Military Acquisitions, Partnerships & Developments

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Austin
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Re: Military Acquisitions, Partnerships & Developments

Post by Austin »

Best Defence: Indian defence production firms make armed forces less dependent on imports
Sandeep Unnithan/India Today
When an Indian Air Force pilot sits in the cockpit of a new Sukhoi Su-30mki, he relies on digital multifunction displays or MFDS for vital flight parameters and digital terrain maps. The MFDS are assembled at Samtel Display Systems' Ghaziabad plant on the outskirts of Delhi. Until recently, India relied entirely on foreign firms for the cockpit displays for its fighter aircraft, with a set of seven costing upwards of several crores.

Visakhapatnam-based Flash Forge is supplying critical valves and pipes for the navy's under-construction fleet of six Scorpene-class stealth submarines. It is fitting special GPS-equipped towed antennae for the navy's current fleet of 14 submarines.

A few years from now, Indian soldiers will use hand-launched spy drones to spot militants in Jammu and Kashmir. The drones, which carry infra-red sensors and can spot intruders even in total darkness from 500 metres away, are being manufactured by Bangalore-based firm Aurora Integrated Systems (AIS).

Firms such as Samtel, Flash Forge and AIS are part of a growing trend of Small and Medium Enterprises (SMES) that are making a mark in India's Government-controlled defence sector. They are niche players who have cornered a key role in indigenising the defence industry by focusing on cutting-edge technology. Their story provides a glimmer of hope in times of heavy import dependence.

Over the next decade, the Indian armed forces will buy over $100 billion (Rs 450,000 crore) worth of fighter aircraft, radars, missiles and warships. Nearly 70 per cent of these will be off-the-shelf imports. The remainder will come from the nine defence public sector undertakings (DPSUS) such as Hindustan Aeronautics Ltd and Bharat Electronics Ltd. DPSUS account for 90 per cent of India's annual domestic defence production of $4 billion (Rs 18,000 crore). The rest of the market is divided among nearly 6,000 firms, ranging from Larsen and Toubro, Tata and Godrej to a host of smaller players. In 2001, the Government threw open the doors to private industry, a full decade after liberalisation. Today, the private sector supplies between 20 and 25 per cent of components and sub-assemblies to DPSUS, ordnance factories, the Defence Research and Development Organisation and the armed forces.

"Successful SMES will be the ones which can innovate, adapt technologies, deliver customised solutions, develop and maintain a global standard in manufacturing quality and specifications while retaining their cost advantage," predicts Dhiraj Mathur, the executive director of PricewaterhouseCoopers, a global professional services firm.

Last year, Gautam Makker, 42, MD of Flash Forge, tied up with a French firm Coyard that makes marine valves that regulate all the fuel, air and gas supply on board warships and submarines. His foresight was rewarded this June when French submarine maker DCNS and Mazagon Docks Limited (MDL) signed a contract of undisclosed value to locally manufacture all the valves, pipes and fittings for the six Scorpene-class submarines being built at the MDL, Mumbai, under a Rs 20,000 crore contract.

Flash Forge will double its Rs 57 crore turnover next year. "There is a vacuum in niche areas as a majority of the firms are not investing in technology," says Makker.

In the next decade, virtually all the MFDS in air force aircraft from helicopter gunships to the 126 Medium Multi-Role Combat Aircraft will be supplied by Samtel. Their turnover is set to increase from Rs 60 crore at present to Rs 500 crore by 2015.

The company has already set its sights higher up the value chain and is looking to import technology to manufacture infra-red search-and-track (IRST) sensors. Unlike radar, IRST sensors spot enemy aircraft 'passively', without alerting them to the presence of another aircraft. "We want to work towards realising the ministry of defence's policy of achieving 70 per cent indigenisation of defence equipment," says Puneet Kaura, executive director, Samtel.

The defence business calls for companies with endurance in the face of red tape and long procurement procedures. It takes between five and seven years for the armed forces to settle on acquiring a system. It also calls for huge investment with little guarantee of return. "The single biggest hurdle to smes in defence is the lack of an effective investment policy; we have no money," says Dhananjay Kamlapurkar of the Pune-based Defence Equipment Manufacturers' Association.

"Five years back, investors would laugh at us when we said we were into defence, but not anymore," says Raman Puri, one of the directors of AIS. Founded by seven Indian Institute of Technology graduates in 2006 with a seed capital infusion of around Rs 5 crore from Tata Industries and the Government, AIS has a few deals with the navy and National Aerospace Laboratories worth Rs 6 crore over the past two years. It is now working on a classified drone project for the navy. AIS is a frontrunner to supply 40 backpackable drones to the army's Northern Command. The business is tough because a majority of the subcomponents are imported. AIS imports the composites that make up its airframe, and vital components like modems and even the tiny integrated circuits that fit into the drones.

