EY India\'s quarterly defense news letter.

1. Eye on defence
July 2012
Dear readers,
• Indian market assessment: 02
It is widely believed that in future the wars and battles will be fought
command, control,communications,
computer intelligence, surveillance, more on the digital battlefield than the conventional battlefields
reconnaissance (C4 ISR) of the plains, mountains and deserts. The winning army, will be
the one who would take over the entire gamut of the enemy’s
• Foreign direct investment in defence: 10
Indian scenario and concerns communications and ensure that there is simply no capability
or resource that enables the enemy to respond to the threat in
• Offsets in defence and MSMEs 17
a coordinated and suitable manner. This will leave the enemy in
• Request for information (RFIs) 21 complete disarray. A somewhat similar scenario was visible in the
• Request for proposal (RFPs) 22 second US-Iraq war. Taking this into cognizance, we have tried to ascertain the C4ISR
• List of industrial licenses (ILs) filed from 23 market in India and also dwelled, to some extent, on its various constituents.
01/04/2012 TO 29/02/2012
There has been an increasing debate in various government, public and private forums over
• New projects/investments/contracts 24 the pros and cons of permitting FDI in excess of the currently stipulated 26% in the defense
• Joint ventures and alliances 27 manufacturing sector. We have tried to put up the arguments of both sides and also for the
• Country-level deals and initiatives 28 interest of our readers, have included most, if not all, of the joint-ventures,; agreements;
• Industry buzz 29
etc that have been signed in the Indian defense sector till date.
• Sources 33 We have been expecting the revised Defense Offset Policy to be released for sometime
now. In the previous issues of the Eye on Defense we have maintained our focus on certain
significant aspects that we feel needs to be addressed in the revised policy. In continuance
of this effort, we take up the cause of the MSME sector’s participation in the defense
manufacturing and services space. We have tried to highlight the impending need for the
Government to provide the requisite assistance and opportunity to the constituents of
this sector enabling them to have their rightful place and also contribute towards building
indigenous strategic manufacturing capabilities.
If you have any suggestions on any of the articles or require any further information on the
same, please feel free to get in touch.
K. Ganesh Raj
Partner and Leader
Aerospace and Defence Practice

2. (C4 ISR) Indian market
assessment
Command, control, communications, computer
intelligence, surveillance, reconnaissance
Introduction
To operate in an era of information warfare (IW)/network centric warfare (NCW), in
complex geopolitical environment, decision makers and war fighters need quality
intelligence. Accurate and timely information is mission-critical to address complex
battlefield and peacekeeping requirements. Intelligence, Surveil-lance, Reconnaissance
(ISR) refers to “integrated capabilities to collect, process, exploit and dis-seminate
accurate and timely information that provides the battle space awareness necessary
to successfully plan and conduct operations.”
This requires the seamless integration of sensors, command and control, and advanced
information systems, network-centric ISR solutions to deliver actionable intelligence in real
time. The given figure depicts a typical ISR-based NCW battlefield scenario. Most of the ISR
resources utilize either airborne platforms or are used by air power.
Tier 3
Satellite Based
Tier 2
Airborne Based
Tier 1
Ground Based
Source: Q-Tech Synergy.
Source: Q-Tech Synergy
Eye on defence | 2

3. Typical elements of a C4ISTAR set up
UAVs and
aerostats
Night
vision
Radars devices
and
sensors
Surveillance
equipment
In terms of function, , the airborne ISR market can be classified into four major segments,
based on role, apart from in addition to the C4 (command, control, communications and
computer):
• Airborne early warning (AEW)
• Airborne ground surveillance (AGS)
• Maritime patrol (MP)
• SIGNIT
Global market size
The C4 market (command, control, communications, computer, intelligence), consisting of
land space, naval and airborne systems, was valued at about US$53.2 billion in 2011. It is
expected to touch US$63.7billion approximately in 2012. The C4ISR constitutes 5% of the
global defence spending. The global airborne ISR market, including new acquisitions and
upgrades, is estimated to be worth US$17.3 billion in 2011, increasing at a CAGR of 2.5%.
Currently, the US is the principal market for ISR systems, but as emerging economies such
as China and India seek to improve their military capabilities, they will necessarily focus on
this aspect of modern warfare.
Global projected C4 and C4ISR market for 2011
ISR ISR
US$17.3bn US$17.3bn
25% 25%
C4 C4
US$53.2bn US$53.2bn
75% 75%
Source: Q-Tech Synergy
Eye on defence | 3

4. The tactical command, control, communication and information system (TAC C3I), which is
essentially the mainstay of the Army’s C4ISR, is plodding along. The TAC C3I comprises the
artillery command, control and communication system (ACCCS), air defence control and
reporting system (ADC&RS), battlefield surveillance system (BSS), battlefield management
system (BMS), all of which are in various stages of development.
The IAF plans to put in place five integrated air command and control systems (IACCS)
through an indi-genous route, which when fully developed, are expected to put all
sensor platforms and weapon systems on a common grid, interlinking its five operational
commands in a fully networked architecture. The Air Force Network (AFNET) is at the heart
of the air force’s communication network. It is a dedicated IAF fiber-optics network that
offers up to 500 MBPS encrypted, unjammable bandwidth. A military satellite is expected
to be launched next year, inter alia, to streamline the massive data flow.
The Navy, among all the three defence services, is the most advanced service in deploying
C4I2 and air-borne ISR components. It is already in the process of implementing concepts
such as network-centric warfare, integrated command and control, system of systems and
global information grid. The Indian Space Research Organization (ISRO) is to launch an
indigenously built geo-stationary satellite for the Navy. The dedicated satellite is aimed at
bolstering the C4ISR capabilities of the Indian Navy. This would also help unify the scattered
assets of the Navy at different geographical locations. The procurement of more UAVs,
maritime patrol aircraft, sonars and radars is in the pipeline through indigenous and foreign
procurements, which will further strengthen its ISR capability. However, within its three
services, there exists an issue on integration to leverage a wide array of ISR capability.
Eye on defence | 4

5. Given below are some of the major indigenous and foreign ISR systems with the defence
services:
Airborne early Airborne ground surveillance (AGS)
warning (AEW)
DRDO’s Airawat Radar/ Sensors UAV Opto electronic
Phalcon AWACS*
Kamov Ka-31*
Swordfish Long Range Rustom (Indigenous
Tracking Radar Akashdeep +Foreign
INDRA series of 2D radars Procurements)
Gagan
Rajendra Radar 3D Nirbhay Night Vision
Central Acquisition Radar Devices
Netra,
(3D-CAR) planar array track- Night Sights
Nishant
ing radar Thermal Imagers
Lakshya
3D AESA Long Range
Tracking Radar Heron I, II*
Low Level Lightweight Ra- Harop*
dar(LLLR) Searcher I, II*
Medium Power Radar 3d Harpy II*
Active Phased Array Radar
Revathi 3D Naval
Surveil-lance Radar
EL/M-2070*
GS-100*
EL/M-2238 STAR*
EL/M-2083 APR*
RAN-30X*
RAN-40L*
DA-05*
LW-08*
DA-08*
Fregat/Top Plate*
Garpun/Plank Shave*
EL/M-2075 Phalcon*
Maritime patrol (MP) Signals intelligence (SIGINT)
EL/M-2022* DO228-201 (ELINT)*
Tupolev TU-142M* Mig 21 MRS*
AN/APY-10* Mig 23 BNS*
P8I* B707*
IIyushin IL-38*
Note: (*) are foreign procurements
Eye on defence | 5

