Archive for December, 2014

Modernisation of the armed forces got a whopping Rs.1.23 lakh crore (Rs.1.23 trillion/$19 billion) boost in the year just ending, but worrisome gaps – the failure to close a deal to replace a combat jet inducted in the 1960s and a crippling shortage of “fighting-rank” officers – remain.

Modernisation of the armed forces got a whopping Rs.1.23 lakh crore (Rs.1.23 trillion/$19 billion) boost in the year just ending, but worrisome gaps – the failure to close a deal to replace a combat jet inducted in the 1960s and a crippling shortage of “fighting-rank” officers – remain.

That the funding came in the first six months of the new BJP-led government was indicative of its determination to overcome almost a decade of sloth caused by A.K. Antony’s bid to keep his image “clean” while he was defence minister (till May).

The funds were cleared by five meetings of the Defence Acquisiton Council – four chaired by Arun Jaitley when he held additional charge of the ministry and one by Manohar Parrikar. The monies will go towards the purchase of six stealth submarines (Rs.50,000 crore), “Spike” Israeli anti-tank guided missiles (Rs.3,200 crore), two midget submarines (Rs.2,017 crore), 12 Dornier maritime reconnaissance aircraft (Rs.1,850 crore), 363 BMP-II infantry combat vehicles (Rs.1,800 crore), ship-borne Russian Uran missiles (Rs.1,436 crore), 1,768 railway wagons (Rs.740 crore) and 1,761 vehicle-mounted radio relay containers (Rs.660) crore, among others.

Much of this, for instance the submarines and the Dorniers, will be made within the country and will majorly take forward Prime Minister Narendra Modi’s ‘Make in India’ campaign.

Other positives during the year included raising the foreign direct investment (FDI) in the defence sector from 25 percent to 49 percent, the indigenous nuclear powered submarine INS Arihant heading out for sea trials, and beginning of series production of the indigenous Tejas light combat aircraft.

Once INS Arihant is commissioned about two years from now, it would complete India’s nuclear triad of strategic bombers, intercontinental ballistic missiles (ICBMs) and submarine-launched ballistic missiles (SLBMs).

India has for long been working on a missile defence shield and this would get a further boost with the construction, under wraps at Visakhapatnam, of a stealth vessel armed with an Aegis type system that employs powerful computer and radar technology to track and guide weapons to destroy enemy targets.

A defence ministry source said this vessel would patrol the seas between Mumbai and Jamnagar to protect both India’s commercial capital and the country’s largest oil refinery.

As for the combat jet, it was in 2012 that the Indian Air Force (IAF) zeroed in on French aviation major Dasault’s Rafale after a six-aircraft competition for a $20 billion deal for 126 medium multi-role combat aircraft (MMRCA) to replace its Soviet-era MiG-21 jets that have been crashing with maddening regularity.

The tender itself was floated in 2007 and the six aircraft shortlisted in 2010, but there has been concrete action only in the last two years due to protracted price negotiations and differences in calculating life-cycle costs and factoring in the cost of transferring technology.

One fallout has been the alarming reduction in the IAF squadrons (16+2 aircraft each) to 25 from its sanctioned strength of 39.

“It’s not just a case of depleting squadrons. The Rafale dates from the mid-1980s and even assuming the deal is clinched this year, by the time the last of the jets are inducted, the technology will be more than 40 years old,” an officer involved in the selection process told IANS, declining to be identified on the ground he was not authorised to speak to the media.

While the initial lot of 18 aircraft (one squadron) will come in fly-away condition, the remaining will be progressively manufactured in the country by Hindustan Aeronautics Limited. The number could eventually go up to 200 as there is a provision for a 50 percent hike as a follow-on order.

On the officer front, the Indian Army, which is authorised 48,000, is short of 7,764 lieutenant colonels, majors, captains and lieutenants, considered the “fighting rank” officers. The Indian Navy is short of 1,499 lieutenant commanders, lieutenants and sub-lieutenants against its authorised strength of 9,000, and the IAF short of 357 wing commanders, squadron leaders, flight lieutenants and flying officers against its authorised strength of 12,000 officers.

