Narendra Modi vs the Dynasty: Contrasting Ideas of India

Victor · Post by **Victor** » 03 Jun 2014 22:52

If a foreign company manufactures its guns in India, it is by no means a given that it will be allowed to buy out competing Indian companies, specially ones that have developed their own IP and more specially, done so with government help. Even if the owners of such companies want to sell to foreign companies, they can and will be restricted from doing so by the government, specially a strong government. That is true in any country and the line of argument is a red herring. Simply can't and won't happen, period.

Defense business is one of the most lucrative businesses and it is absurd to think that a so-called business-friendly Indian government will hand it over only to foreigners on a first-come-first-serve basis. The FDI rules are designed to encourage foreign companies to set up manufacturing based on technologies that we have no or little background or expertise in and that are needed in a hurry. The more we need it and the less capability we have in it, the more the FDI allowed. Not everything can wait to be developed in house and some of these are needed urgently, ie. right now, not in 3 or 5 years. Only a convoluted and deeply flawed leap of logic would end up assuming that Indian companies will never develop jet engines or other high tech stuff. This has not happened with cars, phones, electronics, motorbikes, corn flakes or disposable diapers and there is absolutely no reason to expect it to happen with defense stuff. It is almost certain that Indian companies will INCREASE their involvement with defense production and research once the government gets it act together and the roadmaps are clear.

Nothing in Modi's past shows anything but the most nationalistic of intentions and it is plain silly to think that anything as serious and important as defense will get done without his full say-so. Further, it is utterly foolish to assume that the new government is full of idiots ready to jump into the unknown without enough knowledge. It is very probable that the BJP and Modi have been talking with the right people say from Israel, UK and France for years and know exactly what needs to be done without bartering away India's independence or options. If it comes to listening to Modi or the loony far right, I would choose Modi every time with eyes closed.

India will definitely be a net gainer from increased FDI in defense and the only ones who will definitely lose are those who thrive on sycophancy, corruption and government subsidies with zero culpability and answerability. The same folks who have done nothing in the way of defense development and are entirely responsible for the outrageous situation where a nation of over 1 billion still imports infantry guns, bullets and trainer aircraft after 75 years of independence. It is the definition of insanity to keep doing over and over again something which has not worked. We already know that it is not the capability of Indians that is to blame. So enough is enough and its time to finish off these wasteful black holes forever. We need to divorce the terms "Indian" and "PSU" and enter the bright new world of non-centralized manufacturing. Indians are far more adapted to that model and are more than capable and ready to face any competition.

member_20317 · Post by **member_20317** » 03 Jun 2014 22:55

Part of the trouble is that people in the NaMo admin are just doing a trial ballooning. Where is the black and white draft for 100%. Right now 26% is with Prior government approval route and "beyond that" (perhaps right upto 100%, going by the item 6.2.6 page 45 of the attached file http://dipp.nic.in/English/Policies/FDI ... r_2014.pdf) there is still investment allowed but with approval but of different kind of approval bodies (Dept of defence production then Cabinet Committee on Security nailing the 'state of art'). Thus all approving bodies have defence ministry people or others from the security establishment. So unless it is about total giving up of approval route or introducing some entirely new brainwave, what really are we talking about?

IOW the earlier policy provided for 'control' to remain Indian even though Beyond 26% could conceivably be done - taking out the operational control too. The new policy (right now only a cabinet note) would be dangerous if it dilutes controls whatever be the upper/lower limit of ownership.

KaranM ji you have highlighted at multiple places how other countries 'Control' their structures while allowing for whatever level of 'Ownership' they deem fit. So long as we tie up Ownership with Control without a fuller narration and acceptance of the systemic structures that develop to manage it, we will end up with a simple answer of 'no'.

Frankly just as the FDI is an alternative to outright Imports so it is the other way round. Hence I am not too greatly invested in a Yes vote. Hell if you fear the Amerikhan control over LCA engines, then you overstock it. Make plans for alternatives. My pet fantasy is to overstock LCA engines and Agat seekers.

What I fail to understand is that nobody really is interested in investing even now so why the resistance/enthusiasm. Knowing that it is already allowed but not preferred as an entry route. You could claim that "4.1.3 Guidelines for calculation of total foreign investment i.e. direct and indirect foreign investment in an Indian company" (page 15) is sacroscant hence upper limit is capped below 49%, but then there already is a breach of the sectoral cap allowed provided it is for "state of art".

I see this as a measure to counter Imports+Touts which frustrate our indigenous capacity building. With GoI proposal, we get Capacities under Indian jurisdication+Touts. Eventually having even touts out of the way as the industry matures. Touts are only a function of absent industry and have the negative feedback to the system in that they kill the indigenous industry. Without doing this FDI route, we will be stuck forever with Imports+Touts while the Indian PSUs and research establishments will try all out to simply hog items of production to counter the Import lobby (for which I don't fault the Indian PSUs but still it is quite annoying/frustrating).

For example while I am all for LCA, I am not happy with having to trail on the IJT front (This is not about HAL - let HAL have extra money for LCA but get them out of IJT) and let others handle IJT. The budget is a good 100 billion USD in next 10 years so there is enough room for every body and everything. Nobody is going to give you anything beyond the 300 km 300 kg missile which per force has to be made in-house. At least then let foreigners make lesser then that and you concentrate on more then that. Or better still (though costlier) let both survive and maintain PSU capacity for the emergency situations. The IPRs are normally meant to restrict unwarranted use but suitable freedoms should be capable of being contracted for (I have not worked on IPR related contracts, so I am open on this).

Presently too we have so called tech transfers and our resources get stuck in screw driver giri. By freeing up resources of PSU we can have some real brain work going over there too.

I just wish NaMo takes his own decision without consulting the Kongis even though making some space for the opposition to keep tabs to hedge for unforeseen threats in future.

member_20317 · Post by **member_20317** » 03 Jun 2014 23:15

Basically I look at it as a Capital Allocation problem. While you look at it was a danger to new Indian research. I think I get it.

But I will nonetheless allow my post to remain there considering I wasted so much of my time on it. Thoda aapka time bhi khoti karna chahiye

.

JE Menon · Post by **JE Menon** » 04 Jun 2014 00:18

matrimc wrote:RM ji, can you touch your ideas on Education in India, the current state of affairs, what has gone wrong (if in fact something has gone wrong), and how to fix it. This would be for across the board primary, secondary, high school and higher education including professional/technical education. Where does vocational training fit in and how to move people from unskilled agri and construction sectors to semi-skilled or skilled manufacturing jobs and how to create those jobs - not just IT and service sector (banking, insurance, travel, entertainment) jobs?

Tomorrow or some other day in the near future would be fine along with pointers to your FB (provided mods do not have a problem with the same).

Sorry, not on this thread.

@Rahul Mehta - didn't we create a special thread for you sometime back? Please go and find it, and post all you want there. People who are interested in your ideas can read them all there and respond. Archan has made admin views clear on FB links etc.

Vayutuvan · Post by **Vayutuvan** » 04 Jun 2014 01:47

JEM, OK. Is he allowed to express these views on Indian education thread or in his own thread?

---
RM ji, can you do that on a thread where you can express these views or a pointer in Indian education thread? Speaking for myself , I am curious to know how one who had gone through IIT system, worked in India - I hope you did that for a major part of your professional life, having studied and worked in US a plus) and is right of the center would handle this as opposed to what had been done during the left of the center policies in education sector in the last 50-60 years by the Congress party.

krisna · Post by **krisna** » 04 Jun 2014 02:49

About 100% FDI proposals from NaMo govt-

At present India imports over 70% of its defence requirements.
The defence budget covers mostly the salaries and pension sof its personnel.
R&D funds is inadequate.
There is a strong lobby within the establishment for corruption. foreign defence equipemnt brings in lots of influence and kickbacks amongst the various middle men.
There is less effort at indigenous production due to the above.