6. Current market size of C4ISR systems in India
Garnering the power of C4ISR systems, Indian defence establishments are moving from
platform-centric operations to net-centric operations and gearing up for new and improved
C4ISR technologies, the new thrust area, with an average spend of 5% allocation. It is
apprehended that India procured US$2.76 billion ISR systems from 2007 to 2011, majorly
comprising surveillance systems — UAVs, radars, AEW aircrafts and choppers from abroad.
Aniticipated share of C4ISR in Indian Indian imports including C4ISR
Defence expenditure (2007–2011) (in US$ million)
Land Other Land (1275, 9%)
15% 25%
Missiles (958, 6%)
Naval
15%
ISR (2768, 19%)
R&D Air
10% 30% Ships (361, 2%)
Aircraft
C4ISR (9031, 60%) Engines (238, 2%)
5% Air Defence (294, 2%)
Source: Q-Tech Synergy. Source: Compiled from SIPRI.
Eye on defence | 6

7. Market potential
During the period 2012–2020, it is anticipated that India will be spending a whopping
US$19.6 billion ap-proximately on C4ISR systems and US$16.77 on ISR systems alone.
With an emphasis on the defence services becoming network-centric, more indigenous and
foreign procurements will be in the pipeline.
Market size of ISR submarkets (2012–2020)
Amount in $ billion
3.7 5.6 4.45 3
AEW&C Airborne Ground Maritime Patrol SIGINT (ELINT
surveillance Aircraft)
Market size of ISR systems in India (2012–2020)
US$37.35
Aircraft
38%
Ships US$26.53
27%
US$17.22
Ground Vehicle
18%
US$16.7
ISR
17%
The market for ISR systems will definitely be growing at a robust rate year-by-year, offering
lucrative op-portunities to local and foreign vendors. While AGS dominates, Maritime
Patrol is forecast to experience robust growth throughout the reporting period, followed by
AEW&C Systems.
Eye on defence | 7

8. Manned systems lead even as unmanned systems rise
Projections indicate that India will spend about US$11.15 billion during 2012–2020
on acquisition of manned ISR platforms, while as for the unmanned ISR platforms; it is
expected to spend approximately US$2 billion during 2012–2020.
The below given table shows some of the major future acquisitions in these segments
during 2012–2020
Manned ISR platforms Unmanned ISR platforms
Maritime patrol acquisitions Nos. UAVs/UAS acquisitions Nos.
Medium-range maritime 9+6 Mini and macro UAV for Army 500
reconnaissance (MRMR) aircraft
High-altitude long endurance (Hale) ---
UAV for the Indian Army
Long-range maritime 4+12 UAV mission simulator for the Indian ---
reconnaissance (LRMR) Army
aircraft/P8 I
Amphibious aircraft 9 Mini UAV for Army ---
MPA 6 Aerostat systems for the Army 12
AWACS acquisitions Nos. Unmanned combat aerial vehicles ---
for IAF
Phalcon AWACS 2+5 Micro unmanned aerial systems for 95
IAF and IN
Indigenous AWACS – India 2+4 Small VTOL MINI UAS for IAF ---
Carrier-based airborne early 4 Aerostat systems for IAF 3
warning and control (AEW and C)
aircraft for the Indian Navy
SIGINT (ELINT aircraft) Nos. High-altitude long endurance UAV ---
acquisitions (HALE UAV) for the Navy
ELINT aircraft with 9 Naval Rotary Wing UAV 3
SIGNIT capability
Manned versus unmanned ISR platforms
The ISR market primarily comprises both highly valuable manned surveillance platforms
as well as increasingly popular and numerous unmanned surveillance platforms along with
the ISR radars/sensors they employ. The manned platform encompasses a vast range of
systems from large airliner-based AEW&C and AWACS systems to maritime patrol aircraft
and ELINT aircraft and airships. Unmanned plat-forms largely entail unmanned aerial
vehicles or systems (UAVs/UAS), which are gaining popularity, keeping in view the future
NCW battlefield in mind, which will push more of using such systems. As far as the Indian
ISR market is concerned, as of now, manned systems in ISR continue to account for the
majority of ISR spending, with unmanned systems also demonstrating strong growth.
Further, large global foreign manufacturers govern the Indian ISR market. Thales, IAI,
ST-Engineering, Raytheon, EADS, Northrop Grumman, Boeing and Lockheed Martin are
among the main companies of-fering C4ISR solutions for Indian Armed Forces. As far as the
Indian companies are concerned, there are no significant players from the private sector.
BEL, DRDO and its Laboratories are the only players that have been in volved in developing
ISR capabilities.
Eye on defence | 8

9. Challenges
Indian defence services need to be overcome the challenges of security architecture,
connectivity matrix and points of exchange of information, integration, legacy systems,
standards and protocols, functionalities and procedures, time sensitivity, human resource
issues, training of users and management of trained manpower. Roadmaps of information
and communication must converge into an integrated information communication
technology roadmap, which is yet to take off. In addition, services need to focus on
spectrum management and technology to telescope bandwidth.
References
“Indian Army and Space: Sky is not the limit,” IRGA press release, http://irgamag.
com/?page=spacearms_20120202, 31 January 2012
“The C2/C4ISR Systems Market 2011-2021,” Vision Gain website, http://www.visiongain.com/
Report/565/The-C2-C4ISR-Systems-Market-2011-2021, January 2011
“The C2/C4ISR Systems Market 2011-2021,” Slide share website, http://www.slideshare.net/
ReportLinker/the-c2c4isr-systems-market-20112021, January 2011
“The Industry Review,” Industry Review website, http://industryreviewstore.blogspot.in/2012/03/
global-c2c4isr-market-20112021.html, 1 March 2012
“The Global C2/C4ISR Market 2011–2021,”PR newswire press release, http://www.bizjournals.com/
prnewswire/press_releases/2012/02/09/SP50639, 9 February 2012
Eye on defence | 9

10. Foreign direct investment
in defence:
Indian scenario and concerns
Manned Vs Unmanned ISR Platforms The production of defence equipment in India
was, until 2001, entirely a government function.
20 The Indus-trial Policy Resolution, 1948,
18 restricted the entry of the private sector into this
16
Amount in $ billion
industry. The defence in-dustry was opened to
14
12 2.004 the private sector in May 2001 (Press note 4 of
10 Unmanned the 2001 series) when the Govern-ment of India
8 Manned (GOI) permitted 100% equity with a maximum of
6 11.15 26% foreign direct investment (FDI) com-ponent,
4 subject to licensing.
2
0 Today, India ranks among the world’s top ten
2012 - 2020 nations in terms of defence expenditure. It is
one of the world’s largest importers of defence equipment. Despite India continuing to rely
heavily on imports for its defence requirements (which approximately is 70% of its total
military equipment and system needs) and having a poor defence-industrial-base (DIB), the
MoD has not shifted its stance on the 26% FDI.
The policy of a 26% cap on FDI in defence production has failed to attract any substantive
FDI in the sector, with only approximately INR176.8 million flowing in the form of FDI
between 2001 and January 2012. Many large international defence players have gone
on record, stating that although India is one of the largest defence markets, the cap of
26% foreign investment is stopping them from bringing in the manufacturing technology
of its “crown jewels” to India. Some of the players comprehend the security concerns of
allowing FDI of more than 50% in Indian JVs, but insist that to transfer significantly valuable
technology, a minimum equity participation of 49% should be permitted in order to provide
them with an encouraging revenue stream.
It is often argued that the revision of the FDI policy by increasing the limit on FDI would
provide the requisite momentum to the defence sector, while enabling India to achieve its
target of a 70% level of self sufficiency in defence procurements, but the same has always
been a debatable issue. The moot question at this point is whether an innovative, robust
and sustainable indigenous defence industry could be built by lifting the cap on FDI.
In the recent past, there have been frequent calls by various industry bodies such as the
ASSOCHAM and CII to raise the FDI cap from 26% to 49%. Notwithstanding these demands,
the MoD has unequivo-cally stated its view that as defence is a strategic sector, the foreign
investment in joint ventures in the defence sector would be limited to 26%. Any FDI beyond
26% would be considered on a case-by-case basis only. In some exceptions, such as the joint
venture with Russia to manufacture the multi-role trans-port aircraft, the MoD obtained
dispensations from the Cabinet for 50% foreign equity. BrahMos’ missiles are manufactured
with a 50% Russian equity, while the MoD has also permitted HAL and the French company
Eye on defence | 10

