Indian Defence and Strategic News Thread

[JBH22]

continuing with the song it happens only in India..
WTF antony is doing in the mOD

[JBH22]

Revelations by Canadian investigators that a cyber spy ring based in China specifically targeted India's defence establishment are expected to set off a major cyber security overhaul by New Delhi.
Privileged information suggests the Indian government could seriously consider creating the position of a cyber security czar whose mandate would be to fundamentally overhaul cyber security and bring the currently fragmented networks under a clearly defined structure.
The overhaul will demand a whole new approach outside the bureaucratic confines considering that it necessarily requires tapping the cyber security community constituted by young professionals in their 20s and 30s. Since this community is used to working in a highly non-hierarchical environment with a great deal of personal freedom the government will have to use the office of the cyber security czar as its interface with the young professionals.
Although cyber security had already been coming under government focus for some time now, a 10-month-long investigation by the University of Toronto's Munk Centre for International Studies, Canadian security firm SecDev Group and US-based cyber sleuthing organisation Shadowserver Foundation has added extra urgency to the task. The investigators have issued a report titled "Shadows in the Cloud: An investigation into cyber espionage 2.0" which highlights how India's defence establishment was seriously penetrated by cyber attackers based in Chengdu, the capital of Sichuan province in southwest China.
The report exposes widespread penetration of computer systems at the National Security Council Secretariat (NSCS), which is part of the Prime Minister's Office, Indian diplomatic missions in Kabul, Moscow, Dubai and Abuja, Military Engineer Services, Military Educational Institutions, the Institute of Defence Studies and Analyses, the National Maritime Foundation and some corporations. It is hard to quantify the damage the information obtained by the hackers can cause, but it could be potentially significant.
The report has served to highlight serious flaws and vulnerabilities in India's official information networks. Those who know how the systems work point to a "lack of discipline" in even seemingly trivial details such as senior government officials in sensitive positions still using email addresses on Yahoo, Hotmail and Gmail. They say inasmuch as no email system can be made foolproof, these free accounts are even less so. Even the use of social networking sites such as Facebook and Twitter are known to be ****e to systematic attacks.
Apart from the inherent interest in India's defence and other establishments because of its rise as a major power, there is also another reason why the country has emerged as an important target. Its position as home to large IT companies which are in turn repositories of vast global information also makes India particularly attractive to hackers. In a sense hacking India could lead to a great deal of diverse economic, financial, health and other forms of valuable intelligence.
One of the primary mandates of any future cyber security czar would be to create a multi-layered security system around its national assets in a manner that no single successful penetration would yield a treasure trove of information in one place. The cyber security czar could also be mandated to lay down standards and code of conduct for those in the government handling data of certain sensitive nature. Informed sources say the czar would report to the National Security Advisor and would often end up operating outside the traditional command and control structure of the Indian bureaucracy because of the kind of monitoring the office would be expected to do.
One specific approach that the Indian government might have to consider adopting relates to what in industry parlance are known as defensive and offensive hackers. While the former's job would be to ensure strong defences against all attacks, that of the latter would be to actively be part of hackers worldwide who perform the role of flooding malware or malicious software codes used to infiltrate large systems. Such participation is crucial to pre-empting attacks. It is in this context that the Canadian investigation makes an interesting point.
Under the section "Patriotic Hacking" the report says, "The PRC (People's Republic of China) has a vibrant hacker community that has been tied to targeted attacks in the past and has been linked through informal channels to elements of the Chinese state, although the nature and extent of the connections remain unclear. One common theme regarding attribution relating to attacks emerging from the PRC concerns variations of privateering model in which the state authorizes private persons to perform attacks against enemies of the state."
Unlike China, which has developed a sizable community of defensive as well as offensive hackers, India has not even begun to evolve a cohesive approach to what cyber security experts regard as a decisive aspect of the information technology-driven world. Since the government cannot officially or even unofficially recruit these hackers, it will have to find creative ways to utilize their services and create enough indirect protections in the event some of them run afoul of law-enforcement agencies which may not know about their existence.
This is clearly a grey area which many cyber security experts say is a necessary evil. It is conceivable that India may have to create its own version of "patriotic hackers" if it has to effectively thwart hacking attacks.

http://www.prokerala.com/news/articles/a127571.html

[JBH22]

Puducherry, Apr 10 (PTI) Home Minister P Chidambaram said today said earmarking Rs 1,47,000 crore for India's defence budget was "absolutely necessary and inevitable" as neighbours like Pakistan did not have a friendly attitude towards the country.

