Defence Acquisition Council clears new Defence Procurement Procedure Published March 22, 2016

After a delay of several months, the new Defence Procurement Procedure (DPP), focusing on India-made products and fast-tracked acquisition process, was today cleared by the top committee of the Defence Ministry. However, the Defence Acquisition Council(DAC), chaired by Defence MinisterManohar Parrikar, did not finalise the key chapter on strategic partnership, which the Minister said will be done in another couple of months. Parrikar said the new blacklisting policy will also be issued separately next month and made it clear that there will be “no relaxation” for those who have already been blacklisted and “bribe givers” will be punished. However, the Minister said that existing blacklisted firms will be allowed to appeal before a vigilance committee of the defence Ministry for delisting under the new policy. “The DAC has given the final node to the new DPP. We expect that the new DPP will be loaded on to our website on March 28. It will be effective from April 2,” Parrikar told reporters here. The Minister underlined, that procedure is only a small proportion of what has to be done. “Mindset of people has to change. There is too much of unnecessary secrecy in defence procurement,” he said. Many aspects of the DPP was already cleared by the DAC in February. This included a new category to acquire weapons – IDDM (Indigenously Designed, Developed and Manufactured). The DAC has said that IDDM will be the first preferred category of preference under new DPP, which will guide how India buys its arms and equipment for its armed forces. The new DPP also allows the DAC to take a “fast-track” route to acquire weapons, something which was limited to only the armed forces till now. “There is an impression that fast track can only be done in the event of a war but this is not the case,” Parrikar said. Noting that all earlier DPPs were procedure driven, Parrikar said the new document will come with a preamble, that will be a fall back option in case of any problem, like single vendor situation among others. In a bid to cut down on the time taken for acquisition process, the new DPP mandates that all AONs (Acceptance of Necessity) of a particular platform will be valid only for only six months as against the 12 months deadline now. Also, no AON will be notified until it is accompanied by a finalised RFP (Request for Proposal or tender). This means that the time taken for an RFP is cut down drastically.
Source: The Economic Times

Govt to unveil new defence policy on Mar 28, effective Apr 1

The Defence Acquisition Council, the apex body in the Ministry of Defence, today said it had approved the Defence Procurement Policy (DPP) 2016, which will come into effect from April 1, 2016.

The Defence Acquisition Council, the apex body in the Ministry of Defence, today said it had approved the Defence Procurement Policy (DPP) 2016, which will come into effect from April 1, 2016. The DPP, which will have provisions to fast-track acquisition of critically-needed equipments, will be unveiled at the Defence Expo on March 28. The policy will give first priority to Indian Designed Developed and Manufactured (IDDM) acquisition and relax norms with respect to blacklisting. There will be strategic partnerships in case of helicopters, fighters and submarine prokects. As well, the government will updated the Ordnance Factory Board and Defence Procurement Manuals in 2 months. In an interview with CNBC-TV18, PwC India Partner Dhiraj Mathur, defence expert Anil Chait and M&M’s SP Shukla discussed the policy and outlined their views on the same.

Below is the transcript of the intervew on CNBC-TV18.

Kritika: Is this enough to be able to fast track investment because that is the one area that has been lagging behind other sectors?

Mathur: Yes, absolutely because the key issue with the defence sector is it is a monopoly market. This is a single buy of the government that goes by everyone. So, having a provision for strategic partnerships will allow private Indian companies.

Kritika: But strategic partnership norms will be included later this year. So, the other areas that have been announced is the fast track that Rituparna pointed out the Indigenously Designed, Developed and Manufactured (IDDM) which will be given first priority in defence acquisition. How significant would the norms that have been announced today in the policy be for increasing investments?

Mathur: IDDM is going to be a game changer because it is going to encourage Indian companies to make investments in R&D and the design and development manufacture high value defence equipment and it in a sense is like the strategic partnership concept because the companies will once you design and develop a product and they prove that if you have that assurance that they are going to get orders. Therefore IDDM is going to be a game changer because Indian companies will be encouraged and in fact forced to get into design and development. The only thing to see is that in the details of the policy whether they are going to also allow some of the R&D to be done by the IITs, The Indian Institute of Science because not all Indian companies, some of them do, but not all of them have the R&D infrastructure that is necessary to design and develop products.

