Definsights july2017issue

DefInsights VOL.1 ISSUE 2 ~ JULY 2017

STRATEGIC PARTNERS BOOSTING DEFENCE MANUFACTURING

A SUGOSHA PRESENTATION

MODI-TRUMP BROMANCE EMBRAER LESSONS FOR HAL

CONTENTS BUSINESS BUZZ

Rostec’s new naval MISSILE, ARTY weapon

06 SP POLICY WILL CHANGE INDIA POLICY ANALYSIS

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Pantsir-ME provides protection for ships through high engagement effectiveness.

Strategic Partners to get the biggest ever opportunity to make good their promise of creating a defence industrial base within the country.

INDUSTRY REVIEW

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BRAZIL’S EMBRAER SUCCESS STORY

There is a lesson to learn by India’s HAL from Brazilian aviation manufacturing sector’s experience, in particular from the growth trajectory and strategy of Embraer.

SOUND BYTE

WIN-WIN FOR INDIA, RUSSIA

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Defence Minister Arun Jaitley lists out the way forward for Russian defence business in the sub-continent.

L&T launches 22 FIRST indiaN floating dock Kattupalli shipyard to deliver the Dock to Navy at Port Blair within schedule.

EDITOR’S NOTE EVENTS OPPORTUNITIES

Editor’s Note

Takeaway from Modi’s US visit

T

he biggest takeaway from Prime Minister Narendra Modi’s visit to the United States on June 25 and 26 is the US State Department notifying its approval for a prospective sale of 22 Guardian drones to India. The announcement from the US administration ahead of Modi meeting with President Donald Trump turned out to be the centrepiece on the table during the talks between the two leaders.

What has surprised India-US relations observers is the speed at which the Trump administration provided its stamp of approval for a possible sale of the Guardian drones to India, though the Letter of Request from the Indian Navy went out only less than a year ago.

For reasons of history, the sale of US military equipment to India has been almost negligible till the dawn of the 21st Century. But defence trade between the two nations has picked pace since Atal Bihari Vajpayee government’s efforts at mending the Indian ties with the US, more than a decade after the Cold War era ended. Since the first sale of a used USS Trenton Landing Pontoon Dock to India for amphibious warfare in 2007, the American companies have notched up nearly $20 billion worth of deals from the Indian armed forces in the last 10 years.

That has, in fact, enabled the US to nudge past Russia over the last five years to emerge as the top arms supplier to India. Yet, overall, Russians still have an edge over the Americans, primarily due to the kind of umbilical ties that India’s defence sector enjoys with them. Russians have truly gone way beyond any other nation, may be besides Israel, to throw open its portfolio of arms and defence equipment to India.

Guardian, the MQ-9B variant from the San Diego-based General Atomics Aeronautical Systems, is probably the best surveillance and reconnaissance drone that the Indian Navy could ever get. The 22 Guardian drones, estimated to cost anywhere between US$2 billion to US$3 billion according to reports from Washington, would be a force multiplier that would considerably boost Indian Navy’s Intelligence, Surveillance and Reconnaissance capabilities in the Indian Ocean Region, being nibbled at by the Chinese much more aggressively now in the last 10 years.

The Guardian drone’s possible sale found a mention in the Trump-Modi joint statement issued after their meeting at the White House on June 26. A reading of the relevant portion of that statement is enough indication where the two nation’s defence trade is headed.

July 2017 | DefInsights | 3

“President Trump and Prime Minister Modi pledged to deepen defense and security cooperation, building on the United States’ recognition of India as a Major Defense Partner. The United States and India look forward to working together on advanced defense equipment and technology at a level commensurate with that of the closest allies and partners of the United States. Reflecting the partnership, the United States has offered for India’s consideration the sale of Sea Guardian Unmanned Aerial Systems, which would enhance India’s capabilities and promote shared security interests.”

Surprisingly, there was no mention of the previous Obama administration’s pet programme for India, called the Defence Trade and Technology Initiative (DTTI), in the statement. There is no word yet on some of the key programmes that the two nations were pursuing under the DTTI, or on the jet engine and aircraft carrier technologies.

India had also sought information from the US administration and General Atomics on the possibility of offering its Avenger, a naval variant of its armed Predator drones.

But this is still in an uncertain realm. If the Trump administration agrees to the sale of the armed drone anytime soon that will be a game-changer deal for both India and the US. Not surprisingly, there was no mention of the Lockheed Martin’s offer to build the F-16 single-engine combat planes in collaboration with the Tata Advanced Systems in India. There certainly was some discussion between the two nations on the F-16 being the combat plane to replace the aging MiG-21 fleet of the Indian Air Force. But we got to wait some more before the Indian decision on the fighter race is known. That decision could come by the end of 2017, though the deal inking may take more time.

But this aircraft procurement - for which Swedish Saab’s Gripen E is the competitor to F-16 - under the Strategic Partners policy could be a test case for the new Defence Procurement Procedure that India has adopted.

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The drones apart, India is also pursuing a case to buy more than the 22 Apaches from Boeing stable it bought in September 2015. It will also add a lone C-17 long-haul military cargo plane, again from Boeing, to its existing fleet of 10. These deals, along with the previous ones for 15 Chinooks, 12 P-8Is, 12 C-130Js, and Harpoon missiles will help US to remain among the top three defence suppliers to India, and a future partner in the ‘Make in India’ programme that will boost the local military industrial capabilities.

This space is getting interesting and it will remain so for some time from now. Watch out for more here.