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100% FDI in defence can circumvent some of these-actually there are 4 types -26% 49% 74%? and 100% decided case by case basis. It is not flat 100% on all.
Bringing in technology will give higher %age of control by the foreign company inside the country but subject to national laws.

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some argue- foreign companies will hold back technology--> currently the same holds true with a gun to our head in case of war or problems with western world.
At least with new proprosals, the existing foreign vendors will be under tremendous pressure to side with the GOI in case of war as repercussions will be severe as their investments will be sunk in India.
Also local personnel will be involved in doing some work----> far far better than importing stuff from foreign countries.(huge risk in war)
Employment generator---> India has a large pool of talented people who will go to these companies in India rather than working for forein companies outside India. (I know many Indians working for companies like Raytheon, my distant uncle (old IITian) works for Lockheed Martin etc).
salaries will increase for these people.-->some will start their own enterprises.

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people will always argue bringing in foreign compoetiton will destroy local Indian manufacturers.
before during Nehru-IG times there were hardly any foreign companies. later many entered- some Indian companies clsoed down but new ones took over. still many foreign companies are not monopolising the Indian market entirely.

I am sure with adequate safeguards for the local Indian manufacturers, this will work.

JMTs.

Sanju · Post by **Sanju** » 04 Jun 2014 03:43

Nice post Krisna!

Rahul M · Post by **Rahul M** » 04 Jun 2014 04:03

karan, I feel there are enough safeguards for the 100% FDI proposal. permission is by no means automatic.

putnanja · Post by **putnanja** » 04 Jun 2014 04:08

FDI in defence: Investment of up to 49% may be allowed without tech transfer

SaiK · Post by **SaiK** » 04 Jun 2014 05:16

do we have a list of objectives with respect to FDI? this FDI chillaoing is going on too much without attention to details? feed me specific details to what exactly we want, and who is ready to supply at what cost and agreements?

Lilo · Post by **Lilo** » 04 Jun 2014 05:34

Indian MIC must stay quarantined from Western MIC.
If Western MIC gets networked into Indian defence supply market while located in India and operating in close proximity to Indian MIC , its agents will only be scuttling all indigenous initiatives in strategic Defence sectors with exponentially growing vigor.

So either Western MIC setup "strictly for export" fullyowned firms geared towards global markets - or they dont setup fullyowned defence firms in India -and remain satisfied with owning nominal minority stakes in Indian firms.

*MIC = Military Industrial Complex.

Rahul Mehta · Post by **Rahul Mehta** » 04 Jun 2014 06:22

1. About NaMo's recent SIT on black money

First let me state a basic fact ---- tax benefits to A is loot on B. Every person, company etc who works in India is using Indian police, courts, military, roads etc and all that comes from tax money. Now if B has to pay say 30% of his incomes as taxes as A has to pay say only 10% of his income as taxes, Now if same tax rate was applied on BOTH, then B would have had to pay say say 5% less tax.. IOW, the tax benefits given to A is just a loot on B.

Now let me explain what Mauritius route is and how it damages tax paying Indians. The treaty was drafted in 1982, but came into actual effect only in 1992 under PVNR\MMS time. The treaty says --- if a company with postal address in Mauritius, invests dollars in Indian share market , and all its short term capital gains of 35% will be waived i.e. that company only has to pay 3% tax in Mauritius. Please note --- this tax exemption is just a clever way of saying that Mauritius company will not pay taxes, and instead Indians will have to pay HIGHER taxes because someone has to bear all the costs eventually.

Now what if an Indian opens company in Mauritius and invests via Mauritius and pays only 3% tax and save rest 32%? Why doenst everyone do it? Because if Indian citizen declares that he has foreign company, then he has to pay ( 35% - tax paid to that local govt) tax in India on his profits made abroad. So he has to pay 3% tax in Mauritius and then 32% in India, and thus he makes no gains, and plus faces 10s of hassles. Unless, that Indian citizen makes company in Mauritius and hides it from Govt of India, in which case it is illegal and he may also face imprisonment.

So now there are two types of companies in Mauritius who invest in India

1. Companies owned by Rothschilde , Rockefellar etc i.e. USUK elitemen.
2. Companies owned by Indians and not disclosed to Govt of India

NaMo's SIT is focusing ONLY on (2) and it looks like NaMo want to continue (1) on and on !! IOW, NaMo is only "judiciously" implementing the policy that "gora will pay no tax , Indians must pay all taxes" !! NaMo is NOT making a policy of "all , be gora or Indian, must pay same tax rate" , which is what we see in USA.. In USA, tax rate on foreign company is same is local companies.

So NMo's tirade of bring black money back effectively focus ONLY on those Indians who evaded taxes using Mauritius route. The foreigners who didnt pay tax in past cant be prosecuted legally anyway. But the loot via tax exemption can be stopped TODAY within 1 day by issuing Ordinance to cancel Mauritius route and stop all nefarious tax exemptions that foreigners and Indians get , legally or illegally. But NaMo has refused to issue ordinance to cancel Mauritius route, and confines ONLY to tracking Indians who have misused this treaty.

I will later post solutions in my SMS thread.

====

2. Nripendra Mishra's appointment raises concern on who now the real boss in PMO is

An old modus operandi of elitemen goes as follow --- when an elitemen like Mukeshbhai Ambani makes an MP a Minister, then Mukeshbhai decides who his PA , PS etc will be. This is necessary for Mukeshbhai. Using his Ministers' staff, he can know what his appointee Minister is doing. Thats how world has been going on for past 5000 years.

Now Nripendra Mishra is supposed to be an IMF man. So did IMF etc dictated that Nripendra Mishra should be Principal Secretary? Because his becoming Princiipal Secretary is very dramatic and fast.

Now if the decision to appoint Mishra is of BJP or RSS or NaMo, then all is well. But if IMF is behind such dramatic and fast appointment of Mishra as Principal Secretary, then something is unwell. And lets see Mishra's appointment in conjunction with how rapdily PMO moved to satisfy foreign elitemen's demand to allow FDI in defence and newspapers. IMO, all is unwell in PMO. We make be back to PVNR days when IMF etc decided all Indian policies. In jun-2013 in my video, I had said that "MNC-owners using paidmedia and AK will corner and force NaMo\BJP to accept all MNC-owners' conditions". That could have have happened.

RamaY · Post by **RamaY** » 04 Jun 2014 06:59

^RM ji

Prof R Vaidyanatha on NDTV explained four types of Blackmoney

1. Tax evasion within India, money stayed on India
2. Blackmoney kept in tax havens abroad by businesses, saying they will spend there but aren't.
3. Blackmoney kept abroad by individuals such as politicians, businessmen, actors, media persons etc.,
4. Money earned from illegal activities (such as drugs, human trafficking etc.,)

The SIT is asked to cover all these areas and identify people, routes/methods used to funny money in/out of nation etc.,

You are trying to confuse people as if Modi is behind only one type of Blackmoney.

He is pushing for all your pet topics but thru different method (no talatis) but intent and objective is same.

Are you afraid that Modi is taking your platform away from you?

devesh · Post by **devesh** » 04 Jun 2014 07:56

either way, the 100% FDI cannot be allowed at once.

gradual increases are better: it's a nice carrot to dangle. if you give it all at once, what leverage do you have for future.

when finance/profits are involved, the Western Mil-ind complex is like the dog frothing at the mouth hungry to jump on any bone that is thrown.

it should be gradual piece-meal increases over a period of 10 years. keep dangling that carrot.

SaiK · Post by **SaiK** » 04 Jun 2014 08:24

huh! one of the biggest source of black money is cooly let off! eh~~~~ yama ji?

Real Estates!

====

i think this is clinical
http://www.firstpost.com/politics/death ... 55599.html

Vayutuvan · Post by **Vayutuvan** » 04 Jun 2014 09:19

Lilo wrote:So either Western MIC setup "strictly for export" fullyowned firms geared towards global markets - or they dont setup fullyowned defence firms in India -and remain satisfied with owning nominal minority stakes in Indian firms.