The first quarter of the year saw a nasty hiccup with Admiral D.K. Joshi putting in his papers as the Indian Navy chief after a series of mishaps, including the sinking of a submarine in Mumbai harbour after an explosion and a fire aboard another.

As the year progressed, the chill in the India-Russia defence ties became more pronounced, with New Delhi clearly stating, ahead of President Vladimir Putin’s visit earlier this month, that it could not indefinitely wait for a fifth-generation stealth fighter, an understanding on which was reached during Antony’s visit to Moscow in 2007.

Russia’s decision to deepen its military ties was another matter of concern but not entirely unexpected. After all, the US has overtaken Russia as India’s principal source of armaments and other military hardware – in the last three years, this country made purchases worth Rs.32,615 crore from the US, against Rs.25,364 crore from Russia.

“This has been caused by the changing global paradigm and the trend will continue with both India and the US saying they want to put the past behind them and move ahead. Also, don’t forget that ‘Make in India’ has a better chance of moving forward with the US than with Russia,” the defence ministry source told IANS.

Source : Defence News
Advertisements
The Defence Research and Development Organisation (DRDO) on Sunday said that the agency has set its sight to make India self-sufficient in producing defence equipment ranging from missiles, manned and unmanned aircrafts to sensors among others.

“The DRDO had been depending on the indigenisation of the weapon system. We have now taken on five new missions to make sure that we have cutting-edge capabilities,” Director General Dr Avinash Chander told ANI.

“We are making ourselves totally self-reliant in making our own missiles; manned and unmanned aircrafts to dominate the skies; go into modernising the army with better mobility. We are also looking at providing state of the art sensors, communication radars and sonar,” he added.

Dr Chander also said that the agency has taken major strides in ensuring that weapons are delivered to the armed forces on time to meet their immediate requirements.

“The DRDO is the prime organisation for designing indigenous defence systems. In that context, we have a major role to indigenise the systems and develop our own technologies. We have taken major initiatives to make sure that we deliver the immediate weapons on time and giving the cutting edge capabilities,” he said.

Source : Defence News
PARIS/NEW DELHI: With the Indo-French $6 billion surface-to-air missile systems project in doldrums, France is hoping that new government’s push for “Make in India” will lead to inking of the long delayed deal.

 France remains hopeful of signing the deal even though Indian armed forces are sceptical about the missile since indigenously developed Akash is in play.
Titled Maitri, the project for joint development and production between India’s Defence Research and Development Organisation (DRDO) and France’s MBDA, was initiated in 2007 and a MoU to co-develop the surface-to-air missile (SRSAM) was signed during French President Francois Hollande’s visit to India in February last year.Since then, the situation has changed as Indian Air Force feels that its requirements could be met by indigenous Akash surface-to-air missile weapon system.

Asked about reservations by the Air Force, a top MBDA official in Paris told PTI, “we have written back answering the issues raised by the IAF. We are hopeful that this deal would be inked soon.”

The official at MBDA also said that the “Make in India” project is apt for the deal.

He added that while the range of SRSAM will be of 40 km, Akash’s range is only 25 km.
Sources at Indian Air Force said that they have nothing against the Maitri project per se but would prefer to use the available Akash missile rather than wait for the Indo-French ones to come.

“The Maitri project can go on but we want the missiles and Akash is serving that purpose,” sources said.

Refusing to comment about the Maitri project, sources in DRDO said that the Akash missile is already in play and is based on a similar platform like the Maitri.

However, the French are pushing for Maitri. “SRSAM is part of our strategic dialogue with India and is raised whenever top officials and leaders from both sides meet. We believe that a lot of information has been handed over after the new government has taken over in Delhi,” an MBDA official said.

French officials said that both Akash and Maitri can be inducted as the two will improve overall weapon system of India.

MBDA believes that the Maitri will be better for India as it will be “more cost-effective to develop a new missile than to upgrade a missile based on outdated propulsion”.

India is working on Akash Mark-II with longer range and MBDA is even calling Maitri as a potential Akash Mark-II.

As per the deal, the Maitri missiles will be produced only in India and the first deliveries will happen three years after the agreement is signed.

India can also export the missile with “MBDA support”. The French defence major said Source Codes for Maitri will be delivered to DRDO giving an autonomy to India for guided missiles and seekers.