Bipindra NC Editor

July 2017 | DefInsights | 5

Policy Analysis

SP Policy will change India’s defence sector S

ystemic changes to the environment around us has affected our thought processes to have an enhanced look at ourselves. This is what the Modi government has done to us, has made us feel better of ourselves, and empowered us with the ability to achieve what we always wanted to.

By Colonel K V Kuber

Among the 23 identified sectors for ‘Make in India’, the PM has chosen the defence sector to be the key one. Much talk has happened of reversing the import ratio of 70:30 for more than a decade without any work done on ground. The then Manohar Parrikar-led Defence ministry embarked upon a series of reforms amongst which the Strategic Partners (SP) figured towards the end. This was essentially to ensure that the ground work is done to enable the industry and the nation to respond to the Strategic Partnerships in the private sector, in the manner envisioned by the Dhirendra Singh Committee (of which the author was a key member).

The vision was to arm the armed forces with the state-of-the-art weapons and systems to engage with the ever-provoking enemy, both from within and without. Key strategic procurements cannot be relegated to the vagaries of a procurement procedure that handles routine procurements. Delays in decision-making have crippled the armed forces as never.

For example, the procurement of 126 fighter aircraft, the now-dead much-talked-about Medium Multi Role Combat Aircraft (MMRCA), began in 2004 or so and the Request for Proposals (RFP) was issued in 2007 and no decision was taken till 2016, despite down-selecting the lowest bidder in 2012.

This is essentially because we drafted a Qualitative Requirement (QR) for an aircraft that was never made and the global majors such as American Boeing and Lockheed Martin, the European erstwhile Cassidian (Airbus Defence and Space), Swedish SAAB, Russian MiG, French Dassault Aviation were competing for the deal. It would have been wiser for the Indian Air Force (IAF) to have placed a finger on the aircraft they needed and left the rest to the Ministry of Defence (MoD) to make sure the deal is done in a timeframe that the IAF wants. Ideally,

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such deals must be negotiated between governments to iron out any misgivings and assure support at the government level.

In the same manner as the MoD can place orders/indents onto the Ordnance Factory Board (OFB) and Defence Public Sector Undertakings (DPSUs) on a single tender basis, an enabling condition was necessary to extend this to the private sector. Thus, came about the Strategic Partnership policy that now finds a place as Chapter VII in the Defence Procurement Procedure (DPP) 2016, though the policy itself was finalised only in May 2017. There is space for everyone - the OFB, DPSUs and the private sector. With the demand side being strong, a balanced approach is expected.

Indian defence industry has grown beyond the realms of the OFB and DPSUs to include the private sector as a force-multiplier. While it may be argued that the infrastructure investment in the private sector is way too low, the game has, well, just begun.

In the past five years, there have been many private sector companies that have bagged large orders from the MoD - Larsen & Toubro with the K9 Thunder 155mm/52calibre tracked self-propelled guns in collaboration with South Korea’s Hanwa Techwin; Tata Power SED for the mountain warfare Electronic Warfare (EW) systems; Alpha Design for various programmes in communications and EW; and recently with ISRO, just to name a few. There are also many examples of private sector companies actively supporting the public sector, such as the Global Engineers building the explosive plants for OFB, VEM Technologies developing their own Anti-Tank Guided Missile (ATGM) with home grown technologies, and so many more.

India’s geo-political and economic ambitions have grown significantly. Establishment of a robust indigenous manufacturing capability supported by an energetic and vibrant ecosystem in the Aerospace and Defence (A&D) industry is the call of the hour.

The un-enviable security environment in the Indian subcontinent region, places huge demands on defence requirement. In the foreseeable future, this will

Policy Analysis

only increase thus making indigenous development of modern defence hardware and technology a top priority for the government.

DPP-2016 was indeed a game changer, a transformational one bringing about such lasting changes with a focus on indigenous design, development and increased manufacturing. With the government’s agenda to reduce import dependence in defence by 35 to 40 percent, it is actively promoting indigenous defence manufacturing with initiatives like ‘Make in India’ and policy reforms, including allowing 100 percent Foreign Direct Investment (FDI). Several states are also offering incentives and concessions in the form of aerospace clusters or Special Economic Zones (SEZs) for developing an ecosystem, where all core and ancillary activities related to defence manufacturing can co-exist; the most recent one being Haryana, with a A&D industry policy.

How does the SP policy contribute?

It is estimated that procurement of a US$10 billion worth of defence products a year is planned in the next five to 10 years. It is in the interest of the Original Equipment Manufacturers (OEMs) and the domestic industry to move on from a buyer-seller relationship to that of a partner in terms of co-development and co-manufacturing, with transfer of technology. Indian companies will largely front-end all business with the government and the opportunity for the OEMs is indeed huge in establishing a sound relationship, not only for the Indian market, but also to service the global market.

While the government will short-select both the platform and OEM on the one side and the pool of

Indian industry considered eligible to become SPs on the domestic side, the differentiator would be the partnership-relevance between the SP and the OEM. This relevance comes about through indication of range and depth of transfer of technologies, development of ecosystem and establishment of a production base in India.

One of the essential parameters of the SP policy is that of outsourcing. Although, deliberately, the Government of India has not indicated any specific percentage of outsourcing that an SP should do; they have outlined the concept. It has been elaborated that the SP is expected to be a system of systems integrator; this means a lot, clearly indicating that if something can be outsourced, please do not do it yourself. Concentrate on the integration part, concentrate on the core technology part, and leave the rest to the eco-system.