Lilo: Shouldn't just minority stakes (< 50.0 %) be enough? By "nominal" you mean less than 10%? or is the worry that directors can be bought off to vote for Western interest? In any case, there is no way around but develop own technology and have IPR unambiguously in the hands of Indian entities. ITAR is a big hurdle and would be used to push their (w. MICs') own agendas which usually are against Indian interests.

Karan M · Post by **Karan M** » 04 Jun 2014 11:05

Supratik wrote:@karanM

From your long rants what I could gather is that your main concern is that foreign companies will buy up small Indian companies and acquire the indigenous tech which if used in any equipment supplied to Indian armed forces could come under sanctions from the parent country of the MNC. I think this is largely convoluted logic.

From the fact that you think what I posted is a rant, it shows your complete ignorance of the sphere.

Clearly, you don't have the first idea of what has happened in the past and what Indian firms attempting to acquire technology - both private and public continue to face, otherwise you would understand how disastrous this move can be.

Before dismissing other folks considered opinion as rants, be a little less sanguine about your own knowledge and research a bit.

First, companies which work in the same space as many Indian SMEs do, have acquisition warchests which dwarf the entire projected revenue stream of Indian companies many times over. They can merely walk over and purchase entire firms lock stock and barrel.

The end result of such acquisitions is that these firms entire domain experience (and past project history) is known to the acquirer - including details of such items like what frequency certain electronic items developed were working on, their critical firmware and higher software details - anything and everything.

More importantly, given the limited investments India has seen, we only have a limited number of firms, each working in a critical area. Even one or two of those firms disappearing from the vendor list will have a huge impact on our programs, starting from our strategic programs (which depend on these SMEs for a range of manufactured, build to print and even customized designs - DRDO ends up hand holding these firms for the first few designs).

Second - since you have no idea of what has happened in the past, several of these small firms were tapped and acquired since they were working on several kinds of programs not just defence and there was no monitoring agency. The end result - sanctions on the entire Indian MIC, meant these firms no longer work with Indian Govt. Tomorrow, much the same may result. Right now, the entire Indian SME structure protects us from sanctions, making sanction weak and ineffective. The asinine 100% FDI proposal weakens this ecosystem and makes it irrelevant.

In short, twenty years of effort down the tubes.

I think a Ajai Shukla may be a defense analyst but has no idea how tech infusion happens. The R&D products of foreign MNCs operating in India are their IPR products. It is upto them how and where they want to use it. If the IPR enters a product that they think they can sell to India then they will do it.

You write such stuff and then go on to claim Ajai Shukla has no idea of what he is talking about.

In contrast he makes the exact point that IPR developed even by Indian operations of the foreign national owned companies, belongs to that company and can only be sold back to India on that companies choice- and whether it chooses to go with its parent nations laws such as ITAR. Which makes the entire point of subsidizing a 100 such fully owned subsidiaries moot, since its benefits to India are limited overall. Similarly, he also notes how stringent laws force foreign firms to work with Indian firms (to the latters benefit) as is evident from the L&T case, whereas you ignore this point completely.

Its not he who is wrong, in this case, its you who can't even understand the topic.

However, it creates a eco system largely manned by Indians who run these things and then many of them go on to create their own companies.

More vacuous stuff based on theory completely ignoring the practise.

For your kind information, go on and show me a dozen firms started by the proteges of the defence software/MNC Aero firms in the South. In contrast, I can point out a dozen firms started by the proteges of the Defence PSU cluster. The difference is stark. The former work on limited products customized for specific applications decided by their parent firm.

The latter have cut their teeth on state of the art, much more complex programs being run out of the DRDO/DPSU combine and have their firms which work on critical programs in areas which dwarf even the DPSU combines themselves which are addicted to TOT and build to print.

It is these small firms which are liable to be picked up, because instead of supporting them with incentives, tax breaks and R&D sponsorship, the idea is to merely use FDI to make things better.

Science and technology doesn't progress very well in isolation unless it is unaviodable e.g. strategic defense systems.

Once again, completely wrong and makes me wonder as to how you write such stuff and expect people to buy into it whilst arrogantly dismissing anything out of your ken as a rant.

Strategic defense systems being developed by India today are JOINED AT THE HIP with tactical programs. Systems and capabilities being developed for one system are reused for the other. People move, experience moves, subsystems are reused, vendor lists are common.

This SYNERGY is what allows Indian developers to rapidly develop follow on programs after painstaking efforts in the first program which is usually delayed having to develop everything from scratch, including developing SME cluster who will build niche, low volume, yet critical items that a larger DPSU will refuse to touch, citing financial implications. Both DPSUs and SMEs are hence working together for different parts of the pie.

The Akash program's entire C3I was used for the Brahmos - integrated and made by a DPSU with a SME supplying core compute. The Brahmos's fire control system and TEL were adopted from the work done on the Prithvi, which was India's first strategic missile till the Agni matured. Supplied by a SME and a DPSU.

The radar technology being used for our STRATEGIC program i.e. the BMD system were matured via the Akash program, which saw a bunch of people exposed to ESA technology for the first time, allowing them to then develop a Greenpine variant for a local system. That radar BTW uses components from SMEs which supply to the tactical programs being run by DRDO, on the basis of which they developed these capabilities. Integration is done by a DPSU which makes other items.

Regarding your concern about tech being bought over and then denied this can be addressed by passing appropriate IPR laws related to defense R&D and export control laws, etc.

More hand waving at airy fairy laws, because the entire facade of export control laws and this and that has not worked at all within India, and even the Defence Offsets Management organization has been still born and has not managed to work out significant loopholes in how tech transfer was fraudulently accounted for.

The history of tech transfer deals in India has been replete with poorly drafted laws, complete non compliance by foreign vendors (who have us by our b@lls in other deals) and the MOD then backing off and letting bygones be bygones.

And your solution is more laws, and yes, that will make things alright.

Wake me up when the Russians stick to the letter of the law in the T-90 deal (the agreement itself rather), or the Americans with the Firefinder or the Israelis with their SAR pods.

In short, you have no idea of the topic whatsoever, and how deeply this issue can significantly break the one critical achievement of our MIC combine, which is the steady development of an all Indian network of Indian owned and run SMEs/larger firms.

Karan M · Post by **Karan M** » 04 Jun 2014 11:27

ravi_g wrote:Part of the trouble is that people in the NaMo admin are just doing a trial ballooning. Where is the black and white draft for 100%. Right now 26% is with Prior government approval route and "beyond that" (perhaps right upto 100%, going by the item 6.2.6 page 45 of the attached file http://dipp.nic.in/English/Policies/FDI ... r_2014.pdf) there is still investment allowed but with approval but of different kind of approval bodies (Dept of defence production then Cabinet Committee on Security nailing the 'state of art'). Thus all approving bodies have defence ministry people or others from the security establishment. So unless it is about total giving up of approval route or introducing some entirely new brainwave, what really are we talking about?

IOW the earlier policy provided for 'control' to remain Indian even though Beyond 26% could conceivably be done - taking out the operational control too. The new policy (right now only a cabinet note) would be dangerous if it dilutes controls whatever be the upper/lower limit of ownership.

These trials balloons should never arise in the first place. The commerce ministry and the idiots in that place should be given a stern briefing and told firmly not to engage in such FUD.

If I were a lobbyist, such FUD encourages me. It tells me there are people on the Indian side willing to subvert their system, if I do one more push, if I engage one more group to plant articles on their behalf and so forth.

Its happened in the past, and continues to happen. The level of rot in our system is unbelievable - anyone who has seen it or experienced it via third party accounts will be shocked.

Despite ALL this, there are good systems in place, thanks to diligent efforts from visionaries and patriots. Now even those are being targeted.

UPA doing this - par for the course. NDA - inexcusable.