Q: The DPP will layout provisions to fast track acquisition of critically needed equipments and products by cutting short the procedure. So, this is what we know, we don’t know what the provisions are but how significant would that be in cutting down the time that is required which interferes with the overall delivery process?

Chait: The process has been under discussion and if it is followed as has been talked then the compression of time would be of great advantage because it will ensure that the users requirement are met within the stipulated time and there are no slippages. Hence capability shortfalls as envisaged in the capability building roadmap is not sacrificed. So, I think it is extremely important for two reasons, capability deficit or capability gap does not exists and that we get the capability which is in the form of product at the best price.

Q: What do you think the defence ministry needs to focus on with respect to the Ordinance Factory Board (OFB) procurement manuals and defence procurement manuals to be able to simplify the process?

Chait: As far as the simplification of the process is concerned you talked about the OFB and the DPP, I am very certain and very optimistic having been part of the process myself that the simplification as being discussed and envisaged would ensure that the problems that the vendors or the manufacturers were facing are removed to a very large extent, property is maintained along with the transparency and the processes get speeded up. As far as the Ordinance Factory Board is concerned I am very certain it would give the capability to acquire the cutting edge technologies so that their products become that much more competitive to what is being offered by the other manufacturers.

Kritika: Your first reaction to this. You have been talking about the Defence Procurement Policy (DPP). There have been several loopholes that haven’t been covered in the defence sector because there hasn’t been clarity on the policy. From what you have heard so far, is this enough and what more does the Ministry of Defence need to focus on to be able to fast track investments in the sector?

Shukla: Yes, we wholeheartedly welcome the new policy. It has been in the making with the inputs from all stakeholders. The most welcome party of the policy is there is a special category of design and developed in India and that is golden news. What it means is not just assembly. If an Indian firm invests and spends money on design and development effort, develops a technology, develops its IPR, those projects will get preference over something which is purely imported and assembled. This is a welcome change, it is going to give a boost to investment in design and development by all Indian companies. We as far as in Mahindra are concerned we have always invested in this particular area believing that ultimately India will need to develop its own expertise. So, we welcome it wholeheartedly.

Q: Indian Designed Developed and Manufactured (IDDM) basically focuses on design and development. While big companies will be able to put in money in this regard, what about small companies and MSMEs, do you think they will have their wherewithal to put in their resources in design and development because defence procurement procedure for 2016 was also supposed to be about MSMEs. So, how do you think will the government take forward that particular agenda as well as promoting MSMEs in the defence sector is concerned?

Shukla: This has to be understood once and for all by everyone, when we come to engineering sector there is one level which is called platform maker and there is second level which is tier I and tier II. Everyone has a symbiotic relationship in the ecosystem. Whether it is plane or helicopter, whether it is tank or a truck or whether it is car or a tractor, the platform maker designs, develops and creates and assembly platform where he puts together. Whereas large number of suppliers they actually supply parts and components for the same thing. The platform maker actually works closely with every part and component supplier and even sub assembly supplier. It is he who provides essential specs and designs so that they can supply to his specs and sit into the platform. Only when platform makers take the lead the parts and components suppliers are able to feed into the system. Very simply put, when you make a car, the wheel comes from somebody, tyre comes from somebody else, the windscreen comes from somebody else, wiper from somebody else, everything comes from somebody else. So, design and development at platform level is one thing and then synergistically in a symbiotic relationship parts and components come together. So, I believe there is no competition. Medium and small scale units will be integral part of the ecosystem. They will benefit when platform makers are making it in India, everybody in medium and small scale will benefit and we are here to promote them.