How did Bangalore, Hyderabad, and Chennai in a major manner, and other towns like Pune, Belgaum, and Nasik in a smaller scale, develop into pockets of excellence in the defence sector? This was because of the DPSUs/OFB and DRDO labs in the vicinity that were an industry-enabler-cum-developer. So, an eco-system was developed to support the large government-owned factories, despite these DPSUs having huge infrastructure and their erstwhile known resistance to outsourcing.

Now the situation is much in favour of the smallscale industry. Here, the government will enable the formation of SPs with guaranteed business. Four segments have already been identified - the single-engine aircraft, next generation submarines, helicopters and armour fighting vehicles; all of which July 2017 | DefInsights | 7

Policy Analysis cumulatively amount to 100,000 crore rupees. Although the potential SPs in the submarine segment have some infrastructure to talk about, in each of the other segments, they have little to offer, and will have to build from scratch.

Herein lies the opportunity for the eco-system to develop. If, for example, we carry out a systems analysis of an aircraft, we could well end up with some 5,000 sub-systems that go into its making, some of the major ones being Flight Control, Engine Control, Fuel, Hydraulic, Electrical, Pneumatic, Environmental Control, Emergency, Rotary, Advanced, Avionics Systems, and more than 200 technologies that determine its efficacy. The idea of listing some of these above is that the nominated SP will not be able to master these, and perforce, have to outsource, retaining the core technologies and systems integration.

SPs are expected to have an outreach addressing the global market and service them in addition to the domestic demand. Demand side dynamics are very strong in each of these segments and hence the opportunity for the industry to show up with centres of excellence in each of these areas. In addition, India offers tremendous opportunities in engineering services, supply chain sourcing and associated maintenance, repair and overhaul-related activities. This is the call of the hour and the nominated SPs are mandated to service all revenue requirement, MRO, spares, performance-based logistics (PBL) over the life cycle of the product.

One challenge for the industry will be skill. From where do you get the work-force? Companies like P3 Consulting Engineering have been pioneers in establishing centres of excellence in skill development for training fresh engineering graduates to provide them with a finishing course in design skills. This initiative needs more hand-holding from the government and must extend to manufacturing and services like MRO and testing. As per government estimates, a reduction in 20-25 percent in defence-related imports could directly create an additional 100,000 to 120,000 highly skilled jobs in India. The industry, therefore, needs to build and train talent to address the growing needs of the market. With SPs in business, these figures could well exceed the estimates.

Tiered system of industry – this is in the making with the SPs. While, presently in India, we either have the Micro, Small and Medium Enterprises (MSMEs) or big industries, the medium ones are neither here nor there. While they continue to do what the MSMEs do, they have greater aspirations. Aspirations will now be matched with discipline-oriented investments at system and sub-system levels. Partnerships, both with foreign OEMs and with the public sector, are in the offing, for increased efficiencies.

It is the turn of the Defence Research and Develop8 | DefInsights | July 2017

ment Organisation (DRDO) labs to interface with the industry in forging technology-oriented relationships. Every design house must have a front-end manufacturing house. This relationship will boost indigenous design and development. Partnerships amongst the private sector will also be the order of the day. Discipline-oriented partnerships to converge on technologies and products will determine success in business.

One key element of the SP policy lies in ‘Buy in India’. One of the ingredients that determines Foreign Exchange (FE) outgo is raw material. It is widely believed that aerospace- and defence-grade raw-material is not available domestically. This, therefore, becomes a thrust area for achieving our objectives of ‘Make in India’. If a raw material is available within the country, it must be procured; imports of such raw material must be forbidden, even if the Indian supplier is higher in price. Similar mandate is required for any sub-system and products/technologies that are home-grown.

Cost to Country It is often argued by few finance experts that Indian products and systems are costly and drains the national exchequer. MoD Finance is very happy with the award of contract to the lowest bidder, also called as L-1. This could be true in a purely domestic competition, but has a slightly different connotation when the competition is geography agnostic.

Consider this as an example. From available public information, the cost of a Sukhoi-30MKI, if procured directly from Russia, is 350 crore rupees. However, when Hindustan Aeronautics Limited (HAL) makes the Su-30, the cost is 450 crore rupees, implying a cost escalation of 30 per cent. Is it then wiser to procure the Su-30 from Russia and not get it manufactured in HAL? The answer lies in an understanding of the concept of ‘Cost to Country’. When the Su-30 is made in HAL, the first advantage the country gains is the direct savings of precious FE of equivalent of US$60 million an aircraft. There would, however, be an element of FE outgo in terms of certain raw materials and proprietary products that may still have to be sourced from Russia. This FE savings can be better utilised for purposes that could have a social effect.

The funding of Su-30 from HAL would be done by the MoD in rupee terms, and this rupee is circulated back into the system in a variety of ways. Tax-payers’ money is getting back to enrich the tax-payer.

The other advantages are far more over-reaching.

More than 42 new high-end technologies were mastered by HAL-Nashik. HAL-Nasik has grown into a manufacturing division and one for overhaul. Com-

Policy Analysis

plete Repair and Overhaul (ROH) is done within the country now. Besides manufacturing the Su-30, it also supplies spares, consumables and aerospace fasteners. It has also taken up work-packages for civil aircraft and exports spares to various countries as well - such as Egypt, Syria, Vietnam, Malaysia, Algeria, Poland and Russia.