11. Snecma to form a 50-50 partnership for manufacturing aircraft engines. However, in
the recent past, the MoD has rejected proposals for 49% foreign equity in joint ventures
between Mahindra Defence Systems and the UK-based BAE systems and the one between
L&T and European EADS.
There is no denying the fact that increases in FDI in the defence sector are indeed essential,
considering the following aspects:
• I
ndia currently lacks the advanced state-of-the-art technology, which is used in most
►
of the de-fence products/equipment.
• T
he current FDI cap of 26% does not provide enough motivation to original equipment
►
manufac-turers (OEMs) to bring in proprietary technology to the Indian joint venture
partners.
• W
ith the growth in the defence sector, India’s reliance on the import of defence
►
equipment would reduce, which in turn would result in noteworthy savings in
foreign exchange.
• M
anufacturing within the country through foreign capital with a full transfer of
►
modern technology is a far-better option than importing the equipment from abroad.
• I
n order to develop a domestic industrial base, it is necessary to encourage
►
technology transfers and curb large-scale imports.
However, there is a flipside to allowing higher FDI in the defence sector, which makes
increasing FDI in the defence sector difficult, considering the following road blocks:
• I
t is often apprehended that allowing foreign companies to exercise control over Indian
►
defence companies would compromise with the Indian defence and security apparatus.
• T
he issue of possibly passing on critical equipment plans, design or source code to
►
other players, particularly to countries not aligned with Indian interests is a
major deterrent.
• C
oncerns also revolve around the capability of defence public sector undertakings
►
(PSUs) and the ordinance factories to be able to factor in competition, due to increased
foreign participation in the defence sector and the consequent damage to the nascent
domestic defence industry.
• C
oncerns regarding illegal arms trade have led to greater reluctance on raising the cap.
►
Industry experts however believe that the aforesaid concerns can be tackled by
strengthening the existing regulatory framework of addressing security issues through
extensive verification, clearance procedures and controls. The government could reserve
the right to inspect or control the production and dispatches in facilities through the
deployment of necessary security agencies.
An increase in the FDI ceiling limit will allow foreign firms a larger share of the risks and
profits and the confidence to transfer sensitive technology to joint ventures in India,
resulting in indigenous capability building. Larger Indian firms seeking to diversify into
defence production would also benefit as it would help them mitigate commercial risks in
the highly fraught development environment of defence produc-tion. The example of the
automobile industry may be relevant here. There are also instances of countries such as the
US, the UK and other European countries, which allowed unrestricted FDI in the defence
sec-tor without compromising on control, security and secrecy.
Eye on defence | 11

12. Offsets policy
There are diverse perspectives on using the offsets policy as a tool to attract the latest
technology without compromising the national security interests. The offsets policy obliges
every foreign company winning a defence contract to invest a certain portion of the
contract value back into the home country. However, for the policy to succeed, the foreign
vendor should want to operate in a country where it actually derives commercial benefits
from partnering with locals.
It would however be presumptuous to assume that the level of technology required by
the country can be achieved within the existing FDI limits, merely by offsets. Considering
that India does not have the indus-trial capacities and knowhow to absorb the offsets
obligations, there is a risk that foreign vendors, faced with significant offsets obligations,
would then be forced to seek non-commercial and artificial offsets trades with Indian
businesses for low technology components with a minimal technology value addition simply
to discharge its offsets obligations.
Conclusion
Similar apprehensions and objections were expressed at a time when the government
reformed the tele-communications and insurance sectors. However, with time, foreign
investment has transformed the technological sophistication, generated employment,
built local expertise and improved the reach and effectiveness of the services.
A careful analysis of the pros and cons of increasing the FDI limit reveals that the
benefits arising from heightened investment and technological advancement have
outweighed the associated concerns that may anyway be overcome by strong
government regulation.
The government should demonstrate a bold vision to realize India’s potential to
become self reliant in defence equipment manufacturing in the near future. India’s
cap on FDI is stunting the progress of its defence industry and would have to give way,
sooner or later, since it is a cap that the country cannot afford. This is fine.
Eye on defence | 12

13. Aerospace and defence joint ventures and MoUs
A & D joint ventures
Name of JV Foreign OEM Indian lead Other Indian Other Main area of business Year
company partner partners global
partners
Hindustan Aeronautics Limited
SAAB AB HAL Airborne electronic warfare systems 2011
Fifth Generation United Aircraft HAL FGFA 2010
Fighter Aircraft Corporation of
Program Russia
International Rolls Royce HAL Manufacturing compressor rings, turbine 2010
Aerospace blades and nozzle guide vanes
Manufacturing Pvt.
Ltd.
Multirole Transport UAC & HAL Co-design/develop and co-produce multirole 2009
Aircraft Ltd. Rosonboron transport aircraft
HATSOFF Helicopter CAE HAL Military and civil helicopter pilot training 2009
Training Pvt. Ltd. services through operation of flight training
devices
Tata HAL Technologies HAL TATA Work packages related to engineering design 2008
Ltd. services in aero structures as well as the
captive offshore and onsite workload from
OEMs, including the offset program
HALBIT Avionics Pvt. ELBIT HAL Merlin Hawk Design, development and marketing 2007
Ltd. of aircraft simulators and all related
applications for Indian and international
markets. Integrated logistics support and
maintenance services throughout the life
cycle of products
HAL Edgewood EDGEWOOD HAL EDGEWOOD Application through development /acquisition 2007
Technologies Pvt. Ltd. Ventures, USA Technologies Pvt. of cutting- edge technologies. Phase I 3D
Ltd. India technology for: i) Memory modules ii) System
in package modules iii) DC/DC converters IV)
Charge-coupled device (CCD)/cameras for
space application
Infotech HAL Ltd. HAL INFOTECH Design/Software development for aero 2007
engines, technical publications and
anticipated work from various OEMs under
the offset program
MRO facility in Pratt and Whitney HAL of India A unit for static parts of aircraft engines 2006
Bangalore of Canada in Bangalore and another in Koraput for
rotating parts
Samtel Hal Display Samtel HAL Manufacturing MFD/HUD/HMDS for aircraft 2006
System Ltd. of Indian defence services
Snecma HAL SNECMA HAL Production of precision aero engine 2005
Aerospace Pvt. Ltd. components and assemblies
Indo Russian Aviation RAC-MiG HAL ICICI Bank Ryazan Supply of all types of aircraft (Russian origin) 1994
Ltd. Aviazapchast engines, accessories, aggregates, systems
and spares
BaeHAL Software Ltd. Bae Systems UK HAL BAE HAL Design, develop and market software, 1993
Employees Trust firmware and computer programs and
systems, incorporating them and to provide
consultancy in the field of computer
technology
Bharat Electronics Limited
SAAB BEL Coastal surveillance radars 2011
ELTA BEL Radars 2011
DHS Systems BEL Soft shelters 2009
Eye on defence | 13