A bigger opportunity for the private sector comes from 'defence offsets'. Five years ago, the defence ministry made it mandatory for foreign defence equipment suppliers to source 30 per cent of the value of the equipment from within India.

"Offset requirements can potentially open up significant business opportunities for Indian smes to integrate themselves into the supply chains of national and international defence majors," Mathur predicts. With 41 offset contracts worth over Rs 49,000 crore set to materialise in the next three years, the going has never been better for defence smes.
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Re: Military Acquisitions, Partnerships & Developments

Post by VinodTK »

Hindujas want big slice of defence pie
The Hinduja Group has decided to cash in on India’s defence requirements, by realigning its holding company, Hinduja Automotive, as a one-stop shop for all military hardware — from specialty trucks, artillery and combat systems to aerospace components and engineering services.

Hinduja Automotive, which makes trucks and buses under the Ashok Leyland brand, will line up alongside several other domestic companies to make substantial gains from defence contracts to be offered by the Indian government, the world’s 10th largest spender on military hardware, under the offset clause.
:
:
VinodTK
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Re: Military Acquisitions, Partnerships & Developments

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Tata wins Indian radar-jamming contract
BANGALORE, India, Nov. 3 (UPI) -- India has awarded Tata Power Strategic Electronics Division a contract for two integrated electronic warfare systems to be deployed in mountain regions.

Tata came out the low bidder, narrowly beating Israeli firm Elta, for the contract estimated to be around $186 million, the Press Trust of India reported.

The IEWS will be used to locate, detect and jam enemy radar and electro-optical measures in mountainous borders with China and Pakistan.

India's defense department sent out the tender in 2007 to domestic and foreign companies -- Israeli firms Elisra and Elta, Thales of France, EADS of Germany and domestic suppliers Tata Power, Larsen and Toubro, Bharat Electronics, ITI and Axis Aerospace.

The contract likely will be finalized this month, the Press Trust report said.

The deal follow another major contact win for Tata Power SED in April, a $260 million contract to modernize 30 Indian air force military airports.

Tata Power SED beat Selex of Italy to win the contract, the Modernization of Airfield Infrastructure-Phase I. It was the first win by a domestic private-sector defense company against overseas bidders.

"Award of this contract won against a global defense tender is a watershed moment, not only for us but also for increasing private-sector participation in Indian defense," said Rahul Chaudhry, chief executive officer of Tata Power SED.

The SED division of Tata Power -- India's largest private sector power utility with an installed generation capacity of over 2300 MW -- has won previous defense contracts for ordnance programs and subsystems for first-tier suppliers' equipment.

In 2006, Tata Power SED and Larsen and Toubro's heavy engineering division picked up a $45 million contract to produce 40 Pinaka multi-barrel rocket launcher systems.

SED also was part of the group, including Bharat Electronics, government research organization Defense Electronics Research Laboratory and Tata's CMC information technology company that developed the Samyukta mobile integrated electronic warfare system.

It was said to be the largest Electronic Warfare System in India when deliveries began in January 2004.

Tata's aviation business, Tata-Sikorsky, is joint venture for manufacturing aerospace components and systems in India, specifically cabins for Sikorsky's S-92 helicopter.

Production began last November, 14 months after the agreement was signed, at a new facility in the Aerospace Park on the outskirts of Hyderabad, in Andhra Pradesh state.

It was in June 2009 that the Indian conglomerate Tata joined forces with Sikorsky as a way into India's lucrative aerospace industry. Tata Advanced Systems, a subsidiary of the holding firm Tata Sons, is leading the joint venture.

At the time of the joint venture signing in 2009, Jeffrey Pino, president of Sikorsky Aircraft Corp., said they were "proud to have the highly admired Tata Group join our global supply chain" and "India's aerospace market is poised for significant growth."
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Re: Military Acquisitions, Partnerships & Developments

Post by arun »

X Posted from the Indian Naval Discussion thread.

Excerpt from CNS’ Admiral Nirmal Verma’s Navy Day 2011 speech.

49 ships and submarines are on order for the Indian Navy:
Our preferred choice of inducting ships and submarines has been through the indigenous route and of the 49 ships and submarines presently on order, 45 are from Indian shipyards.
Details of the ships and submarines that are on order and news that orders for MCMV’s and P-17A Frigates will be “soon” concluded:
This year we have concluded eight important contracts which include contracts for four destroyers, five Offshore Patrol Vessels, two Cadet Training Ships, eight Landing Craft Utility and Fast Interceptor Craft for coastal security duties. We are also looking forward to soon concluding contracts for Mine Counter Measure vessels and P 17A frigates.

