake to provide India a “qualitative military edge” (QME), as the US does with Israel.

“India has already been declared a 'major defence partner' of the United States. Mandating a QME for India would open the door for supplying the F-35”, notes a top US defence industry head, based in India.

Yet, supplying F-35s to India would require a special effort by Washington. The IAF wants to rapidly induct fighters to replace 10 squadrons (about 200 aircraft) of MiG-21 and MiG-27s that are already overdue to retire, but the F-35 production line is already committed to building 3,000 fighters, including 600 for foreign customers, according to Lockheed Martin.

With the F-35 line at Fort Worth, Texas, currently building 66 fighters per year, and due to reach its full annual rate of 166 fighters only in 2023, it already has orders for two decades worth of production.

“Does Washington have the political will to squeeze out 100 F-35s for India from a fully committed line?” asks a recently-retired IAF air marshal.

The F-35’s affordability would be important for New Delhi. India is paying $115 million as the bare-bones cost of each Rafale fighter (with India-specific enhancements, spares, logistics and weapons all extra). In comparison, an F-35A (the air force version) cost just $94.6 million in February 2017, said Lockheed Martin.

This is slated to become even cheaper. “As production ramps [up] and additional improvements are implemented, Lockheed Martin’s goal is to reduce the cost of an F-35A to $80 million by 2020”, announced the company in November.

More than 265 operational F-35s have already been delivered to the US Air Force and eight other nations including Australia, Italy, Israel, Japan, Netherlands, Norway and United Kingdom.

Monday, 22 January 2018

Naval Tejas stalled, no flights for eight months

Halt in flight-testing jeopardises Naval Tejas Mark 2 (Pic: Naval Tejas takes off from the SBTF in happier days)

By Ajai Shukla
Business Standard, 20th Jan 18

Even as the Indian Air Force (IAF) version of the indigenous Tejas Light Combat Aircraft (LCA) powers ahead, the naval version of the Tejas has ground to a worrying standstill.

Neither of the two Naval LCA prototypes has taken off in eight months.

Since the last Naval LCA sortie on May 20, one of the prototypes lies half dismantled in Hindustan Aeronautics Ltd (HAL), its interiors gaping open. The other stands forgotten on one side of the hangar.

Meanwhile the other 14 Tejas prototypes, which are flight-testing the IAF’s Tejas Mark 1, flew 406 test sorties last year – more flights than any preceding year, except 2013.

Navy chief, Admiral Sunil Lanba, has publicly rejected the Naval Tejas Mark 1 as too heavy to fly combat missions off an aircraft carrier. Instead, he has backed the Naval Tejas Mark 2, which will have a more powerful engine. But, with the Mark 1 effectively grounded, the Mark 2’s development is also crippled, if not actually halted.

That is because many systems essential for the Naval LCA Mark 2, such as the arrestor hook and leading edge vortex controllers (Levcons allow the fighter to land on a carrier deck at a slower speed), are being designed and tested on the Mark 1 prototypes. The Mark 1 is a crucial technology test-bed and data generator for developing the Mark 2.

That would be a serious setback for the navy, which urgently requires the Tejas for its next aircraft carrier, INS Vikrant, which will join the fleet in 2020, says Lanba. He said the Vikrant “is designed to operate the MiG-29K and the LCA.”

The eight-month gap in flight-testing the Naval Tejas has been a major setback for the test programme. At the “shore based test facility” (SBTF) in Goa – a concrete runway-cum-ramp that replicates an aircraft carrier deck – the easterly winter winds and furious west coast monsoon allow aircraft to take-off only in the February-to-June period. It was planned that the Naval Tejas would carry out an “arrested landing” in 2018, using the arrestor cables on the SBTF but, with no preliminary work done over the last eight months, this will now be possible only in February-to-June 2019. That means a project already heavily criticized for delay has just lost another full year.

Asked why HAL – which builds, repairs and operates Tejas prototypes – is going slow on the Naval Tejas, a senior HAL officer says the navy has turned its back on the programme.

“We have limited resources and manpower for Tejas flight-testing. The air force has committed to buying 123 Tejas fighters. The navy, on the other hand, has publicly rejected the Tejas. Why waste resources on the Naval Tejas?” says a top HAL executive.

However, technology development processes should not be linked with production orders, as HAL is doing, says a senior MoD official.

The navy chief insisted last month that he continues backing the Navy LCA. He said the navy has paid ~6 billion towards the Mark 1, ~3 billion for the Mark 2,  and would pay more as development continues. “As far as the LCA Navy is concerned, we are committed to indigenisation. We have supported the project and continue to [do so]”, said Lanba.

