Eye on Defence April 2016

Contents title
Contents subjects
April 2016
Eye on Defence
Dear readers,
Electronics systems form an important part of almost all defence systems and
are currently built into nearly every weapon system and piece of equipment
held by defence forces. Electronics provide capabilities that are critical to
defence requirements and the effectiveness & lethality of weapons systems
are dependent upon electronics subsystems they employ. In recent times the
Indian industry has grown progressively in the electronics domain and the
strategic defence electronics is likely to witness high growth over the next
several years. In the first article of our issue, we provide an overview of the market and its segments
as well as highlight upcoming opportunities and its challenges.
With the release of defence budget 2016–17 along with the Union budget in February, our second
article draws out comparisons from last years’ budget for the three forces in terms of capital
acquisition and take a closer look at the distribution of the entire budget into various demand
numbers, which have been altered and rearranged from this year onward.
Our third article is specific to the indirect taxes that have been proposed in the new defence budget.
Overall the proposals that have been introduced seek to establish a balanced indirect tax system
by rationalizing the exemptions on imports coupled with incentivizing the domestic industry, both
for manufacturing as well as services sectors. Although the industry feels that few more robust
measures focused on providing an impetus to the aerospace and defence sector could have been
introduced. Through this article we look to decipher the changes within the customs duty and
proposals suggested within the domain of aviation sector like taxes for MRO related activities, fuel
charges and development of new commercial airports.
By end-March the defence focus shifted to Goa as Defexpo 2016 moved outside of the capital for the
first time. In this issue we have attached the list of the registered exhibitors.
Among the regular sections, we have industrial license applicants, RFIs/RFPs released, new projects
and investments, joint ventures and alliances, country-level deals and the latest buzz in the industry.
I hope you find this issue useful. It has been our constant endeavor to make this publication
increasingly relevant to you, and we will appreciate your comments and suggestions in this regard.
K. Ganesh Raj
Partner and Leader
Contents
Strategic defence
electronics manufacturing
ecosystem 2
Defence Budget
2016-17 and resonance
with ”Make in India” 10
Union Budget 2016:
deciphering key
indirect tax proposals
for the A&D sector 13
List of registered
exhibitors at
Defexpo 2016 16
Request for Information
(December–January
2016) 22
Request for proposal
(December–January
2016) 23
List of Industrial Licenses
(ILs) filed for January
2016–February 2016 26
New projects
/investments/contracts 28
JVs and alliances 30
Country-level deals
and initiatives 31
Industry buzz 33

2 | Eye on Defence
The Indian Electronics Systems Design and Manufacturing
(ESDM) industry sector comprises electronic products,
electronic components, semiconductor design and
electronics manufacturing services (EMS). India imports
65% of its electronic products and accounts for around 27%
of the country’s trade deficit. In case the trend continues
like in the past, the country’s electronics import bill may
well surpass its oil import expenses by 2020. The industry,
worth around US$125 billion in 2014, is expected to grow
to US$400 billion by 2020 and the estimated domestic
production could only rise to US$104 billion. The segment
spread is as under:
Source: Meeting of India-EU 7th Joint WG-2012 on
Information Society CMAI India and Q-Tech
Government of India (GoI) launched the National Policy on
Electronics 2012 (NPE 12) with the vision to make India
a globally competitive destination for Electronics System
Strategic defence electronics
manufacturing ecosystem
Design and Manufacturing (ESDM). Some visible indicators
from recent data (in January 2016) suggests that electronic
imports declined by 2.2% to US$3.2 billion, while electronic
exports rose 7.8% to US$0.5 billion. Electronic exports
turning positive in the recent past is likely to change the
dynamics of India’s manufacturing and international trade.
Increase in exports and decline in imports of electronic
items is an indicator of the changing dynamics.
Recently the Department of Electronics and Information
Technology (DietY) has joined hands with Canbank
Venture Capital fund to launch Electronic Development
Fund (EDF) in Mumbai. EDF is an initiative of Department
of Information Technology to set up a “fund of funds” to
participate in “daughter funds”. The daughter funds will,
in turn, provide risk capital to companies developing new
technologies in the area of electronics, nano-electronics and
IT. The supported funds will promote innovation, R&D and
product development within the country in the specified
fields of electronics, nano-electronics and IT. They will also
support acquisition of foreign companies and technologies
for products imported in India in large volumes. Although
the Government has laid down the policies for attracting
manufacturers and is making it easy to do business in
India, the private sector needs to be convinced now to start
manufacturing in the country.
Strategic electronics
systems
Electronics systems form an important part of almost all
defence systems and are built into nearly every weapon
systems and piece of equipment held by the defence forces.
Electronics provide capabilities that are critical to defence
requirements and the effectiveness and lethality of weapons
systems are dependent upon the electronics subsystems
they employ. Combined with “Network Enabled or Network
Centric Warfare” (NEW), it will continue to grow in
importance in the future, enabling far-reaching advances in
military capability and efficiency. Indian defence electronics
industry has shown an uptrend during the Eleventh plan
period. The Defence Electronics sector is likely to see a high
growth during the next few plan periods. The major products
and systems planned for induction by the Indian MoD during
Twelfth and Thirteenth plan are:
ESDM Projection Segment , 2020E
Semiconductor
design
15%
Hi-Tech mnfg.
6%
Electronics
Components
1%
Electronics Mfr.
Services
1%
IT Systems and
hardware
14%
Telecom
products and
equipments
37%
Consumer
electronics
4%
Others
2%
Exports
20%
Indian Demand Projection: ESDM
45
125
400
2009 2014 2020
$USDBillion

3Eye on Defence |
Sourc
Che
1. Us
2. Re
3. Us
4 De
5. Se
6. Gi
7. Te
8. He
9. Ch
10. T
11. C
12. K
makCOMS EW SIGNIT
Platform
Electronics
Data links
Seeker
Electronics
13750
11000
16500
16500
16500
13750
27500
16500 22000
27500
27500
22000
16500
11000 11000
27500
16500 16500
0
10000
20000
30000
40000
50000
60000
70000
80000
INRCrores
Air Force Naval Systems Land Systems
• Battlefield management systems
• Future infantry soldier as a system
• Long range surveillance radars, weapon locating radars,
mountain radars
• Tactical communication systems
• Softwar defined radios
• EW systems for different terrains and aircraft
• Unmanned aerial vehicles and aerostats
• Long range electro optical surveillance systems
• Thermal imager based sights for tanks and weapons
• Image intensifier-based passive night vision devices
• Weapon and missile systems
• Satellite communication and homeland security
solutions
• Electrical systems that comprise components such as
fuel systems, fire prevention systems, connectors and
electrical wiring, etc.
• Instrumentation and display systems comprising
components such as fly-by-wire and autopilot systems,
aircraft data display systems, g-load, side slip sensors,
temperature and pressure sensors, etc.
• Radio and communication systems
• Platform electronics/avionics systems/underwater
electronics
• Communication equipment
• Tools, testers and ground equipment
High levels of electronics such as avionics, airborne systems,
military communication systems, UAVs, land system
electronics, naval system electronics, electronic warfare
systems, C4ISR and weapon and missile system electronics
are emerging as key focus area for the defence electronics
industry. The table below throws light on the sub-segments
of the defence electronics market for the period 2015–
2027.
Source: Q-tech Synergy
Defence Electronics Market - Sub - System Segment - Wise

4 | Eye on Defence
Source: Q-tech Synergy
Assumptions: In Electronics & Information Networks
Programs, the Electronics part is around 50%–60% of overall
cost; while Platform Electronics is around 25% of overall
platform cost. The above data is based on proposed new
acquisition (capital procurement) and does not include the
replacement due under revenue procurement.
Some emerging opportunity:
Electronics & Information
Networks Program
Considering the system of systems stand-alone level, the
consolidated INR1000 billion (US$14.4 billion) opportunity
is congregated around major developmental programs
related to information systems and battle field transparency
for the Indian Army such as TCS and BMS (refer table)
Defence
Service
Project Approx. cost in US$ billion
Project cost Electronics
systems
share
Indian Army BMS 7.5 5.5
TCS 1.5 5.5
NFS 3 1.5
IACCS 2.5 1.5
CIDSS-I 6.5 0.2
CIDSS-II 7.5 0.1
ACCCS 0.3 0.2
ADC&R 0.1 0.1
BSS 0.1 0.1
CICP 0 0
ASCON 0.1 0.05
Sub Total 29.1 14.8
Indian Navy CSN 2.5 0.5
Sub Total 2.5 0.5
Indian Air
Force
AFNET 0.3 0.2
ODL 0.003 0.002
Sub Total 0.3 0.2
Three
Defence
Services
SATCOM 0.1 0.1
DCN 0.1 0.1
Sub Total 0.2 0.2
Grand Total 32.1 15.7
Aero Systems
29%
Land Systems
24%
Naval Systems
47%
Defence Electronics Market - Segment - Wise
Platform
Electronics
22%
Data Links
18%
Seeker Electronics
16%
SIGNIT
15%
EW
12%
COMS
17%