French Defence Minister Jean-Yves Le Drian had also written to the Modi government about the project.

The issue was also raised when Drian and the country’s Foreign Minister visited India since the Modi government came into power, sources at MBDA said.

Source : Defence News
An opportunity has arisen for Russian shipyards to tap the Indian market, with New Delhi canceling a billion dollar deal with South Korea for the supply of eight Mine Countermeasure Vessels (MCMV) to the Indian Navy over suspected irregularities.

 An MCMV is designed for the location of and destruction of naval mines, combining the roles of minesweeper and mine hunter in one hull.
Strategically, the MCMVs are of crucial importance for all countries as terrorists become more and more tech-savvy and embark on newer ways to wreak mayhem. India and Russia are no exception. There were several intelligence reports recently in India conveying threats from terror outfits from the sea.

In early November, the port of Kolkata in West Bengal was put on a high alert after intelligence reports warning of a possible terror attack by well-trained terrorists with help from Pakistan Navy elements. Two warships, INS Khukri and INS Sumitra, were ordered to set sail as a pre-emptive move.

As many as 41 ships and vessels of different parameters are currently being constructed in India at a cost of $32 billion. However, given the current security scenario, the role of MCMVs is of increasing significance for keeping sea lanes mine-free, protecting naval assets and for clearing minefields near enemy shores for launching offensive attacks.

India has previously done business with Russia with MCMVs. The Indian Navy currently operates at least seven aging minesweepers bought from Russia four decades ago.

But before we elaborate on the Russian angle in this context, it will be in order to give a brief background on India’s cancelation of the MCMV deal with South Korea.

Cancelation of S. Korean Contract ::
The Indian decision, the first major decision taken by Manohar Parrikar after taking over as defense minister on November 9, was formally conveyed to South Korea earlier this month, Sitanshu Kar, chief spokesperson of the Defense Ministry confirmed to this writer.

The South Korean company Kangnam Corporation had worked hard for years for the minesweeper deal with the previous government headed by Manmohan Singh and had won the competition in 2008 by quoting the lowest price for the minesweepers.

The Bharatiya Janata Party (BJP) government inherited the South Korean minesweeper contract along with a major lacuna – the suspicion that Kangnam bagged the deal with the help of a middleman, which is a big ‘no-no’ for the Indian Defense Ministry. The matter was further complicated as the Korean company refused to give a guarantee that no middleman was used to clinch the MCMV deal.

The BJP government was extra cautious about the minesweeper deal as one of the clauses of the deal was that the Koreans would deliver two fully built MCMVs to India while the rest of the six boats would be built by Goa Shipyard Limited through technology transfer.

Manohar Parrikar is from Goa and is a former Goa chief minister. He felt that the MCMV deal negotiated by the previous government could be a trap for him and the BJP.

However, the Defense Ministry has not blacklisted Kangnam Corporation for the simple reason that blacklisting invariably backfires as the rest of the companies having required specialization take advantage of the situation and jack up their prices.

India’s Defense Acquisition Council (DAC) has given its approval to Goa Shipyard Ltd (GSL) for construction of all eight minesweepers for the Indian Navy, with the option of additional vessels. The Indian Navy requires at least 24 MCMVs urgently.

The Indian government is likely to encourage roping in a foreign vendor for the MCMV project. This is where the Russian angle comes in.

How Russia can be on board ::
Russia is working on its own MCMV project: Aleksandrit class minesweeper (Project 12700). The new Russian minesweeper is being constructed for the Russian Navy. The first ship was laid down on September 22, 2011 and was launched in June 2014.

Currently four ships are planned to be constructed but Russia plans to induct 30 minesweepers in its navy by 2050. The Russian MCMV’s hull is made of monolithic fiberglass, which gives it advantage in minesweeping. The vessel’s USP is that it is capable of detecting and destroying all kinds of modern sea mines, even if they are silt-covered.

At a time when Indian is looking for foreign vendors who have proven expertise in building MCMVs, Russia can throw its hat in the ring. This could be Russia’s wild card entry into a new defense area of MCMVs and get on board with the Indians at this opportune time when Prime Minister Narendra Modi is eagerly looking toward foreign companies’ participation in his pet ‘Make in India’ scheme.