14. BEL Astra Microwave Design, development and manufacture of 2009
BEL's microwave intensive products
Elbit Systems BEL Development, production and marketing 2007
Electro Optics of thermal imaging cameras and forward
ELOP Ltd looking infra red (FLIRs)
Tata Group Companies
ITT Exelis TASL Gen 3 NVDs 2012
Tata Lockheed Martin Lockheed Martin TASL Aerostructures of the C-130J platform 2011
Aerostructures
Indian Rotocraft Augusta Westland TASL Integration and assembly of the AW119 2010
platform
HELA ELTA TASL Radar, electronic warfare and surveillance 2010
systems
Tata Sikorsky Sikorsky TASL S-92 helicopter cabins 2009
Aerostructures
Nova Integrated Ltd. IAI Tata EW, missiles and radars 2008
Boeing Tata Industries Manufacturing military components for 2008
Ltd. the F-18 Super Hornet fighter, the CH-47
Chinook helicopter and the P-8 Maritime
Patrol Aircraft
Aeronautical Design SAAB TCS Engineering design 2008
and Development
Center (ADDC)
Larsen & Toubro
Samsung Techwin L&T 155mm 52 cal SP Howitzer 2012
NEXTER L&T Manufacturing and integrating platforms for 2011
the 155mm / 52 cal towed gun
L & T Cassadian Ltd. Cassadian L&T Manufacturing, designing, engineering, 2011
Electronics distributing and marketing in the fields of
electronic warfare, radars, avionics and
mobile systems for military applications
HCL Technologies
Aerospace Network Boeing HCL Indian Institute Wireless and other network technologies 2008
Research Consortium of Science and
Wipro
Circor Aerospace HCL Develop software for fluid controls, landing 2008
Inc gear for aerospace and defence applications
Development Centre Smith Aerospace HCL Software solutions for aircraft 2007
Wipro
CAE Wipro Simulation-based training for areas such as 2010
war gaming and C4ISR
GE Security Wipro Jointly produce and market physical security 2009
solutions for the Indian defence forces
Network Centric Lockheed Martin Wipro This lab will develop, demonstrate and 2007
Operations Centre: experiment with emerging network-enabled
Amber Jyoti in capabilities and applications.
Gurgaon
Mahindra Satyam
Saab India Technology SAAB Mahindra Satyam Technology center 2011
Centre in Hyderabad
Mahindra Defense
Systems
Rafael Mahindra & Develop and manufacture products such as 2012
Mahindra anti torpedo defence systems, electronic
warfare systems, advanced armoring
solutions and remotely operated weapon
stations for futuristic infantry combat
vehicles (FICV)
Eye on defence | 14

15. Telephonics (a Mahindra IFF and electronic systems 2012
unit of US-based Defense Systems
diversified Griffon
Corp)
Defense Land Systems BAE Systems UK Mahindra Land systems for defence and security 2009
India Defense Systems purposes
Government-owned departments
Cargo ammunition IMI of Israel OFB (At Production of 130mm and 155mm cargo 2004
facility Khamaria and at projectiles, 122mm grad cargo rockets,
Nalanda) 125mm advanced tank ammunition and
120mm cargo mortars
Mayawi Project ($100 Elisra Group, Defence Avionics EW systems for combat aircraft 2006
million) Bene Beraq, Israel Research
(30%) Establishment
Banagalore of
DRDO
Maitri Project (US$ MBDA of France Defence Bharat Dynamics
$500 million) (Technology Research and Limited
Transfer) Development
Laboratory
(DRDL),
Hyderabad
Electronic and Development of 2007
Radar Development new generation
Organisation (Radars) Low Level Quick
Reaction Missile
(LLQRM) system
named as Maitiri
Sagarika Project Rafael of Israel Defence The Research IAI of Israel Development of Sagarika Cruise Missile 2005
Research and Centre Imarat
Development (RCI), Hyderabad,
Laboratory Aerospace
[DRDL}, Systems Limited,
Hyderabad Hyderabad and
Defence Avionics
Research
Establishment
(DARE),
Bangalore ,
Electronics
and Radar
Development
Establishment
(LRDE)
Bangalore, Naval
Physical and
Oceanographic
Laboratory
(NOPL) in Kochi
Barak Missile Project Rafael of Israel DRDL of IAI of Israel Development of the Barak extended range 2007
($350 Mn) Hyderabad surface to air missile
Other companies
Track System India Diehl Remschied India Forge Diehl System Tracks for several applications, 2012
Limited Gmbh such as the infantry combat vehicles BMP1/2
as well as the T-family of vehicles (e.g. T72,
T90)
Reginson India ITA, Spain Raghu Vamsi Reginson, UK Aero-engine components 2012
Machine Tools
Eye on defence | 15

16. Dassault Reliance Participate in the MMRCA delivery program 2012
Aerospace
Chemring Ashok Leyland Pyrotechnics 2012
Defense Systems
Pipav Shipyard MDL Vessels of war 2012
Selex Galalieo UK Data Patterns Defense electronics 2012
Kineco Kaman Kaman Kineco Advanced composite parts 2012
Composites
Samtel Thales Avionics Thales Samtel Avionics 2011
Compania Wipro Manufacture actuators, control systems, 2011
Espanola Infrastructure precision engineering components
De Sistemas Engineering
Aeronauticos SA
(CEPA), an arm of
EADS
Vyoneeshrosebank Rosebank Vyoneesh MRO for aerospace and land systems 2011
Technologies
Jubilant Aeronautics Aeronautics Jubilant Bhartia UAVs and aerostats 2011
Defense Systems
MASGMR Aerospace Malaysia's MAE GMR India Aircraft MRO 2011
Engineering
Thales Axis Aerospace Flight simulators training center 2011
and technologies
AeroEuro Engineering GECI PL Engineering Product design and engineering services 2010
India company providing product design,
engineering and R&D services in the
aerospace domain
Ashok Leyland Paramount Group Mine-protected Vehicles 2010
Dassault Systèmes KPIT Cummins Joint solution and business development on 2009
Infosystems the ENOVIA platform
Saertex - Kemrock Saertex Kemrock Components for the aeronautical industry 2009
India Limited
Spares Support Airlogic Ltd Airspace Airbus Maintain an inventory of rotable components 2009
Solutions India, Pvt. Infrastructure used on all types of airbus commercial,
Ltd. aircraft by operators in India for outright
sale, exchange and customized pooling
arrangements
Project 71 Air Defense Italian Fincantieri Directorate of Russian NDB Aircraft carrier 2008
Ships (propulsion naval design (Aviation
system) Technology)
Aerospace Processing Magallen QuEST
India Pvt. Ltd.
Aerospace Global
Global Approved 2008 Approved aero-space surface treatments 2008
aerospace surface
treatments
Rolta Thales Ltd. Thales Rolta C4ISTAR 2007
Project 75 Scorpene DCNS, France Mazagaon Docks Aramis, Scorpene Submarines 2005
Submarine Ltd. Thales
BRAHMOS Aerospace NPO DRDO India BRAHMOS Cruise Missile 1998
Private Limited ($250 Mashinostroyenia
million) of Russia
Eye on defence | 16