Sub-system segment
The land systems opportunity for Indian companies is
around projects such as the FICV, FRCV, Artillery, AD
Artillery and launcher programs. The naval opportunity is
around platform programs of conventional submarines,
frigates, aircraft carriers and support vehicles. In the
Air Force, the market could open up around supplies to
fighter and transport projects. Platform Electronics has an
approximate share of 25%–30% share in the overall platform
cost.
Capability gap
The design and development by DRDO laboratories is in
various facets of electronics and its applications besides
developing main combat platforms. Therefore, from the
design and development of solid state material, devices,
microwave tubes, microprocessors, communication
systems, command and control systems, radars, electronic
warfare systems and electro-optical systems, to advanced
computing, artificial intelligence and robotics — DRDO’s R&D
activities covers it all, besides developing main platforms
such as MBT-Mark-II, Rustom-II, LCA Mark-II, Long Range
Missiles, etc. The presence of a single agency has created
a capability gap in the private sector. The key capability
gaps for domestic players in military communication
systems lie in the areas of IP radios/software defined radios,
military grade GPS, encryption and secrecy modules,
integrated CMS solutions, 3DTC radars, target acquisition
systems, battery backup systems, field wireless systems
and support of LTE while adhering to the defence services
security protocols and core electronics technologies. In
terms of core technologies, the key gaps are in the areas
of Field Programmable Gated Array (FPGA) technology
and micro-electromechanical systems (MEMS) design and
manufacturing; miniaturization, ruggedization and wireless
design of existing equipment are three broad areas of focus
in terms of modification of existing devices and systems. In
terms of software engineering, cyber and network security
solutions, algorithms and data security and software
protocol stacks emerge as product gaps.
Indian industry participation
Manufacturing of defence products in India was opened
up to private and foreign players in 2001. Till then, only
defence PSUs such as Hindustan Aeronautics (HAL), Bharat
Electronics Limited (BEL), etc., manufactured defence
electronics equipment in the country. The Government
sector relied mainly on assembling the imported kits and
bit of in-house manufacturing with little outsourcing to the
private sector. The ever-growing potential of electronics
systems as a force-multiplier for the military has been
recognized by the private firms as well. To begin with
they have played a very effective role with its expertise
in electronics, communication and IT. The Indian private
sector has the necessary licenses for design, development
and production of EW systems and also demonstrated
indigenous capability in most of the domains, which
has been verified during NCNC evaluations. They also
have flexibility to leverage the eco system to obtain
comprehensive ToT and IPRs for imported sub-systems,
which will lead to self-reliance. Some of the firms active
in the domain are Tata Power SED, Larsen & Toubro,
Alpha Design, Axis Technologies, etc., and their estimated
share is just 5% of the defence equipment market. This
domain needs companies that are into design, custom-
built products, contract manufacturing, component
manufacturing, systems integration, etc. While in 2010, 92%
of the private sector’s orders that came to India were for
build-to-print, this figure has dropped to 80% in 2014. Indian
manufacturers have now started building capabilities in the
“build to specifications” category and have taken big strides
forward, technologically, in the last few years and can now
match international standards.
Private players have been prime bidders even in Buy
(Global) EW tenders and are willing to invest stand alone
or as Consortia modes. They can provide Lifecycle Product
Support across India. L&T & TATA Power SED have been
identified by DRDO as candidates for Engg & Life cycle
Support Agency (ELSA) for AEW&C project, besides having
the ability to take on Annual Maintenance Contract.
6 | Eye on Defence

7Eye on Defence |
A list of all RFIs related to strategic electronics for the year 2015 have been tabulated below
Date of Issue RFI Details
Communication
25 Aug 2015 VHF Radio Sets for Pechora Fleet for IAF
4 Sep 2015 Light Weight Man Portable High Frequency sets for IAF
13 Oct 2015 High Capacity Radio Relay (HCRR) Minimum 8/34 MBPS RR for IA
10 Nov 2015 High Frequency Sets, Approx. 100/200/300; for IAF
22 Dec 2015 Mobile Satcom Tropo Terminal (MSTT) for IAF
6 Jan 2016 Helicopter Satellite Tracking System for IAF
Radars
8 Jan 2015 Army Wide Area Network (AWAN) Phase-II Main System Less Encryption System for IA
7 April 2015 Low Level Light Weight Radar Mark-II for IA
30 Dec 2015 Aerostat Systems for IAF
EW Systems
16 Sep 2015 Integrated EW Suite For Mi-17 V5, for IAF
Surveillance Systems
9 Feb 2015 Flexible Surveillance Device (FSD) for IA
20 Oct 15 Laser Range Finder for IAF
8 Feb 2016 Electro Optical Pods for Reconnaissance and Observation Flights of Army Aviation for IA
Satellite Communication
19 Feb 15 Static and Mobile Photogrammetry and GIS Systems (SMPGIS) for IA
Night Vision
14 Feb 2015 Night Sight for 5.56 mm Galil Assault Rifle for IA
14 Feb 2015 Reflex Sight for 5.56 mm Tavor Assault Rifle for IA; Qty 200
10 Aug 2015 Night Sight for 84mm RL (TI) for IA
22 Jan 2016 Night Vision Devices for IAF; Qty 100

Challenges
Some of the challenges faced by the industry for realization
of this opportunity are:
• Restricted technologies: Restricted access to defence
technology, particularly in areas of electronics and
communication, missiles and smart ammunition —
which is closely guarded by firms and nations. The lack
of access to critical technologies, many of which are of
dual use, delays projects.
• High R&D cost: Prohibitive cost of R&D for development
of cutting edge technologies, which is further
accentuated by the lack of synergy between the
institutions working in this area. Indian industry’s
emphasis on R&D has been rather low with most
companies spending only around 2% of their sales
revenue on R&D.
• Monopsonic defence market: The Defence industry
being monopsonic in nature, companies find it difficult
to commit adequate funds for R&D in the absence of
guaranteed business at the end of the development
cycle.
• Low volumes of high technology equipment: Low
volumes of high technology equipment are unattractive
to qualified vendors. Absence of consortium approach
between the designer, manufacturer and the vendor.
• Relatively limited local production base leading to
significant reliance on imports

8 | Eye on Defence
Way ahead
Over the years, Indian manufacturers have built capabilities,
expertise and capacities to manufacture electronic systems;
however, their strengths and abilities have remained under-
utilized due to the regulatory, operational and tax structure
issues. To build a complete ecosystem with a robust
infrastructure, supply chain and a favorable regulatory
environment is essential. Toward that, campaigns such as
Make-in-India and ease of doing business in India, which
aim to create an investment-friendly environment and
strengthen our production potential, have set the right tone.
The indigenous design, development and manufacture of
defence equipment, is undergoing a paradigm shift with
the entry of private players. To overcome the gaps in the
desired number and the existing force level, time bound
manufacturing and induction is inescapable. The following
key issues need to be addressed through the inclusive
provisions in Defence Electronics Policy (DEP) to overcome
the challenges:
• Provide private sector the visibility of government
procurement plans focused on technology.
• Import the component; the Indian industry’s ability
to develop system-level competence, i.e., graduation
from know-how to know-why will value add using
”commercially off the shelf” technologies/ products
and development of defence systems from them for the
industry.
• Leveraging large developmental projects to ensure
maximization of indigenization potential, especially
at component levels thereby affecting SMEs. Make
project focus will also ensure development of key
“system of system” integration competence, which the
Indian industry has already demonstrated across major
programs.
• The defence electronics industry should be provided
with enablers such as easy and more price efficient
access to financing and infrastructure, multipliers to
incentivize first-time exports or multipliers where global
single source competencies are created.
• Foreign OEMs, which are willing to relocate global
A&D electronics manufacturing to India through
partnerships with local players should be extended
all benefits including those of preferential market
access for defence procurement. This is critical for all
global electronics players as the home market is often
the basis of building a business case, which is then
substantiated through international market access.
• Defence electronics today is not really codified at the
ITC-HS level as a distinct category and hence, there
are operational issues that emerge. There is a need
to detail out defence electronics from chapter 85 of
ITC-HS as well as create a simple procedure for export
of such products by populating Category 6 of SCOMET
guidelines.
• Develop a talent pool through specialized courses that
focus on defence so that there is more awareness of
defence as a career opportunity.
• Some other measures such as resolving duty
differential anomalies, giving a boost to domestic
production and exports, tax exemptions and
rationalization to improve competitiveness.
Industry structure
The strategic electronics industry comprises lead system
integrators and component and sub-system manufacturers
(tier-II and tier-I). To develop desired capabilities, India
needs to create supply chain established according to global
model. Till now, the Electronics system manufacturing in
India has been assembling imported sub systems, now CKD
kits are being imported and assembled. However, now Indian
components ecosystem is getting ready to move to local
sourcing of components.
Tier 1 and Tier 2
Partially Capable
Component Manufacturers
Yet to pick up
Design Product providing and testing Technology
Adoption Cost Leadership
Design Product Providing / Testing Cost Leadership
OEM
Capable
Brand and Time-to-Test Design Product providing and
testing Integration and Supply chain Sustainment and
Upgrade Ability to Finance product and Supply chain
CapabilityLevel
In line with the global model, in India also structural shift has
to take place, where the integrator does ~20% of value add
and for the rest it relies on indigenous supply chain.

9Eye on Defence |
The current Government stresses on self-reliance in defence
and the need for indigenous design, development and
manufacture of defence equipment. With the country’s
defence outlay going up by around 10% every year, the
defence electronics sector has undergone a paradigm shift
with the entry of private players into a traditionally “public
sector only” domain. Although the Government is the
sole buyer and market marker for defence electronics, the
segment has come a long way due to the participation of
private players along with public sector units, even though
a major part of the market is yet to be explored in the
country. Several key areas need to be strengthened for each
part of the supply chain. The way forward for electronics
in this segment varies by the role a company plays. System
integrators/OEMs will need to create a viable supply chain.
Indian companies will need to evolve models that rest
on a triad of technology, applications and production,
in a manner that engages with DRDO, DPSUs and other
private players to be successful. The initiatives need to
be supported with a complete ecosystem that promotes
growth. Given the right environment to grow, the domestic
electronic manufacturing industry can surely play an
increasingly important role.
References
• “Policies”, DeITY website, www.deity.gov.in/esdm/
policies, accessed 1 Mar 2016
• “Make in India for Aerospace Defence electronics
market -2 Lakh Cr INR in coming five years”, The ELE
Times, 24 September 2014, via Factiva
• “Has India’s electronic manufacturing turned a corner,”
The Live Mint, 20 Mar 2015, via Factiva
• “DeitY Will Back Startup Industry, Will Soon Launch
Electronic Development Fund For Startup”, The Tech
Story, 16 February 2016, via Factiva

Overview
India’s Union Budget for the fiscal year 2016—17, was
presented on 29 February 2016. This was the second full
budget of the Narendra Modi-led government. Unlike all
previous budgets, the Finance Minister kept the defence
budget out of his speech and there was absolutely no
mention of any defence allocation throughout his budget
presentation.
This defence budget can be viewed through two different
lenses and can therefore, reap two different interpretations
of budget figures. Due to the significant depreciation of INR
against US$ in this past year, there is a marked difference in
how the numbers will be read for either currencies. In terms
of US$, the overall defence budget has reduced by 9.28%
as compared to the Budgetary Estimate (BE) of 2015–16
and reduced by 0.36% as compared to the Revised Estimate
(RE) of 2015–16. On the other hand in INR terms there
has been an increase of 1% over the BE of last year and the
increase is in excess of 10% over the RE of the same period.
The US$ has appreciated from ~INR62 to ~INR69 during the
last year. This increase of ~11% is the main reason why the
defence budget is showing an overall decline.
The figures for 2015–16 have been calculated at INR62
whereas the figures for 2016–17 have been calculated at
INR69.
Total Defence expenditure (US $ billion)
Defence Budget 2016-17 and resonance
with ”Make in India”
Capital expenditure (US $ billion)
15.26
13.13 12.51
2015-16
(Budget)
2015-16
(Revised)
2016-17
(Budget)
Revenue expenditure (US $ billion)
24.54
23.10
23.59
2015-16
(Budget)
2015-16
(Revised)
2016-17
(Budget)
39.79
36.23 36.10
2015-16
(Budget)
2015-16
(Revised)
2016-17
(Budget)
10 | Eye on Defence