KaranM ji you have highlighted at multiple places how other countries 'Control' their structures while allowing for whatever level of 'Ownership' they deem fit. So long as we tie up Ownership with Control without a fuller narration and acceptance of the systemic structures that develop to manage it, we will end up with a simple answer of 'no'.

Ownership and control both go hand in hand for a country with limited resources as we do. A United States with trillions invested into its MIC has depth and scale to a huge extent and significant redundancy. It can afford partial divestment of ownership and even if that translated into loss of control, it can recover. In our case, we don't have that leeway.

Frankly just as the FDI is an alternative to outright Imports so it is the other way round. Hence I am not too greatly invested in a Yes vote. Hell if you fear the Amerikhan control over LCA engines, then you overstock it. Make plans for alternatives. My pet fantasy is to overstock LCA engines and Agat seekers.

It doesn't work this way in India because of limited acquisition budgets. The forces dont want to overstock. The sparing factor is low. Reason being they think the manufacturer should provide them with whatever they want as and when they need it, tied to the fact their capital acquisition budget is limited.

What I fail to understand is that nobody really is interested in investing even now so why the resistance/enthusiasm. Knowing that it is already allowed but not preferred as an entry route. You could claim that "4.1.3 Guidelines for calculation of total foreign investment i.e. direct and indirect foreign investment in an Indian company" (page 15) is sacroscant hence upper limit is capped below 49%, but then there already is a breach of the sectoral cap allowed provided it is for "state of art".

Simply put, the exception should only be in the rarest of rare cases and even there, it should go through so much approval, that touts do not misuse it. As long as such clauses exist, foreign firms will use it to push their agenda and blatantly refuse to abide by their agreements. They have done it, will do so. Their lobbying is constant, and uses the Indian MSM and a well greased network of ex babus, service folk and technocrats to push their agenda. Another bunch is impressed by PPTgiri and also the claim that "technology will flow in" and things will be ok.
PS: The pride of BRF - the Brahmos - only moved towards significant tech transfer (yet to happen) when it became clear, a lobbying effort to push the Harpoon might work. So when things are easy, everyone gets fat and happy.

I see this as a measure to counter Imports+Touts which frustrate our indigenous capacity building. With GoI proposal, we get Capacities under Indian jurisdication+Touts. Eventually having even touts out of the way as the industry matures. Touts are only a function of absent industry and have the negative feedback to the system in that they kill the indigenous industry. Without doing this FDI route, we will be stuck forever with Imports+Touts while the Indian PSUs and research establishments will try all out to simply hog items of production to counter the Import lobby (for which I don't fault the Indian PSUs but still it is quite annoying/frustrating).

This is incorrect, because the proposal is ill thought out to begin with. Imports will remain imports, who guarantees Moog India for instance will make actuators in India from the raw material stage and even if it does so, can a strategic bomber program to launch missiles, use the same firm to give it actuators? See the missing link?

India wants to make stuff inhouse because for long term capability, there is no veto. If tomorrow, India wants to make a hypersonic strike vehicle, all the INDIAN owned firms can pitch for it. The foreign owned ones cannot, until and unless their parent says OK. In which case, if India nationalizes these firms, you create a trade war!!

Next, who says that Indian PSUs and research establishments are trying to hog all items of production? Long gone, and only used by discredited folks in "Think tanks" to peddle their import/FDI agenda. Reality is that in most programs today, DRDO signs a waiver saying they will allow imports if a) program lead time is >5 years b) if existing program is delayed

can still cause a problem but more and more legacy programs are either being cancelled or dropped, and delays there mean a) kicks in allowing for imports IF the MOD gets its act together.

The DPSU combine is LEAST bothered about hogging anything by making it inhouse, because, they will get TOT and make it locally anyways!!

Easy as pie!

The DRDO developed the SME/MSME network exactly for this reason, in some cases helped by the DPSU leadership itself which wanted to do the "Right thing" but also noted that tight fiscal controls by MOD etc meant they did not or would not invest in long gestation DRDO programs.

For example while I am all for LCA, I am not happy with having to trail on the IJT front (This is not about HAL - let HAL have extra money for LCA but get them out of IJT) and let others handle IJT. The budget is a good 100 billion USD in next 10 years so there is enough room for every body and everything. Nobody is going to give you anything beyond the 300 km 300 kg missile which per force has to be made in-house. At least then let foreigners make lesser then that and you concentrate on more then that. Or better still (though costlier) let both survive and maintain PSU capacity for the emergency situations. The IPRs are normally meant to restrict unwarranted use but suitable freedoms should be capable of being contracted for (I have not worked on IPR related contracts, so I am open on this).

When you create such complex policies and unwarranted for nuance, you will end up creating a messy situation where nobody knows anything or claims likewise, and there will be massive abuse of the system.

Simple solution - open up the defence sector (in reality not on paper) to Indian pvt sector and let them compete with HAL etc.

FDI etc is a red herring.

Presently too we have so called tech transfers and our resources get stuck in screw driver giri. By freeing up resources of PSU we can have some real brain work going over there too.

Competition will do the trick by itself. I know of two loss making PSUs which are now doing good work for the MOD, after their management AND employeers realized the writing on the wall. In contrast fat cat DPSUs are letahrgic

Karan M · Post by **Karan M** » 04 Jun 2014 11:34

Rahul M wrote:karan, I feel there are enough safeguards for the 100% FDI proposal. permission is by no means automatic.

Right now there are very limited safeguards. The law is completely ignored or bypassed and decisions taken on the basis of exigency. Simply put, you allow the foxes in, they will rule the roost and the services, who then depend on these firms will complain if any retrospective efforts are made to keep them in line. Our acquisitions are replete with such blatant arm twisting at multiple levels. Why do you think nobody reads the riot act to any of the foreign firms in any deal?

Its not that all the folks in GOI are idiots or sold out etc. The fact is poor policy allows these events to happen and once it does, issues get correlated. Have a problem with T-90, oh so sorry, Su spares got delayed. Have an issue with MMRCA TOT, oh wait - dozens of articles in open press about how the DRDO/DPSU combine sux and should be bypassed entirely & even TOT is meaningless. The depth and scale of the network is huge, and giving them any foot in the door is a big mistake.

The situation is fairly similar here. Once a poor policy is made, it is almost never rolled back. To do so would put existing contracts in jeopardy and create howls of outrage. Govt backs down.

Fact of the matter is that the key success of our MIC are the successful creation of our MSME network which provides everything from connectors to OBCs to valves to electronic modules. We need to support these folks to get heft but not transfer ownership to do so. That would be a huge mistake.

JohnTitor · Post by **JohnTitor** » 04 Jun 2014 11:43

^^

The govt should be funding indian SMEs to create things. Similar to the grant scheme the US runs. Ofcourse there is a good chance people will try to abuse this, but every receipt needs to be audited and the final product needs to be provided. This will lead to innovation and an indigenous MIC. Instead of this silly 100% FDI which will do nothing for our country.

People who are arguing that these guys will come and create an industry for us are living in lala land. No company, not even russian ones are willing to set up shop and transfer high tech even for the purposes of profit because their govts won't allow that. So what you would have is companies that make things that do not really create an indegenous MIC but make things like doors, nuts, bolts. Sure these create jobs but they don't create a MIC.

Govt should stop wasting money on DRDO HAL etc who take forever to deliver things and make everything time bound. HAL and DRDO will be wiped out once there is a proper MIC in place just like air india got wiped out since the entry of private players. The govt should ensure that either HAL competes or is closed down when the time comes.

For now though, MIC through indigenous SMEs is what is needed. not 100% FDI which will do nothing but let companies buy out every budding company and move tech out of the country,

Karan M · Post by **Karan M** » 04 Jun 2014 11:48

krisna wrote:About 100% FDI proposals from NaMo govt-

At present India imports over 70% of its defence requirements.
The defence budget covers mostly the salaries and pension sof its personnel.
R&D funds is inadequate.
There is a strong lobby within the establishment for corruption. foreign defence equipemnt brings in lots of influence and kickbacks amongst the various middle men.
There is less effort at indigenous production due to the above.