Amongst the major projects, under construction in Indian shipyards, are the three ships of Kolkata Class (P-15A), four P- 15B ships which are an advanced version of the Kolkata Class and the six P 75 submarines, all at Mazagaon Dock Limited, Mumbai. Four Anti Surface Warfare Corvettes are being built at Garden Reach Ship-builders, Kolkata. In addition, nine Naval Offshore Patrol Vessels are under construction at Goa Shipyard Limited and a private Shipyard. The construction of the Indigenous Aircraft Carrier is also progressing.

We expect to induct one Shivalik class frigate – Sahyadri, one Offshore Patrol Vessel, one Kolkata class destroyer, one P-28 ASW Corvette, three Catamaran Hull Survey Vessels and twenty five Fast Interceptor Craft over the next one year.

Amongst the overseas projects, the refurbishment of Vikramaditya is progressing on track and the ship is expected to be delivered in December 2012. The three Follow-on ships of Talwar class, under construction at Russia are likely to be delivered in the time frame 2012-13.
News of what is happening on the Naval Aviation side:
Our maritime surveillance capability is a critical component of maritime security, both in times of peace and conflict, and plays a crucial role in the security of the Maritime Zones of India, as also of our vast coastline. The planned induction of twelve P-8I Poseidon maritime patrol aircraft to add more teeth to this capability, is on schedule. The first flight of the P-8I for the Indian Navy took place on the 28th of September this year and that signals that the programme is well on track. The first aircraft would arrive in India by Jan 13. Acquisition of Medium Range Maritime Reconnaissance aircraft is also being progressed concurrently.

The delivery of 16 carrier borne MiG 29K aircraft, as per the initial contract will be completed by the end of the year. We have also signed a contract for 29 more aircraft, the delivery of which is likely to commence from April next year. The Naval version of the LCA is under development and two main engine runs of the first prototype have been carried out. The Naval variant differs from the Air Force version due to its requirement to operate from the deck of the aircraft carrier. The prototype is expected to do the much delayed first flight by the first quarter of 2012. Once successful flight trials are completed, we intend to go ahead with a Limited Series Production (LSP) of the aircraft, in preparation for future inductions.

Further, the induction of Hawk AJT commencing 2013 would facilitate advanced training of our young pilots in developing requisite flying skills over sea prior to graduating to deck based fighter aircraft.

The Mid Life Upgrade of existing Seaking and Kamov helicopters, aimed at upgrading their weapon and sensor package would be undertaken in the XII Plan period. Further, efforts are in hand for acquiring Multirole helicopters, additional Air Early Warning helicopters and utility helicopters. The field evaluation for procurement of 16 Multirole helicopters was concluded recently and the contract negotiations should commence by early 2012.
The Full text of the speech is here:

Speech of CNS’ Admiral Nirmal Verma during Navy Day Press Conference – 2011
Austin
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Re: Military Acquisitions, Partnerships & Developments

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Portfolio of Russian-Indian military-technical cooperation projects is estimated at about $ 20 billion - Russian Ambassador to India
Of Delhi. On December 13. Interfax-AVN - Competition in the Indian arms market in recent years has increased, but no Western country can offer Indian partners such level of cooperation on joint projects in the MTC, as well as technology transfer, which provides Russia, said Russian Ambassador Alexander in India Kadakin.

"I want to remind you that our military portfolio in India is about $ 20 billion, and it's not bad at all" - said in an interview with A. Kadakin "Interfax" on Tuesday.

He noted that "Russian-Indian relations in the defense sector are very deep and time-tested." "Yes, in recent years, several countries have thrown a few carrots in the Indian garden, luring their products. But none of our competitors do not offer and do not share with the Indian defense industry for its know-how. Meanwhile, the country already produces the Su-30 with Russian technologies ", - said the Ambassador.

According to Mr. Kadakin, due to the fact that we share with all of India's most valuable, she was able to produce the world's best supersonic cruise missile "Brahmos". "There are so many other similar things that I can not say, without violating privacy," - he said.

A. Kadakin noted that successfully promoted a joint project to develop fifth generation fighter.

"Work on it are successful, according to the schedule due to the fact that the parties fully comply with their obligations. During the summit, this theme will also be discussed, but only to, figuratively speaking," compare notes ", to determine the order at what stage we are now. But again, everything goes smoothly, and as we now have the world's best supersonic missile, so it will be the best fighter of the fifth generation. This, of course, the exact dates now, no one will call, because they depend on the intensity of work and funding, "- said the Ambassador.

According to Mr. Kadakin on minor issues, including attacks on journalists in pursuit of fried sensations, we should look realistic and sober.

"Take the recent history with the T-90. One of the Indian journalists in the article about the problems of the country's armored stated that the licensed production of T-90 in India has stalled, because Russia does not provide the necessary technology. Meanwhile, all interested parties on both sides clearly know absolutely that this is not true: Russia fulfills all contractual obligations in respect of this project, and the problem was with the manufacturers and suppliers from the Indian side, "- said A. Kadakin.