The complete MiG-21 and MiG-27 fleet (about 500 aircraft still in service in many air forces globally) is supported by HAL-Nasik. The division has (from information on their website) manufactured 850 aircraft and undertaken overhaul of more than 1,800 aircraft. The division presently holds on rolls, 1,770 trained technical experts and 650 engineers; while more than 8,000 trained over the last two decades; this much for skill. They have a huge outsourcing bill, including disciplines like sheet metal components, machined components, non-metallic components, springs, metallic tanks, and a variety of tooling items, besides outsourcing labour.

The eco-system developed just for the SU 30 MKI line could be more than 350 small companies that are tirelessly working on high-end aerospace components. The outsourcing has a target of 30 per cent and is leaning towards that with a 20 per cent outsourcing that is presently taking place. Nasik has three huge industrial estates, namely, Satpur, Ambad and Sinnar, with more than 2,600 industries in it. The who’s who in the industry have their manufacturing plant there - just to name a few, Siemens, Kirloskars, Crompton Greeves, Mahindra, VIP industries, and Mico. Also, to facilitate exports, HAL-Nashik created a socio-economic Joint Venture (JV) between

HAL and CCI Corporation of India to provide a single window export clearance and facilitation for the agri-produce (Grapes, Pomegranate, Bananas and others) the region is famous for.

A cost analysis of all the above and the over-bearing advantages would indicate that the cost to the country is far less, when we source from within the country.

When our SPs get on to their jobs, the contribution they could make to the environment would be far greater with a sound eco-system and a formidable production base established in the country, with impinging technologies and manufacturing processes of global standards. SP model initiated by the government is a great transformational initiative and all stake-holders must come forward to whole-heartedly support this.

Parting Shot The SP policy is expected to cause a sea-change in the industry both in terms of outlook and real effects.

Proliferation of technologies, development of skilled force, best practices in manufacturing, tired system of industry and development of MSMEs will be the order of the industry. Niche companies with intense technological outlook will mushroom across the geography of the country and centres of excellence such as Nasik, Bangalore, Hyderabad and Chennai will spring to support the national effort.

(The writer is an Indian Army veteran)

July 2017 | DefInsights | 9

industry review

Brazil’s Aviation Success Story T

By Sanjay Badri-Maharaj

he Brazilian aviation company EMBRAER has carved out a niche for itself in the turbo-prop trainer and civil aviation markets.

Since its founding in 1969, EMBRAER has made a concerted effort to produce civilian aircraft as well as to seek export markets for its products. With respect to both civil aviation and training aircraft, the company has been able to secure an impressive share of the global market. However, it is to be noted that EMBRAER’s military aircraft design and production capabilities are very modest, a reflection of the priority given to transport aircraft for the civilian market.

Brazil has continued to subsidise the company despite its private nature.

This led to a number of World Trade Organisation (WTO) disputes involving EMBRAER and Bombardier of Canada, which resulted in both countries being deemed to have run illegal subsidy programmes for their aviation industries. These disputes cover the period 1999-2000 and involved cross complaints by the respective parties. Since then, it does not appear that the subsidies have been reinstated and EMBRAER functions as an entirely private entity that receives orders from the Brazilian government.

Government to Private Company

Product Mix: Civil Success

Brazil made several efforts in the 1940s and 1950s to initiate a domestic aviation industry, but it was only in 1969 that the Empresa Brasileira de Aeronáutica (EMBRAER) was formed. In stark contrast to India’s Hindustan Aeronautics Limited (HAL), EMBRAER was never tasked with nor given responsibility for designing, developing or licence-producing advanced combat aircraft for Brazil’s air force. This trend continues to the present day. EMBRAER has the ability to upgrade the Forca Aerea Brasilera’s (FAB) fleet of F-5s, but has not manufactured either engines or advanced avionics for combat aircraft.

The most prolific project to date undertaken by EMBRAER was the assembly of Piper light aircraft from knocked-down kits. Over three decades, starting in 1974, well over 2,000 Pipers of various types had been manufactured in Brazil. The demand for these aircraft was extensive in Latin America where light aircraft form a crucial component of the transport and communication system – over 1,000 Pipers were sold in Brazil alone within four years of the venture starting. This emphasis on civilian and dual-purpose aircraft allowed EMBRAER to develop a broad customer base as well as to satisfy the modest requirements of the FAB for transport aircraft.

EMBRAER started off as a government entity, but was sold on 7 December 1994 as part of a broader sale of government assets during a period of economic turmoil and hyper-inflation, though the Brazilian government holds golden shares ensuring veto power. The sale also allowed EMBRAER to narrowly avoid bankruptcy. In 2000, the company made initial public offerings on both the New York Stock Exchange and Brazil’s Bovespa, and its ownership is as follows: Bozano Group 11.10 per cent, Previ 16.40, Sistel 7.40, Dassault Aviation 2.1, EADS 2.1, Thales 2.1, Safran 1.1, Government of Brazil 0.3, Oppenheimer Funds, Inc. 12.29, pt:Caixa de Previdência dos Funcionários do Banco do Brasil 6.71, Baillie Gifford 6.46, and BNDESPAR 5.31 per cent.