All this can be addressed by making good policies which a) scale up R&D investment in functional areas & also, by b ) giving the private industry an equal say in manufacturing & production.

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100% FDI in defence can circumvent some of these-actually there are 4 types -26% 49% 74%? and 100% decided case by case basis. It is not flat 100% on all.
Bringing in technology will give higher %age of control by the foreign company inside the country but subject to national laws.

Those national laws are only good on paper. So far none of them have been applied to any large deal from abroad - what & where will India apply these laws on billion $ MNCs which will lobby their parent Govt to intercede?
And this case by case basis also flopped. FYI, tried in offsets proposal - everything & anything was being marked as an offset, including items made in India to be fitted to the platform anyhow, but the company shows it as an offset against its obligations. Its a joke. The service agrees to it, to get it done fast. In short, laws only on paper, spirit ignored, complete farce. Much the same here..

--------------------------------------------------
some argue- foreign companies will hold back technology--> currently the same holds true with a gun to our head in case of war or problems with western world.

Irrelevant, as existing system warrants local work with a local partner.

At least with new proprosals, the existing foreign vendors will be under tremendous pressure to side with the GOI in case of war as repercussions will be severe as their investments will be sunk in India.

Yeah sure. Like in Op Parakram, where the much vaunted Indian IT sector single handedly convinced US to side with India, and had it back off on its TSP policies.

Also local personnel will be involved in doing some work----> far far better than importing stuff from foreign countries.(huge risk in war)
Employment generator---> India has a large pool of talented people who will go to these companies in India rather than working for forein companies outside India. (I know many Indians working for companies like Raytheon, my distant uncle (old IITian) works for Lockheed Martin etc).
salaries will increase for these people.-->some will start their own enterprises.

Both irrelevant points, as foreign owned firms currently have to work with local firms to compete for large contracts and both together can address both the employment and local work factor.

I cannot even begin to imagine the convoluted arguments at work here. So first GOI delays the entire deals which would have shown the above system to work well - eg arty for decade plus. Then claims nothing worked, so lets allow 100% FDI.
The terms artificial scarcity comes to mind.

People work in Raytheon etc when L&Ts defence business is a fraction of what it should be. Because a pathetic Govt owned yard is ripping apart a Kilo sub and L&T doesn't get the support to replace it. The answer to that is to allow L&T to compete fairly and scale up.

Not to allow "foreign owned yards" to set up in India, because hey, thats better than L&T doing all this. What kind of logic is this?

------------------------------------------------------
people will always argue bringing in foreign compoetiton will destroy local Indian manufacturers.
before during Nehru-IG times there were hardly any foreign companies. later many entered- some Indian companies clsoed down but new ones took over. still many foreign companies are not monopolising the Indian market entirely.

This is not foreign companies and market share alone. We are not talking of Thums Up and Coca Cola (though yeah, look what happened there as a deliberate measure) - its about our strat programs and many others getting exposed and then subverted.

If you are one of those who thinks a BARAK-NG is the ultimate best bet for India, then no point in discussing this further. If you are one of those who thinks an AKASH is better - then understand where I am coming from.

PS: Yes, different programs, different requirements - but think on the concepts and ownership of critical knowledge regarding their security and function.

I am sure with adequate safeguards for the local Indian manufacturers, this will work.

Like it has worked so well in the past with all our other successful TOT & complex programs depending on the good graces of govts more economically powerful and a better strategic vision than we are.

In the meantime, can we ask Russia where the armor tech for the T-90 is? The French for why they charged us an arm and a leg for the Mirage 2000 upgrade without even transferring the tech? And so forth.

Rahul M · Post by **Rahul M** » 04 Jun 2014 11:57

Karan M wrote:
Rahul M wrote:karan, I feel there are enough safeguards for the 100% FDI proposal. permission is by no means automatic.
Right now there are very limited safeguards. The law is completely ignored or bypassed and decisions taken on the basis of exigency. Simply put, you allow the foxes in, they will rule the roost and the services, who then depend on these firms will complain if any retrospective efforts are made to keep them in line. Our acquisitions are replete with such blatant arm twisting at multiple levels. Why do you think nobody reads the riot act to any of the foreign firms in any deal?

Its not that all the folks in GOI are idiots or sold out etc. The fact is poor policy allows these events to happen and once it does, issues get correlated. Have a problem with T-90, oh so sorry, Su spares got delayed. Have an issue with MMRCA TOT, oh wait - dozens of articles in open press about how the DRDO/DPSU combine sux and should be bypassed entirely & even TOT is meaningless. The depth and scale of the network is huge, and giving them any foot in the door is a big mistake.

The situation is fairly similar here. Once a poor policy is made, it is almost never rolled back. To do so would put existing contracts in jeopardy and create howls of outrage. Govt backs down.

Fact of the matter is that the key success of our MIC are the successful creation of our MSME network which provides everything from connectors to OBCs to valves to electronic modules. We need to support these folks to get heft but not transfer ownership to do so. That would be a huge mistake.

you have a point. but the current situation of imports in toto is hardly a good one to be in either.
the proposed draft, which hasnt been tabled yet calls for graded FDI (posted an ET article in DRDO thread). why not hope the execution would be better under this govt ? I mean it cant really get much worse than what its now can it ?
drdo's products are fouled up by shoddy OFB's, pvt sector competence is pushed away at the behest of PSU trade unions, PSU's take home a premium for screw driver giri, I could go on.

@Supratik ji, karan has a better idea than most about defence R&D. pooh pooing his comments as rant would be a huge mistake.

Karan M · Post by **Karan M** » 04 Jun 2014 11:57

Shonu wrote:^^

The govt should be funding indian SMEs to create things. Similar to the grant scheme the US runs. Ofcourse there is a good chance people will try to abuse this, but every receipt needs to be audited and the final product needs to be provided. This will lead to innovation and an indigenous MIC. Instead of this silly 100% FDI which will do nothing for our country.

Exactly.

People who are arguing that these guys will come and create an industry for us are living in lala land. No company, not even russian ones are willing to set up shop and transfer high tech even for the purposes of profit because their govts won't allow that. So what you would have is companies that make things that do not really create an indegenous MIC but make things like doors, nuts, bolts. Sure these create jobs but they don't create a MIC.

+1. People need to wake up and see the reality.

Why does HAL make so much of the Sukhoi yet so little of India made items go into the export Su30 MKM and MKAs?
Why are Algerian T-90s not full of OFB parts?
Why are Yakhont and Brahmos separate, and Yakhont exported to Vietnam separately, when practically, both are programs with a common genesis?

No country wants to let go of its own MIC for some namby pamby global export model, talk on paper apart.

The claims that local manufacture will boom with 100% FDI are simply rubbish. Why wont local manufacture boom, if a L&T & BHEL combine works with (say) Thales and Rosboronexport for BMP upgrades???
No, we have to give the contract ENTIRELY to a Thales subsidiary. Why??
And Thales will build the latest TI in India? Yeah right - it will invest hundreds of millions in India, without Indian Govt picking up the tab to meet the Indian contract. As if. And if India is to pick up the tab - why should that money go to Thales and not an Indian firm?

Govt should stop wasting money on DRDO HAL etc who take forever to deliver things and make everything time bound. HAL and DRDO will be wiped out once there is a proper MIC in place just like air india got wiped out since the entry of private players. The govt should ensure that either HAL competes or is closed down when the time comes.