According to him, "gave the best answer to slander a brave lady, the President of India Pratibha Patil, who traveled recently to the T-90, thereby showing that he was and remains the best "tank in the world."

"And look how much noise arose when we lost the tender for attack helicopters, in which we, in fact, took part for its own sake, in order of workouts, so to speak!", - Said A. Kadakin.

He noted that some well-known may be mentioned also the GLONASS system - take advantage of its high-precision signal only Russia has offered India. "Particularly preferred strategic partnership in practice means that we provide India what do not share with any other country, our plan of action for decades to come, as we comfort each other. And we share GLONASS technology with India, being absolutely sure that the partner will not abuse them, "- said A. Kadakin.
Austin
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Re: Military Acquisitions, Partnerships & Developments

Post by Austin »

Kangaroo Hug
Australia warms to India and agrees to sell it uranium
Australia's Defence Minister Stephen Smith flew into Delhi just two days after the ruling Labour Party's historic December 4 vote to end the uranium export ban on India. Australia, which holds nearly half the world's uranium reserves, had earlier declined to sell, citing India's refusal to sign the Nuclear Non-Proliferation Treaty.

Smith backed India's candidature to the Security Council, spoke of maritime cooperation and of India being one of the world's three great powers with China and the US. But Australia will not sell what India really wants: Over the Horizon Radar (OTHR).

Underlining the sensitivity of the strategic radar, which can detect targets over 3,000 km away, Smith called it "an Australian developed capability", which "we value very highly", effectively ruling out its sale. "I'm sure India has certain capabilities which it has developed, which it does not intend to share with anyone else," he said soon after meeting Defence Minister A.K. Antony.

Indian officials say they inquired about the possibility of obtaining OTHR technology from Australia at the ministerial level some years ago. They were, however, politely refused. The Indian Navy's maritime domain awareness project calls for real-time surveillance of the seas around its territorial waters, particularly in the light of the foray made by the Chinese navy into the Indian Ocean. Ordinary shore-based radars have a limited range due to the earth's curvature. Australia's OTHR, developed with US assistance, bounces radio waves off the ionosphere to detect targets at extended ranges. Its $1.8 billion (Rs.9,000 crore) price, is less than what India paid for a second-hand Soviet-era aircraft carrier, the Admiral Gorshkov. "Australia most likely did not want to sell the radar technology for fear of upsetting China," reasons a senior official.

The removal of the uranium irritant has rejuvenated the moribund strategic partnership inked in 2009. Smith emphasised maritime cooperation as the focus. "We are Indian Ocean Rim naval countries and we should utilise that. As India rises as a power, the potential of the Indian Ocean Rim also rises. So strategic and practical cooperation depends on what we can do on the navy-to-navy front," Smith said. His discussions with Antony and navy chief Admiral Nirmal Verma were about building maritime cooperation. Australia has so far held only one naval exercise with India: In 2007, where it joined warships from the US, Singapore and Japan. Both countries are expected to formalise a series of bilateral annual naval exercises. As India acquires aerial platforms like the C-17 and the C-130J aircraft, which Australia also operates, the potential for air force exercises increased, Smith said and emphasised that the relationship was not directed at China. He, however, echoed the Indian stance that China's disputes in the South China Sea were not bilateral to countries of the region but concerned the global community.

"The more India interacts with countries like Australia, the more China will recognise that the world sees it as problematic," says G. Parthasarathy, former high commissioner to Australia. A view China is unlikely to share as it watches Indo-Australian ties with keen interest.
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Re: Military Acquisitions, Partnerships & Developments

Post by Singha »

its good to know we were thinking of OTHR even years ago...hope we started work on local version right then.
china has been working on it and deploys some early bird systems
http://www.ausairpower.net/APA-PLA-IADS ... TocId88569
arun
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Re: Military Acquisitions, Partnerships & Developments

Post by arun »

X Posted from the Indian naval Discussion thread:

Russia hands over Nerpa nuclear sub to India
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Post by Singha »

to me this looks like a high end customer briefing and experience center.

business standard:
Boeing looks to expand tie-up with BEL
BS Reporter / Chennai/ Bangalore December 22, 2011, 0:17 IST


The defence PSU Bharat Electronics Ltd (BEL) which has a partnership with Boeing for the Analysis and Experimentation Centre (A&E Centre) in Bangalore, is said to be mulling an additional centre at its Ghaziabad site near Delhi.

Projects such as the A&E Centre, which was set up during the early part of 2009 by Boeing, is said to benefit industry partners while providing an environment for exploring collaborative projects between domestic and foreign companies to work in practice and build on the Boeing experience with defence experimentation best practice in other countries.