"Had the neighbouring countries been stable, peaceful and were oriented in a friendly manner towards India, our allocation of such a big fund for defence in the budget would not have arisen," he said at a meeting organised by Puducherry PCC as part of the 125th year celebrations of party formation.

Referring to internal security, Chidambaram said the budget for the current fiscal is expected to be Rs 40,000 crores to address the requirements of para military forces and the police.

http://www.ptinews.com/news/604506_H...y--Chidambaram

[JBH22]

Bangalore, April 10 (IANS) The Indian Air Force (IAF) has called for a national policy on aerospace technology to achieve self-reliance in producing indigenous aircraft and support systems for military and civilian operations, a senior official said Saturday.
'It's high time a national policy on aerospace technology is put on a fast track to achieve self-reliance in the sector and scale up manufacturing various types of aircraft for military and civilian operations, with greater involvement of the private sector,' IAF Vice Chief Air Marshal Pranab Kumar Barbora said here at a national convention on aeronautical technologies.
Regretting that India missed out in developing middle level technologies post-independence, Barbora said though the manufacturing sector was able to produce a passenger car (Landmaster/Ambassador) in 1960s and achieved near self-reliance in space technology in the subsequent decades, the absence of any development in the aerospace industry had created a void.
'Though we are a major economic power to reckon with in South Asia, we have not leveraged it to bargain for greater access to aerospace technologies or attracting overseas investment through joint ventures to develop our state-run or private industry,' Barbora told about 700 delegates participating in the two-day convention.
The event, Frontiers of Aeronautical Technologies, is organised by the Aeronautical Society of India (ASI).
Noting that there was no dearth of brains to achieve self-reliance in aerospace technologies and aviation operations, the officer said the government should invest in research and development (R&D) and manufacturing by the private sector as it had been doing for the defence public sector undertakings.
'The role of aerospace industry is not limited to meeting defence needs but to civilian applications (also) as the aviation sector plays a vital role in the economic growth of the country. While China produced an entire Airbus, some of our state-run firms like Hindustan Aeronautics Ltd (HAL) supply only doors or under carriage for passenger jets,' Barbora lamented.
Pointing out that indigenisation was not happening at the pace it should have for speeding up self-reliance, Barbora said the country was lagging behind in completing projects like the Light Combat Aircraft (LCA) or Kaveri engine even two decades after they were taken up.
'The government must encourage the private sector by assuring firm orders to recover investments made in developing the technologies and products. Ban on defence exports by the private sector should be lifted to ensure the industry attracts more entrepreneurs, explore joint ventures with overseas firms and secure technology transfers,' Barbora pointed out.
Admitting developing sophisticated aerospace technologies takes longer time, Barbora said a sound national policy would enable the stakeholders to work in a time frame and deliver the equipment required for the armed forces, especially the IAF, which was spending billions of dollars in buying aircraft and spare parts from global aerospace majors.
'If we don't produce in time, others will take advantage of our delays and sell their products to us. The Indian aerospace industry should not only produce for defence and civil aviation sectors, but also to export,' Barbora said, adding Pakistan exports more than India does.

http://www.bharat-rakshak.com/NEWS/n...p?newsid=12703

[JBH22]

Bangalore: India will conduct afresh the trial of its tactical ballistic missile in June to build a credible defence shield for intercepting and destroying incoming missiles, a top defence scientist said today.