For now though, MIC through indigenous SMEs is what is needed. not 100% FDI which will do nothing but let companies buy out every budding company and move tech out of the country,

Actually, DRDO has already started delivering through its SME network. Take a look at the BFSR. Its internal components are designed by DRDO, made by a SME, the entire package integrated by a DPSU! The video display unit was entirely made inhouse by another SME - supported by DRDO, later on, the DPSU happily started importing it from an Israeli company instead.
IMO, DRDO/handful of performing DPSUs need encouragement (and competition). The rest need to shape up or ship out BUT on OUR TERMS. India's terms. Not like the disastrous "Russian great leap forward" under Yeltsin which saw tank factories build refrigerators under teh advise of great reformists from the IMF etc, and the entire Russian MIC ground to a halt.

Rahul M · Post by **Rahul M** » 04 Jun 2014 11:58

btw, this is better discussed in mil I think.

Karan M · Post by **Karan M** » 04 Jun 2014 12:09

Rahul M wrote: you have a point. but the current situation of imports in toto is hardly a good one to be in either.
the proposed draft, which hasnt been tabled yet calls for graded FDI (posted an ET article in DRDO thread). why not hope the execution would be better under this govt ? I mean it cant really get much worse than what its now can it ?
drdo's products are fouled up by shoddy OFB's, pvt sector competence is pushed away at the behest of PSU trade unions, PSU's take home a premium for screw driver giri, I could go on.

My point is that there is no need for this sort of proposal because the entire issue is one of deliberate artificial scarcity. Look at it this way. Has the MOD cleared any existing proposals under the existing law for artillery upgrades etc? No, right? That's the red flag right there.

Basically, there are enough proposals under existing (less than 50% foreign ownership law) that would allow huge investments to be set up for arms manufacture in India. None of them have materialized, because the entire process is stopped at MOD. Call it deliberate inaction, incompetence, AKAs shoddy behavior, PCs attempt to garner all the funds - reasons could be a mix of all these, but basically, what we have seen is the model which would have worked was not allowed to work!

With this artificial stalling, come the deluge of articles and constant attempts to relax the laws, saying that will work. Question is why?

How is it that when we spend, we DO manage to often purchase the core tech we require, when we DO spend we do manage to develop what we cannot procure, YET we have claims to the contrary deliberately ignoring these attempts.

The answer is unfortunately straightforward. Most foreign firms do NOT want to transfer any tech to India. They are however desparate for orders and the occasional MMRCA, Scorpene etc force them to compromise.

Yet the effort is on to shape the Indian market to their terms and have us compromise our laws.

A decade or so back, the PRC was in a similar situation as us, with American and French/Euro firms. They didn't back down, and told the firms to transfer critical wing manufacturing tech (considered gold standard in manufacturing tolerances at the time) or they would not allow it to sell. It happened. Today both firms source billions of $ worth of aero items from *state owned* PRC firms in China, let alone Pvt firms!!

The PRC showed that market muscle combined with dedicated strategy works.

In contrast we are told, only 100% FDI is the only answer and even the pvt sector cannot bring in the quality. IMO, this is a complete red herring and deliberately floated to ensure

1. We continue dependent on imports / foreign controlled systems
2. Osmosis from foreign firms to Indian labs is controlled (as versus a BEL making seekers and BEL working w/DRDO on next gen Akash3 or whatever)
3. Indian industry is controlled via selective acquisitions of SMEs etc
4. What we want is an Almaz Antei - what we are being told is good for us is a Thales Rockwin. IMHO, our interests are completely orthagonal.

Karan M · Post by **Karan M** » 04 Jun 2014 12:19

Rahul M wrote:btw, this is better discussed in mil I think.

GD allows us to talk freely w/less snooping, thats the reason I posted it here..

Yagnasri · Post by **Yagnasri** » 04 Jun 2014 17:51

Cross post from NM Sarkar thread:
Unfortunately AP is a toxic case of freebees due to YSR mafia gang system. CBN could not fight this free power/loan/food/gas/coporate hospital etc in 2009. He did offered direct money transfer for poor people which he could not explain and convince. This time around Jagan created a huge pressure during elections and CBN had to make this kind of rubbish promises.

AP is in for a very hard time and NM need to support it if he wants to win 2019. Further fight against EJ forces is to be fought seriously in T/AP/TN and Kerala. This is a clear and present danger.

One example I give you - I travelled for some 500km in Gujarath in the last one month. Mostly in rural areas. I could not find a single church or a Majid adjesently to road. Just travel in TN or in AP and see how many you will see. Some 83k Cr was the money inflow permitted by MHA between 2009 to 2014 into India. They are all over south - In PAAP, in Kudakulam agitation, in YSRC, in Kerala mafia gang, in T cabinet and even CBN has to arrange one side to support TDP.

So CBN/ BJP is the only Indic local force in South as of now. Amma used to be Indic. Now may be sometimes indic but of late slipping too many times. Once Karnataka is captured and T kicks out KCR in 2019 we have to pick up peaces there. Kerala mostly lost and needs serious effort. TN - Amma needed to be brought back. She is also getting old and BJP need to promote its local leadership.

Supratik · Post by **Supratik** » 04 Jun 2014 20:24

@karanM,

Your posts are too long and rambling like Rahul Mehta's. If you can keep it to the point it will be helpful.

SaiK · Post by **SaiK** » 04 Jun 2014 20:37

Karan M wrote:
Rahul M wrote:btw, this is better discussed in mil I think.
GD allows us to talk freely w/less snooping, thats the reason I posted it here..

I'm concerned at this snooper out there who is willing to prosecute you only on bot-search results. May I know the real concerns? The snooper could have a BRF id, and then snoop too.. no?

IOW, are we doing the right scoping of discussions within GDF?

Supratik · Post by **Supratik** » 04 Jun 2014 20:46

Karan M wrote:
From the fact that you think what I posted is a rant, it shows your complete ignorance of the sphere.

Clearly, you don't have the first idea of what has happened in the past and what Indian firms attempting to acquire technology - both private and public continue to face, otherwise you would understand how disastrous this move can be.

Before dismissing other folks considered opinion as rants, be a little less sanguine about your own knowledge and research a bit.

First, companies which work in the same space as many Indian SMEs do, have acquisition warchests which dwarf the entire projected revenue stream of Indian companies many times over. They can merely walk over and purchase entire firms lock stock and barrel.

The end result of such acquisitions is that these firms entire domain experience (and past project history) is known to the acquirer - including details of such items like what frequency certain electronic items developed were working on, their critical firmware and higher software details - anything and everything.

More importantly, given the limited investments India has seen, we only have a limited number of firms, each working in a critical area. Even one or two of those firms disappearing from the vendor list will have a huge impact on our programs, starting from our strategic programs (which depend on these SMEs for a range of manufactured, build to print and even customized designs - DRDO ends up hand holding these firms for the first few designs).

Second - since you have no idea of what has happened in the past, several of these small firms were tapped and acquired since they were working on several kinds of programs not just defence and there was no monitoring agency. The end result - sanctions on the entire Indian MIC, meant these firms no longer work with Indian Govt. Tomorrow, much the same may result. Right now, the entire Indian SME structure protects us from sanctions, making sanction weak and ineffective. The asinine 100% FDI proposal weakens this ecosystem and makes it irrelevant.

In short, twenty years of effort down the tubes.

You don't need to make personal attacks. I am highly qualified in my field.

From what I could gather from what you wrote I have already said that Indian IPR should be protected and for that we need laws if they already don't exist. I am not an expert in the field of defense (I don't contribute to the mil forum although I read it) but in my field FDI has enormously benefited India. There are companies mushrooming all over India some of whom are doing cutting edge stuff unthinkable even 10 yrs back. Many of these are run by Indians previously working for MNCs. Since you are an expert on this subject I will also be interested for my own GK to know specific examples from the Indian defense sector where Indian companies have been bought up bending rules, their IPR taken over and have intentionally or inadvertantly disrupted Indian programs. I think RahulM has a good suggestion to take it to the mil forum where there are many experts on defense and there the pros and cons can be better discussed.