11Eye on Defence |
Changes in accounting
One of the major deviations of this years’ budget from
previous years is the allocation of funds under various
demand numbers. Previously, the entire defence allocation
was broken down into eight demand numbers whereas these
On capital expenditure
The budgetary allocation toward capital expenditure, which
primarily caters to fresh procurement programs of military
hardware; both platforms and infrastructure, as well as the
development and modernization effort of the DRDO and
the OFB’s has been kept at US$12.51 billion. The capital
allocation has reduced significantly (17.98%) as compared
to the BE of 2015–16 and there has been a minor reduction
as compared to the RE of the same period. This can be
attributed to the fact that an excess of US$2 billion was un-
spent from last year’s BE.
The decline in capital budget, when compared to the BE of
the previous year, is most significant for the Navy, Air Force
and the DRDO.
When we compare the Capital budget BE for 2016–17 with
the RE for the previous year, the Army and the Navy actually
have more or less remained flat whereas there is a double
digit reduction for the Air Force.
The decline in the Air Force’s budget could lead to delays for
some of the programs that are anticipated to be signed this
year. These include, the Rafale (Dassault Aviation), Aerial
Re-fueler (Airbus is L1); repeat order for two AWACS from
Israel and the Jaguar re-engine program (Honeywell). On
the other hand, the Army’s budget has managed to remain
constant and this could bode well for the M777 (FMS- BAE);
and the RSH (Ka-226) programs.
demand numbers have now been consolidated into four.
Such alterations in fund allocations have further troubled
the analysts to undertake a real assessment of the defence
budget this time. The table below briefly explains the old
and new break up of demand numbers.
Old demand number New demand number % change over BE 15-16
21 Ministry of Defence 20 -
22 Defence Pensions 21 51.07
23 Defence Services – Army
22
9.19
24 Defence Services – Navy 12.23
25 Defence Services – Air Force 2.85
26 Defence Ordnance Factories
Part of 20
-57.78
27 Defence Services - Research
and Development
2.40
28 Capital Outlay on Defence
Services
23 -8.72
On revenue expenditure
Revenue expenditure includes budget for pay and allowances,
rations, clothing, stocking of spares, petrol, oil and lubricants,
maintenance works, etc. In the budget it has shown a decline
of 3.87% when compared to the BE and an increase of 2.10%
when compared to the RE of 2015–16.
This increase, when compared to the RE of the previous year,
is due to the fact that approximately US$1.5 billion remained
unspent from the revenue budget.
The Air Force has seen the largest (single digit) decline in its
revenue budget when compared to the BE of last year. The
Navy has seen the largest (single digit) increase in its revenue
budget when compared to the RE of the year.
Utilization of previous years’
budget
Another key point observed through the budget numbers is
the non-utilization of the funds allocated under capital budget
resulting in withdrawal of the remainder back to the ministry
of finance. The capital budget comprises of parts — first part
is modernization of the three services and second includes
funds for land, capital works, the Defence Research and
Development Organization (DRDO), ordnance factories, etc.

12 | Eye on Defence
Modernization budget is primarily utilized for the
“committed liabilities”, i.e., milestone-related stage
payment due in respect of contracts signed in the past.
Underutilization of the capital budget directly signifies the
underutilization of the payment of “committed liabilities”.
This indicates that for the various defence procurement
programs the deliveries/stage payment milestones were
not achieved and the money allotted for that has now been
surrendered and is no more part of the defence budget.
Conclusion
A series of industry friendly steps, increase in FDI,
acceptance of key defence programs and an overall focus
on “Make in India” held maximum defence limelight in the
financial year 2015–16. From the defence budget for 2016–
17 the industry was anticipating large funds earmarked
for acquisition programs as well as toward implementation
of “Make in India” plans. Only time will tell how best this
budget will support and drive the defence requirements of a
country that needs to strengthen its defence quickly.
Source:
‘Complete budget’, India Budget website, http://indiabudget.
nic.in/, accessed on 1 Mar 2016
‘Union Budget’, IDSA website, http://www.idsa.in/
idsacomments/union-budget-2016-17-defence-budget_
vkausal_010316, accessed 1 March 2016

13Eye on Defence |
On 29 February 2016, the Union Finance Minister, Mr.
Arun Jaitley presented the Union Budget 2016–17 on a
positive note that the economy is recovering. The FM’s
budget proposals had a transformative agenda built on nine
distinct pillars of agriculture welfare, rural sector, social
sector, education, skills and job creation, infrastructure and
investment, financial sector reforms, governance and ease
of doing business, fiscal discipline and tax reforms.
The budget contained several proposals introduced with
an intent to boost investment and economic growth. It also
aimed to provide relief to small taxpayers with measures
to boost growth and employment generation, incentivize
domestic value addition, reduce litigation and provide
certainty, and for simplification and rationalization of
taxation.
Defence sector: promoting
“Make in India”
While India is one of the world’s largest spenders on
defence, with an estimated expenditure of almost more
than 2% of its total GDP, the country has remained largely
dependent on imported defence equipment. The domestic
manufacturing base for the defence industry has a very
small footprint with insignificant investments been made till
date toward development and manufacture of state-of-the-
art equipment.
The proposal to withdraw existing Customs duty exemptions
on import of certain goods for defence purposes from 1
April 2016, is primarily aimed to reduce the excessive
dependence on imports and incentivize local manufacturers
to undertake manufacture of goods, further bolstering the
“Make in India” initiative.
Prior to announcement of the Union Budget for 2016-2017,
there was an exemption from the Customs duty on import of
aircrafts, aircraft parts, aircraft engine arms, ammunitions,
radars, torpedoes, spares etc. by the Government of India
or State Governments. Further, on import of such goods by
contractors of the Government of India, PSUs of the Central
Government or the State Government and sub-contractor
of such PSUs, only Additional duty of customs (‘CVD’) and
Special additional customs duty (‘SACD’) were payable, i.e.,
Basic Custom Duty (‘BCD’) was exempt.
A similar exemption from BCD was also available for
machinery, equipment, components, spares etc. required
for construction of or fitment to ships of the Indian Navy
or the Coast Guard when imported by person authorised
Union Budget 2016: deciphering key
indirect tax proposals for the AD sector
by the Government of India or goods shipped on the order
of a Government Department, i.e., only CVD and SACD was
payable. Further, in case of import of such goods by the
Government of India, no Customs Duty was payable.
Vide amendment ushered in the Union Budget 2016-2017,
the exemption from Customs Duty on the import of aircrafts,
aircraft parts, aircraft engine arms, ammunitions, radars,
torpedoes, spares etc. by the Government, their PSUs and/
or their contractors, and on import of machinery, equipment,
components, spares etc. required for construction of or
fitment to ships of Indian Navy or Coast Guard by the
Government of India, Government Department or any other
authorised person, has been withdrawn.
With the aforesaid change, the cost to be incurred in
procurement of such goods imported by the Government of
India or State Governments, contractors of the Government
of India, PSUs of the Central Government or the State
Government and subcontractor of such PSUs or a person
authorised by the Government of India or goods shipped
on an order of a Government Department, as the case may
be, would increase by the quantum of BCD applicable on
such goods, which could range from 5 to 10 percent on an
average.
Further, certain practical issues may also emanate while
implementing the amendments.
For example, the removal of exemption from Customs Duty
is effective from 1 April 2016. Given that till date, there was
a specific exemption from the BCD (which is non creditable
tax), and the other taxes (such as CVD and SAD) are
creditable taxes, in case of ongoing defence contracts, there
is a likelihood that the parties to the contract may not have
specified the party who would bear the incidence of the taxes
in case of a change in duty rates. By virtue of this increase
in non-creditable duty, the tax cost on the contract would
increase, which could necessitate review of the tax clauses of
the contract to ascertain as to who shall bear the escalation
in project cost.
Similarly, where contract negotiations may have been going
on currently, the increase in Customs duty cost may require
the parties to go back to the drawing board to discuss
pricing.
Although the intention is clearly to promote “Make in India”,
in the short term, the recent budget amendments may not
prove very fruitful given the nascent domestic manufacturing
base and use of outdated technology by domestic players;
it is likely that imports will continue in the same manner as
present, albeit with a higher Customs duty cost now.

14 | Eye on Defence
Aviation sector: taking the
industry to new heights
India’s civil aviation industry is on a high-growth trajectory.
The country aims to become the third-largest aviation
market by 2020 and the largest by 2030. The Civil Aviation
industry has ushered in a new era of expansion, driven by
factors such as low-cost carriers (LCCs), modern airports,
Foreign Direct Investment (FDI) in domestic airlines,
advanced information technology (IT) interventions and
growing emphasis on regional connectivity. India is the
ninth-largest civil aviation market in the world, with a
market size of around US$16 billion. Government agencies
project that around 500 brownfield and greenfield airports
will be required by 2020.1
In view of the growing importance of the Indian aviation
market, the FM announced a slew of indirect tax measures
to provide an impetus to the sector, including the
maintenance, repair and overhauling (MRO) operators.
MRO
Prior to the Budget 2016, import/domestic purchase of
tools and tool kits by MROs for the maintenance of aircraft
was subject to Custom duty/Excise duty and accordingly,
the incidence of indirect taxes on procurement of such
equipment was high.
Vide the Union Budget 2016–17, the Custom Duty/Excise
duty leviable on such tools and tool kits imported for
maintenance, repair and overhauling of aircraft has been
done away with.
As a result, the cost of procurement for MROs from a tax
perspective will reduce irrespective of whether the same
is imported from anywhere outside India or procured
domestically in India.
Furthermore, the restriction on the period for utilization of
duty free parts imported for the maintenance, repair and
overhauling of aircraft (which existed prior to Budget 2016)
has been done away with. This will be a relief to importers
who were unable to fulfil the said condition of using the
parts within the designated period.
Moreover, the foreign aircraft, which were neither registered
nor intended to be registered in India, when brought to
India for maintenance, repair or overhauling, were exempt
from payment of BCD, provided the said aircraft removed
from India within 60 days. This time limit of stay has been
extended from the existing 60 days to 6 months, provided
during the stay period of the aircraft in India; the same
should not ply for any commercial flights in India.
Some of the above have been long-standing demands of the
Indian MRO operators, and the amendments are been hailed
as a welcome move.
Fuel
Vide Budget 2016, the rate of Excise Duty on Aviation
Turbine Fuel has been increased from 8% to 14%. However,
in case of Aviation Turbine Fuel manufactured by an assesse
for supply to regional commercial scheme airports, the rate
of Excise Duty applicable will remain at 8%.
While the move has been largely seen as a dampener, the
industry is likely to pass on such cost to passengers instead
of absorbing the same.
Construction of new airports
Service tax, which is now effectively levied at 14.5%
(proposed to increase to 15% with the proposed introduction
of Krishi Kalyan Cess at the rate of 0.5% with effect from 1
June 2016) constitutes a major cost for the aviation sector.
While historically, services provided by way of construction,
erection, commissioning or installation of original works
pertaining to an airport have been exempted from Service
tax, such exemption was withdrawn suddenly with effect
from 1 April 2015.
However, given the large number of airports under
construction/major renovation, many of them with private
participation, it appears that the Government has had a
rethink on the withdrawal of the said exemption at least for
projects that were already underway in 2015.
Accordingly, the Union Budget 2016 has retrospectively
exempted execution of such works contract (i.e., for
construction etc., related to an airport) from the levy
of Service tax subject to the fulfilment of certain key
conditions, which are:
The contract for such services should have been entered
into prior to 1 March 2015.
Appropriate stamp duty, wherever applicable, had been paid
prior to 1 March 2015.
1. ‘Indian Aviation’, IBEF website, http://www.ibef.org/industry/indian-aviation, accessed 3 Mar 2016