17. Offsets in defence and MSMEs
Small enterprises exist in the form of factories, workshops, trading and service
organizations and range from the most modern to simple and traditional units. The
operational range varies from independent en-terprises to ancillaries, sub-contractors and
vendors engaged in catering to the needs of the markets, extending from the domestic
to the global horizon. These enterprises exist in various forms such as proprietorship,
partnership, companies or co-operatives. While the main objectives of small enterprises are
almost the same, they are defined and viewed differently across countries.
Micro, small and medium enterprises (MSMEs) are recognized as engines of economic
growth worldwide. In India, MSMEs manufacture products ranging from handloom sarees,
carpets and soaps to machine parts for large industries. Not only do MSMEs generate the
highest employment per capita investment, they are also an important factor in checking
the rural to urban migration by providing villagers and people living in small towns and
isolated areas a sustainable source of
employment. MSMEs often act as ancillary
industries for the large-scale industries
providing them with raw materials, vital
components and backward linkages.
Ever since the announcement of the
Industrial Policy resolution in 1948,
small-scale industries have oc-cupied a
prominent place in the overall strategy
of industrial development in India.
Successive five-year plans have allocated
increasing resources for the development
of small industries. In view of the abun-
dance of labor, scarcity of capital and
the rural nature of the economy, the
preference of small industries is natural.
They are heterogeneous, dispersed
and mostly unorganized. Due to the
unorganized nature of the sector,
entrepreneurs and artisans/workers
face difficulties in accessing government
schemes. Con-sequently, those workers
engaged in the MSME sector, and these are vulnerable and poor, have little bargaining
power and are exploited by middlemen, unit owners and large business houses. Unable to
take up aggressive marketing, similar to large industries, they cannot find markets despite
good quality and competitive prices.
It is no surprise then that MSMEs do not play a significant role in the defence sector. The
defence sector has always been a holy cow, shredded in secrecy and ruled by the large,
influential and famous. Recent-ly, a defense public sector undertaking (DPSU) formed
a JV with a private Indian entity. The JV did not find favor with some large domestic
industrial houses in the country. This forced the government to issue guidelines for JVs
between DPSUs and private Indian entities. While all this may have been for a good cause,
one cannot help but wonder if any MSME could have ever brought about the same result.
Eye on defence | 17

18. The issue is “who is batting for the cause of the MSMEs”? They do not have a CEO or
a chairman who can address their concerns directly at the office of the Prime Minister.
Their concerns are not even heard ade-quately in industry meetings, since large industries
dominate such forums. A quick check to find out about the companies that are heading the
defence committees in the various industry chambers will prove the point. Even the media
bats for the large industrial houses, leaving the MSMEs to fend for themselves. No wonder
then, the large domestic competitors continue to fight for a Raksha Udyog Ratna (RUR)
status to become more equal than the rest of the equals. In such a scenario, what is then
the fate of the MSMEs in our country?
The offset policy was formulated in the year 2005 and detailed offset guidelines were
promulgated in September 2006 by the MoD as a part of the DPP 2006. The entire exercise
was undertaken by the ministry, with a view to plough back at least 30% of the FE (foreign
exchange) outgo and also develop and broaden the defence industrial base. If the aim of
the policy was to develop the defence industrial base, so be it, let this happen. Why is the
MoD shying away from inclusive growth? A policy that is designed to favor the large and
influential will create more disparity in the country than address inclusive growth. The
policy framework instead must cater to the development of the MSMEs for
real development.
In this particular area of development of the MSMEs, the MoD has done little, which is in
itself in-excusable. This is allowed to happen just because MSMEs do not have the reach and
connect within the higher echelons of the ministries to make their voice heard and their
woes addressed. What then is the solution? How do we integrate MSMEs into this game of
the affluent and the influential?
Small and medium enterprises account for approximately 80% of the private sector
industrial workers and therefore occupy an important position in the industrial structure of
Japan. The employment-generating capacity of the small and medium enterprises in Japan
has been seen to be larger than that in Germany or the US. Small and medium enterprises
play an extraordinarily important role as muscles for regional economic development. In
the development of sparsely populated areas such as the Hokkaido Island in the north,
they have been a valuable tool for development. In the early 1960s, small and medium
enterprises accounted for more than 50% of Japanese exports. Such business was mostly
labor intensive and not dependent on imports/raw materials. As such, its net contribution
to foreign exchange was very high.
The Indian economy is a developing economy. Its vast resources are either unutilized or
underutilized. A major section of man-power is lying idle. The per capita income is low.
Capital is scarce and investment is lean. Production is traditional and techniques are
outdated. The output is insufficient and the basic needs of the people remain unfulfilled.
Industrialization is the only answer to the current disrupted economic state. The problem
is of the approach, which should be direct, utilitarian and pragmatic. Such industries do
not require huge capital and are therefore suitable for a country such as India. Small-scale
industries have a talent of “dispersal.” They can be accessible to the remote rural areas of
the country and do not lead to regional imbalances and concentration of industries at one
place, which is responsible for many economic resources such as entrepreneurship and
capital. Planners and economists in India took recourse to small-scale industries because
most of these industries existed in the traditional form, which symbolize our heritage.
These still serve as the backbone of our economy, which is mostly rural.
The Ashok Mitra Committee also pointed out that SSI (small scale industries) play an
important role in combating poverty alleviation in the country — more incentives to SSI,
lesser is the poverty. While the committee has highlighted the government’s negligence
Eye on defence | 18