Yagnasri · Post by **Yagnasri** » 04 Jun 2014 21:32

Suddenly UN and US SD are making statements on women safety in India. Goras trying to find reasons for doing color revolution in India again. NM will be attacked soon may be from Anna team, Khejri or some other wako. Already terrible attacks on freedom of expression are the talk. Arnob, Thaper, UndiTV and all are going gaga on that.

Rahul M · Post by **Rahul M** » 04 Jun 2014 21:53

it was a desi PTI reporter who goaded the SD rep.

Karan M · Post by **Karan M** » 04 Jun 2014 22:29

Supratik wrote: You don't need to make personal attacks. I am highly qualified in my field.

When you dismiss opinions about a topic you clearly know nothing or little about as rants, expect to be called out on it. Your rejoinder about not making personal attacks or whatever would have had some grounds to stand upon if you had not made such a patronizing post to begin with.

I would not have responded forcefully either. You could have merely asked me to elucidate further on the points you didn't grok/agree with.

But lets proceed to the facts and keep personal acrimony (which is useless and counter productive) off the table.

From what I could gather from what you wrote I have already said that Indian IPR should be protected and for that we need laws if they already don't exist.

You have not understood what I am saying.

It is not about IPR alone. This IPR stuff is money is the be-all, everything that can be catalogued should be sort of attitude which is completely orthogonal to security considerations.

Lets get to that later.

First, lets not have the notion that it is new laws which will make a difference, when

a) existing policy can get the job done without having to depend on more laws and

b) relying on laws as a primary driver is dangerous when current laws are being violated left right and center without lack of adequate enforcement

c) it is policy (e.g. DRDO deliberately reaching out to MSMEs from Kalams time) and now even DPSUs - which is working

Again, see how the offset policy was violated (Ajai Shukla has an article on that too as I recall) to do all sorts of dubious stuff. Even the AW deal for which a bunch of bigwigs were caught out, used offset laws to do money laundering.

This BTW is the offset policy which HAS done good and IS necessary. Its the one good thing that came out of the UPA. Its been revised year after year and was still misused.

The misuse was tacitly agreed to by the import starved services and egged on by all the administrators who greased the wheels for their personal benefit. So what does that tell us?

It means laws alone in a notoriously creaky edifice such as India's are of limited use. The spirit of the law will be completely misconstrued and every sort of loophole found and misused.

So if tomorrow the policy/law is completely misused, who will bell the cat, when we don't even handle the issue when existing agreements are violated openly? We dont have the strength to tackle any foreign Govt on existing deals for the most part.

Instead, a good policy which does not tinker with existing laws and strengthens them, as versus replacing them, is the need of the hour. Good policy in that we develop our own capabilities, forcing foreign firms to work with us, for our market and they can't stop our own growth either.

If no Indian SMEs are open for acquisition, if Indian imports for complex platforms which cannot be built only from local resources remain open, and that policy states Indian participation is critical, everyone from aunt jemima to victoria homme will send their execs to India to work with Indian partners to get a share of the defence pie. China did this.

Next - the claim that its all about "IPR". No its not!!

We DONT want or NEED any foreign entity to:

a) Know intricate levels of our current technology across the spectrum
b) Have access to our current ecosystem
c) Own any part of our current ecosystem

We need a firewalled industry which operates on ITS own terms, accesses technology paid for by the Indian taxpayer to India's benefit and gets whatever it can gain from the WW industry.

That is what the US does. The French do. The Russians do. The Chinese do.

For instance, Indian firms cannot procure Thales. France will say get lost.

India need not be some model of globalization or capitalism that allows its vendors to be bought out so that next time, any ambitious program is launched, the Indian SME says "sorry sir, we made x widget for you, and x+1, but now, y is not available unless Shri Duckbottom who sits in Foggy Dum can clear it." And by approaching Foggy Dum for clearance, we - in India -

a) Inform everyone about what we lack (so that going forward they can continue to work on it)

b ) Are now dependent on FD for a long while to come

c) Any attempt to replace FD with a local Indian vendor can be similarly torpedoed when that vendor is bought out.

d) DRDOs entire budget is at the$1-2 Bn level. Its peanuts. Using those peanuts they have developed Rs 1 Cr - 2Cr SMEs across the spectrum. Those firms can be bought out for trifling amounts by the MNC groups which spend 10x that amount on protective patents.

e) By allowing access to these firms we also open up ALL our systems to foreign intervention. It does not take magic to figure out that system A runs on X OS sourced from the open source community. That it uses Y chip. However, if you pair that knowledge with actual implementation details, the hardware details, access details, suddenly you have enough data to cripple the entire system. See Stuxnet and how it was used. That is btw an infrastructure attack. To develop systems targeting tactical systems would be childs play in comparison.

f) Usual excuse is hey we import anyways, so e) shouldn't be an issue. Guess what, we have STILL managed to overcome e in a substantial fashion using the SME base. However we now risk that!

If a L&T purchases a SME and L&T remains Indian, good!! If a foreign firm purchases an Indian SME or a L&T defence SBU - should not be allowed period.

We are NOT an ally or a client state of ANY of the other powers, other nations and their joined at the hip stuff is hence not something we should be replicating.

The alternative? We import those systems, and become dependent while our systems are swadeshi outside, videshi inside.

I am not an expert in the field of defense (I don't contribute to the mil forum although I read it) but in my field FDI has enormously benefited India. There are companies mushrooming all over India some of whom are doing cutting edge stuff unthinkable even 10 yrs back. Many of these are run by Indians previously working for MNCs. Since you are an expert on this subject I will also be interested for my own GK to know specific examples from the Indian defense sector where Indian companies have been bought up bending rules, their IPR taken over and have intentionally or inadvertantly disrupted Indian programs.

If your own sector is not defence oriented, its success or not is not directly applicable to Indian defence sector which has severely different constraints and risks.

Further, I am not giving specific examples or even specific names for a reason which is why I prefer this discussion remain in GD.

A) By telling which firms are particularly critical , its painting a bulls eye on them. Similarly, the firms which have been targeted in the past & talking about how it affected us, is similarly openly admitting those tactics worked. Why would I mention those specifics so that those who used those methods knew which worked and which didn't, so that they could replicate them?

By telling which firms are acknowledged by some to have gamed the system (hint: check out who pushed for all these rule relaxations), I open up the forum to legal challenges from these packs of predatory animals.

c) One of the big problems that has happened and which makes the no acquisitions policy critical is to benefit from the offsets policy many MSMEs and others have widely publicized their capabilities. This was done with the tacit understanding that they would still remain within the gamut of Indian control. This retarded move to allow 100% FDI and acquistion now torpedoes that intent as now sufficient information exists to determine which companies are working on specific programs.

d) Worst part is the amount of leverage foreign firms have, they can easily swamp our entire sector with a blanket purchase policy. We can do nothing to stop it as our inability to even police our current system is thoroughly inefficient.

e)Last but not least, I point out this quote about how keenly our setup is scrutinized. One DRDO personal - "whatever we wanted to import they would not give us, when we developed it, it would be available". This is a consistent policy followed by the entire arms cartel when it comes to India - west or east. Only when we started making offers they couldn't refuse ($$) they started giving us stuff we really wanted. Even there, they want to do it on their terms.

We shouldn't be playing their game. They should be playing ours, sir!!

I think RahulM has a good suggestion to take it to the mil forum where there are many experts on defense and there the pros and cons can be better discussed.

I am not going to openly discuss these topics on an open forum, thanks much.

member_20317 · Post by **member_20317** » 04 Jun 2014 22:29

Supratik wrote:I will also be interested for my own GK to know specific examples from the Indian defense sector where Indian companies have been bought up bending rules, their IPR taken over and have intentionally or inadvertantly disrupted Indian programs. I think RahulM has a good suggestion to take it to the mil forum where there are many experts on defense and there the pros and cons can be better discussed.

Actually KaranM does have a point but he is now a man on a mission and a knowledgeable guy who has made up his mind can be a very good advocate.