"We will conduct a flight test of the anti-missile system again in June to build the ballistic missile defence shield against incoming medium- or long-range missiles," Defence Research and Development Organisation (DRDO) director-general VK Saraswat said here.
Admitting that the earlier test conducted on March 15 at the integrated test facility on Wheeler Island off Orissa failed when one of the two rockets involved in the trial deviated off the course, Saraswat said investigation into the incident revealed that the system did not work and the target was missed due to fuel leakage.
"Analysis of the earlier trial revealed that there was a leakage in the target missile leading to system failure. We are rectifying it to ensure the next flight test in June will hit the target and demonstrate our advance capability in developing the missile defence shield against any adversary missile attack," Saraswat said on the sidelines of an event.
The fresh trial will also be conducted in the endo-atmospheric (within the earth's atmosphere) region, at an altitude of 100km, and subsequently in the exo-atmospheric (out of the atmosphere) region.
India plans to deploy the first phase of the defence shield by 2012 after completing a series of trials and evaluating their target range.
"As in the previous trial, a target missile will be launched as an incoming missile and intercepted with another missile," Saraswat, who is also the scientific adviser to the defence minister, said after delivering a keynote address at a convention organised by the Aeronautical Society of India.
The sophisticated ballistic missile defence system is built to thwart any incoming missile from entering the air space of the country.
The state-run DRDO has developed the Advanced Air Defence (AAD) system for endo-atmospheric interception and the Prithvi Air Defence (PAD) missile for exo-atmospheric interception.

http://www.dnaindia.com/india/report...shield_1370184

[JBH22]

Kolkata: Although the campaign against Maoists in West Bengal has met with a few successes, a larger problem is brewing among the combined security forces. There is a lack of trust between the state police and the central paramilitary forces.
The tension has been aggravated by statements made by some Union and state ministers and even by some top police officials. Instead of defusing the tension, these statements have created an unhealthy competition between the two constituents of the combined forces with each trying to downplay the other.
Central paramilitary forces claim that they have better physical agility, expertise in handling sophisticated arms, and identifying and defusing pressure bombs and landmines. On the other hand, the state police claim better knowledge about the jungle terrains and an intelligence network among the local population.
The West Bengal police director general, Bhupinder Singh was the first to ignite this sense of competition between the two constituents of the combined forces. Two days after the Union home minister, P Chidambaram paid a visit to Lalgarh and commented that the state has greater responsibility in tackling the Maoist menace, Singh came out with an explosive statement that the state police have the capability to handle the problem independently.
“Of course, the central forces are more efficient in sophisticated arms handling and physical agility. But there are things beyond that in such kind of operation — like building network among the locals and getting proper information. In all these areas, the state police have performed brilliantly and in a self-sufficient manner,” Singh said.
Such comments have irked the officials of the central forces deputed in the region. Although none of them are willing to comment openly, many of them have rubbished the state police’s intelligence network.
According to the Central Reserve Police Force (CRPF) assistant commandant deputed in the region, the state police themselves are unsure of their source network’s reliability. “Only two days ago the state police DGP himself admitted that that some of their sources are double-crossing them. Now when the state police, which is closer to the roots here unlike us, are not sure of their own source network, how can they claim that it is of great help for the combined forces?,” he said.
Another CRPF inspector also deputed at Lalgarh pointed out a peculiar example, “Often we receive information about dead bodies in remote jungle areas. But the state police, under whose guidance we operate, don’t allow us to recover the dead bodies immediately. The reason is the state police is not sure whether pressure bombs or landmines are attached to the dead body or not. There have been several instances where the state police have forced the villagers to remove the dead body out of sheer fear. Such lack of coordination is slowing down our movement,” the CRPF inspector said.
However, the state home secretary, Ardhendu Sen has claimed that the lack of coordination between the combined forces of West Bengal, Orissa and Bihar is main hurdle for the success of the combined forces. “The Maoists are striking targets in West Bengal and slipping away to neighbouring states without much resistance. What is required is coordinated action by the forces in these three states by sealing the respective borders,” he said.

http://www.dnaindia.com/india/report...s-crpf_1369890

[JBH22]

IAF Vice-Chief Air Marshal Pranab Kumar Barbora today suggested India should go the Chinese way by gathering technical data to produce defence equipment through reverse engineering.