Source: Money Control.com

Made to order: Special Cell sleuths will be dressed to kill

They are Delhi Police’s best crime investigators. But their dress code -loose pants, formal shirts tucked out and white sports shoes -often belie their reputation. But it isn’t just about reputation; sometimes, they even have to convince other men in uniform to gain access to crime scenes. That’s all set to change.Police commissioner Alok Verma has decided to give the Special Cell a makeover. Black T-shirts with `Special Cell, Delhi Police’ printed on back and front, cargo pants, lightweight high-ankle shoes and commando belts will bring the unit on par with FBI and Israel’s Mossad, at least visually.

Special Cell has a strength of about 700 and as many as 450 will get the new uniform. “Though masters at their work, their outfits give a different impression at times. With this, they would resemble the smartlydressed detectives in the West. This will be a major facelift,“ said a source, detailing the plans. But officers also clarified that this wouldn’t be a `dress code’ as the men will still have to freedom to be in civil dress to protect their identity.

“The ones wearing these will primarily be at the forefront of investigations and raids. We are discussing the nitty-gritty, but as of now, we would offer these to the men who would be visiting a crime scene or go on raids where an encounter could be likely .There have been instances when our men ran the risk of being mistaken as accused when more than one team of Special Cell was involved in an operation,“ a senior officer said.

The revamp plan also includes a range of refresher courses to improve the sleuths’ efficiency in crime detection, evidence collection and handling of terror cases.As of now, the unit is informally divided into two parts.While the New Delhi range deals with anti-terror operations, the other deals with organised crime. The unit has two DCPs as well.

The cell has had a history of cracking high-profile cases, such as the Rs 7.5 crore robbery at Lajpat Nagar, the double murder of security men at a missionary school opposite LG House, and arrests of many terrorists.

Source: The Times of India

In Defence of Startups

The ministry of defence is in the process of setting up a society to enable startups to provide solutions for the Indian defence forces, reports Vishal Dutta. “It will take nearly eight to nine weeks for setting up the society“ said Sanjay Garg, IAS, joint secretary ­ defence industries promotion, Government of India. Startups with innovative solutions or technologies with dual application -civilian as well as defence, can be a matter of interest for defence ministry .

Source: The Economic Times

Big boost: Army to get ammo worth Rs 15k cr

Missiles And Rockets On Shopping List

The 1.18-million strong Army , grappling with critical operational deficiencies on several fronts, is finally going to get some much-needed missiles, thermal imagers, weapon-locating radars and multiple-launch rocket systems (MLRS).Defence ministry sources on Friday said the Cabinet Committee on Security (CCS) has cleared four longpending arms deals worth Rs 6,600 crore, while two others for over Rs 8,300 crore are on the verge of getting the final nod. “Contracts for the four cleared deals will now be inked,“ said a source. They will include the Rs 1,200 crore acquisition of 65,000 new-generation 84mm rockets, with greater range and better armour-penetration capabilities, for the Swedish-origin Carl Gustaf man-portable rocket launchers.

The other contracts are for 4,000 hand-held thermal imagers with laser-range finders (Rs 1,400 crore), 5,000 Milan-2T anti-tank guided missiles (Rs 2,000 crore) and 30 indigenous `Swati’ weapon-locating radars (Rs 2,000 crore).

The two projects headed for CCS nod are for two more Pinaka MLRS regiments for Rs 3,300 crore and another regiment of BrahMos supersonic cruise missiles for over Rs 5,000 crore.

The two Pinaka regiments, which will add to the two such regiments already inducted by the Army , will help plug gaps in the force’s medium-range, high-volume firepower. With a strike range of 40-km, the Pinaka is manufactured by the Tatas and L&T based on technology developed by DRDO.

Similarly , the BrahMos land-attack missile, which flies almost three times the speed of sound at Mach 2.8 to targets 290 km away , will help boost the Army’s precision-strike capabilities.

With the Army already having three BrahMos regiments, the government has approved deployment of the missile’s Block-III version in Arunachal Pradesh to counter China’s huge build-up of military infrastructure all along the 4,057km Line of Actual Control.This missile variant has “trajectory maneuver and steep dive capabilities“ for mountain warfare, as reported by TOI earlier.

But the lack of third-generation anti-tank guided mis siles (ATGMs), with fire-andforget capabilities, remains a big operational gap on the western front with Pakistan.The case for inducting these shoulder-fired tank-killers has been meandering for almost a decade now.