Boeing India’s A&E Centre in Bangalore is the third one outside the US, with the other two in Australia and United Kingdom. The centre allows its customers the opportunity to explore options for future systems in a virtual environment. While using the analysis and experimentation methods, the collaborative approach supports the defence forces in the US, the UK and Australia.

The centre is staffed with Indian ex-military operations analysts and, modelling and simulation engineers. Comprising of reconfigurable laboratories and visualisation space, the centre draws on the experience from other nations where experimentation is a part of defence planning and equipment acquisition. Boeing will also transfer a number of mature A&E tools that are not commercially available anywhere else.

“The tools will be made available for use by the Indian defence customer and our local partners,” said Dinesh A Keskar, president, Boeing India, adding “this would also allow us to integrate locally-developed intellectual property with these established tools.”

Boeing is working with the defence community to identify key capability challenges, and the local Boeing team will conduct analyses and warfighting experiments. The process will see frequent interactions with the defence customer to ensure the right experimental questions are developed and, right tools and techniques are used to address the questions.

“The process encourages participation in experiments by experienced serving personnel. This ensures that the experimentation environment is for purpose and exposes service personnel to future systems options. The opinions of these personnel can then be fed back to the operational community to improve current and future warfighting capability and concepts,” said an official from Boeing.
arun
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Re: Military Acquisitions, Partnerships & Developments

Post by arun »

X Posted.

Sail Training Ship INS Sudarshini inducted:

INS Sudarshini inducted into Navy
VinodTK
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Re: Military Acquisitions, Partnerships & Developments

Post by VinodTK »

B/E Aerospace opens engineering services division in Hyderabad
Hyderabad, Feb. 29:

Hyderabad's potential to emerge as an aerospace hub got a boost with B/E Aerospace, a world leader in manufacture of aircraft cabin interior products, announcing the opening of its Engineering Services Division here.

The Nasdaq listed company is also a leading distributor of aerospace fasteners and consumables with $2.5 billion in revenues.

According to a company press release, the facility was formally inaugurated by Mr Paul Mueller, In-charge of Business and Economic Portfolio for the US Consulate. Mr Wayne Exton, Vice President- Business Jet Segment, B/E Aerospace, senior executives of the company and officials were present.
The products

B/E Aerospace designs, develops and manufactures a broad range of products for both commercial aircraft and business jets. The company manufactured products include aircraft cabin seating, lighting, oxygen, and food and beverage preparation and storage equipment.

In the cabin interior design, reconfiguration and passenger-to-freighter conversion services are its expertise. Products for the existing aircraft fleet – the aftermarket – generate approximately 50 percent of its sales, the release added.
Emerging hub

Interestingly the development comes close to the 3{+r}{+d} edition of India Aviation, a major aviation show that is lined up in Hyderabad during March 14-18, where most of the global civilian, defence, aerospace companies are expected to participate in a big way.

A number of big players in the aerospace industry from the US, the UK and Israel have been involved with both the public sector and small and medium enterprises in an around Hyderabad, which have expertise in the sector.

The presence of the large defence sector, civil aviation, airport infrastructure, training facilities and industry has positioned Hyderabad as an attractive destination for the aerospace sector. The Tata-Sikorsky joint venture has already started producing helicopter cabins.
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Re: Military Acquisitions, Partnerships & Developments

Post by Nikhil T »

Defence ministry asks armed forces to prioritize purchases
NEW DELHI: Days of frenzied defence purchases by India may be over, at least for the immediate future.

According to sources, the committed liabilities -- money to be paid for contracts already signed -- of the Indian defence budget has reached almost 65-70% of the total capital outlay. As a result, the defence ministry has told the armed forces to "prioritize" their purchases.

India has been among the world's biggest defence buyers for the past many years, thanks to the regular hike in defence budgets and efforts to make up for the 'lost decade' of the 1990s, when defence modernization had come to a virtual standstill. Since the Kargil conflict of 1999, the military stepped up its shopping spree in the international market. Between 2006 and 2010, India bought 9% of all arms imported in the world, emerging as the largest weapon importer ahead of China.

However, serious financial issues have now cropped up to slow down this spending spree, say sources. An official pointed out that India's committed liabilities for purchases made in recent years is now hovering around 65-70% of the total capital outlay. Last year, the total capital outlay for the three services was Rs 69,198.81 crore. The total defence budget, which also includes revenue allocation, was Rs 1,64,415.49 crore.

Government sources said MoD has told the Army, Navy and IAF to "prioritize" their purchases. Instead of the frenzied push for every purchase, the three services will have to clearly prioritize what they want urgently, an official said. "The MoD has been telling them about the need to prioritize for some time," he said.

Officials said this also would call for taking a relook at future projections. "We will have to think of them, and rationalize so that we are able to buy them within the allocations," the official said.