But this is not going to be easy as the South Koreans won’t be throwing in the towel. Indian Foreign Minister Sushma Swaraj would be in South Korea this weekend (December 27-28) to attend a meeting of the India-South Korea Joint Commission.

The Koreans will definitely be raising the MCMV issue with Swaraj. India has not shut the door on South Korea. Its problem was only with regard to its concerns on the suspected involvement of middlemen.

Moreover, India would not like to let the cancelation of the MCMV deal affect its bilateral relations with South Korea, an important country for India over the larger issue of its strategies in dealing with China. Political ties between India and South Korea were put on a very high pedestal by the previous UPA government and the Narendra Modi government is also keen on continuing with the same policy toward South Korea.

India and South Korea have a bilateral trade of $17 billion and Joongyu Lee, South Korean ambassador in New Delhi, went on record as saying at an event in New Delhi on 18 December that the two countries had the trade potential of $100 billion.

What the Russians can do is to convince India of their utility and proven expertise in the area. But Moscow will have to take the initiative. It could be a multibillion dollar opportunity as the two sides can sweeten the deal for themselves by developing these vessels for joint exports as well.

This may well be a low-hung fruit as boosting defense exports is a stated objective of the Modi government. If all goes well this could be another input in consolidating Indo-Russian defense ties, a priority area for both New Delhi and Moscow.

Source : Defence News
NEW DELHI: Four strategic places along the Sino-India border have been identified by the Defence Ministry for rail connectivity in the first phase, Lok Sabha was informed today.

They are Missamari-Tenga-Tawang (378 km), Bilaspur-Manali- Leh (498 km), Pasighat-Tezu-Rupai (227 km) and North Lakhimpur-Bame-Silapathar (249km), Minister of State for Railways Manoj Sinha said.

In a written reply, he said, “The Railway Ministry has requested the Defence Ministry to convey approval to carry out final location survey at a cost of Rs 345 crore and provide the necessary funds.”

The time of completion and cost, however, cannot be ascertained till completion of the final location survey and detailed geo-technical studies and consequent sanction of the project, he added.

To a related question, he said no strategic line along Pakistan border has been identified by the Defence Ministry in the first phase.

Source : Defence News
Russia will help India to renew its aging military hardware, providing the country with its most advanced technologies. Russian-Indian joint military projects will help India to bolster its defense industry.

MOSCOW, December 19 (Sputnik), Ekaterina Blinova – Russia will provide India with its most advanced weapons and technologies in order to renew Delhi’s aging military hardware; since the countries have launched joint military projects, India has obtained new opportunities on the weapons market.

“Russia wants early inking of the final R&D contract for the joint fifth-generation fighter (FGFA) project, in which India will invest $5.5 billion to develop a stealth fighter. India will spend around $25 billion on 127 such fighters, to be built domestically, in the FGFA project,” the Times of India reported.

India will also assemble 400 Russian Ka-226T helicopters a year. The deal is important to India, since the country needs to upgrade its aging military hardware.

“I am pleased that Russia has offered to fully manufacture in India one of its most advanced helicopters. It includes the possibility of exports from India. It can be used for both military and civilian use. We will follow up on this quickly,” Indian Prime Minister Narendra Modi said in an official statement as quoted by Defense News.

Russia is also ready to provide India with its Akula-II class nuclear-powered submarines, which will bolster India’s capability to maintain control over its territorial waters in the Indian Ocean amid growing geopolitical tensions in the region.

Bloomberg notes that India acquired its first nuclear submarine costing $1 billion from Russia in 2012. Delhi is intended to renew its old diesel-power fleet of submarines, since “half of them were commissioned in the 1980s.”

It should be noted that India has always been one the biggest Russia’s defense customer. The Times of India points out that Russian-Indian arms deals included “refit of aircraft carrier Admiral Gorshkov or INS Vikra maditya ($2.33 billion), six Talwar-class stealth frigates (almost $2 billion), 272 almost $2 billion), 272 Sukhois (project cost over $12 billion), 45 MiG-29Ks ($2 billion), 139 Mi-17 V5s helicopters (over $2 billion).”