The acquisition of `Spike’ ATGMs from Israel, however, is still stuck in the commercial negotiations stage. Consequently , infantry battalions are making do with the second-generation Milan (2-km range) and Konkurs (4-km) ATGMs, which are produced by defence PSU Bharat Dynamics under licence from French and Russian companies. Being wire-guided, they have to be directed to the target.

Source: The Times of India

DCNS First to Apply for 100% FDI in High-Tech Defence Tech

Ship Shape French co DCNS has sought approval to set up fully-owned Indian subsidiary that will develop advanced systems to give submarines more endurance underwater

In the first major foreign investment proposal for high-end defence technology after the government relaxed rules last year, French firm DCNS has sought approval to set up a fully owned Indian subsidiary that will develop advanced systems to give submarines more endurance underwater.DCNS, a global leader in submarine systems, has requested clearance from the Foreign Investment Promotion Board to invest over ` . 100 crore in DCNS India Pvt Ltd, which is currently restricted to providing services, officials involved in the process told ET.

The French company has applied under a special category that considers applications for high-end critical defence technology not available in the country . In rules that were changed in November, FDI of up to 49% has been allowed in defen ce under automatic rule and proposals with higher investment levels have to be approved on a case-by-case basis by FIPB in consultation with ministries.

DCNS declined to comment on the development. Analysts said the proposal will be a test case for the new policy , which does away with cumbersome process that involved approval by the Cabinet Committee on Security for all applications above 49%.

“Technology on offer is cutting-edge and will prove critical in India’s next line of submarines (P75I). The ball is now in the government’s court. Whatever is decided could serve as a yardstick for future proposals,“ Ankur Gupta of EY India said.

Officials said the DCNS proposal is structured around the new policy that is aimed at development and manufacturing of high-tech and complex equipment in India. The technology that DCNS wants to bring is Air Independent Propulsion (AIP) systems, which give conventio nal submarines substantially greater endurance underwater.

AIP is essential for future Indian submarines, with the Defence Research & Development Organisation also trying its hand at a developmental project. There are also plans to fit the AIP system on some Scorpene submarines that are under construction in Mumbai. DCNS, which has contracted six Scorpenes, is in contention for a follow-on order for at least two more.

The French company , which is also bidding for a mega-contract to build four landing platform docks in partnership with Reliance Defence, has asked for 100% FDI as it wants to develop AIP equipment in India with local companies, including preparation of detailed drawings, 3D modelling and design for future submarine systems.

Despite efforts to market India as a defence manufacturing hub, actual FDI inflow in the sector has been dismal, with just over `. 1crore flowing in last year.

Source: The Economic Times

Tata Group to Focus on Defence, May Expand GEC

Defence & aerospace identified as growth and focus area by Cyrus Mistry in 2014

The Tata Group may expand its group executive council (GEC) to include a new member with responsibility for defence and aerospace.“Defence is an important focus for the group and in the future we would not rule out having someone to look after this segment,“ said Mukund Rajan, Tata brand custodian and council member.

The group of six was formed to give strategic guidance to chairman Cyrus Mistry. Defence and aerospace was one of the four clusters identified by Mistry in 2014 as growth and focus areas for the group. The other three were realty and infrastructure; consumer and retail; and financial services. The order book for the business group in defence and aerospace could be similar to last year’s ` . 10,000 crore, Rajan said.

The defence sector has attracted the interest of the Tatas, Mahindra Group, Ashok Leyland, Bharat Forge and the Kirloskars among others with the government looking to encourage private sector participation and easing overseas investment rules.

“Defence will see huge traction from business houses because the purchases are going to be high, with government’s Make in India thrust. Large contracts over a long period of time and single-client focus will see more private players take part in it,“ said a defence analyst who didn’t want to be named. Around 60% of India’s defence needs are met through imports -that’s expected to change.