15Eye on Defence |
The Ministry of Civil Aviation or the Ministry of Shipping in
the Government of India certifies that the contract under
which aforementioned services were provided had been
entered into prior to 1 March 2015.
Hence, the contracts related to construction of an airport,
which were entered into prior to 1 March 2015 but
executed later on, have been retrospectively exempted
from the levy of Service tax. Furthermore, the service
providers have been provided with the option to claim
refund of the Service tax already paid on this account
within six months from the date from which the Finance Bill
receives the assent of the President.
However, any contracts entered on or after 1 March 2015
will attract Service tax from 1 April 2015 onward.
There are various other indirect tax proposals that have
been brought in with a view to reduce litigation backlog,
improve ease of doing business and promote a tax-friendly
administration. For instance, the interest rate for delayed
payment of Customs duty, Excise duty and Service tax
has been reduced to 15% per annum, barring specified
scenarios. Moreover, various changes have been made to
the CENVAT credit-related provisions.
However, the increase in limitation period for raising of
demands (in cases not involving fraud, collusion etc.) under
Excise and Customs from 12 months to 24 months, and
under Service tax from 18 months to 30 months, is likely to
result in increased litigation, even as the Government seeks
to expedite dispute resolution vide the Indirect tax Dispute
Resolution Scheme 2016.
Overall, the budget proposals seek to establish a balanced
indirect tax system by rationalizing the exemptions on
imports coupled with incentivizing the domestic industry,
both manufacturing as well as services. The industry
only wished that the FM should have included a few more
robust measures focused on providing an impetus to the
aerospace and defence sector.

16 | Eye on Defence
List of registered exhibitors at Defexpo 2016
A-1 Fence Products Company Pvt. Ltd.
Aartech Solonics Ltd
Abaco Systems
ABHYUDAY TECHNO ECONOMIC CONSULTANT PVT LTD
ACCORD SOFTWARE AND SYSTEMS PVT. LTD.
ACCURATE GAUGING AND INSTRUMENTS PVT LTD
ACCURATE INDUSTRIAL CONTROLS PVT. LTD.
Aditya Techno Solutions
Admiralty Shipyards JSC
ADS Group Ltd
Aerogel One Limited
Aeromag - Aerosun Media Pvt Ltd
AEROMAOZ LTD.
AEROSPACE ENGINEERS
AEROSPATIALE BATTERIES
Aerotek Sika AvioSystems Pvt. Ltd.
AGLAYA (Cyber Warfare Labs)
Agmatel India Pvt Ltd
AIMTREX Technologies Pvt Ltd
Airborne Systems
Airborne Systemss
Airbus Group
Al Cielo Inertial Solutions Lltd.
ALKAN
Allison Transmission India Pvt. Ltd.
Almaz – Antey Air Space Defence Corporation, JSC
(Almaz-Antey Corp.)
Almaz Central Marine Design Bureau, JSC
ALPHA DESIGN TECHNOLOGIES PVT LTD
AM General
Amphenol Interconnect India Pvt. Ltd.
Amplus Communication pte ltd
Analinear Design Technologies Pvt Ltd
Ananth Technologies Ltd
Andhra polymers pvt ltd
Andhra Pradesh Aerospace Defence Electronics Park
Andre Canada
APOLLO HEAT EXCHANGERS PVT.LTD.
APOLLO MICROSYSTEMS PVT LTD
Ardmel Group
ARI Simulation
Armscor
ARMSTRONG INDUSTRIAL
Arsenal 2000 JSCo.
Ascentech Engineering Solutions Pvt. Ltd.
Ashok Leyland Ltd.
Asian Press Group Pte Ltd
Asteria Aerospace Private Limited
Astha Corporation Pvt Ltd
Astra Microwave Products Ltd.
ASTRONAUTICS C.A. LTD.
Atlas Elektronik GmbH
Audo Viso Private Limited
Avalon Technologies Private Limited
Avanna Software Services Pvt Ltd
Avon Protection
AVRORA INDIA MARINE SYSTEMS PVT LTD
AXISCADES Engineering Technologies Ltd
AxleTech Internationa
AXON INTERCONNECTORS AND WIRES PVT LTD
BADAWE ENGINEERS PRIVATE LIMITED
BAE Systems India (Services) Pvt. Ltd.
Balmer Lawrie Co. Ltd
Bauer Kompressoren
Beechcraft Defense Company
BEML Ltd
BENENGG DESIGN AND MANUFACTURING PVT. LTD.
Beretta Defense Technology
Beth - El Zikhron Yaaqov Industries Ltd.
BGI Engitech Pvt.Ltd
Bharat dynamics limited
Bharat Electronics Limited
Bipromasz Bipron Trading S.A.
BLA ETECH PVT LTD
Blue Stampings Forgings Ltd - Extrusion Division
Boeing India Defense Private Limited
BrahMos Aerospace
Breeze Eastern Corporation
BRYKA ELECTROSYSTEM SOFTWARE PRIVATE LIMITED
Burevestnik
Carpenter Paterson India Private Limited
Caterpillar
CCO Creative Consulting GmbH
CEASEFIRE INDUSTRIES LTD
Central Design Bureau For Marine Engineering RUBIN
Centre for Development of Telematics
Centum Electronics Ltd
CHAMBER OF MARATHWADA INDUSTRIES AGRICULTURE
CHANAKYA AEROSPACE, DEFENCE MARITIME REVIEW
Chowgule Company Pvt.Ltd.
CHW Forge Private Limited
CI SYSTEMS LTD.
CISB Technologies Pvt. Ltd
A
B
C

17Eye on Defence |
ERCON COMPOSITES
Essar Steel India Limited
Esterline
Eternus Performance Materials Private Limited
EURENCO
EURONAVAL
EVEREST KANTO CYLINDER LIMITED
EXPLORER CASES by GT Line
EXXELIA GROUP
Fedders Lloyd Corporation Limited
Fincantieri
Finmeccanica
First Care Products
Fischer Connectors India Pvt Ltd
Flash Forge Pvt Ltd
FLIR Systems
Force Magazine
FS Co.,Ltd
Futura Automation Pvt. Ltd
Gala Precision Engineering PVT LTD
Gandhi Automations Pvt Ltd
Garden Reach Shipbuilders Engineers Ltd
Garg Associates Private Limited
Geeta Engineering Works PVT. LTD.
General Atomics
General Dynamics Land Systems-Canada
General Optics (Asia) Limited
Geo Informatics Consultants Pvt. Ltd.
GEW Technologies
GICAN
Global Components Inc
Global IT Point
Globez Sdn Bhd
Goa Shipyard Limited
Goldring Industries LTD
Grand Polycoats Company Pvt Ltd
Ground Co Ltd
Growcontrols
GTN Engineering (India) Limited
HARIOM INDOTS AND POWER PVT LTD
HARWIN
Heavy Engineering Corporation Limited
Helmet Integrated Systems Ltd
CM Envirosystems Pvt. Ltd.
Cobham Defence
Colts Manufacturing Company LLC
Concept Shapers Electronics Pvt Ltd
Concern Morinformsystem Agat JSC
Continental Defence Solutions Pvt Ltd
CONTROP PRECISION TECHNOLOGIES LTD.
Cranfield
Curtiss-Wright Defense Solutions
D.I Optical Co., Ltd
DABI Llc
DASAN MACHINERIES CO LTD
DATA PATTERNS (INDIA) PVT LTD
DataPath
DCI
DCNS
DEE PIPING SYSTEMS (DEE Development Engineers
Limited)
Defence Research Development Organisation (DRDO)
Delta Automation Pvt Ltd.
Denel SOC Ltd
DESPAT PVT LTD
DEXCEL ELECTRONICS DESIGNS PRIVATE LIMITED
DHANAJAY INDUSTRIAL ENGINEERS PVT LTD
DIAB Core Material Pvt Ltd
Diehl Defence Holding GmbH
Digital Broadcast India Pvt Ltd
DOK-ING
DSM Dyneema Asia Pacific
DSM India P Ltd
Duveet Co LTD
E.I. DUPONT INDIA PVT. LTD.
ELBIT SYSTEMS LTD.
Elcom Innovations Private Limited
Elcomponics Sales Private Limited
Electronet Equipment Pvt ltd
Electropneumatics Hydraulics (India) Private Limited
Elektronik Lab
Elettronica
ELNO
EM electronix private limited
EMI SOLUTIONS PVT LTD
EMSAC Engineering Pvt. Ltd.
Enercon Technologies Ltd.
ERAP KOREA Co.,Ltd.
D
E
F
G
H
(cont’d.)