“Russia will remain our most important defense partner,” Prime Minister Narendra Modi underscored during his meeting with Vladimir Putin earlier this month, pledging to deepen the defense cooperation.

Source : Defence News
By the year 2020, could emerge as the third-biggest country in terms of defence-related expenditure, US-based consulting firm projected in a study published on Friday.
7_img131214094036
India, home to the world’s second-largest population, currently stands eighth in total spending on defence (expenditure, procurement, research and development). The country in 2014 spent $47.78 billion (Rs 3,01,299 crore), higher than those like Germany, Brazil, south Korea, Italy, Canada, according to the IHS study, where the NYSE-listed research firm analysed specific forecasts for defence-related expenditure by 91 countries and captured 98 per cent of the global defence spend.
The US, which currently is the biggest spender on defence — it spent $586.92 billion in 2014 — is followed by ($176.25 billion) as a distant second. The UK, Japan, the Russian federation, France and Saudi Arabia also spent more than India during the year, the IHS study revealed.
However, the study points out, though the will continue to be on top in defence expenditure by 2020 as well, the combined spend by the Asia-Pacific, too, will have risen significantly by then. The region currently spends $170 billion less on defene than the US; by 2020, it will spend exceed the US on this. “Spending in Asia-Pacific, meanwhile, is expected to grow to $547.1 billion by 2020, over 30 per cent of the global total,” said Craig Caffrey, senior defence budgets analyst at IHS Aerospace & Defence.
The study also forecast defence spend to flat-line over the next two years, as fiscal constraints among oil-producing states in West Asia and North Africa removed a key source of growth.
“By 2019, for the first time in history, the North Atlantic Treaty Organization (Nato) will not account for a majority of worldwide defence expenditure. It accounted for almost two-thirds of global spending as recently as 2010,” said IHS. expenditure was expected to fall in real terms from $869.6 billion in 2014 to $837.9 billion by 2020. By the end of the decade, defence spending would decline from 54.4 per cent of total expenditure to 48.5 per cent, it added.
“By 2019, the alliance (Nato) will fail to account for the majority of worldwide defence expenditure… By 2020, the centre of gravity of the global defence spending landscape is expected to have continued its gradual shift away from the developed economies of Western Europe and North America and towards emerging markets, particularly in Asia,” said Fenella McGerty, senior defence budget analyst at IHS Aerospace & Defence.
Despite the region not being immune to the present challenges in the global economy, Asia’s defence expenditure growth is expected to accelerate from 3.3 per cent in 2014 to 4.8 per cent next year. Unlike in West Asia and North Africa, falling oil prices were expected to have a net positive effect on economic growth in China, India and Indonesia, and would aid government finances, the study said.
Source : Business Standard



TOKYO — When India raised the upper limit on foreign ownership in the defense industry to 49% from 26% in August, it had three goals in mind: improve the current-account balance, introduce foreign military technologies, and set the stage for eventually exporting domestically made weapons.

India’s leading private-sector companies responded enthusiastically to the liberalization move — part of the country’s “Make in India” campaign — and have been ramping up their defense-related businesses ever since.

Anand Mahindra, chairman of Mahindra group, a conglomerate involved in everything from cars to information technology, welcomes the change. “[Allowing] 49% foreign direct investment in the defense sector will enable us to access global partners who could complement our strengths and bring in new technologies,” he said.

The group has expressed plans to develop radar systems, as well as parts for armored vehicles and airplanes.

Mahindra is far from alone in sensing a profit opportunity. Tata Power SED, a unit of Tata Group, India’s biggest conglomerate, formed a technological partnership with Honeywell International of the U.S. for military-use navigation systems. Bharat Forge, a major autoparts maker, has begun developing self-propelled artillery and howitzers using its metalworking technology, the company’s forte. Larsen & Toubro, India’s largest construction and engineering company, is looking to quadruple annual sales at its defense division to $1 billion in five years.

Even small and midsize companies, such as textile mills, are eager to supply their products to the military.