The Tata group’s revenue from the sector in FY16 is pegged at around `. 2,650 crore, up 7.5% from last year. Revenue from the business has grown at a compounded annual growth rate of 18% in the last five years. The Tata firms have been part of the country’s defence projects since 1950s and the focus now is on mobility solutions, aerospace, missiles, radars, electronic warfare systems, manned and unmanned platforms, integration of C4I (command, control, communica tions, computers and intelligence) and homeland security systems.

The group companies working in defence and aerospace include Tata Advanced Systems and its subsidiaries, Tata Advanced Materials, Tata Motors, Tata Power Strategic Engineering Division (SED), TAL Manufacturing Solutions, Tata Technologies, Tata Consultancy Services, Tata Steel, Tata Elxsi and Titan Company (Precision Engineering Division).

“There will also be a thrust towards homegrown products and at least 70% of the defence products are expected to be indigenous,“ said Vernon Noronha, vice-president, defence and government business, Tata Motors, which makes armoured vehicles. The company’s defence focus will be on combat vehicles.

Another unit targeting a total defence market that’s seen at `. 700,000 crore in the next 10 years is Tata Power SED. The company has a presence in artillery, armour, air de fence and night vision sensors.Growth areas will include artillery, launchers, guns and precision guidance equipment.

“We have invested . `500 crore in defence and have received appro ave received approval of . `700 crore more from the board for the manufacturing plant in Vemagal, Karnataka,“ said Rahul Chaudhry, chief executive officer of Tata Power SED. Tata Advanced Systems CEO Sukaran Singh said it has hired expatriates with 20-30 years of experience in the business and they are being shadowed by Indian recruits.TASL’s ongoing TASL’s ongoing projects include missiles, aerospace, radar, optronics and command and control systems.

Source: The Economic Times

Indigenous defence showpieces like Tejas and Arjun continue to be powered by foreign parts

Indigenous defence showpieces continue to be powered by foreign parts. Defence minister Manohar Parrikar on Tuesday told Parliament that the import content in the Tejas light combat aircraft still stands at 40%, while it is 55% for Arjun main-battle tanks.

TOI in January 2014 had reported the same figures, and nothing seems to have changed in over two years since then. India still continues to import 65% of its military hardware and software, making it the world’s largest arms importer, because of the shoddy performance of DRDO and its 50 labs, five defence PSUs, four shipyards and 39 ordnance factories as well as the failure of successive governments to encourage the private sector to enter defence production in a major way.

Defence scientists, however, contend that the continuing refusal of IAF and Army to give orders for Tejas and Arjun in bulk ensures that production lines are not stabilized and economies of scale are not achieved. While the Arjun project was first approved in 1974, and the Army has inducted 124 of the tanks over the last decade, the Tejas got the nod in 1983 but is yet to get combat-ready.

Noting that the armed forces had inducted or were in the process of inducting Rs 1.90 lakh crore worth of products and technologies developed by DRDO over the years, Parrikar told Rajya Sabha that the organization was “making all possible efforts to increase the indigenous content” in different products.

As per the list provided by Parrikar, the joint projects with other countries have a high import content like the one for long-range surface-to-air missile systems with Israel (60%) and the BrahMos supersonic cruise missiles with Russia (65%).

DRDO has performed much better in the arena of indigenous missiles. The import content for the Agni series of long-range nuclear-capable missiles is 15%, while it is 15% for the Prithvi short-range ballistic missiles and 10% for the Akash surface-to-air one. But the Nag anti-tank guided missile, which is yet to be inducted, has an import content of 30%.

It hovers between 5 to 15% for airborne early warning and control systems, Lakshya pilotless target aircraft, Nishant remotely piloted vehicles, aircraft arrester barriers, heavy-drop systems, Pinaka multi-barrel rocket systems and the like.

Source: TNN

TATA MOTORS TEAMS UP WITH BHARAT FORGE, GENERAL DYNAMICS TO MAKE COMBAT VEHICLE

Will bid for contracts under Defence Ministry’s FICV program

Home-grown auto major TATA Motors has joined hands with Bharat Forge and the US-based General Dynamics Land Systems (GDLS) to manufacture a combat vehicle for the Indian Army. The companies will bid for contracts under the Ministry of Defence’s (MoD) Future Infantry Combat Vehicle (FICV) program.