Privatisation has meant that the profit motive has become important for EMBRAER. Its development projects and production processes are calculated to deliver products on a cost-effective basis rather than seeking to develop a holistic aircraft design and manufacturing capacity through technology transfer and licence-production. However, the Government of 10 | DefInsights | July 2017

EMBRAER’s first indigenous design venture was to set the stage for its development path. Rather than opting for combat aircraft or even trainers, EMBRAER chose to produce the EMB-110 Bandeirante, a turboprop regional airliner which was designed in 1965 by a French engineer – Max Holste. This aircraft established EMBRAER as a reliable manufacturer of cost-effective transport aircraft. Between 1968 and 1990, over 500 of these aircraft were produced. Today, 38 survive in service with 14 airline operators, alongside 48 with the FAB. A maritime patrol variant, the EMB-111, achieved limited export success with the navies of Chile and Argentina. This was followed by a larger version – the EMB 120 – which again achieved commercial success with over 350 produced and sold.

Post privatisation, EMBRAER began to emerge as a manufacturer of regional jets and transport aircraft intended for the civilian and export markets. Variants of the EMBRAER Regional Jet (ERJ) (890 in service), the EMBRAER E-Jet (1317 in service) and

industry review

the EMBRAER E-JetE2 (233 on order) families with between 37 and 146 passengers capacity have proven to be an export success for the company. Its most ambitious effort – the KC-390 military transport – makes extensive use of expertise from Boeing and is currently in development.

The ERJ was EMBRAER’s breakthrough product and represented an evolutionary process whereby the turboprop EMB 120 was transformed into a turbofan powered jet transport. The versatility of the basic design has been proven with military variants of the ERJ 145 being employed for the Airborne Early Warning (AEW) as well as maritime reconnaissance roles, though the number so used are modest.

Combat Aircraft: Modest capabilities – Trainer Success In contrast to its diverse products in transport aircraft, EMBRAER’s forays into the arena of combat aircraft have been very modest. For many years, 167 licence-built versions of the Aermacchi MB.326GC jet trainer – known as the AT-26 Xavante – formed the backbone of the FAB’s combat force, with exports to Togo and Paraguay (and 11 ex-FAB aircraft being transferred to Argentina).

The only other jet combat aircraft manufactured by EMBRAER was the A-1 version of the AMX fighter-bomber. This Italian-Brazilian joint venture clearly shows the willingness of EMBRAER to sacrifice work-share and technology transfer in order to obtain a cost-effective product. In terms of component manufacture, Italy’s Aeritalia manufactured 46.5 per cent of the aircraft’s components (central fuselage, stabilisers and rudders) and Aermacchi, also Ital-

ian, produced 22.8 per cent (front fuselage and tail cone), leaving Brazil’s EMBRAER to perform 29.7 per cent of the work (wing, air intakes, pylons and drop tanks).

What is significant is that there was no duplication of effort, with each component of the aircraft built at one source only, and deliveries began in 1989. The A-1 had a modest performance, comparable in some ways to the BAE Hawk, and this was further compromised due to differences in avionics and weapons between the Italian AMX and Brazil’s less well-equipped aircraft. With some 60 aircraft still in FAB service, the type forms an important part of the country’s air force. In contrast to this modest, though by no means insignificant, jet combat aircraft, EMBRAER has achieved considerable success with its turboprop trainers – the EMB-312 Tucano and its successor the EMB-314 Super Tucano which are easily among the best of their type.

In the late 1970s, faced with an urgent need to replace its force of T-37 trainers, and also reeling from the impact of high oil prices, the FAB issued a requirement for a new trainer that would be cheap to operate, mimic the characteristics of jet aircraft and have ejection seats. The result was the turboprop EMB-312 Tucano which entered FAB service in 1983 as the T-27. The Tucano received a boost when the Royal Air Force procured a version modified by Short Brothers as the EMB-312S to fulfil its basic training role. An additional sale to France added to the attraction of the type. With two NATO air forces opting for the type, the Tucano was able to secure export sales throughout Latin America, Africa and the Middle East with 624 aircraft produced.

July 2017 | DefInsights | 11

industry review While a sound aircraft, the Tucano was unexceptional in performance. However, thanks to the FAB’s requirement for a cost-effective strike aircraft, the T-27 morphed into the armed AT-27 counter-insurgency aircraft, with roles being interchangeable. Coming at a time when older aircraft such as the AD-1 Skyraider, AT-6 Texan and the T-28 Trojan were being phased out, the Tucano filled a void most admirably.

The Tucano’s closest rival was the Pilatus PC-7. Although the Pilatus secured many successes as a trainer, Swiss restrictions on its use as a combat aircraft allowed the Tucano to secure customers interested in dual use capabilities. The FAB, for example, uses the Tucano extensively to patrol the Amazon region and intercept illicit flights. Colombia turned the aircraft into a formidable strike aircraft in its long-running war against leftist guerrillas.

In light of the Tucano’s success, EMBRAER began work on an improved type which entered service in 2003 as the EMB-314 Super Tucano. Known in FAB service as the A-29, the Super Tucano was optimised to fill both the attack and training roles, with a single seat version known as ALX entering FAB service.

With 200 aircraft already sold – winning the US Light Air Support aircraft competition for supply to the Afghan Air Force – the Super Tucano has established itself in Asia, Africa and Latin America as a combat aircraft with a secondary training role. As a light strike aircraft, the Super Tucano appealed to countries seeking to replace ageing assets such as the OV-10 Bronco and the Cessna A-37 Dragonfly with a cost-effective platform. To this end, it replaced the latter type in the Dominican Republic and the former type in Indonesia.

In FAB service, the aircraft has distinguished itself during Operations Agatha 1-3 in which its effectiveness in counter-narcotics operations was proven.