18 | Eye on Defence
Kalyani group
Kappa optronics GmbH
Karcher Cleaning Systems Private Limited
KAVACH SECURE DYNAMIC TECHNOLOGY PVT. LTD
KAYNES TECHNOLOGY INDIA PRIVATE LIMITED
KBP NAMED AFTER ACADEMICIAN A. SHIPUNOV, JSC
Khedcity - Khed Economic Infrastructure Pvt. Ltd.
Kineco Kaman Composites India Private Limited
Kineco Private Limited
kirloskar oil engines limited
KIRLOSKAR PNEUMATIC CO LTD
Kollmorgen Corporation
KONGSBERG
Korea Defense Industry Association(KDIA)
Kovrov electromechanical plant
KVH Industries, Inc
L-3 Cincinnati Electronics
L-3 Communication Systems - East
L-3 Communications MAPPS Inc
L3 Communications SDS CyTerra
L-3 KEO
L-3 Ocean Systems
LACROIX
LAKSHMI VACUUM TECHNOLOGIES PRIVATE LIMITED
Larsen Toubro Limited
Laversab India
Leafield Cases
LIG Nex1
LiTak-Tak
LMB Fans Motors
Lockheed Martin
Lotus Aviation Technology Private Limited
LPS Industrial Supplies Pvt. Ltd.
LS telcom AG
M2K Technologies Pvt. Ltd
Macgregor India
MacTaggart Scott
Magal Security Systems Ltd.
Maharashtra Ex-Servicemen Corporation Ltd (MESCO)
MAK Controls and Systems (P)Ltd
MAN Diesel Turbo
Marine Electrical (I) Pvt Ltd
MARINE FRONTIERS PRIVATE LIMITED
MARSAP SERVICES PVT LTD
MATN*S STABILISERS
HGH INFRARED SYSTEMS
HIGH PRECISION WEAPONS, JSC
HIGHTEMP FURNACES LIMITED
Him Teknoforge Ltd.
HIMACHAL FUTURISTIC COMMUNICATIONS LTD
Hindustan Aeronautics Limited
Hirtenberger Defence Systems GmbH Co KG
Honeywell Aerospace
Huber+Suhner Electronics Pvt. Ltd.
Hyderabad Precision Manufacturing Company Pvt. Ltd.
Hydroma India Pvt. Ltd.
IAI - Israel Aerospace Industries Ltd.
ICE Ltd
IMR Media Pvt Ltd
IMS GROUP
Imtech Marine India Pvt Ltd
India Strategic Inc
Indian Armour Systems Pvt.Ltd.
INDIAN DEFENCE REVIEW
INDICA INDUSTRIES PRIVATE LIMITED
Indo Group
INTECH DMLS Pvt Ltd
IRTS
ISRAEL PAVILION
IVCHENKO-PROGRESS, SE
IWI - ISRAEL WEAPON INDUSTRIES LTD.
IXBlue Pte Ltd
Jahagirdar Aero Products
Jeet Jeet Glass and Chemicals P Ltd.
JISNU COMMUNICATIONS LTD
Joint-stock company YANTAR shipyard
JSC RADIOZAVOD
JSC Concern Granit-Electron
JSC Proletarsky zavod
JSC RP Corp. KBM
JSC Russian Helicopters
JSC Shvabe
JSC Tecmash
JSC Vympel Shipyard
JUNGHANS Microtec GmbH
Kabra Extrusiontechnik Ltd
Kadet Defence Systems ℗ Limited
Kallman Worldwide, Inc.
(cont’d.)
I
L
M
J
K

19Eye on Defence |
OPGAL OPTRONIC INDUSTRIES LTD.
Ophir Optronics Ltd.
ORBIT Communication Systems Ltd
Orbital ATK
ORDNANCE FACTORY BOARD
OTM Servo Mechanism Ltd
PAKO Communications Private Limited
Pandect Precision Components Ltd
Park Controls and Communications Pvt Ltd
PCB Technologies Ltd
Pearson Engineering Ltd
PepperBall
Physical Logic Ltd.
PLANSEE INDIA HPM PVT LTD
Plasan sasa
Polaris India Pvt Ltd
Poliplast, LTD
Polish Armaments Group
Precision Machinekraft (P) Ltd
Precision power products india pvt ltd
Presto Stantest Private Limited
Pricol Engineering Industries Limited
Proizvodstvennoye Ob`edinenie Severnoye
mashinostroitelnoye predpriyatie SC
Prosafe International Private Limited
PSC Amurshipbuilding Plant
PTC INDUSTRIES LIMITED
Punj Lloyd Ltd
Purbanchal Udyog Ltd
Qmax Test Equipments Pvt Ltd
Quantum3D
RAFAEL ADVANCEDS DEFENSE SYSTEMS
Raksha Supreme Camouflage Pvt Ltd
Rangsons Electronics Private Limited
Ratnamani Metals and Tubes Ltd
Ray Service, a.s.
Raytheon
Realtime Techsolutions Pvt Ltd
Reliance Defence Limited
Research and Design Institute of sea thermal
engineering,JSC
Research Institute of Polymeric Materials, JSC
RESISTOFLEX PVT. LTD.
Matrix Comsec Pvt Ltd
MAZAGON DOCK SHIPBUILDERS LIMITED
MBDA
Meggitt Defence Systems
MEPROLIGHT LTD.
Messung erfi
Microflown AVISA
MicroMet-ATI India Private Limited
MILCOTS- 901D
MINERVA SPECIAL PURPOSE VEHICLE PRIVATE LIMITED
Mistral Solutions Pvt. Ltd.
MKU
Mody Pumps India Pvt Ltd
MORE MILITARY OPTICAL RF EQUIPMENT LTD.
Moscow Research Institute Agat
Motor Sich, JSC
MS INSTRUMENTS LTD
MSC Software Corporation India Pvt. Ltd.
MTU Friedrichshafen GmbH
Multisphere Power Solutions Pvt Ltd
MVS ENGINEERING LIMITED
MYMO Wireless Technology Pvt Ltd
Name Baltic Shipyard Ltd.
Nammo AS
Nanomotion Ltd.
NARENDRA EXPLOSIVES LIMITED
Nevskoe Design Bureau PJSC
NEWSEYE MEDIA PVT LTD
NEXTER SYSTEMS
Nicomatic India Electronics Pvt. Ltd.
Nihar Agrotech
NIMDA DIESEL GROUP
NIMI JSC
NITIN FIRE PROTECTION INDUSTRIES LIMITED
NOGA EINAT SHOE INDUSTRIES LTD.
Nordic Shelter AS
Norsafe AS
Norwegian Defence and Security Industries Association
Nucon Aerospace
NUDELMAN PRECISION ENGINEERING DESIGN BUREAU
ODU GmbH and Co. KG
OFFSET INDIA SOLUTIONS PVT LTD
OIS ADVANCED TECHNOLOGY PVT LTD
OIS AEROSPACE PRIVATE LIMITED
Omsktrsnsmash
N
P
Q
R
O
(cont’d.)

20 | Eye on Defence
Reutech
Robert Bass
ROBOTEAM
Rockwell Collins
Rohde Schwarz
ROLTA INDIA LTD.
ROSOBORONEXPORT
Rotaryelectronics Pvt Ltd.,
ROTZLER Deutschland GmbH + Co. KG
ROXEL
Royal Norwegian Embassy
RP OPTICAL LAB LTD.
RPA Bazalt, JSC
RTI, JSC
RUNFLAT Tire Systems
S.G.MARKETING PVT. LTD.
Saab AB
SAFESURE RUNFLAT SYSTEM
SAGEM
Sahuwala Cylinders Pvt Ltd
SAI SYNERGY LLP
Saint-Petersburg Marine Design Bureau Malachite
Samtel Avionics Ltd.
Sanauto Engineers India Pvt. Ltd. Aerospace Division
Sandeep Metalcraft Private Limited
Sap Media Worldwide Ltd
Saraswati Dynamics Private Limited
SCD - SEMI CONDUCTOR DEVICES
Scientific Production Association PRIBOR, JSC
Seaborne International PET LLC
SEC INDUSTRIES PVT LTD
Sensonor AS
SERVOCONTROLS AND HYDRAULICS INDIA PVT LTD
Severnoye Design Bureau, JSC
SFTE SpetsTechnoExport
Shephard Media
ShinMaywa Industries,Ltd
Shipbuilding Shiprepair Technology Center, JSC (JSC
SSTC)
Shipbuilding plant Severnaya Verf, JSC
Shipreparing Center Zvyozdochka JSC
Shree Refrigerations (P) Ltd.
SI2 MICROSYSTEMS PVT LTD
SIBAT Israel Ministry of Defense
Sidwal Refrigeration Industries Private Limited
Sika Interplant Systems Ltd
Sika Tourism Pvt. Ltd.
Sikka n Sikka Engineers Pvt. Ltd.
Sikorsky
Simplex Castings Limited
SMART SECURE INDIA PVT. LTD.
Smart Shield
SMPP PVT. LTD.
SOGENA FRENCH PAVILION
SOHAME AS
SOLAR INDUSTRIES INDIA LIMITED
Sonoscan, Inc.
Soosung Defense Industries, Ltd
Southern Electronics (Bangalore) Pvt Ltd
SP Guide Publications Pvt Ltd
SPLAV SPA, JSC
Sredne - Nevsky Shipbuilding Plant, JSC
SRG TECHNO PVT. LTD.
SRKL Technovations Private Limited
SSD POLYMERS
SSV TECHNOCRATES
Staco Systems
Star Hentzen Coatings
STAR WIRE INDIA LIMITED
State Corporation ROSTEC
STRONGFIELD TECHNOLOGIES LTD
TAK Technologies Pvt. Ltd.
Tarang Kinetics Pvt Ltd
TATA ADVANCED MATERIALS LIMITED
Tata Advanced Systems Limited
Tata Consultancy Services
Tata Group
Tata Motors Ltd
TATRA EXPORT s.r.o.
TCOM, L.P.
TE Connectivity India Pvt. Ltd.
TESSOLVE SEMICONDUCTOR PVT. LTD.
Textron Systems
Thales
THE HI-TECH ROBOTIC SYSTEMZ
The Tata Power Company Limited - Strategic Engineering
Division
THOTAKA TEKHNOLOGIES INDIA PRIVATE LIMITED
Three Digi Prints
Thrikasa Technologies
ThyssenKrupp Marine Systems GmbH
TITAN COMPANY LIMITED
Tonbo Imaging Pvt Ltd
Trasccon Interconnection Systems Pvt Ltd
Tratec Engineers (P) Ltd
Trikona Technologies Pvt. Ltd.
S
T
(cont’d.)

21Eye on Defence |
TTGA pvt ltd
Tulsky Oruzheiny Zavod, JSC
TVS Logistics Services Limited
UCAL-JAP SYSYTEMS LIMITED
UCONSYSTEM CO Ltd.
UKBTM
UKTI Defence Security Organisation
ULIS SOFRADIR
Ultra Dimensions Pvt Ltd
ULTRA ELECTRONICS PALS
Ultraweld Engineers Pvt. Ltd.
Uni Tritech India, Division of Uni Deritend Limited
Unified Electro-Tech Ltd
UNITED ENGINE CORPORATION
United Shipbuilding Corporation JSC (USC)
Universal Avionics Systems Corp
URALTRANSMASH
URALVAGONZAVOD
URDAN Metal Casting Ind.
USAI FORGE PRIVATE LIMITED
UTC Aerospace Systems
UURM V. Tikhomirov Scientific-research Institute of
Instrument Design
V.A.DEGTYAREV PLANT, OJSC
VAJRA RUBBER PRODUCTS (P) LTD
Valeth Hightech Composites Private Limited
VASINI GUALANDI S.r.l.
Vayu Aerospace and Defence Review
Vega aviation products pvt ltd
Vehere Interactive
VEM Technologies Private Limited
Venus Safety and Health Pvt Ltd
Vestdavit
VESTENS OCEAN AS
Victorinox India Private Limited
Vital Seating Systems Limited
Vitzrocell Co.,Ltd.
VNII SIGNAL JSC
VNIITRANSMASH
VOGO.I SYSTEMS PVT LTD
U
WALCHANDNAGAR INDUSTRIES LIMITED
WALTHER GMBH, CARL
Wartsila India Private Limited
WATER MIST ENGNEERING AS
Weiss Technik India Private Limited
WHEELS INDIA LIMITED
Wipro Enterprises Private Limited
WOO KYUNG OPTICS Company
Yeoman Marine Services
YUGOIMPORT-SDPR
Zelenodolsk Design Bureau, JSC
ZEN TECHNOLOGIES LIMITED
V
Z
W
Y
(cont’d.)