19. toward the infringement of laws relating to SSI, it has also pointed out that the SSI sector
is not receiving adequate attention by the government. The committee also suggested the
need for an active protectionist role by the government.
Where is the protection provided by the government in the case of the opportunity provided
by the offsets in MoD? While the government may be thinking of incentivization of OEMs
through a system of multipliers to exercise its choice around MSMEs, there is no real
protectionist role. Is the MoD not aware that their DPSUs and OFB are supported actively by
more than 25,000 SMEs in the country? When you pick up the supply chain of any of the
DPSUs or the OFB, they have cultivated a huge supply chain often boasting of numbers in
excess of a few thousands. If that is true, then, why has the MoD not addressed this aspect
in the offsets policy?MSMEs generate high employment next only to the agricultural sector.
They are labor intensive and therefore promise wider employment possibilities. They are
suitable as a supplementary source of em-ployment for Indian farmers who are out of work
during the lean season and to the educated and unem-ployed youth in urban areas to be
employed gainfully. They have a widely disbursed entrepreneurial base and can be easily
set up anywhere in the country. They have a relatively low capital investment and en-sure
regional balanced development. If MSMEs can dominate in the export of sports goods,
readymade garments, woolen garments, knitwear and plastic products, then why not
defence goods and services? This has not happened because the government has not hand-
held them ever, What then is the solu-tion?
Offsets implementation provides for the best possible opportunity for MSMEs, more than
any other. If the MSMEs were to tie up with OEMs and allowed a direct access to their name
(as an Indian offset partner, IOP to Dassault Rafale), it straight away ushers in twin benefits,
one a sense of doing business with a foreign company (boost in self-esteem) and second
the OEM now handholds the MSME with the best practices followed and therefore brings
in the best industry culture for greater efficiency. This is a game-changer for the MSME
sector. MSMEs must be encouraged by the MoD to have direct tie-ups with foreign OEMs
as an Indian offsets partner. Should it be necessary, the government must also fund them
appropriately, with systems for such funding in place. There was a concept of an offset fund
in the name of the Indian rising fund, which was formed with single-minded investment into
the SME sector alone, from among the approved list of the MoD. However, the MoD did not
consider this initiative favorably. While OEMs were keen to be a part of this fund, MoD had
many apprehensions, mostly, ill-founded and based on presumptions and not facts.
MoD must incentivize OEMs with multipliers for choice of IOP from among the MSMEs. In
addition, the MoD must place a mandate on OEMs to source at least 20% (or to begin with
10% or any percentage deemed fair, so as to be in sync with the national policy on growth
of MSMEs) of the offsets from the MSME sector.
The Union Cabinet has approved a procurement policy asking government departments
and public sector undertakings (PSUs) to give preference to micro and small entrepreneurs
(MSEs), including those be-longing to SC/ST entrepreneurs, while making purchases.
According to the Public Procurement Policy for goods produced and services rendered
by MSEs by the central ministries/departments/PSUs to be noti-fied under Section 11 of
the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, all central
ministries and PSUs will have to ensure that a minimum 20% of all their total annual
purchases of products or services are from MSEs. Within this limit, 4% of the orders should
be placed to the SC/ST entrepreneurs. This has been promulgated through a gazette
notification on 23 March 2012.
Eye on defence | 19

20. But, given their unique nature, defence armament imports will not be included in computing
the 20% goal for the Ministry of Defence. In addition, defence equipment such as weapon
system remains out of the purview of such policy for reservation. Therefore, only defence
armament imports are excluded and cer-tain equipment such as missiles, weapon systems
are not under the purview of such a reservation. This actually means that the reminder of
military procurement such as IT, services and revenue purchases such as ration, food stuff,
fresh products, consumables, etc., do feature under the compulsory reservation system.
In this scenario, it may be a good idea for the MoD to provide a mandate to OEMs to exercise
adequate efforts to choose from the MSMEs for their offset obligations. In this regard, they
may be directed to approach National Small Scale Corporation (NSIC) a mini ratna profit-
making PSU for necessary facilitation. NSIC is a 55-year old Indian company, dedicatedly
bringing about transformational growth in the MSME sector. NSIC also has the bandwidth to
be able to infuse funds into the MSMEs when required. The licencing conditions are also met
worth by NSIC through their single-window registration mechanism, which happens after
thorough due-diligence and inspections.
DRDO could also play a very key role in the growth of SME sector through technology
infusion and filling in the gaps where necessary. An integrated approach with participation
in offsets, indigenization, participation under the “Buy Indian” category and duly
complemented by the existing tiered system will provide a boost to MSMEs and in turn to the
nations as a whole.
Eye on defence | 20

21. Request for Information (RFIs)
Date of issue RFI details Response date Issued by Service
11 April 2012 Air defence guns 30 April 2012 Directorate General of Army Air Defence Army
18 May 2012 Sniper rifle for infantry 15 June 2012 Additional Directorate General of Weapons, Army
PMO FINSAS , Directorate General of
Perspective Planning
22 May 2012 Mini unmanned air vehicle (UAV) 1 July 2012 Directorate General of Infantry -5, Army
Directorate General of Weapons and
Equipment-9
22 May 2012 Fibrescope 10 July 2012 Directorate General of Infantry -5, Army
Directorate General of Weapons and
Equipment-9
31 May 2012 Air conditioner with auxiliary power unit 20 Jun 2012 Dte Gen of Mech Forces Army
(APU) in Tank T-90 S/SK
9 April 2012 COMJAM and SIGINT Aircraft 24 May 2012 PD ASR (Room No 460) Air HQ (Vayu Army
Bhawan), Rafi Marg Qty: 9
25 April 2012 Twin dome simulators for Hawk MK 25 May 2012 PD Projects Air HQ (Vayu Bhawan) Indian Navy
132 AJT
11 May 2012 Light strike vehicle (All Terrain Light 11 June 2012 Joint Dte of Garud Air HQ (Vayu Bhavan) Indian Air Force
Strike Vehicle)
29 May 2012 Universal ground power unit GPU(U) 20 June 2012 Dte of MT Air Force
3 April 2012 Diver navigation system 20 April 2012 Directorate of Special Ops & Diving Navy
Qty: 42
1 May 2012 Diving accessories — search lamp 30 May 2012 Directorate of Special Ops & Diving Navy
‘A’ Block
1 May 2012 Underwater hydraulic tools 30 May 2012 Directorate of Spl Ops and Diving Navy
Integrated Headquarters of MoD (Navy),
1 Jun 2012 Indigenous construction of survey 30 June 2012 Integrated Headquarters of Ministry of Navy
vessels Defence (Navy) Qty: 04
28 May 2012 Plasma nitrocarbuzing equipment 9 August 2012 Defence Research & Development Defence Service
Laboratory Qty: 01
Eye on defence | 21

22. Request for proposal (RFPs)
Date of issue RFP details/equipment Response date Issued by Remarks
10 April 2012 Holographic weapon sight 21 May 2012 Col GS Arty (A) Army
for Rifle 47 For MG Arty Qty: 520
16 April 2012 Harness for bullet proof 30 May 2012 ACSFP CELL HQ, Northern Army
patka Command Qty: 18000
25 April 2012 Propellant NGB 204 29 May 2012 Ordnance Factory Khamaria For Army
Jabalpur
10 April 2012 Holographic weapon sight 21 May 2012 GOC-in-C, Northern Command, For Army
for Rifle AK 47 C/o 56 APO
7 May 2012 Combat under water diving 5 July 2012 For Army
equipment
11 May 2012 Armour piercing incendiary 8 June 2012 Ordnance Factory Khamaria - For Army
bullet for 14.5 Mm AMMN. Jabalpur (MP) Qty:134130 Nos.
15 May 2012 VT Fuze for Pinaka (F) 25 June 2012 General Manager, Ordnance For Army
Factory, Chanda Qty: 515 Sets.
16 May 2012 Divers vision system 14 July 2012 GOC-in-C, Northern Command, For Army
C/o 56 APO Qty: 24 Nos.
28 May 2012 Propellant powder M-1 With 29 Jun 2012 Dy. General Manager, Ordnance For Army
19 Holes for IM 212 Factory Khamaria Qty: 37000 kg
30 May 2012 Propellant (Gun powder 1 July 2012 Dy. General Manager, Ordnance For Army
5/7) for 23 mm SCHILKA Factory Khamaria Qty: 20000 kgs
Ammn
13 June 2012 RDX/TNT 80/20 Hexolite 27 July 2012 Ordnance Factory Khamaria For Army
Type B Jabalpur (MP) Qty: 94950 Kgs.
4 April 2012 Ammunition for shooting 18 May 2012 Directorate General, Border For BSF
competition Security Force Qty: 882400 Rounds
2 April 2012 Rubberized inflatable Boats 15 May 2012 Directorate General, Border For BSF
with 25 HP OBM Security Force Qty: 75 No’s.
May 2012 Global positioning system 5 June 2012 Office Of The DIGP/ Principal , For CRPF
CTC , CRPF Qty 50: Nos.
25 May 2012 Bomb suit 2 July 2012 Asstt. Inspector General/Prov. For CISF
Qty: 5
25 May 2012 Waterjet disrupter 3 July 2012 Asstt. Inspector General/Prov. For CISF
Qty: 04
18 May 2012 Laser warning system 31 Aug 2012 Ordnance Factory Project, Yeddu Defence service
Mailaram, Medak
4 April 2012 Doppler radar system for 29 May 2012 Indian Ordnance Factories Defence service
the velocity measurement Ammunition Factory, Khadki
of sub-sonic and super-
sonic projectiles
Eye on defence | 22