Sources said the sudden induction of new systems could also cause trouble to the budget balance, especially between the capital and revenue outlay. They pointed out that the new inductions mean they would require higher revenue allocation for maintaining the systems.

The sobering realization comes at a time when the government has already moved to cut the defence budget by a few thousand crores to meet the rising fiscal deficit challenges. The unusual move to cut defence budget during a financial year will only further slow down military purchases.

Indications are that the defence budget for the coming year would rise by about 10% from the allocation for 2011-12, while the capital outlay would rise by about 15%. Other than catering for inflation, the hike would mean no significant increase. "So we may have at best about 35% of the capital budget for new purchases," a source said.

This situation has arisen because of major purchases, mostly by the Navy and the IAF, in recent years. The two forces, and the Army to a minor extent, have undertaken major purchases of ships, aircraft, helicopters, missiles and other systems.
So the next defence budget would be ~184,300 cr with ~80,000 cr for Capital Expenditure.
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Re: Military Acquisitions, Partnerships & Developments

Post by Vipul »

So financial issues crop up because Defence forces are spending allocated funds on the much required acquisitions and not due to the vote buying wasteful schemes of the Govt?
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Re: Military Acquisitions, Partnerships & Developments

Post by Indranil »

^^^
while(1) like++;
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Post by kit »

At a time when India becomes more coy about its arms purchases .,

http://www.reuters.com/article/2012/03/ ... 2O20120304


China will boost military spending by 11.2 percent this year, the government said on Sunday, unveiling Beijing's first defense budget since President Barack Obama launched a "pivot" to reinforce U.S. influence across the Asia-Pacific.

(Reuters)
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Re: Military Acquisitions, Partnerships & Developments

Post by Kersi D »

Nikhil T wrote:Defence ministry asks armed forces to prioritize purchases

NEW DELHI: Days of frenzied defence purchases by India may be over, at least for the immediate future.

According to sources, the committed liabilities -- money to be paid for contracts already signed -- of the Indian defence budget has reached almost 65-70% of the total capital outlay. As a result, the defence ministry has told the armed forces to "prioritize" their purchases.

India has been among the world's biggest defence buyers for the past many years, thanks to the regular hike in defence budgets and efforts to make up for the 'lost decade' of the 1990s, when defence modernization had come to a virtual standstill. Since the Kargil conflict of 1999, the military stepped up its shopping spree in the international market. Between 2006 and 2010, India bought 9% of all arms imported in the world, emerging as the largest weapon importer ahead of China.

However, serious financial issues have now cropped up to slow down this spending spree, say sources. An official pointed out that India's committed liabilities for purchases made in recent years is now hovering around 65-70% of the total capital outlay. Last year, the total capital outlay for the three services was Rs 69,198.81 crore. The total defence budget, which also includes revenue allocation, was Rs 1,64,415.49 crore.

Government sources said MoD has told the Army, Navy and IAF to "prioritize" their purchases. Instead of the frenzied push for every purchase, the three services will have to clearly prioritize what they want urgently, an official said. "The MoD has been telling them about the need to prioritize for some time," he said.

Officials said this also would call for taking a relook at future projections. "We will have to think of them, and rationalize so that we are able to buy them within the allocations," the official said.

Sources said the sudden induction of new systems could also cause trouble to the budget balance, especially between the capital and revenue outlay. They pointed out that the new inductions mean they would require higher revenue allocation for maintaining the systems.

The sobering realization comes at a time when the government has already moved to cut the defence budget by a few thousand crores to meet the rising fiscal deficit challenges. The unusual move to cut defence budget during a financial year will only further slow down military purchases.

Indications are that the defence budget for the coming year would rise by about 10% from the allocation for 2011-12, while the capital outlay would rise by about 15%. Other than catering for inflation, the hike would mean no significant increase. "So we may have at best about 35% of the capital budget for new purchases," a source said.

This situation has arisen because of major purchases, mostly by the Navy and the IAF, in recent years. The two forces, and the Army to a minor extent, have undertaken major purchases of ships, aircraft, helicopters, missiles and other systems.
So the armed forces should cut down on their requirement of heavy lift helicopters, attack helicopters, light helicopters, ASW helicopters etc.

Only the important deals like VVIP transport helicopters should go through.

MERA BHARAT MAHA MAHAN
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Re: Military Acquisitions, Partnerships & Developments

Post by Nikhil T »

...And now its implemented :evil:

Govt's ban on new defence deals till Mar 31
NEW DELHI: The government has enforced a ban on new defence purchases till March 31. The decision has been prompted by severe fiscal deficit challenges, and to safeguard against the usual haste in clearing major defence deals before the financial year draws to a close.

According to a senior source, the move is part of the finance ministry efforts to "conserve" as much government finance as possible in the last lap of 2011-12 in the face of severe shortages in government collections from sources such as taxes and divestment.