Colombia, on the other hand, has turned the Super Tucano into a sophisticated strike aircraft, equipping it with laser-guided bombs to conduct precision strikes against FARC rebels. This flexibility augurs well for future sales of the type.

How did EMBRAER achieve success?

The inevitable question arises as to how a company with a hitherto limited repertoire could emerge as a major manufacturer of civilian airliners and establish itself as an exporter of basic training aircraft. In part, the answer lies in EMBRAER’s ability to find a lacuna in the existing airline market and aggressively market its products to carve out a niche for itself. In the case of its basic training aircraft, a combination of a sound design and good timing enabled the company to capitalise on the bloc obsolescence of long-serving training aircraft as well as older piston-engine light strike aircraft. As will be noted, even from its earliest 12 | DefInsights | July 2017

designs, EMBARER has always sought civilian and export markets for its products. Exports were not an “optional extra” but a priority for the company from its inception. The privatisation of the company in 1994 gave a further impetus to a strong culture of seeking export markets which was assisted by an enhanced product range.

Another aspect is an incremental approach to the development of new aircraft – the EMB 110 being followed by the larger EMB-120 and thereafter by the turbojet ERJ family. A similar approach was followed in the case of the Tucano which evolved into the Super Tucano. In respect of combat aircraft, EMBRAER has been very careful not to overreach in terms of either design or manufacturing capabilities and to date its sole venture into the sphere of high-performance combat aircraft is the A-1/AMX. Finally, EMBRAER has had no pretentions of trying to make Brazil self-sufficient in aircraft manufacturing technology – certainly not in combat aircraft. The company outsources supply and, through joint-ventures and subsidiaries, serves as an assembly and integrator of aircraft with materials, avionics, and engines all being sourced from abroad. EMBRAER has not needed to invest effort into indigenising components from foreign suppliers or paying licence fees for components and systems. As can be seen from the A-1/AMX project, EMBRAER has not been bothered with its relatively small proportions of the work-share in joint projects.

The combination of these factors has enabled EMBRAER to concentrate on being a design company which integrates and assembles aircraft rather than attempt to manufacture costly avionics, engines, and other subsystems. Its early emphasis on civil and military exports established the company first regionally and then globally, with export sales enabling the company to fund new design products. By eschewing costly attempts at indigenisation, the costs of EMBRAER’s products became more competitive.

Lessons for India?

It is tempting to compare the success of EMBRAER as a major designer and exporter of aircraft with the much less successful efforts of India’s HAL. However, it is suggested that such comparisons are not warranted as the two companies have had very different priorities, this being reflected in their product mix and the scope of work undertaken.

HAL has had, from its inception, a strong military bias, seeking to manufacture and indigenise combat aircraft, engines, avionics and subsystems. Through the licence production route, HAL has achieved a significant degree of indigenisation for combat aircraft – the Su-30MKI for example being 51 per cent

industry review

indigenised by value (53 per cent in the case of the AL-31FP engines) and 73 per cent by component in 2014. Such figures are unheard of for any aircraft made by EMBRAER. HAL’s design efforts which produced aircraft such as the HF-24, the HJT-16 and the HPT-32 were not further developed and much of the company’s design capabilities were lost – being only partially reconstituted in the Aeronautical Development Agency tasked with developing the ‘Tejas’ Light Combat Aircraft. While HAL has achieved some degree of design and manufacturing success with the Dhruv helicopter and its variants, its successor to the HJT16 (the HJT-36 Sitara) was a failure and the successor to the HPT-32 (the HTT-40) is a work in progress.

While the HJT-16 could have achieved a degree of export success (its Mk.2 variant being similar in performance to the BAE Strikemaster), no efforts were made to effectively market or promote the product past a single appearance at Farnborough in 1984.

In addition, compared to EMBRAER, HAL has had to contend with the requirements of the Indian Air Force for large numbers of combat aircraft (even now, the IAF operates 10 to 15 times the number of supersonic combat aircraft with the FAB). This has inevitably had implications for HAL’s priorities and the company has made minimal efforts in respect of civil aircraft, with the attendant lack of market presence and penetration. HAL’s ventures with producing the HS.748 and Dornier Do.228 were largely for

the Indian military market, with few being sold to civilian airlines.

It is difficult for India’s aviation sector to replicate EMBRAER’s success without perhaps a reorientation of priorities. Should India desire to develop a viable, export oriented civil aircraft design and manufacturing capability, consideration may need to be given to allow the private sector, as well as HAL, with incentives if necessary, to initiate work in this sphere with the freedom to outsource components and even design work where necessary without having to expend resources duplicating manufacture of such items.

EMBRAER has shown that this route can lead to success, albeit at the expense of indigenisation. It is submitted, however, that this ought not to be a consideration for civilian aircraft and should India wish to become a manufacturer and eventually an exporter of civilian aircraft this would appear to be the only viable path to take. Brazil’s path to success in the aviation sphere demonstrates how a pragmatic approach to aircraft manufacture can lead to success provided that expectations are kept at realistic levels.

By not choosing to “re-invent the wheel” and concentrating on making use of existing manufacturers of components, EMBRAER has established itself as a major player in the civil aviation market and its efforts are worthy of emulation.

(This article was first published

by New Delhi-based IDSA) July 2017 | DefInsights | 13

sound byte

Win-Win situation for India, Russia defence firms T

his year, India and Russia are celebrating the 70th Anniversary of the establishment of diplomatic relations. Over the past seven decades, our relations have grown from strength to strength.