Addressing a gathering at a convention of The Frontiers of Aeronautical Technologies and 61st AGM in Bangalore, Air Marshal Babora said, “Do reverse engineering. Don't be scared. Our neighbours are already doing it. If someone does not give you, and you want it, do reverse engineering.”
His comments, however, might not go down well with Americans and Europeans, who are finding it hard to protect their intellectual property rights.
Reverse engineering is a process of analysing a technology to ascertain how it was designed. The knowledge is then used to build the equipment or system or make improvements to it without using any physical part of the original.
Critical of the defence industry’s inability to be self-reliant in producing indegenous systems for defence and aerospace requirements, Air Marshal Barbora said, “We have got the best brains, but it has to be focussed to get the product.”
Prodding the defence establishment and manufacturers to go for joint ventures and get the technological knowhow of systems, Barbora said: “No country has produced fighter aircraft on its own. It has been a joint effort of like-minded countries.”
Barbora said India was technologically less literate than Russia and China because it had no access to middle-level technologies following World War-II. “Now, a lot of private players have emerged in India, but they are playing rough because of rules and regulations.”
He also asked the private sector to focus on core competence instead of trying to manufacture the entire aircraft from scratch. “We must not dilute our core competency,” he said.
Citing China’s efforts, the Air Marshal said while the country was already producing entire airbuses, Indian companies were proud and satisfied to produce a few small parts like doors and undercarriages.
“When China can manufacture an Airbus, why not India? Though we are a major economic power to reckon with in South Asia, we have not leveraged it to bargain for greater access to aerospace technologies or attracting overseas investment through joint ventures to develop our state-run or private industry,” he rued.
The Indian Air Force is buying equipment worth billions of dollars every year. However, the benefits of these are not reaching the private sector in the absence of a “national policy framework or national technology plan”.
“A sound national policy will enable stakeholders to work within a timeframe and deliver the equipment required for the armed forces, especially the IAF,” Barbora said.

http://www.bharat-rakshak.com/NEWS/n...p?newsid=12704

[JBH22]

BANGALORE: India is developing a sub-sonic 1,000-km range cruise missile "Nirbhay" which can be used for a "variety of applications", a top military scientist said today.

The 1000-kg "missile is getting into some shape", Dr V K Saraswat, Scientific Advisor to Defence Minister and Chief of Defence Research and Development Organisation said.

He also said the flight-trial of air-to-air missile 'Astra', having a range of 45 to 100 km, is on the cards.

Saraswat was delivering the keynote address at a national convention on 'The Frontiers of Aeronautical Technologies', organised by the Aeronautical Society of India here.

He said India's armed forces are looking for long duration loitering missiles which can enter "enemy territory", search targets such as radars, concentration of assets and "a variety of movements of enemy", "home-on" the targets and "bang" them.

"We need to develop (loitering missiles)", he said. Saraswat made a strong push for deploying space-based sensors to keep tab on "adversaries" and gather intelligence via-a-vis defence surveillance.

He said space-based sensors are a must for tracking and detection of movements of enemies. Unless it have space-based sensors, India would not be able to make its ballistic missile defence system a "potent weapon", the scientist said.

India is launching a major programme for surveillance, particularly space-based, in terms of electro-optical payload and synthetic aperture radar. "So, unless we prepare ourselves for future space-based systems, security is going to be a major issue," he said

http://timesofindia.indiatimes.com/i...ow/5784644.cms

[JBH22]

The engine division of Hindustan Aeronautics Limited (HAL) at Sunabeda in Orissa's Koraput district has got a separate overhauling department for Sukhoi-30 MKI fighter aircraft.