TATA Motors will lead the consortium, with Pune-based Bharat Forge as a partner and GDLS providing expertise on combat vehicle platforms.

“Through this partnership we will be better positioned to help the country realise its ‘Make in India’ vision, for the first completely indigenised combat vehicle, at the same time cater to the opportunities available right here in India,” said Ravi Pisharody, Executive Director (Commercial Vehicles), TATA Motors.

FICVs are compact, tracked and amphibious and should not be heavier than 18-20 tonne, making it easily transportable to combat zones. The vehicle must fire anti-tank guided missiles to ranges beyond 4 km, with a capability to carry a crew of three and eight combat-kitted infantrymen.

To be developed under the ‘Make Category’, FICVs are high-mobility armoured battle vehicle for infantry being developed to replace Indian Army’s fleet of 2610 Russian-designed BMP (Sarath BMP-II) series armed vehicles, that are in operations since 1980.

“Our partnership will constitute an important milestone, to help meet the government’s objectives to strengthen indigenous defence capabilities, and particularly in-land systems, with the FICV. Working with the country’s largest automotive manufacturer, will help us develop new directions for both companies and to address future requirements of the Indian Armed Forces,” said Baba N Kalyani, Chairman& Managing Director, Bharat Forge.

TATA Motors is a contender for the FICV program, for which the Ministry had issued an expression of interest (EOI). Companies such as L&T, TATA Power (SED), Mahindra & Mahindra, Bharat Forge, Pipavav Defence, Rolta India, Punj Lloyd and Titagarh Wagons are also in the fray.

TATA Advanced Systems, TATA Advanced Materials, TATA Consultancy Services, TAL Manufacturing Solutions and Tata Technologies are the other companies involved in the TATA Motors-led FICV program.

Source: Business Line

AHEAD OF PM MODI’S VISIT TO ISRAEL, INDIA LINES UP DEFENCE DEALS WORTH $3 BILLION

NEW DELHI: Ahead of Prime Minister Narendra Modi’s first visit to Tel Aviv later this year, the Cabinet Committee on Security (CCS) has begun to clear a slew of defence deals with Israel. The deals, some of which have been pending for long, are together worth well over $3 billion.

 

Defence ministry sources on Tuesday said while the deals for Spice-2000 bombs and laser-designation pods have already been cleared by the CCS, the ones for acquisition of two more Phalcon AWACS (airborne warning and control systems), four more aerostat radars and the medium-range surface-to-air missile system (MR-SAM) for the Army are now on the anvil.

 

TOI had last month reported that most of these deals had reached the final stages of approvals, while the negotiations for the initial Rs 3,200 crore contract for 321 Israeli “Spike” anti-tank guided missile (ATGM) systems and 8,356 missiles were also making some headway after being stalled for months.

 

Both the 164 laser-designation pods (Litening-4) and 250 advanced “Spice” precision stand-off bombs are meant to arm IAF fighter jets like Sukhoi-30MKIs and Jaguars for greater lethality and accuracy.

 

The around Rs 10,000 crore joint development of the MR-SAM for the Army, in turn, will follow the similar ongoing DRDO-Israeli Aerospace Industries projects worth around Rs 13,000 crore for the Navy and IAF. The IAF-Navy variants have an interception range of 70-km, while the one for the Army will be 50-km.

 

The acquisition of two additional AWACS for over $1 billion, in turn, will be a follow-on order to the three such “force-multipliers” already inducted by the IAF under a tripartite $1.1 billion agreement inked by India, Israel and Russia in 2004.

 

The AWACS are basically Israeli early-warning radar suites mounted on Russian IL-76 transport aircraft. With a 400-km range and 360-degree coverage, they are “eyes in the sky” capable of detecting incoming fighters, cruise missiles and drones much before ground-based radars.

 

Similarly, the four new aerostat radars – sensors mounted on blimp-like large balloons tethered to the ground – will follow the two such EL/M-2083 radars inducted by the IAF under a $145 million deal in 2004-2005.

 

Source: TOI