For India, relations with Russia are a key foreign policy priority. Russia has been a trusted and time-tested partner.

By Arun Jaitley

Since the signing of the Declaration of India-Russia Strategic Partnership in 2000, our bilateral ties have witnessed enhanced levels of cooperation in a wide range of areas. Today, we enjoy vibrant and mutually beneficial political ties, defence and security cooperation, trade and economic partnership, science and technology linkages and cultural exchanges.

we are able to establish a symbiotic relationship between innovation and enterprise.

I have been asked to share a few thoughts today about how we intend to develop the defence manufacturing sector, which is one of the key areas identified in the ‘Make in India’ initiative.

Firstly, we have initiated a series of policy and procedural changes to facilitate tie-ups, including joint ventures and technology partnerships between Indian and foreign companies.

Russian companies, which already have a long experience of working in India and working with India are well placed to take a leading role in this process.

Our long standing and wide ranging cooperation with Russia in the field of military technical cooperation has graduated from a simple buyer-seller relationship to one involving joint research, development and production of advanced defence systems.

The Brahmos Missile System and the licensed production of advanced Sukhoi 30 aircraft in India are recent highlights of our bilateral cooperation, which today covers practically all areas in defence.

Since the announcement of ‘Make in India’ initiative by the Prime Minister, we have witnessed tremendous and growing enthusiasm and participation from private companies in the area of defence production.

I have just co-chaired with Deputy Prime Minister Rogozin the inaugural meeting of the India-Russia High Level Science and Technology Committee. Together, we have resolved to place our scientific and technological cooperation at the centre of our future relationship.

Here again, Russia as India’s largest, oldest and most trusted partner in defence hardware and equipment, would have a comparative advantage in partnering with Indian companies for realizing ‘Make in India’ potential in defence production.

This new mechanism will further energise our partnership by opening up advanced areas of cooperation that will benefit our future generations.

The Prime Minister of India, Narendra Modi, had immediately after forming the Government, launched the flagship ‘Make in India’ initiative to promote manufacturing in India.

We recognize that in today’s fast moving world of technological innovation and information driven business models, manufacturing can thrive only if 14 | DefInsights | July 2017

In the days to come, we hope to fully harness the energies, entrepreneurial spirit and enterprise of the private sector in the area of defence manufacturing.

Further, we recognize that technological progress is spread across the spectrum of products from full platforms to the smallest of hardware components or software. We are thus placing great emphasis on development of capacities in the areas of components and sub-systems, with a view to developing a vibrant ecosystem of defence manufacturing.

One way in which we seek to accomplish this is by incentivizing indigenous content, specifically indigenous design, development and manufacturing in our defence procurement. In the latest edition of Defence Procurement Procedure (DPP) of 2016, we

sound byte have introduced a new category of acquisition called ‘Buy (IDDM)’, wherein the first preference would be given to the equipments, which are designed, developed and manufactured within the country. We hope this will encourage Indian companies to invest in R&D and technology.

The new DPP has also made several other provisions for indigenization and greater participation of Indian industry in design, development and manufacturing.

Indian companies are already gearing up by developing capabilities for design and development. In this area too, the cost effective and state-of-the-art technological capabilities of Russian companies can be an important asset.

I invite Russian companies to come forward with proposals for technology transfer to Indian companies and facilitate manufacturing of more advanced components/parts and sub-systems. This can start with platforms of Russian origin, where the requirement is in large numbers and is recurring in nature.

As an incentive, industrial licensing for manufacturing of defence equipments has been significantly liberalized. Now for manufacturing of parts, components, sub-systems, production equipments and testing equipments, no license is required from the Government. Even for the items for which license is required, the initial validity has been increased from three years to 15 years. As a result of this liberal approach, the presence of private companies in defence production sector has risen manifold in the last two years.

We envisage ‘Make in India’ in the defence sector to not only address domestic requirements, but also to enable Indian firms to become part of the global supply chain. Despite India’s significant domestic requirements in defence, manufacturing and business would be sustainable in the longer term only if companies look at global requirements and create economies of scale.

Russian companies may identify some items for which they can set up joint ventures with Indian companies so that these items can be supplied across the world. Keeping this in mind, we have also streamlined the process of export clearances in last two years. India’s export control processes and technology security mechanisms are robust as required in the interest of national security. India is likely to soon become a member of the multilateral Wassenaar Arrangement, which will further catalyse our international engagement.

Another area where Russian industry and business houses can join hands with Indian companies is research and development. We are now giving significant emphasis to technology development and innovation in the defence sector. In the Defence Procurement Procedure-2016, we have streamlined the ‘Make’ procedure to encourage and incentivize design and development of defence equipment and systems. We would welcome partnerships between Indian and Russian companies in this area as well.

Cities such as Bengaluru, Delhi and Hyderabad have design centers of many global defence companies.

Bengaluru is fast emerging as an aerospace design hub of the world. Russian companies must take advantage of the large skilled manpower available in India. This would be a win-win situation for companies of both countries.

In the past three years, the government has introduced several path-breaking policy and procedural changes in the defence production sector for encouraging private investment, R&D and indigenization. We are witnessing a significant momentum in industry for setting up manufacturing facilities for defence items.

Russian companies can be natural partners of the Indian companies as most of our defence equipments and inventory are of Russian origin. A large industrial base and supply chain can be created for manufacturing of spare parts and components of such platforms to be made in India by Indian companies either through transfer of technology from Russian OEMs or through joint ventures between Indian and Russian companies.