But merely allocating funds will not energise the Naval Tejas programme, retorts a senior officer in the Aeronautical Development Agency (ADA), which oversees the Tejas programme. “A user service’s intent is evident from what it commits to the project in terms of test pilots, finance, oversight and most importantly moral support,” he says.

The navy has never committed more than three officers to the Tejas LCA. An ADA officer estimates that is one-fifth to one-tenth what the IAF has committed over the years.

Despite its protestations of support, the navy has steadily backed away from the Tejas programme. In March 2016, in the LCA Tejas Empowered Committee in the defence ministry, top admirals first declared the Tejas Mark I inadequate, but committed to supporting the Mark 2.

In May 2017, the navy declined to pay its 25 per cent share of the ~12.31 billion cost of enhancing the capacity of the LCA Mark I manufacturing line from 8 to 16 aircraft per year. The IAF is paying its share.

Difficulty is inevitable in translating an air force fighter into a naval, carrier-deck version, says aerospace expert Pushpinder Singh. It involves strengthening the entire aircraft, especially the undercarriage, to withstand the jarring impacts of carrier deck landings, which are often described as “controlled crashes”. This makes naval fighters heavier.

Despite the navy’s pusillanimous approach to the Tejas, that fighter remains crucial to the future of carrier deck aviation in India. The Russian MiG-29K has not proved a success and the navy is grappling with the consequences of that purchase. Procurement is under way of 57 multi-role carrier deck fighters, but that will take time and a cheap, light fighter like the Tejas will still be required on future aircraft carriers. “Realising the Tejas Mark 2 will require deeper reserves of fortitude and clarity than the navy, HAL and ADA have displayed so far”, says a senior naval officer.

Wednesday, 17 January 2018

Defence ministry simplifies private firms’ role in developing weapons prototypes

By Ajai Shukla
Business Standard, 17th Jan 18

In an initiative that is being welcomed by small private defence firms, Raksha Mantri Nirmala Sitharaman on Tuesday simplified the “Make II” procedure, which is a framework for defence firms to develop and build equipment the military has announced it wants.

The “Make I” procedure is aimed at large, expensive projects like the Future Infantry Combat Vehicle. It provides for private industry consortia to develop such platforms, with the ministry reimbursing up to 90 per cent of the cost incurred.

In contrast, “Make II” is an industry-funded initiative for small projects that do not incur a heavy development cost. It allows private companies to develop equipment that the military has publicly stated it requires, in a document called the “Technology Perspective and Capability Roadmap” (TPCR), which is posted on the defence ministry website.

Now, aiming to make the “Make II” process more practical for private firms, the Defence Acquisition Council (DAC) announced it has “simplified the procedure to make it industry friendly, with minimal government control.”

“The salient aspects of the revised procedure will now allow Ministry of Defence to accept suo-motu proposals from the industry and also allows start-ups to develop equipment for Indian Armed Forces”, said the announcement.

The first change involves broadening the playing field and allowing more companies access. While the earlier “Make II” procedure provided for shortlisting only two vendors to develop prototype equipment, now multiple vendors can participate.

The second change involves relaxing the eligibility criteria for private firms to participate in prototype development projects. According to the ministry, “The minimum qualification criteria to participate in ‘Make II’ projects has been relaxed by removing conditions related to credit rating and reducing financial net worth criteria.”

Thirdly, the “Make II” procedure has been simplified and decentralised. “The vendor will not be required to submit Detailed Project Report. After accord of approval… [by the DAC], all clearances will be accorded at Service HQ (SHQ) level”, announced the MoD. 
To hand-hold small scale firms and start-ups that might be technologically gifted but managerial novices, “SHQs will now setup project facilitation teams to act as the primary interface between the SHQ and the industry during the design and development stage. These teams would provide technical inputs, trial infrastructure and other facilities as required by the vendor”, announced the MoD.

Service headquarters have now been given greater flexibility. “Even if a single individual or firm offers innovative solutions, the SHQ will now have the option to accept and process the vendor’s development initiative. SHQs will be allowed to hire domain experts/consultants from private sector to increase outreach and enhance awareness among the industry”, the DAC decided. 

Finally, the DAC addressed the biggest bugbear for private firms, which is that even successful design work sometimes does not bring in orders for the product they have developed. The DAC decided today: “Most importantly, there will be no foreclosure of project after the project is sanctioned, except on default by the vendor, to ensure that the successful vendor has assured orders.”

Private defence industry has welcomed these announcements. “These changes are in line with what industry has been requesting. We are hopeful the ministry will implement these changes quickly and kick off the first “Make II” project within a few months to build confidence within industry”, says Jayant Patil, who heads the heavy engineering division in L&T.