22 | Eye on Defence
Request for Information
(December–January 2016)
Date of issue RFP detail/equipment Response date Issued by Remarks
9 Feb 2016 High Explosive Squash
Head (HESH) Ammunition
for 120 MM Rifled Bore
Main Gun for MBT Arjun
Tank
22 Mar 2016 Director Indigenous
Production (AC) Dte
Gen of Mech Forces
For IA
9 Feb 2016 FIN Stabilized Armor
Piercing Discarding Sabot
(FSAPDS) Ammunition
22 Mar 2016 MGO PPO-5 For IA
8 Feb 2016 Electro Optical Pods for
Reconnaissance and
Observation Flights of
Army Aviation
7 March 2016 Directorate General
Army Aviation (AA-6)
For IA
5 Feb 2016 Light Bullet Proof Vehicle 24 Feb 2016 DGRR For IA
25 Jan 2016 Indigenous construction
of Survey Training Vessel
(STV)
21 Mar 2016 Integrated Head
Quarters IN
For IN
22 Jan 2016 Night Vision Devices; Qty:
100 Nos. approximately
3 March 2016 Dte Of Plans For IAF
6 Jan 2016 Helicopter Satellite
Tracking System
19 Jan 2016 Senior Engineer
Air Force Station
Sarsawa
For IAF
6 Jan 2016 30MM New Generation
Ammunition
15 Feb 2016 DG of Mechanized
Forces
For IA
30 Dec 2015 Aerostat Systems 24 Feb 2016 Dte Of Plans For IAF
23 Dec 2015 Anti-Tank Guided Missile
for Advanced Light
Helicopter Weapon
Systems Integrated
21 Jan 2016 DG ARMY AVN For IA
22 Dec 2015 Mobile Satcom Tropo
Terminal (MSTT)
16 Feb 2016 Dte of Plans For IAF
1 Dec 2015 Micro Unmanned Air
Vehicle Fixed Wing
9 Dec 2015 3 ADV BASE WKSP
PIN 906403 c/o 56
For IA

23Eye on Defence |
(December–January 2016)
9 Jan 2016 Thermal Imaging Camera 25 Jan 2016 30 Wing, AF
Air Force Station,
Sarsawa
For IAF
8 Jan 2016 Design and Development
of Test Equipment for
Russian and Ukrainian
Origin Air Launched
Missiles
5 April 2016 Dte of Armt and
Safety
For IAF
8 Jan 2016 Jet Propulsion Boat; Qty:
06 nos.
8 Feb 2016 Engrs Branch For IA
8 Jan 2016 4.6 M Antenna Based
Ship Borne Telemetry
Systems; Qty: 01 No.
22 Mar 2016 ITR*Integrated Test
Range
Issued By DRDO
7 Jan 2016 Two man fast patrol
Boat; Qty: 04 Nos.
8 Feb 2016 Engrs Branch, For IA
4 Jan 2016 Soft Armored Panel (SAP
Protection Level-3A) of
BP Jacket; Qty 42 Nos.
29 Jan 2016 CISF 5TH Reserve
Battalion Indirapuram
For CISF
2 Jan 2016 Ropes on Single Bid
System
18 Feb 2016 Controller Of
Procurement Material
For IN
1 Jan 2016 Medium Machine Gun Fire
Simulator; Qty: 08 Nos.
9 Feb 2016 Provisioning
Directorate
(Procurement Cell)
For BSF
31 Dec 2015 Electronic Shooting
Range - QRs and TDs
--- Training Directorate For BSF
31 Dec 2015 Outdoor Reflex Shooting
Range - QRs
--- Training Directorate For BSF
30 Dec 2015 Aerial Bombs (Make Sony
Oye Bubbly)
6 Jan 2016 INS Dega
NAD Post
For IN
29 Dec 2015 Rifle Mounted Laser Dot
Sight and Pointer; Qty:
270 No. each
2 Feb 2016 HQ WAC IAF
Subroto Park
For IAF

24 | Eye on Defence
(December–January 2016) (cont’d.)
28 Dec 2015 Speed Radar Gun; Qty:
01 Nos.
6 Jan 2016 Air Force Academy
Dundigal, Hyderabad
For IAF
28 Dec 2015 Up gradation of 25Mtr
Shooting Range for
training of shooters,
7 Jan 2016 --- For IA
26 Dec 2015 Bullet Proof Jacket; Qty:
1038 Nos.
16 Jan 2016 Engrs Branch, HQ
South Western
For IA
26 Dec 2015 Coalescer and Separator
Cartridge Type M
12 Jan 2016 Senior Logistics
Officer - 8 WG
For IAF
18 Dec 2015 Nose Fuze Type
A670M(Empty) for
30MM BMP-II Ammn.TO
CQA(A); Qty: 81996 Set
12 Jan 2016 Ordnance Factory
Badmal
Issued By OFB
22 Dec 2015 BEML Tatra ER (L) 8X8
vehicle
4 Jan 2016 Electronics Radar
Development
Establishment
Issued By DRDO
22 Dec 2015 Coastal Security Boats
and Accessories
17 Feb 2016 Indian Navy Sports
Control Board
For IN
22 Dec 2015 Qualitative Requirement
for Night Vision Device
Thermal
7 Jan 2016 MHA Directorate
General BSF
For BSF
21 Dec 2015 Concealable Body
Armour; Qty: 340 Nos
27 Jan 2016 DG NSG For NSG
21 Dec 2015 Night Vision Devices 29 Dec 2015 AF Stn, Adampur For IAF
21 Dec 2015 Multi-Purpose Reflex
Weapon Sight for 5.56
MM Assault Rifle
4 Jan 2016 Rifle Factory Ishapore Issued By OFB
21 Dec 2015 Telescopic Day Sight,
Magnification-3X Min. for
5.56 Mm Assault Rifle
4 Jan 2016 Rifle Factory Ishapore Issued By OFB
1 Dec 2015 Pulse Phased Array
Tracking Radar
19 Feb 2015 PXE, Chandipur Issued By DRDO

25Eye on Defence |
1 Dec 2015 Maintenance Contract
With HAL
14 Dec 2015 DOMR, DRDL,
Kanchanbagh
Issued By DRDO
2 Dec 2015 Uncool thermal Imager
for Assault rifle
22 Dec 2015 Instruments Research
Development
Establishment
Issued By DRDO
7 Dec 2015 Refurbishment of AVRO
Aircraft
22 Dec 2015 Air Force Station,
Borjhar, Guwahati
For IAF
9 Dec 2015 Development of
Anti-Personnel Mine
Simulation Package
30 Dec 2015 Commandant CME,
PO-Dapodi, Pune
For IA
11 Dec 2015 Driving Simulator For
Heavy Vehicle
20 Jan 2016 Directorate General,
Border Security Force
For BSF
17 Dec 2015 PP Ropes (Polypropylene
Ropes)
7 Jan 2016 Material
Organization,
Visakhapatnam
For IN
17 Dec 2015 Advance Small Arms
Training Simulator-8
Lane (ASATS); Qty: 25
Nos
21 Jan 2016 Proc cell Dte. Genl,
CRPF
For CRPF
18 Dec 2015 Air Weapons for Indoor
Precision Shooting
26 Dec 2015 GSO-1 (Training) For IA
18 Dec 2015 Light Bullet Proof
Vehicle; Qty:42 Nos.
28 Jan 2016 Prov Dte (Proc Cell) For BSF
18 Dec 2015 Manufacturing of various
components made
up of aluminum alloy
for Wheeled Armored
Vehicle
28 Jan 2016 Vehicle Research
Development
Establishment
Issued By DRDO
18 Dec 2015 Nylon Filament Rope OG
16MM DIA; Qty: 7282
Mtr
8 Jan 2016 Napier Road Cantt.,
Kanpur
For OFB
18 Dec 2015 Rope Station for Fighters
Squadron at Indian Naval
Academy; Qty: 04Nos.
1 Jan 2016 Indian Naval
Academy
For IN
(December–January 2016) (cont’d.)

26 | Eye on Defence
List of Industrial Licenses (ILs) filed for
January 2016–February 2016
Application no. and
date
Name of the applicant Item of manufacture
24
25/02/2016
M/s Giridhari Explosives Pvt. Ltd. Slurry
23
24/02/2016
M/s Scarlet Industries Pvt. Ltd. Metal working service activities
22
24/02/2016
M/s Schoeller Technologies India Pvt.
Ltd.
Multi Spectral Camouflage Nets
21
24/02/2016
M/s Barracuda Camouflage Pvt. Ltd. MSCN
20
24/02/2016
M/s River Engineering Pvt. Ltd.
Guidance and navigation equipment for military
aircraft
19
24/02/2016
Imaging equipment, night vision devices, optical
sights and thermal imager for guns and tanks
18
24/02/2016
M/s VST Industries Ltd. Cigarettes
17
18/02/2016
Fuel pump, its parts/ components and accessories of
fuel system for Military Aircraft.
16
16/02/2015
M/s Skil Advanced Systems Pvt. Ltd.
Arms and ammunitions of all types for Army/ Navy
and Airforce and Homeland Security
15
15/02/2016
M/s Skil Advanced Systems Pvt. Ltd. Manufacture of helicopters
14
15/02/2016
M/s Vinyas Innovative Technologies Pvt.
Ltd.
Microwave components and modules for EW Radar
and sub systems
13
05/02/2016
M/s SEC Industries Pvt. Ltd. Metal working service activities.
12
01/02/2016
M/s Entremonde Polycoaters Ltd.
Miscellaneous concealment and deception
equipment specially design for military application-
MSCN