The facility was inaugurated by Union Minister of state for defence, M M Pallam Raju on Saturday.
The people of the state must be feeling proud for having a division of HAL at Sunabeda, Raju said. He also visited the M S Swaminathan Research Foundation at Jeypore in the same district.
The minister, who reached Sunabeda in a special helicopter, also reviewed the performance of the engine division of HAL, a public sector undertaking of the Government of India.
The engine division of HAL has a long term plan to undertake manufacture of AL-31FP engines for Sukhoi-30 KLI aircraft under license, sources said. The division has a unique distinction of manufacturing almost all types of components required for the manufacture and overhaul of engines and spares for service exploitation.
Sukhoi-30 MKI is a twin-engine military aircraft developed by Russia’s Sukhoi Aviation Corporation and is overhauled at the HAL’s engine division at Sunabeda before being supplied to the Indian Air Force (IAF).

http://www.bharat-rakshak.com/NEWS/n...p?newsid=12704

[Kunal Biswas]

^ Gud News!

[JBH22]

New Delhi: A senior navy officer, who played a crucial role in the acquisition of Admiral Gorshkov, the Russian aircraft carrier, has been placed under the scanner. Investigators are looking into whether commodore Sukhjinder Singh’s proximity to some Russians was in any way linked to problems associated with the Gorshkov project, including the escalation in cost as well as delays. Singh was in charge of the aircraft carrier project in Russia, and had been stationed there for many years. The commodore was deputed there to supervise the re-fitting and technical requirements.
The probe also focuses on his improper personal conduct.
The carrier has for long been in focus for the quantum jump in its cost — the project cost has gone up from Rs4,870 crore in 2004 to Rs11,650 crore currently. In the second week of March, during Russian prime minister Vladimir Putin’s visit to New Delhi, India had — in a controversial move — agreed to pay $2.33 billion for the refitting as against the original $974 million agreed upon in 2004. Singh was posted in Russia until about three years ago, and was probably the senior-most officer there to oversee the Gorshkov project. On his return to Delhi, he was appointed to the crucial post of principal director (aircraft carrier project) looking after the Gorshkov project from the headquarters. All of this underlines Singh’s extensive involvement in the project.
According to the navy, the formal inquiry against Singh, who till some months ago was the principal director of the project, started a few weeks ago. It was ordered after incriminating evidence emerged showing his links to some Russians.
DNA has material to establish the commodore’s involvement in activities which were unbecoming of an officer of his rank and stature.
Confirming the inquiry, a navy spokesperson told DNA, “The IN (Indian Navy) has received information about a senior naval officer who has been involved in an act of loose moral conduct. The navy has instituted an inquiry to establish whether this had any influence on the performance of his official duties. Preliminary indications are that the involvement has been at a personal level.”
A navy source said the inquiry is looking into “all aspects” of Singh’s conduct, including whether his behaviour in Russia and proximity to some Russian individuals has had any “impact on the Gorshkov deal”. The concern is whether those individuals were part of a larger conspiracy of the Russian arms industry.
The Gorshkov project took a bizarre turn when Russians demanded in mid-2008 a massive price hike for the refit, leading to many within the navy and outside to suggest scrapping the entire project. In fact, questions continue to swirl about the logic of price hike. The carrier, which was originally slated to be delivered in 2008, is now only expected in 2012. Again, through it all, Singh has had a crucial role.
A navy source told DNA that “preliminary evidence” indicates that Singh may not have played any significant role in deciding the new price.
However, Singh was a member of the cost negotiation committee (CNC) set up last year to resolve the unprecedented Russian demand for increase in refit cost. According to naval records, Singh sat through the first meeting of the CNC last year. The CNC comprised at least three admirals from the navy, some three joint secretary rank officers and others. Singh was among the junior-most.
“The inquiry is going through the records” of the CNC, sources confirmed. The one man investigation, a formal court of inquiry, would “sum up in the next few days”, they said.
Connections, implications
Project cost of Admiral Gorshkov has gone up from Rs4,870 crore in 2004 to Rs11,650 crore currently Singh was in charge of the aircraft carrier project in Russia and had been stationed there for many years Sources in the intelligence set-up said incriminating evidence detailing Singh’s improper conduct was made available to naval authorities, prompting them to start the inquiry
Investigators are also looking at his Russian contacts and if they had any links to the Russian arms industry, as well as if some of those close associations could have influenced his conduct in the Gorshkov deal

http://www.bharat-rakshak.com/NEWS/n...p?newsid=12713

Nail the bas#** if he was corrupt in the dealings

[JBH22]

The Central Reserve Police Force deployed commandos of the Special Armed Force in the Naxal-infested forests of Dantewada in Chhattisgarh where Maoists had trapped and gunned down 76 security personnel earlier this week.