In August, the Indian navy commissioned the INS Kolkata, a guided-missile stealth destroyer. One of the largest Indian-made warships, the vessel is equipped with the latest anti-air and submarine weaponry. At the commissioning ceremony, held at a naval base in the western city of Mumbai, Prime Minister Narendra Modi praised the ship, saying, “When people have a sense of our military capability, nobody will ever dare to cast an evil eye on our nation.”

Currently the world’s biggest weapons importer, India has been investing aggressively in warships and aircraft in recent years. In the budget for the fiscal year through March 2015, 2.29 trillion rupees ($36.7 billion) was earmarked for military spending, up 11.2% from the previous year and an increase of 150% from the year through March 2008. Only eight countries spent more.

India became the sixth country with a nuclear submarine after it purchased one from Russia, and in August 2013 it launched its first domestically built aircraft carrier, the 40,000-ton Vikrant, in which China is showing a strong interest. India is currently field testing its first homegrown nuclear submarine, the Arihant, aiming to deploy the vessel by the end of 2015.

The country’s air force is also expanding rapidly. In 2012, French company Dassault Aviation won a $20 billion bid to supply India with 126 of its Rafale midsize multirole fighters. And in 2013, India began deploying Boeing’s C-17 Globemaster III transport planes, which can carry tanks. The country is also planning to use U.S.-made attack helicopters.

India’s hasty military buildup is fueled in part by concerns about China, which is stepping up maritime expansion, as well as misgivings about neighboring Pakistan. The threat of cross-border terrorist attacks is also ever-present. India appears convinced it must expand its navy, air force and army simultaneously to counter these perceived threats.

But the more urgent aim of the drive is to modernize as soon as possible the country’s aging and obsolete weapons and equipment, which lag far behind global standards in quality and quantity. Its airplane and tank fleets consist largely of old Russian models, and its infantry equipment, such as wireless communications and night-vision devices, is far inferior to that of the People’s Liberation Army of China, India’s biggest potential adversary.

India’s policy of building up its underdeveloped defense sector appears to have created the industrial momentum the government was hoping for, with foreign and domestic companies alike rushing to a market expected to be worth hundreds of billions of dollars over the next decade.

Source : Defence News
New Delhi: The Defence Acquisition Council (DAC) on Wednesday approved proposals worth Rs 4,444 crore, including the purchase of four helicopters for survey vessels at Rs 2,324 crore, but deferrred a decision on a joint bid of Tata Sons Ltd and Airbus for replacing IAF’s Avro transport fleet.

Besides giving its go-ahead to acquire four choppers, the DAC, under Defence Minister Manohar Parrikar, also cleared the upgradation of the mobile integrated electronic warfare system, Samyukta, at a cost of Rs 1,682 crore, a Defence Ministry spokesperson said.

The DAC also cleared a proposal relating to purchase of P-7 Heavy Drop Platform, which is used for military logistics, for Rs 402 crore, the official said.

Another proposal of Rs 36 crore for acquiring propeller engine for offshore patrol vessel of the Coast Guard was also given a go-ahead, the spokesman said.

The DAC, however, could not arrive at a decision on a joint bid by Tata Sons Ltd and Airbus to replace the Indian Air Force’s Avro transport fleet, according to sources.

European consortium Airbus Defence and Space has made a joint bid with Tata Advanced Systems Ltd (TASL) for 56 medium-transport aircraft of IAF valued at Rs 20,000 crore (USD 3 billion).

The euro 14 billion (USD 17.8 billion) Airbus Defence has tied up with Tata Sons’ subsidiary (TASL) as its Indian production partner for the order.

The bid is for 56 twin-turboprop tactical military aircraft, including 16 in fly-away condition from the Airbus Defence final assembly line and the remaining 40 to be built and assembled by TASL in Hyderabad.

The aircraft is in the six-eight tonne class, with a cruise speed of 800 kms per hour and a range of 2,500-2,800 kms.

The IAF had floated the tender after the DAC had on July 19 cleared the proposal for manufacturing the 56 transport aircraft in the private sector, excluding state-run defence firm Hindustan Aeronautics Ltd (HAL), which built the Avro planes.

Source : Defence News
NEW DELHI — Prime Minister Narendra Modi has cleared $19 billion of arms procurement proposals since taking power in May, almost double India’s spending on weapons in the last fiscal year as he tries to modernize the country’s military.