27Eye on Defence |
List of Industrial Licenses (ILs) filed for
January 2016–February 2016 (cont’d.)
Application no. and
date
Name of the applicant Item of manufacture
11
01/02/2016
M/s Bharij Fabricators Bullet proofing for all types of vehicles, SUVs
10
27/01/2016
M/s Himachal Futuristic
Communications Ltd.
Concealment and deception equipment specially
designed for military application
9
18/01/2016
M/s Texmaco Rail Engineering Ltd.
Design, development, manufacture, assembly and
upgrade of artillery guns/Howitzers
8
15/01/2016
M/s SEC Industries Pvt. Ltd. Metal working service activities
7
08/01/2016
M/s Kalyani Rafael Advanced Systems
Pvt. Ltd.
Manufacture, upgrade and overhaul of tanks and
other armored fighting vehicles
6
07/01/2016
M/s Eirene Unmanned Systems Pvt. Ltd. UAV
5
07/01/2016
M/s Eirene Strategic Systems Pvt. Ltd. Tanks
4
07/01/2016
M/s Texmaco Rail Engineering Pvt.
Ltd.
Manufacture of empty shells required for
ammunition and explosives, e.g., bombs, mines,
missiles, torpedo
3
07/01/2016
M/s Texmaco Rail Engineering Pvt.
Ltd.
Design, development and production of ready to use
ammunition of 22 mm caliber
2
01/01/2016
M/s Sagar Defence Engineering Pvt.
Ltd.
Unmanned boats
1
01/01/2016
M/s D Gipro Systems Pvt. Ltd. Electronic component such as fuzes

28 | Eye on Defence
Name of entity Project details Value*
Defense
Acquisitions
Council (DAC)
and Indian Air
Force (IAF)
• ► DAC approved purchase of five Russian S-400 Triumf air defence missile systems
worth INR412 billion for the IAF.
• ► The system is capable of destroying incoming hostile aircraft, missiles and drones
within a range of 400 km, with 2.5 times faster firing rate as compared to its
predecessor, the S-300.
• ► DAC also cleared the digitization of 24 Pechora Air Defence surface-to-air missile
system for INR12 billion.
INR412
billion
DAC and Indian
Army
• ► DAC granted Acceptance of Necessity (AoN) for purchase of six regiments of the
Pinaka rocket system worth INR146 billion for the Indian Army.
• ► In addition to the rocket system, DAC approved purchase of 571 light bullet-proof
vehicles (worth INR3.1 billion), 120 trawls to be used on Russian-origin T-72 and
T-90 tanks (worth INR4.5 billion) and an electronic warfare system (worth INR4.25
billion).
~INR158
billion
Lockheed Martin • ► ►Lockheed Martin has been awarded a contract to provide pilot night vision sensor
(PNVS) systems, its spares and Modernised Target Acquisition Designation Sight
(M-TADS) systems to the Indian Army for Apache helicopters.
• ► All PNVS and M-TADS systems are expected to be delivered by December 2021.
INR74.4
billion
(US$107.8
million)
Hindustan
Aeronautics
Limited (HAL)
and Rostech
• ► HAL has tied up with the Russia’s Rostech State Corporation for manufacture of
at least 200 Kamov 226T light helicopters under the “Make in India” initiative to
replace the ageing fleet of Cheetah and Chetak.
INR69 billion
(US$1
billion)
Cabinet
Committee on
Security and
James Fisher
Defense
• ► CCS approved the purchase of two deep-submergence rescue vessels (DSRVs) from
a UK-based company, James Fisher Defence for the Indian Navy.
• ► The deal was pending, since June 2000, when the Indian Navy initiated the request
for two DSRVs.
INR19 billion
Kerala State
Electronics
Development
Corporation
(Keltron)
• ► ►Keltron, the only indigenous manufacturer of re-transmission units for naval ships in
India, has received an order for manufacturing four re-transmission units for naval
ships from the Indian Navy.
~INR54
million
Ministry of
Defence (MoD),
Tata Advanced
Materials and
MKU
• ► ►The MoD plans to procure 50,000 bulletproof jackets from two companies, Tata
Advanced Materials and MKU Pvt. Ltd., 25,000 jackets each.
• ► The final contract is expected to be signed in first half 2016.
NA
New projects/investments/contracts

29Eye on Defence |
*The values of the deals have been converted to Indian Rupees. 1US$ = INR69.
Sources:
1. “Government clears purchase of five S-400 air defence systems worth Rs 40,000 crore: Sources,” The Economic Times, 29 October 2015, via
Factiva
2. “Russian S-400 Triumf missile to boost Indian defence system,” Hindustan Times, 18 December 2015, via Q-tech Synergy Newsletter
3. “Defence Ministry to buy bulletproof jackets from two companies,” Indian Express, 30 December 2015, via Q-tech Synergy Newsletter
4. “Lockheed Martin bags $108-m Indian Army contract,” Business Line, 24 December 2015, via Factiva
5. “Hindustan Aeronautics Limited ties up for manufacturing Russian Kamov helicopters,” Business Today, 30 December 2015, via Q-tech Synergy
Newsletter
6. “Centre clears Rs 1,900 crore deal for Navy to acquire two deep-submergence rescue vessels,” The Economic Times, 11 March 2016, via Q-tech
Synergy Newsletter
7. “Keltron bags Rs 5 crore order from Indian Navy for supply of four sets of re-transmission units,” The Economic Times, 29 January 2016, via
Q-tech Synergy Newsletter
8. “Russian aircraft service centre soon in India,” Russia and India report, 5 February 2016, via Q-tech Synergy Newsletter
9. “PM lays foundation stone for HAL’s chopper-making unit,” The Hindu, 4 January 2016, via Factiva
10. “Defence Ministry Signs 50 Manufacturing MoUs with Global Helicopter, Jet Makers,” Business World, 16 February 2016, via Q-tech Synergy
Newsletter
11. “Test in India: Military ranges, labs opened to private players to test equipment,” The Economic Times, 17 December 2015, via Factiva
Name of entity Project details Value*
ASC Aeronautical
Equipment
• Russia-based ASC Aeronautical Equipment will open a service center in India by end
of March 2016.
• It will be engaged in repairing Russian military vehicles, supplying accessories and
ground equipment for aircraft and helicopters currently operating in India.
NA
HAL • HAL has laid the foundation stone of a helicopter manufacturing facility at
Tumakuru in Karnataka.
• The facility will produce 3-10 tons class of helicopters. Operational clearance of
the basic version of helicopter is expected in 2016–17.
NA
MoD • During the ”Make in India” week, held in Mumbai from 13–18 February, the
MoD has signed around 50 MoUs for defense equipment manufacturing in India
especially for manufacturing of jets and helicopters with global companies.
• The manufacturing of helicopters and jets in India is expected to create more
than 100,000 employment opportunities.
NA
MoD • The MoD has opened several testing facilities and military ranges for private
players for RD and new equipment development activities.
• The facilities will primarily provide weapon range testing and material tensile
strength testing.
• To avail the facility, private players will need to submit financial documents and
equipment details to the MoD.
NA
New projects/investments/contracts (cont’d.)

30 | Eye on Defence
Name of the
entities
Nature of transaction Value
Reliance Defence
Ltd. and Almaz-
Antey
• ► ►Reliance Defence Ltd. and Russian defense manufacturer Almaz-Antey have
decided to jointly make missiles and radar systems for the Indian armed forces.
• ► The tie-up will also focus on joint implementation of modernization, repair and
overhaul of Almaz-Antey systems that are already in service with the Indian forces.
INR400
billion
Reliance Defence
Ltd. and Tatra
• ► Reliance Defence and Czech Republic-based vehicle manufacturer, Tatra, have
entered a 51:49 JV, to manufacture and provide services to military trucks for
India as well as international markets.
INR35 billion
(annually)
Premier
Explosives and
Israel Aerospace
Industries (IAI)
• ► Premier Explosives Ltd. (PEL) has signed a memorandum of understanding (MOU)
with Israel Aerospace Industries Limited (IAIL) for exploring potential business
opportunities in surface-to-air (SAM) missiles.
NA
Mahindra
Defence
and Airbus
Helicopters
• ► ►Mahindra Defence and Airbus Helicopters have entered into an agreement to form
a JV for production of helicopters in India.
• ► The partnership will lead to transfer of state-of-the-art technologies and
development of manufacturing activities to India.
NA
Kalyani Strategic
Systems Ltd.
(KSSL) and Saab
• KSSL and Swedish defense company Saab, formed a JV for a multi-billion dollar
contract for short–range, surface-to-air missile and man-portable very short-
range air defense (VSHORAD) programs.
NA
KSSL and Rafael
Advanced
Defense Systems
• KSSL and Rafael have entered into a JV to bid for key defense programs in India
such as infant combat vehicle BMP II upgrade, tactical control systems and other
advanced systems.
NA
Punj Lloyd
Ltd and Israel
Weapon
Industries (IWI)
• Punj Lloyd Ltd. and IWI entered a 51:49 JV to manufacture small arms in India.
• Initially, the JV will focus on manufacturing small components for guns, which
will be exported to Israel for final assembly while later on complete guns will be
made in India.
NA
Mahindra
Defence and BAE
Systems
• BAE Systems has partnered with Mahindra Defence for the assembly,
integration and testing (AIT) facility for the 145 M777 ultra-light howitzers,
recently ordered by the Government of India (GoI).
NA
JVs and alliances
Sources:
1. “Reliance Defence ties up with Russian firm for air missile systems,” The Hindu, 24 December 2015, via Factiva
2. “Post FDI policy change, Tatra set to partner with Reliance Defence for making military trucks,” The Economic Times, 30 December 2015, via
Q-tech Synergy Newsletter
3. “India’s Premier Explosives and Israel Aerospace Industries agree to explore missile collaboration,” IHS Jane’s 360, 6 January 2016, via Factiva
4. “Mahindra, Airbus Pact To Make Helicopters Among 16 India-France Deals,” NDTV India, 25 January 2016, via Q-tech Synergy Newsletter
5. “Bharat Forge arm forms JV with Rafael Advanced Defense Systems,” The Economic Times, 9 February 2016, via Q-tech Synergy Newsletter
6. “Israeli-Indian JV to make small arms in private sector,” The Indian Express, 4 February 2016, via Q-tech Synergy Newsletter
7. “BAE announces Mahindra as partner for the M777 ultra-light howitzers deal,” The Economic Times, 18 February 2016, via Q-tech Synergy
Newsletter
8. “Kalyani Group, Sweden’s Saab tie up for air defence systems,” Money Control, 13 February 2016, via Q-tech Synergy Newsletter