Five platoons (about 150 personnel) of SAF, the erstwhile Commando Batallion for Resolute Action wing of CRPF, have been sent to reinforce and assist the 62nd Battalion, official sources said. The Naxals ambushed and wiped out almost the entire strength of the CRPF company of the 62nd Battalion on Tuesday in the deadliest attack on security forces.

Presently, seven companies of this battalion (more than 1,000 personnel) are operating in various districts of Chhattisgarh. A CRPF battalion has seven companies with an approximate strength of 125 personnel in each. The operational strength of a company is around 80 personnel with other service ranks. Following the attack, the CRPF was mulling to move the present battalion to its headquarters in Lucknow

http://www.bharat-rakshak.com/NEWS/n...p?newsid=12712

[JBH22]

NEW DELHI: Nothing projects geostrategic power better than aircraft carriers prowling on high seas. Powerful fighter jets tearing into the skies from a moving airfield, which can travel 600 nautical miles a day, can send shivers down any adversary’s spine. Carrier-battle groups (CBGs) can, after all, rapidly respond across the entire spectrum of operations as ‘‘situation changers’’ in times of crisis. It’s no wonder then that US has as many as 11 CBGs to deploy around the globe, giving it the capability to strike almost anywhere.

India has been making do with a solitary carrier, the 50-year-old INS Viraat, since 1987. But now, with India and Russia finally ending their bitter wrangling over the huge cost escalation in Admiral Gorshkov’s refit, the Navy is steaming towards its aim of deploying two CBGs in Indian Ocean and beyond. ‘‘By 2014-2015, we should have two full-fledged CBGs, with their accompanying fighters and other aircraft, destroyers, frigates and tankers. It will make a huge difference,’’ said Navy chief Admiral Nirmal Verma, talking exclusively to TOI.

The first CBG will be centred around the 44,570-tonne Gorshkov, rechristened INS Vikramaditya, which India will now get in early-2013 under the fresh $2.33 billion deal inked last month. ‘‘We hope to run Vikramaditya for 40 years,’’ said Admiral Verma. The second CBG will be around the 40,000-tonne indigenous aircraft carrier (IAC), whose keel was laid at Cochin Shipyard in February 2009. ‘‘There is some delay but it will be launched by first half of 2011. We should get it by 2014,’’ he added. The 45 MiG-29K fighters, contracted from Russia for about $2 billion, will operate both from Vikramaditya and IAC. Incidentally, a 65,000-tonne IAC-II is also on the drawing board. ‘‘It will be much bigger and capable of operating fighters, AEW (airborne early-warning) aircraft, tankers etc,’’ Admiral Verma said.

But for now, Navy’s intention is to ‘‘stretch’’ the operational life of the 28,000-tonne INS Viraat, even though it’s left with only 11 of its Sea Harrier jump-jets, till IAC is commissioned. With as many as 40 warships and submarines on order, coupled with a dedicated communication satellite to be launched later this year by Isro, Navy is fast emerging as a true-blue three-dimensional blue-water force.

This is critical since India’s geopolitical interests stretch right from Hormuz Strait down to Malacca Strait. ‘‘Construction of support and escort warships for the CBGs is going well,’’ said Admiral Verma. Under the Rs 8,101 crore Project-17 at Mazagon Docks, for instance, the first of the 5,300-tonne stealth frigate INS Shivalik will be commissioned this month.