23. List of industrial licenses (ILs) filed from
01/04/2012 TO 29/02/2012
Application no. and date Name of the applicant Item of manufacture
11: 05/03/2012 Ray-Hans Technologies Pvt. Ltd. Military grade electronics and communication products and
assemblies designed for military use such as electronic counter
measure and counter measure equipment surveillance and
monitoring, data processing and signaling systems
12: 12/03/2012 HBL Power Systems Ltd. Nickel cadmium batteries and parts thereof
13: 15/03/2012 Premier Explosives Ltd. Site mixed explosives
14: 15/03/2012 Premier Explosives Ltd. Mob dispersion devices
15: 16/03/2012 Machhar Industries Ltd. Bulk explosives
16: 20/03/2012 Global Precision Pvt. Ltd. Parts and accessories for industrial machine
17: 21/03/2012 DCX Cable Assemblies Pvt. Ltd. Electronic printed circuit board assemblies subassemblies, box
build, and military wire harness for defence aerospace application
18: 28/03/2012 Economic Explosives Ltd. Energetic binders for propellants
19: 28/03/2012 Kavveri Telecom Products Ltd. Weapons and ammunition
20: 09/04/2012 Tech Mahindra Ltd. IT services and software development for defence
21: 09/04/2012 Sri Venkateswara Explosives Pvt. Ltd. All kinds of detonators
26: 19/04/2012 Raghu Vamsi Machine Tools Pvt. Ltd. Aerospace components and defence equipment parts
23: 16/04/2012 Pipavav Defence and Offshore Manufacturing missiles and rockets, torpedoes and autonomous
Engineering Co. Ltd. underwater vehicles including sub-systems and ground/ship. etc.
24: 18/04/2012 Taneja Aerospace & Aviation Ltd. Manufacturing space craft, aircraft and their parts
25: 19/04/2012 Octania Aerostructure Group Pvt. Ltd. Aircrafts and precision machined aircraft components
26: 19/04/2012 Raghu Vamsi Machine Tools Pvt. Ltd. Aerospace components defence equipment parts
27: 25/04/2012 Southern Electronics (Bangalore) Aircraft components maintenance, repair and overhaul (MRO)
Pvt. Ltd. activities
28: 26/04/2012 Srinivasa Explochem Pvt. Ltd. Detonating fuse
29: 30/04/2012 Millennium Aero Dynamics Pvt. Ltd. On-board oxygen generating system (OBOGS)
Eye on defence | 23

24. New projects/investments/contracts
Name of entity Project details Value
L&T, BEL, Tata • The L&T-led consortium, in competition with BEL, was se-lected to develop a INR80–100 billion
Power SED and prototype of the Tactical Communica-tions System — a telecommunication network
HCL Infosystems that can be rolled across battlefields on the fly.
• The L&T consortium will be formulated as a special purpose vehicle (SPV) that also
has Tata Power SED and HCL Info-systems as the other partners.
• This is the first project to be approved under the ‘Make’ cat-egory and is expected to
strengthen private participation in the defence sector.
Sun Forest City • GOI has signed contracts with M/s Thales, France and M/s Dassault Aviation, France, INR100 billion
Sun Forest City Ventures Ltd., jointly promoted by the Gur-gaon-based Sun Group
and the UK-based Forest City Inter-national, proposes to set up an aerospace hub
near Banga-lore.
• The state government has given approval to the project and land for the project
has been identified and preliminary noti-fication has been issued to the farmers for
acquisition of their lands.
Boeing • Boeing is negotiating to sell its Apache AH-64D multirole combat helicopter to the INR30.3 billion
Indian Air Force.
►
• The IAF is seeking 22 heavy attack helicopters. Boeing’s Apache is expected to be
the preferred choice over Russia’s Mi-28N Night Hunter.
• Apache has successfully conducted trials; the delivery is ex-pected to commence
within 36 months of signing the con-tract.
Indian Air Force • The Cabinet Committee on Security cleared the purchase of the 75-basic trainer INR30 billion
aircraft.
• Pilatus’ aircraft will replace the 1988-vintage, single-piston-engine HPT-32s,
grounded in 2009, following a series of crashes.
• The first basic trainer would be inducted 15 months after the contract is signed. All
the 75 PC-7s will be acquired in a fly-away condition.
BAE Systems • The Defence Acquistion Council cleared a contract for 145 howitzer guns from BAE INR28.2 billion
Systems (BAE’s M777 lightweight artillery guns).
►
• The howitzers, with a range of 30 km, will fortify India’s mountainous northern
borders with India and Pakistan. The guns will be built by the BAE division in the US.
• The deal awaits clearance from the CCS before it can be signed.
Goa Shipyard Ltd. • Goa Shipyard Ltd. will build six offshore patrol vessels (OPVs) under a contract from INR18 billion
the Indian coastguard.
• Each of the 2,400-tonne vessels will be 105 m (344.5 ft) long and will feature an
integrated bridge system (IBS), quick re-sponse boats and a four-lane simulator.
Eye on defence | 24

25. Name of entity Project details Value
Hindustan • HAL is investing in a facility spread over 40 acres at Chal-laghatta, Bangalore. INR6 billion
Aero-nautics Ltd.
• The unit would undertake licensed production for the fourth-generation fighters
(HAL)
MMRCA for the Indian Air Force. HAL is creating two new divisions, one for aircraft
► assembly and the other for engine assembly and testing.
• The new facility is expected to potentially employ 1,200 people directly and another
3,600 by way of related services and outsourcing.
BEML • BEML is setting up an aerospace manufacturing division at an SEZ park near the INR4.55 billion
Bangalore International Airport, Deva-nahalli, in Bengaluru.
• The facility will manufacture aerospace components and parts, and assemble
aircraft and helicopters up to a height of 21 meters.
• The facility, spread over a 3,00,000 sq. ft. area, is expected to be ready by
September 2012.
Boeing • B
oeing is setting up a transonic wind tunnel facility in Hyde-rabad, which is expected
► INR3.1 billion
to come up in three to four years.
• The facility will be used by DRDO to test the aerodynamic features of various aircraft
shapes and space vehicles. A transonic tunnel is a high-speed tunnel, which can
generate a speed up to Mach 1.4 (Mach is the speed of sound).
Astra Microwave • Astra Microwave Products Ltd. bagged the deal to supply critical radar sub-systems INR3.1 billion
to one of its overseas customers.
• This is the first time the company has bagged such a con-tract and the company is
expected to reach revenues of INR2 billion this year.
Defence Avionics • Ultra Electronics TCS was awarded an order for electronic warfare equipment to be INR171.5 mil-lion
Research delivered to the Defence Avionics Research Establishment (DARE) in Bangalore.
Establishment
• The complete system would be used in a test environment to evaluate aircraft EW
(DARE)
radar capability and provide an opportunity for pilots to assess the effectiveness of
countermeasure techniques.
• The EW system will be integrated into the ultra TCS facility in Ottawa and then
shipped to the DARE facility in Bangalore in late 2012.
Keltron • The Kerala State Electronics Development Corp (Keltron) bagged a contract worth INR60 million
INR60 million from the National Physical and Oceanographic Laboratory (NPOL).
• Keltron won the contract to manufacture and supply sonar simulators used for
training the Indian Navy’s submarine op-erators.
• Keltron’s Aroor unit would manufacture the electronic simu-lators, designed by the
NPOL, Defence Research and De-velopment Organization (DRDO) lab.
Eye on defence | 25