There is an old movie about Afghanistan (with that Forest Gump ka hero). Don't remember either of the names. But Gen. Zia does ask for aircrafts and he is offered planes without radars (F-20!) when Zia wanted radar wala F-16. Then when the Amerikhan democracy walas wanted Zia on their side they were more then willing to give Zia an AWACS. Poor Rajiv had to raise a hue and cry to have it stopped.

For a Pakistani it would not matter much except in terms of HnD. A Paki ain't ever gonna produce a plane. But for a country with a promise, one that decides to forget both F-20 or F-16 and instead develop something of its own, this can be very dangerous. Strategically off course, unless the establishment is very astute in these matters. This sort of active but subtle killing of projects is quite rampant. Like some rocket motor suddenly becoming available when your own cryo-motor is about to come online. Nuke plants getting supplied when the competing nuke plants are getting picketed by locals. Or the current hot maal F-35 JSF that can kill Thor of Assguard. The silly thing comes into play just when things begin to look up for the Indians. Today the Amerikhans know well that there is a NaMo premium in the economy and so to kill two birds with one stone - kill of the economy + kill the local tech base. Simple ji, offer the life time opportunity to paint a Tiranga tatoo on an pregnant lady.

But on and off you must have heard of an assembly line of Mirages or some Czech guns or some cargo shell being abandoned by some Uropain manufacturer for UXO concerns. This low grade stuff not needed by others can be just as profitable. No show-sha-bazzi. Plain usable stuff. This is where we Indians can make a killing. But the caveat remains - you got to manage the whole show end to end.

Mota-mota, you actually do not need the most ati much many bleeding cutting edge tech for your weapons inventory that must have IPR protection and is meant as a favor done onto you. The jugaad stuff can be produced and used too without committing too much of your own capital into all the required stuff. War planners do not need the hexiest maal, they do not plan to turn every aviator into an ace or every Sub-lieutenant into a Khetarpal. Most time they are quite happy ensuring a mission kill instead of a k-kill or an earth moving capability instead of a air to air ballet. You find out for yourself the ratio of "successful air to air vs. sorties flown" and you would know why you should be aiming for the more practical earth moving, mission killing, escorting etc. Same for armor or artillery. Hell even a loss in say an armor battle or artillery exchange, can give you a successful mission kill if you plan it right.

But then you got to control the desire for the longest, hardest, wettest, reddest, most climaxtic, before you embark on an adventure. Tharak is the bane of all joshyukt youth.

RoyG · Post by **RoyG** » 04 Jun 2014 22:31

Narayana Rao wrote:Suddenly UN and US SD are making statements on women safety in India. Goras trying to find reasons for doing color revolution in India again. NM will be attacked soon may be from Anna team, Khejri or some other wako. Already terrible attacks on freedom of expression are the talk. Arnob, Thaper, UndiTV and all are going gaga on that.

Color revolution because of violence against women is quite a stretch but yes it can be used as a stick to beat India and tarnish it's reputation.

SaiK · Post by **SaiK** » 04 Jun 2014 22:35

time to take action and not to chase behind MSMs.. the need of the hour is good governance, and instill confidence in the existence of democracy and freedom, and not kangaroos and dacoits. it does not have to be told by international MSM or local undies.

wake up, and tell your folks around.. spread it out, and ask the gov to take action. nail the culprits, and hang them out! it is a rape+murder+subversion by illegal decree at many rural places around. this is not joke.

member_22733 · Post by **member_22733** » 04 Jun 2014 22:39

That PTI correspondent is such a retard! He does not understand the internal dynamics of the US and washes our dirty laundry in the US public! That too when the US is targeting SDREs with a laser like focus for some reason (most likely a racist reason )

I think the left-libtards who are supposedly atheist also believe in GOD! The left-libtard God happens to be West/USA. They have zero confidence in their own kind and think that Indian problems can only be solved by the west and that toomagically and miraculously just like Jeesus (pbuh). This is no different from praying to God about a situation in your home that you think you cannot solve.

So according to left-libtards a solution evolved in the west is magically and miraculously resolve Indian problems. Now they think that rape is a uniquely Indian problem and are begging for their God to give them a magical solution, something like sekoooolarism.

Mir Jaffars and JaiChands..... all of them libtards!

Karan M · Post by **Karan M** » 04 Jun 2014 22:44

BTW, you want rapid advances in Indian industry? Set up clusters in each sector with DRDO, pvt industry, services & DPSUs. Indian ownership, Indian control, accountability (user involved from day 1). Also, services to be told to ramp up engineering capability in terms of manpower and program management personnel. Our EXISTING budget alone is sufficient to sustain a huge amount of movement. But its not done. Its not rocket science to conclude there was a gravy train in imports being run from RGs era when the prince figured out foreign exchange via imports could easily be tapped using the emotive national security angle and hence even projects like the OFB (expanded after '71 when foreign powers refused to even give us basic ammo) became vehicles for getting such nice contracts in.

Heres another recent example. Army runs short of FSAPDS. Existing DRDO program abandoned, citing its "behind", never mind, long term promise & requirements, IMI tapped, that completely fails, MOD then blacklists it for corruption, India runs to Russia for new FSAPDs at reportedly 3-4X the actual cost (UOR- Urgent Operational Requirement) and guess what, since that "new FSAPDS" is actually a decade old, Army also wants tens of thousands of million $s of worth of missiles imported and "license made" at BDL. The same missiles which failed earlier in trials. DRDO program only restarted much later, with movement/impetus lost, further delays baked in to the program via tardy approvals

Who benefits? Cui Bono?
How did this entire chain of comedy of errors begin? Why was the local FSAPDS program not kickstarted in between? Why is it that we need to import over expensive missiles which are vulnerable to countermeasures as a backup to main gun rounds which may be obsolete in a decades time (and they are already obsolete against western tanks).

These games of ARTIFICIAL SCARCITY are then used to portray the line that a) Imports are the only solution B ) Only FDI etc can solve the issue with benevolent providers from abroad fixing the issue.

Nobody ever asks why is it that FSAPDS manufacture was not opened up to L&T or TATA (say) to work with DRDO and not just OFB. Why is it that we never worked with the Germans for FSAPDS tech or any one else who are willing to work with even the Poles (who are spending peanuts in comparison). If NATO is an issue, why is it that we are buying obsolete ammo for a flawed platform, the T-90 from the Russians? How it is that Russia would work with us for Brahmos but not FSAPDS? And even in Brahmos, why is that great success of a program only now looking at full scale or major indigenization of the missile propulsion and seeker itself, so late? If the Russians agreed to it now, why not earlier?

Instead, we are told that opening up the defence sector to FDI is the solution. Govt can wash its hands off the investments. Yeah right..

Karan M · Post by **Karan M** » 04 Jun 2014 22:50

The fact is that our entire defence sector has had patriots in it who achieved great things against impossible odds. But many policies have been deliberately engineered to ensure import dependence for the gravy train to continue and these lobbies continue to work for foreign interests. Other "useful idiots" jump onto the bandwagon. Worst part is when all the success that we have achieved DESPITE the challenges is sought to be deliberately sold off/reversed under the guise of "will create x mn jobs" etc.
Be constantly alert for protecting Indian interests and don't fall for these ploys. China, Russia and the others don't and prosper. Somehow, its India which is supposed to always be taking some relaxed stand! Nope - we shouldn't. Want Indian tax money, taken from equally pressing programs, give us what we want in return.

member_20317 · Post by **member_20317** » 04 Jun 2014 22:51

Supratik wrote:@karanM,

Your posts are too long and rambling like Rahul Mehta's. If you can keep it to the point it will be helpful.

Should not have told him that. He probably still does not realize that all this 100% FDI SHAFDI is only to use his time to take this thread to the thousand mark.

Or probably there are more than one people behind that ID. I suspect its the old suspect johneeG ji who has join hands with the real KaranM. My god what if KaranM has been kidnapped

and this is an identity theft in broad BRF. O Teri!