‘‘The second (INS Satpura) will be delivered later this year and the third (INS Sahyadri) next year,’’ he said.

http://timesofindia.indiatimes.com/i...ow/5785929.cms

[JBH22]

The ministry of defence plans to oppose a proposal from the ministry of commerce and industry to allow foreign defence corporations to establish fully-owned defence units in India [ Images ]. The new Consolidated Foreign Direct Investment Policy, effective from April 1, limits FDI in defence units to 26 per cent. But the Department of Industrial Policy & Promotion of the commerce ministry is in favour of raising this limit.
The MoD apprehends that raising the FDI cap significantly would seriously damage India's nascent defence industry, particularly the eight MoD-owned defence public sector undertakings.
"The commerce ministry cannot raise the FDI cap without first consulting us, and we will definitely not allow 100 per cent FDI anytime soon," a senior MoD official told Business Standard on condition of anonymity.
"We have already rejected two applications for setting up Joint Venture companies with 49 per cent FDI. Where is the question of allowing 100 per cent FDI?"
The first application the MoD rejected was that of a proposed JV involving Mahindra Defence Systems (74 per cent) and UK-based BAE Systems (26 per cent); the second rejection involved L&T (74 per cent) and Franco-German corporation, EADS (26 per cent).
Explaining the rationale for raising the FDI limit, DIPP Secretary R P Singh, told Business Standard : "As an industry department, we realise that if the defence sector is opened to FDI, its impact upon the manufacturing sector in India will be great.
Foreign defence majors will be more likely to bring in sensitive technology if you allow them higher FDI. Defence production requires technology, and also huge capital investments.
If we can address security concerns, there is a chance of opening it up to 100 per cent."
Singh revealed that the DIPP had already sent a written proposal to the MoD after preliminary discussions. The DIPP letter proposes greater foreign equity in defence JVs, but does not suggest a specific FDI level.
"Things are still at a discussion stage. Our stance will get crystallised after we discuss and only then will the government of India change the policy," pointed out the DIPP Secretary.
"My personal view is that 100 per cent FDI should be allowed; but all stakeholders will contribute to the final decision."
The MoCI claims that Indian private defence manufacturers, such as L&T and the Tata Group, support the raising of FDI caps in order to allow a larger share to foreign companies.
But Business Standard has learned that R&D-oriented private sector companies are apprehensive that global majors will use their Indian subsidiaries to get the MoD to fund the development of weapons systems under the "Make" category of the Defence Procurement Policy of 2008 (DPP-2008).
The DPP-2008 allows any Indian company -- and a 100 per cent Indian subsidiary of a global major would be eligible for this -- to receive funding from the MoD for developing defence platforms under the 'make' category.
The MoD has undertaken to fund up to 80 per cent of the development cost, with the private vendor paying just
20 per cent of the development cost.
"With defence budgets coming under severe pressure in the west, what better way of obtaining funding than setting up a 100 per cent subsidiary in India that can draw from the Indian MoD", asks the CEO of a prominent private sector defence company.
"It would be entirely legitimate, and it would wipe out the Indian defence manufacturers entirely".
For smaller, less R&D-oriented Indian defence manufacturers, however, a raise in FDI caps would come as a blessing. This would allow them to benefit from borrowed technology and also reduce capital costs in setting up new manufacturing units.
The MoD's opposition, however, to increasing FDI caps stems from the fear that the entry of large private manufacturers will lead to job losses with DPSUs and Ordnance Factories.
The DIPP counters that foreign vendors are likely to partner the defence public sector in setting up manufacture.
Speaking to a CII gathering on April 1, the DIPP Secretary said, "If full investment comes here, (the foreign vendors) are not going to manufacture everything themselves.
"Lot of it will be outsourced from the Ordnance Factories. "

Since 2001, when the private sector was allowed into defence manufacture, there has been a cap of 26 per cent on FDI in defence.
The government's Economic Survey for 2008-09 had flagged the possibility of raising this to 49 per cent. The US government and industry bodies like the US-India Business Council have also lobbied for raising the cap to at least 49 per cent.