26. Name of entity Project details Value
Altran • French Aerospace Company, Altran Technologies plans to expand its India NA
Technologies operations by adding about 2,000 em-ployees over the next two years.
• The company is in discussions with HAL for weight reduction of a few military
aircraft manufactured by HAL.
• It is looking at acquisitions to strengthen its existing capabilities. It plans to open a
center of excellence in Bangalore.
Bell Helicopter • Bell Helicopter opened a new office in New Delhi for its op-erations in India. It is NA
seeking growth opportunities in sales and manufacturing.
Mahindra and Ma- • M&M plans to build unmanned coastal surveillance vessels to boost India’s coastal NA
hindra (M&M) security.
• The company’s joint venture with Israel’s Rafael Advanced Defense Systems will
build unmanned patrol vessels (UPV) at a facility in Pune “in a phased manner” after
initially im-porting models from Rafael.
Maini Precision • The aerospace division of the Bangalore-based Maini Preci-sion Products signed a NA
Products contract with Airbus through global e-bidding.
• The contract is for the supply of standard bushes that would be used across the
various Airbus aircraft platforms.
Bombardier • Bombardier inaugurated its engineering service center at Bangalore to implement NA
aerospace projects, which include aircraft design.
• The company plans to ramp up the headcount in the center to 50 by 2013. The
center would assist about 4,000 engi-neers, including 800 of Indian origin, who are
working at its main service center in Montreal.
Centre for Asia- • The global aviation consulting body, Centre for Asia Pacific Aviation (CAPA), will NA
Pacific Aviation launch an aerospace park in Bangalore to promote high technology research and
(CAPA) manufacturing in aviation.
• The park, being co-promoted by Vittal Innovation City (VIC), will form one of the
industry clusters at VIC.
• The proposed park will be spread across 750 acres and is located near the
Bangalore International Airport.
Mahindra Satyam • Mahindra Satyam set up a delivery center in Toulouse, France, dedicated to the NA
aerospace and defence sector.
• The center will ramp up to 80 employees toward the end of this year and will offer
engineering, IT and communication services.
• The center will help in expanding its operations in France, generating jobs
and utilizing local talent in the areas of aero-space engineering and
information technology.
*The values of the deals have been converted to Indian Rupees using the Oanda currency conversion tool.
US$1 = INR50.44 (Average of the value from July 2011 to June 2012)
Eye on defence | 26

27. Joint ventures and alliances
Name of entities Nature of transaction Value
DCNS and Pipavav • Pipavav Shipyard plans to enter into a strategic partnership with French-based DCNS INR8 billion
Shipyard Technologies to build submarines and other warships for the Indian Navy and Coast Guard.
► • D
CNS is manufacturing six Scorpene submarines for the In-dian Navy in partnership with
►
MDL under Project 75. The partnership between the two companies will allow cost bene-fits
and timely manufacturing of vessels.
Pipavav Defence • M
DL selected Pipavav Defence and Offshore Engineering Co. Ltd. to form a JV that will build
► NA
and Offshore warships and submarines for the Indian Navy.
Engineering Co.
• T
he newly formed entity Mazagon Dock Pipavav will imple-ment a part of the existing orders
►
Ltd. and Mazagon
of MDL as well as bid for future defense contracts in India.
Dock Ltd. (MDL)
Rolta India Ltd. • Rolta India Ltd. signed an MoU to partner with GeoEye Inc., a provider of geospatial NA
and GeoEye Inc. information and insight.
• R
olta is exploring opportunities to leverage GeoEye’s high resolution satellite imagery
►
service, predictive analytics’ ex-perience and intelligent 3-D city solutions to develop defence
and homeland security solutions.
Tata Motors and • T
ata Motors Ltd. signed an agreement with a DRB-HICOM Berhad unit to market and sell light NA
►
DRB-HICOM trucks to Malaysia’s armed forces.
• T
he trucks include Tata’s 2.5 ton-5 ton trucks, including the LPTA 715 and the LPTA 1623.
►
Kaman Aerospace • K
aman Aerospace Group, Inc., a subsidiary of Kaman Cor-poration entered into an
► NA
Group and Kineco agreement with Kineco Pvt. Ltd. to form a manufacturing company in India.
Pvt. Ltd.
• T
he new venture, known as Kineco Kaman Composites, will be based in Goa and will
►
► manufacture advanced composite structures for aerospace, medical and other industries.
Eye on defence | 27

28. Country-level deals and initiatives
Country Nature of transaction Additional details
US • T
he 2012 edition of the annual 10-day In-dia-US
► • T
he US will field three tanks and dep-loy around 200 men
►
naval exercise, “Malabar,” was held in the Bay of accompanied by armored personnel carriers for the war game.
Bengal from 7 April.
• T
he indigenously built guided missile frigate INS Satpura,
►
• I
t involved the American and Indian naval forces.
► guided missile de-stroyers INS Ranvijay and INS Ranvir and
fleet tanker INS Shakti together represented the Indian Navy.
• T
he center turned down an Air Force request to participate in
►
the war games as it was wary of the hype surrounding the joint
military exercises with the US.
US • T
he US Secretary of Defence, Mr. Leon Panetta
► • B
oth sides exchanged views on the security situation in South
►
and Indian Defence Minister, Mr. A.K. Antony Asia, West Asia and the Asia-Pacific region and on various
held defence discussions in global security challenges such as cyber security.
New Delhi.
• T
he Indian Defence Minister empha-sized on moving beyond
►
the buyer-seller transactions and focusing on the transfer of
technologies and partner-ships to build indigenous capabilities.
Japan • T
he first bilateral maritime exercise be-tween
► • T
wo destroyers, one maritime patrol aircraft and a helicopter
►
India and Japan “JIMEX 12” (Japan India from Japa par-ticipated in the Japanese Maritime Self Defence
Maritime Exercise) was held off the coast of Force (JMSDF). INS Rana, INS Shivalik, INS Karmukh and INS
Japan on 9 June 2012 and Shakti are the Indian units, which parti-cipated in the exercise.
10 June 2012.
• T
he focus of these exercises was pri-marily maritime security
►
• T
he engagement between the navies of India
► cooperation. These include Humanitarian Aid & Dis-aster Relief
and Japan is part of the overall de-fence (HADR) operations and visit, board, search and seizure (VBSS)
cooperation between both countries. drills, which form a part of anti-piracy operations.
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