The blitz of 41 approvals spans heavy guns to submarines as Modi seeks to counter China’s rising military heft and take a firmer stance on border disputes with Pakistan. The vice chief of the Indian Air Force, for one, has never seen anything like this pace from the nation’s Defence Acquisition Council.

“I don’t recall the council clearing these many number of procurement proposals within six months and in four meetings,” Air Marshal R. K. Sharma, who has served in the air force for four decades, said in an interview in New Delhi on Dec. 4. “The indication from the government is that this trend in decision- making will continue.”

The approvals add to Modi’s other steps, such as allowing more foreign investment in defense and trying to overcome a history of graft scandals that slowed purchases. The changes are stirring interest: Larsen & Toubro Ltd., India’s largest engineering business, said Europe’s Airbus Group is assessing whether to boost its stake in their defense joint venture. Boeing Co. is already looking for investment options.

Modi in July increased the limit on foreign-direct investment in defense to 49 percent from 26 percent.

That’s part of a plan to stoke domestic production after India surpassed China in 2008-2012 to become the world’s largest importer of major conventional weapons. The premier is also seeking to rely less on state-run companies that have failed to help replace obsolete weapons.

“We’re very happy to increase the scope in the joint venture” with Airbus, Larsen & Toubro’s Heavy Engineering President M. V. Kotwal said in a Dec. 9 phone interview. “They are still under discussion at their end, so I can’t mention about a time-line. They have expressed that they would like to look at their presence in India in a bigger way.”

Larsen & Toubro and Airbus Defence & Space set up their L&T Cassidian venture in 2011, focusing on products such as radar, avionics and electronic warfare. Mumbai-based Larsen & Toubro holds 74 percent and Airbus the rest.

Sunny Guglani, a spokesman for the Indian aerospace unit of Airbus, said the company doesn’t comment on speculation. Yves Guillaume, the president for Airbus in India, said the nation’s push to improve its defenses is encouraging.

BAE Systems, based in London, said the new government has given global defense companies reasons to be optimistic. The rise in the investment cap “substantially increases the attractiveness of the Indian market as a place to transfer technology and develop know-how,” BAE’s India and Southeast Asia Managing Director John Brosnan said in an e-mail interview.

Nuclear-armed India has approved 41 proposals at a cost of 1.2 trillion rupees ($19 billion) since June, Defense Minister Manohar Parrikar told parliament in New Delhi this month. Spending on defense equipment in the 12 months ended March 2014 was 669 billion rupees, he said.

The proposals include 190 billion rupees for submarines, a 158 billion-rupee purchase of artillery — the first acquisition of large-caliber guns since the 1980s — and a 32 billion-rupee deal to buy 8,356 Spike anti-tank guided missiles and 321 launchers from Rafael Advanced Defense Systems Ltd.

Among pending deals is a contract for 126 Rafale combat planes from Dassault Aviation SA for about $11 billion, the world’s biggest order of fighter jets in about two decades.

Chicago-based Boeing is close to winning a $2.5 billion deal to supply 22 Apache helicopters and 15 Chinook heavy-lift transport aircraft to the Indian Air Force. Airbus is jointly bidding with Tata Sons to provide C295 transport aircraft.

Modi faced defense spending near a 50-year low as a percentage of the economy when he swept to power. The military’s reputation has been tarnished by accidents such as the deadly sinking of navy vessels and a fighter jet that ejected its pilots without warning before crashing.

Modi’s challenges include reducing the risk of future graft scandals. Parrikar, who became defense minister last month, has vowed quick and transparent decision-making.

Concern also lingers that preventing foreign companies form controlling joint ventures may curb inflows. Lockheed Martin Corp. said in July that though Modi’s move to raise the overseas investment limit is positive, the government needs to do more to lure big-ticket products involving intellectual property.

Even so, Modi is “serious” about modernizing the armed forces, said Nitin A. Gokhale, a New Delhi-based independent national security analyst. “This government is speeding up processes,” he said.NEW DELHI — Prime Minister Narendra Modi has cleared $19 billion of arms procurement proposals since taking power in May, almost double India’s spending on weapons in the last fiscal year as he tries to modernize the country’s military.