http://www.bharat-rakshak.com/NEWS/n...p?newsid=12718

[JBH22]

Defence ministry opposes hike in FDI limit

The ministry of defence plans to oppose a proposal from the ministry of commerce and industry to allow foreign defence corporations to establish fully-owned defence units in India

The new Consolidated Foreign Direct Investment Policy, effective from April 1, limits FDI in defence units to 26 per cent. But the Department of Industrial Policy & Promotion of the commerce ministry is in favour of raising this limit.
The MoD apprehends that raising the FDI cap significantly would seriously damage India's nascent defence industry, particularly the eight MoD-owned defence public sector undertakings.
"The commerce ministry cannot raise the FDI cap without first consulting us, and we will definitely not allow 100 per cent FDI anytime soon," a senior MoD official told Business Standard on condition of anonymity.
"We have already rejected two applications for setting up Joint Venture companies with 49 per cent FDI. Where is the question of allowing 100 per cent FDI?"
The first application the MoD rejected was that of a proposed JV involving Mahindra Defence Systems (74 per cent) and UK-based BAE Systems (26 per cent); the second rejection involved L&T (74 per cent) and Franco-German corporation, EADS (26 per cent).
Explaining the rationale for raising the FDI limit, DIPP Secretary R P Singh, told Business Standard : "As an industry department, we realise that if the defence sector is opened to FDI, its impact upon the manufacturing sector in India will be great.
Foreign defence majors will be more likely to bring in sensitive technology if you allow them higher FDI. Defence production requires technology, and also huge capital investments.
If we can address security concerns, there is a chance of opening it up to 100 per cent."
Singh revealed that the DIPP had already sent a written proposal to the MoD after preliminary discussions. The DIPP letter proposes greater foreign equity in defence JVs, but does not suggest a specific FDI level.
"Things are still at a discussion stage. Our stance will get crystallised after we discuss and only then will the government of India change the policy," pointed out the DIPP Secretary.
"My personal view is that 100 per cent FDI should be allowed; but all stakeholders will contribute to the final decision."
The MoCI claims that Indian private defence manufacturers, such as L&T and the Tata Group, support the raising of FDI caps in order to allow a larger share to foreign companies.
But Business Standard has learned that R&D-oriented private sector companies are apprehensive that global majors will use their Indian subsidiaries to get the MoD to fund the development of weapons systems under the "Make" category of the Defence Procurement Policy of 2008 (DPP-2008).
The DPP-2008 allows any Indian company -- and a 100 per cent Indian subsidiary of a global major would be eligible for this -- to receive funding from the MoD for developing defence platforms under the 'make' category.
The MoD has undertaken to fund up to 80 per cent of the development cost, with the private vendor paying just
20 per cent of the development cost.
"With defence budgets coming under severe pressure in the west, what better way of obtaining funding than setting up a 100 per cent subsidiary in India that can draw from the Indian MoD", asks the CEO of a prominent private sector defence company.
"It would be entirely legitimate, and it would wipe out the Indian defence manufacturers entirely".
For smaller, less R&D-oriented Indian defence manufacturers, however, a raise in FDI caps would come as a blessing. This would allow them to benefit from borrowed technology and also reduce capital costs in setting up new manufacturing units.
The MoD's opposition, however, to increasing FDI caps stems from the fear that the entry of large private manufacturers will lead to job losses with DPSUs and Ordnance Factories.
The DIPP counters that foreign vendors are likely to partner the defence public sector in setting up manufacture.
Speaking to a CII gathering on April 1, the DIPP Secretary said, "If full investment comes here, (the foreign vendors) are not going to manufacture everything themselves.
"Lot of it will be outsourced from the Ordnance Factories. "

Since 2001, when the private sector was allowed into defence manufacture, there has been a cap of 26 per cent on FDI in defence.
The government's Economic Survey for 2008-09 had flagged the possibility of raising this to 49 per cent. The US government and industry bodies like the US-India Business Council have also lobbied for raising the cap to at least 49 per cent.

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