31Eye on Defence |
Country-level deals and initiatives
Country Nature of transaction Additional details
Japan • ► Japan’s ShinMaywa industries, the
manufacturer of US-2 amphibious aircraft,
plans to set up a manufacturing plant in
India to cater to large local as well as global
demand.
• ► The investment in the manufacturing plant will
serve the 30% offset clause for the 12 US-2
aircraft orders from the Indian Navy.
Japan • ► Indian and Japanese troops successfully
conducted the 15th bilateral Sahyog-Kaijin
joint exercise in the Bay of Bengal.
• ► ►From the Indian side, ICGS Samudra Paheredar,
ICGS Sarang, ICGS Vishwast, ICGS Rajtarang,
ICGS Rajkamal, a Dornier 228 and Chetak
helicopters participated while from Japan
JCGS Echigo and Sikorsky S-76 helicopter
participated.
Israel • ► ►India plans to conclude key bilateral military
deals and projects with Israel, collectively
worth INR180 billion, before Prime Minister
Modi’s visit to Israel, this year.
• ► ►The key deals include medium-range surface-
to-air missile system (worth INR100 billion),
acquisition of 164 laser-designation pods for
IAF fighters and 250 advanced Spice precision
stand-off bombs.
South Africa and
Brazil
• ► India, South Africa and Brazil conducted
5th IBSAMAR (India-Brazil-South Africa
Maritime) naval exercise off the Goa coast.
• ► The scope of the exercise includes a complex
trilateral naval exercise involving participation
of ships, submarine, aircraft and Special Forces
from all three countries.
The US • ► The US has updated its policy on gas-
turbine engine technology transfer to
India to increase cooperation for design
and manufacturing of sensitive jet engine
components.
• ► ►During a meet held in December 2015,
between Indian Defence Minister and the US
Defense Secretary, total 17 new ideas were
discussed. The US proposed 11 new ideas
while India proposed six new proposals.
Russia • ► ►India and Russia have decided to invest
INR276 billion (US$4 billion) each, for the
Fifth Generation Fighter Aircraft (FGFA)
development program. The two countries
will jointly manufacture 250 FGFAs.
• ► The project has been already delayed by two
years. However, India’s push for the program
will bring the project on track with a FGFA
prototype expected to be completed by 2019.
Sources:
1. “Make in India boost: Japan offers to set up plant in India for US-2 amphibious aircraft,” The Economic Times, 1 February 2016, via Q-tech
Synergy Newsletter
2. “Indo-Japan Coast Guard Exercise Sahyog-Kaijin,” Vayu Aerospace Defence Review, 26 February 2016, via Factiva
3. “Fresh push for Israeli missile system,” The Times of India, 9 February 2016, via Factiva.
4. “India, Brazil, South Africa joint naval exercise off Goa coast,” Indo-Asian News Service, 22 February 2016, via Factiva
5. “US updates jet-engine technology transfer policy with India,” The Economic Times, 11 December 2015, via Factiva
6. “After Manohar Parrikar’s push, India Russia revive talks on fifth generation fighter programme,” The Economic Times, 11 February 2016, via
Factiva

33Eye on Defence |
Industry buzz
Tejas undergoing scheduled
weapon trials
India’s indigenous Light Combat Aircraft (LCA), Tejas,
is going through weapon trials that are part of the Final
Operational Clearance (FOC) mandate. The aircraft has
successfully fired a Beyond Visual Range Air-to-Air Missile
(BVRAAM) missile, Derby, from its limited series production
platforms. Tejas is also scheduled to fire a Close Combat
Missile (CCM) Python-5 missile, during the next quarter, as
part of the FOC trails.
(Source: “Tejas fires Derby missile in Jamnagar”, One India, 5 February
2016, via Q-tech Synergy Newsletter)
BARAK 8 missile test fired
successfully
India has successfully test fired its newly developed Long
Range Barak 8 Surface-to-Air Missile (LRSAM). The firing
trial was jointly carried out by the Indian Navy, Defence
Research and Development Organization (DRDO) and Israel
Aerospace Industries from Indian Navy’s Kolkata class
destroyer.
(Source: “India test fires long range Barak 8 missile,” Business Line, 31
December 2015, via Factiva)
Indigenously developed anti-
tank missile, Nag, test fired
DRDO successfully test fired indigenously-built third
generation, fire-and-forget anti-tank missile, Nag during
a night trial in the Mahajan Field Firing Range, Rajasthan.
A thermal target system (TTS) was used as target for the
missile. This will be followed by some other tests under
different conditions in summer and winter during 2016.
(Source: “Nag missile hits bull’s eye with modified seeker,” The Hindu,
15 January 2016, via Q-tech Synergy Newsletter)
Indigenously developed,
surface-to-surface missile,
Prithvi-II successfully test
fired
The Indian Army has conducted successful test fires of the
Prithvi-II surface-to-surface missile, which has a strike range
of 350 km and is capable of carrying 500 kg to 1,000 kg
warheads. The test was carried out from a mobile launcher
in launch complex-3 of the Integrated Test Range (ITR) at
Chandipur, in Orissa. It uses advanced inertial guidance
system with maneuvering trajectory to hit its target.
(Source: “Army successfully test-fires Prithvi-II missile,” Domain-B, 16
February 2016, via Factiva)
INS Arihant successfully
completes all tests
India’s nuclear-powered ballistic missile submarine, INS
Arihant, is ready for full-fledged operations, and is expected
to be commissioned soon. Since September 2015, the
submarine has gone through several deep sea and weapon
launch system tests. The Indian Navy is working on two
more Arihant class submarines at the ship building center
(SBC) in Visakhapatnam, which will be larger and more
advanced than the first submarine.
(Source: “India’s first nuclear submarine INS Arihant ready for
operations, passes deep sea tests,” The Economic Times, 23 February
2016, via Q-tech Synergy Newsletter)
India shows off its naval
might in Visakhapatnam
The Indian Navy conducted International Fleet Review (IFR)
during 4-8 February in Visakhapatnam with 75 frontline
Indian warships and submarines. The IFR was aimed to
strengthen naval ties among friendly countries and was
attended by navies of 50 nations and 21 naval chiefs.
Moreover, some of the key navies such as the US, French,
British and Chinese warships participated in the IFR in Bay
of Bengal.
(Source: “India’s naval might on display off Visakhapatnam,” The
Statesman, 6 February 2016, via Factiva)

34 | Eye on Defence
Indian defense budget
increased by ~11%
The GoI has raised India’s defense budget by 10.9% to
~INR2,491 billion for FY17, as compared to INR2,246
billion in the revised budget for FY16. However, it represents
an increase of only 1% as compared to the original budgeted
expenditure for FY16. The increase in defense budget was
driven by the modernization of the Indian armed forces. The
GoI increased its capital outlay budget for defense by INR50
billion to INR863 billion. The increase in capital outlay
will enable the Ministry to pay for the first installment of
~INR150 billion for proposed deal for 36 Rafale fighter jets.
(Source: “Modest 10.9% boost for Defence sector”, The Pioneer, 1
March 2016, via Factiva)
Ministry of Defence (MoD)
approves amendments in
new Defence Procurement
Procedure (DPP)
The MoD has made some amendments in the new DPP,
emphasizing on higher indigenization in line with the
“Make in India” program and providing a major role for
the private sector in arms manufacturing. The new DPP
contains a new category indigenously designed, developed
and manufactured (IDDM) category. The new regulations
will apply only to new projects and not to those which are
already in process.
(Source: “MoD approves amendments in DPP,” Press Information
Bureau, 16 February 2016, via Q-tech Synergy Newsletter)
Indian defense exports
increased by during the first
three quarters of FY16
The total exports from Indian defense companies during the
first three quarters of FY16 stood at around INR7 billion.
This is an increase of approximately 200% from the three
quarters in FY15. The rise in exports was led by private
defense companies. For the first three quarters, exports by
private defense companies increased from INR1.3 billion in
FY15 to INR4.4 billion in FY16.
(Source: “Defence exports by Indian firms in 2015 up three-fold from
last year,” The Economic Times, 11 December 2015, via Q-tech Synergy
Newsletter)
MoD also amends offset
policy making them
more flexible for foreign
companies
The MoD amended its offset policy. For the “Buy Global”,
category the threshold of indigenous content for offset
has been brought down from 50% to 30%. The process for
seeking changes to signed offset contracts is likely to be
more transparent and speedy.
(Source: “Amendment to the Offset Provision”, Press Information
Bureau, 16 December 2015, via Q-tech Synergy Newsletter)
GoI likely to set up a
separate entity for defense
acquisitions
The MoD plans to create a separate set-up for defense
acquisitions, for speedy acquisition of defense equipment
acquisition. The set-up is expected to be ready by end of
2017.
(Source: “Government Mulling Separate Set Up For Defence Acquisition:
Manohar Parrikar,”NDTV, 25 February 2016, via Factiva)
Local vendors won around
65% of Indian defense
contracts in 2015
The expenditure on capital acquisition, in respect of order
placed on Indian vendors, is more than that of foreign
vendors for the period 2014–15. The local vendors bagged
62% (INR406 billion) while the foreign vendors received
38% (INR250 billion) of Indian defense contracts. The
Government of India (GoI) is targeting 70% indigenization in
Indian defense manufacturing by 2027.
(Source: “Foreign Deals in Defence Sector under make in India Policy,”
Press Information Bureau, 11 December 2015, via Q-tech Synergy
Newsletter)
Industry buzz (cont’d.)

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36 | Eye on Defence
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This announcement appears as a matter of record only.
Large Indian
Infrastructure Group
Business advisory
Entry strategy in AD
US Strategic Electronics
OEM
Litigation services
Advisory services
Tax compliance
US Jet Engine
Manufacturer
Offset advisory
Business advisory
Tax advisory
Transfer pricing
US Aerospace Systems
OEM
Tax advisory
Tax compliance
Transfer pricing
Transaction tax services
Risk advisory services
Indian DPSU Shipyard
Business advisory
Formulation of business plan
and implementation procedure
Swiss Aircraft
Manufacturer
Offset advisory
Business advisory
Tax advisory
*Ranked as #1 brand in India for three consecutive editions of the biennial Global Brand Survey 2015 (Kantar), 2013 (TNS), 2011 (TNS)
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transactions with a US-based buyer will be effected through Ernst Young Corporate Finance (Canada) Inc., a US registered broker-dealer that is part of a global network with Ernst
Young LLP in accordance with Rule 15a-6 under the United States Securities Exchange Act of 1934, as amended.

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For more information , please contact:
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Aerospace and Defence Practice
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Tel: + 91 120 671 7110
Email: ganesh.raj@in.ey.com
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Associate
Corporate Finance Strategy
Aerospace Defence
Ernst Young Pvt. Ltd.
Mob: + 91 9711132596
Email: ankit2.tyagi@in.ey.com
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Tel: +91 79 6608 3800
Fax: +91 79 6608 3900
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Fax: +91 80 2224 0695 (13th floor)
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Kochi
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Pune-411 006
Tel: +91 20 6603 6000
Fax: +91 20 6601 5900

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