Though it is not clear how many deals have been directly hit by the ban, some big ticket purchases from all the three services are in the final stages of approval. For instance, the IAF deal for basic trainer jets is worth over $1 billion, the Army's wish-list for Ultra Light Howitzers from the US is pegged at over $1 billion coupled the plan to purchase Light Utility Helicopters for the Army.

Source said that the MoD had spent about 66% of the total capital budget outlay in this fiscal's first three quarters. "It was better than usual performances," the source said.

The ban is to be seen in the light of the finance ministry's decision to cut the defence budget by a few thousand crores. Be that as it may, it is an unusual step since government usually spends maximum on defence capital outlay in last quarter.

The overall defence spending scenario is also facing long-term pressures. According to the latest estimates by the MoD, almost 70% of the capital outlay is committed for signed contracts. The MoD has instructed the three services to prioritize their purchases since the committed liabilities would have to be persisted with for a few more years.

India's total budget is around $32 billion, and of this the new purchases accounted for $13.8 billion this fiscal. On the contrary, China's defence budget has crossed $100 billion.

The ministry is expecting about 10% overall hike in the defence budget, and a 15% spurt in capital outlay.
Every year the Finance Minister in his budget speech says ".. Needless to say if more funds are required for defence, they will be provided". Forget more funds, they are cutting existing funds - that too unilaterally. Utterly ridiculous.
Vipul
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Re: Military Acquisitions, Partnerships & Developments

Post by Vipul »

Defence cash to FM's deficit rescue.

As in the past, the armed forces have been asked to surrender around Rs 4,000 crore ahead of the Budget.

Normally, this is the amount not spent from the capital account, usually from the army. Former defence secretary Ajay Prasad said: “In my time, around this time of the year, I used to get a call from the finance minister, saying, ‘we want Rs 5,000 crore’.” In the past decade, about Rs 45,000 crore has been returned, either because it was unused or since the government needed the money to balance its books. (The Bloody B******S) :x

Instructions have been given not to conclude any contracts before March 31. The affected projects are the Medium Multi-Role Combat Aircraft, basic trainer aircraft Pilatus and possibly the Multi-Role Tanker Transport aircraft. In the case of the army, it is the American light howitzer gun, the light helicopter and smaller projects.

The armed forces have long complained that this practice of taking back unspent money to balance the finance ministry’s books makes nonsense of procurement plans with long gestation periods. The surrender amounts to roughly Rs 3,000 crore from the army and Rs 1,300 crore from the air force.

Senior sources in the army and air force, however, denied any funds were being surrendered. The army says it has readjusted the unspent amount, partly through the capital component under the revenue head of ‘war stores’. The navy seems to have managed to balance its books by December 2011.

Highlighting the need for funds, the army made a presentation to defence minister A K Antony last month, indicating the ‘hollowness in critical fighting equipment’ such as shortages in war wastage rate of ammunition, thermal imaging equipment in the T72 and T90 battle tanks, no purchases of air defence systems or artillery and slow modernisation of the infantry.
Cain Marko
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Re: Military Acquisitions, Partnerships & Developments

Post by Cain Marko »

^ Well if instructions are to wait only till the end of March, and since a new budget will be forthcoming thereafter - shouldn't new monies be assigned for purchases after March?. IOWs, purchases should not really be affected.
keshavchandra
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Re: Military Acquisitions, Partnerships & Developments

Post by keshavchandra »

Ban on new defence deals till Mar 31

The decision has been prompted by severe fiscal deficit challenges, and to safeguard against the usual haste in clearing major defence deals before the financial year draws to a close.

Though it is not clear how many deals have been directly hit by the ban, some big ticket purchases from all the three services are in the final stages of approval. For instance, the IAF deal for basic trainer jets is worth over $1 billion, the Army's wish-list for Ultra Light Howitzers from the US is pegged at over $1 billion coupled the plan to purchase Light Utility Helicopters for the Army.

The overall defence spending scenario is also facing long-term pressures. According to the latest estimates by the MoD, almost 70% of the capital outlay is committed for signed contracts. The MoD has instructed the three services to prioritize their purchases since the committed liabilities would have to be persisted with for a few more years.....
Difficult situation... :-?
Singha
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Re: Military Acquisitions, Partnerships & Developments

Post by Singha »

in real terms I dont think any new deal was on verge of being signed this month. the pilatus PC7 is the only one deferred because the Govt needs more money to boil sickular herbs and convert into gold, er votes.

but the last line is ominious, predicting that tight money until 2014 elections to paper over the economic mismanagement. this *could* affect the rafale deal.
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Re: Military Acquisitions, Partnerships & Developments

Post by Kailash »

Indian Rotocraft starts work on chopper production facility
Adding another feather to the city’s emerging aerospace market, Indian Rotocraft, a joint venture of the Tata Sons and Augusta Westland, has decided to set up facility that will assemble, customise and flight-test helicopters for worldwide markets near the Rajiv Gandhi International airport here.