NEW DELHI — Prime Minister Narendra Modi has cleared $19 billion of arms procurement proposals since taking power in May, almost double India’s spending on weapons in the last fiscal year as he tries to modernize the country’s military.

The blitz of 41 approvals spans heavy guns to submarines as Modi seeks to counter China’s rising military heft and take a firmer stance on border disputes with Pakistan. The vice chief of the Indian Air Force, for one, has never seen anything like this pace from the nation’s Defence Acquisition Council.

“I don’t recall the council clearing these many number of procurement proposals within six months and in four meetings,” Air Marshal R. K. Sharma, who has served in the air force for four decades, said in an interview in New Delhi on Dec. 4. “The indication from the government is that this trend in decision- making will continue.”

The approvals add to Modi’s other steps, such as allowing more foreign investment in defense and trying to overcome a history of graft scandals that slowed purchases. The changes are stirring interest: Larsen & Toubro Ltd., India’s largest engineering business, said Europe’s Airbus Group is assessing whether to boost its stake in their defense joint venture. Boeing Co. is already looking for investment options.

Modi in July increased the limit on foreign-direct investment in defense to 49 percent from 26 percent.

That’s part of a plan to stoke domestic production after India surpassed China in 2008-2012 to become the world’s largest importer of major conventional weapons. The premier is also seeking to rely less on state-run companies that have failed to help replace obsolete weapons.

“We’re very happy to increase the scope in the joint venture” with Airbus, Larsen & Toubro’s Heavy Engineering President M. V. Kotwal said in a Dec. 9 phone interview. “They are still under discussion at their end, so I can’t mention about a time-line. They have expressed that they would like to look at their presence in India in a bigger way.”

Larsen & Toubro and Airbus Defence & Space set up their L&T Cassidian venture in 2011, focusing on products such as radar, avionics and electronic warfare. Mumbai-based Larsen & Toubro holds 74 percent and Airbus the rest.

Sunny Guglani, a spokesman for the Indian aerospace unit of Airbus, said the company doesn’t comment on speculation. Yves Guillaume, the president for Airbus in India, said the nation’s push to improve its defenses is encouraging.

BAE Systems, based in London, said the new government has given global defense companies reasons to be optimistic. The rise in the investment cap “substantially increases the attractiveness of the Indian market as a place to transfer technology and develop know-how,” BAE’s India and Southeast Asia Managing Director John Brosnan said in an e-mail interview.

Nuclear-armed India has approved 41 proposals at a cost of 1.2 trillion rupees ($19 billion) since June, Defense Minister Manohar Parrikar told parliament in New Delhi this month. Spending on defense equipment in the 12 months ended March 2014 was 669 billion rupees, he said.

The proposals include 190 billion rupees for submarines, a 158 billion-rupee purchase of artillery — the first acquisition of large-caliber guns since the 1980s — and a 32 billion-rupee deal to buy 8,356 Spike anti-tank guided missiles and 321 launchers from Rafael Advanced Defense Systems Ltd.

Among pending deals is a contract for 126 Rafale combat planes from Dassault Aviation SA for about $11 billion, the world’s biggest order of fighter jets in about two decades.

Chicago-based Boeing is close to winning a $2.5 billion deal to supply 22 Apache helicopters and 15 Chinook heavy-lift transport aircraft to the Indian Air Force. Airbus is jointly bidding with Tata Sons to provide C295 transport aircraft.

Modi faced defense spending near a 50-year low as a percentage of the economy when he swept to power. The military’s reputation has been tarnished by accidents such as the deadly sinking of navy vessels and a fighter jet that ejected its pilots without warning before crashing.

Modi’s challenges include reducing the risk of future graft scandals. Parrikar, who became defense minister last month, has vowed quick and transparent decision-making.

Concern also lingers that preventing foreign companies form controlling joint ventures may curb inflows. Lockheed Martin Corp. said in July that though Modi’s move to raise the overseas investment limit is positive, the government needs to do more to lure big-ticket products involving intellectual property.

Even so, Modi is “serious” about modernizing the armed forces, said Nitin A. Gokhale, a New Delhi-based independent national security analyst. “This government is speeding up processes,” he said.

Source : Defence News