To be located on a 10-acre site adjacent to the international airport, the new facility will include a 9,000 sq ft building incorporating the main assembly building, flight hangar and office accommodation besides several chopper landing pads outside. The joint venture, with a capacity of 30 units a year, will initially start producing the 8-seat AW119Ke light helicopter with production expected to commence from mid next year.

The facility has been designed to enable further development for other types of choppers right up to the 16-tonne AW 101. The ground breaking ceremony marking the commencement of construction was performed in the presence of Tata Sons chairman Ratan N. Tata, Augusta Westland CEO Bruno Spagnolini group and others here on Wednesday.
Nikhil T
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Re: Military Acquisitions, Partnerships & Developments

Post by Nikhil T »

193,000 crore for defence budget. Includes 79,500 crore for capital spending.

So about 17.5% growth overall, 15% growth in capital spending.
Will
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Re: Military Acquisitions, Partnerships & Developments

Post by Will »

How much is that in dollar terms?
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Re: Military Acquisitions, Partnerships & Developments

Post by Singha »

a rough rule of thumb is 5000cr = $1billion.
so 80,000cr = $16b capex. rest would be opex , R&D etc.

smells like the first few EMIs on Rafale would be covered :mrgreen:
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Re: Military Acquisitions, Partnerships & Developments

Post by Austin »

So Defence budget is ~ $39 billion and capex at $16 billion , quite nice provided they can spend that and dont return it back , time for MOD to start preparing its purchase list.
Nikhil T
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Re: Military Acquisitions, Partnerships & Developments

Post by Nikhil T »

Austin wrote:So Defence budget is ~ $39 billion and capex at $16 billion , quite nice provided they can spend that and dont return it back , time for MOD to start preparing its purchase list.
Here are a few numbers I ran. For capital, we need to consider change in exchange rates. The USD a year back was 45.16, today its 50.21. In dollar terms, the raise may be negligible, would just account for global inflation.

Secondly, it would be interesting to find reasons for the ~30,000cr change in revenue expenditure.
Image
Nikhil T
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Re: Military Acquisitions, Partnerships & Developments

Post by Nikhil T »

If anyone is interested in interpreting numbers,
1. Budget documents for MoD are here.
2. Capital outlay details

--
One very interesting statistic - MoD actually overspent its budget last year. As opposed to budget of 164,400 cr, MoD spend 170,930 crore even though capital spending was lower by 3000 crore. Revenue expenditure overshot by 9000 crores.
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Re: Military Acquisitions, Partnerships & Developments

Post by alexis »

Nikhil T wrote:If anyone is interested in interpreting numbers,
1. Budget documents for MoD are here.
2. Capital outlay details

--
One very interesting statistic - MoD actually overspent its budget last year. As opposed to budget of 164,400 cr, MoD spend 170,930 crore even though capital spending was lower by 3000 crore. Revenue expenditure overshot by 9000 crores.
If this the case, then finance ministry was right in asking for the surrender of Rs.4,000 crore. Defmin should have kept to the budget atleast in opex. Capex can vary depending on the dealflow.

AKA need to congratulated in one aspect atleast - one of the few times any defense minister was able to spend more than budgeted!
member_20317
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Re: Military Acquisitions, Partnerships & Developments

Post by member_20317 »

Nikhil T wrote:If anyone is interested in interpreting numbers,
1. Budget documents for MoD are here.
2. Capital outlay details

--
One very interesting statistic - MoD actually overspent its budget last year. As opposed to budget of 164,400 cr, MoD spend 170,930 crore even though capital spending was lower by 3000 crore. Revenue expenditure overshot by 9000 crores.
Thanks for the links Nikhil ji,

The Capital budget for Rashtriya Rifles seems good. Some here can rejoice.

WTH is Special projects. Does anybody know?

And why are all the figs in Non-Plan column?
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Re: Military Acquisitions, Partnerships & Developments

Post by keshavchandra »

But two major worries remain.....
One, India’s budgeted defence expenditure still remains just 1.9% of the projected GDP for 2012-13, much less than the 3% being demanded by the armed forces and strategic experts for several years to effectively deter both China and Pakistan. An assertive China, for instance, recently hiked its official defence budget to over $100 billion.

Two, the revenue expenditure (day-to-day costs and salaries) pegged at Rs 1,13,829 crore for the coming fiscal continues to far outstrip the capital one for new weapons, sensors and platforms at Rs 79,579 crore. There is simply no indication the much-touted aim to “transform” the military into a lean, mean fighting machine is anywhere on the horizon..... :|
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