In March this year, we had organized the largest ever India-Russia Military Industrial Conference in New Delhi. Over 600 business representatives from both countries attended the conference. Discussions between our companies have already begun. Both governments are fully supportive of these partnerships.

Defence is only one possible area of engagement.

We would be glad to facilitate involvement of Russian companies, especially young, innovation driven and technology oriented firms to explore the enormous opportunities opening up in India’s fast growing economy.

(Excerpted from the speech of India’s Minister of Defence Arun Jaitley at the plenary session of “Make in Russia: Double Purpose Industrialisation” of Technoprom at Novosibirsk, Russia on June 21, 2017) July 2017 | DefInsights | 15

Business buzz

Rostec’s new naval missile, artillery weapon system Moscow (Russia), June 29: Russia’s Rostec has put on offer its latest naval missile and anti-aircraft artillery weapon system, Pantsir-ME, which has Kasthan and Kashtan-M developed

by Tula KBP, part of the High Precision Systems Holding of Rostec State Corporation, as its forerunners.

These weapon systems, Rostec said, combine a powerful artillery armament, an effective multimode missile armament and an integrated radar-optical armament control system in a single turret mount. Equipped with two types of armament, already a considerable advantage, these systems have better characteristics of each individual armament type as compared to their analogues.

The company said the new weapon system, Pantsir-ME, provides protection for ships against air threats with absolute probability virtually equal to 1, including protection against low-altitude anti-ship missiles and unmanned aerial vehicles.

The key feature of the systems created by KBP is that they can first open fire on a target with missiles and then, in the dead zone of anti-aircraft missiles, use artillery armaments, if the target is not destroyed.

“One of the key imperatives in the strategy of Rostec weapons cluster is the development and creation of new weapons, including anti-aircraft missile systems. The development of the Pantsir-ME system is a consistent element in the implementation of this strategy. The creation of almost each primary system required brand-new high-tech solutions. As a result, the destructive potential of Pantsir-ME is 3-4 times higher than that of Kashtan-M,” Rostec CEO Sergey Chemezov said in a statement.

“Thus, the missile intercept zone has been increased from 10 to 20 kilometers in length and from 3 to 15 kilometers in height. All the stages of combat performance – from target search to firing – are performed in motion. The combined use of radar and optical control systems provides an all-weather 24/7 operation. All the system processes are automated, the crew ensures only supervision and control.”

Pantsir-ME High engagement effectiveness is determined by the new features implemented in the Pantsir-ME system. The modular design remains intact: 1 command module and up to 4 combat modules depending on the ship type, which allows a flexible defence. The combined missile and artillery armaments ensure an effective engagement of all types of targets within the whole range of field conditions and counter-weapons with a potential for further development until 2020–25.

The combat module of Pantsir-ME includes a multifunction radar station with a phased antenna and an intercept missile with an engagement range of 20 km, which ensures simultaneous engagement of four targets, as well as an engagement of new types, updated anti-ship missiles and small-size air threats and surface targets. The combat module can work autonomously and as part of a cell of the four modules. The system can be installed on ships with a displacement of 300 tonnes and more.

TO GET YOUR FREE COPY AND FOR ADVERTISING SLOTS PLEASE EMAIL US AT info@sugosha.com

16 | DefInsights | July 2017

Business buzz

First flight of Saab Gripen E

Lockheed, Tata tie-up for India F-16

Linköping (Sweden), June 15: Defense and security company SAAB completed a successful first flight of the next-generation smart fighter, Gripen E. The flight was launched from Saab’s airfield in Linköping and lasted 40 minutes, flown by Marcus Wandt, the company’s experimental test pilot. During the flight, the aircraft carried out a number of actions to demonstrate various test criteria including the retracting and extending of the landing gear.

According to Jonas Hjelm, Senior Vice President and Head of Saab Business Area Aeronautics, the aircraft (designation 39-8) that flew was equipped with the fully qualified software for the advanced avionics developed for Gripen E. “Today we have flown this world class fighter aircraft for the first time. We achieved it with the fully qualified software for the revolutionary avionics system. This is about giving our customers a smart fighter system with the future designed in from the start. The flight test activities will continue to build on this achievement with the program on track to achieve the 2019 delivery schedule to our Swedish and Brazilian customers.”

On its maiden flight over the eastern parts of Östergötland, Wandt took the Gripen E to an altitude of 13,000 feet, but the new fighter will be able to reach a ceiling limit of 52,000 feet. The new aircraft uses the General Electric GE 414G turbofan engine rated at 22,000 lb (98 kN). With this powerful engine, Gripen E can fly up to a speed of Mach 2 or 1,400 km/h at sea level, its main advantage is the ability to cruise at supersonic speed without afterburner, thus saving fuel and achieving longer mission endurance.

“The flight was just as expected, with the aircraft performance matching the experience in our simulations. Its acceleration performance is impressive with smooth handling. Needless to say I’m very happy to have piloted this maiden flight,” Wandt said.

Tata Sons Chairman Ratan Tata and TASL CEO Sukaran Singh with Lockheed Martin Aeronautics VP Business Development George Standridge and EVP Orlando Carvalho.

Paris (France), June 19: Lockheed Martin and Tata Advanced Systems Limited (TASL) have signed a landmark agreement affirming the companies intent to join hands to produce the F-16 Block 70 in India.

The companies said the F-16 Block 70 is ideally suited to meet the Indian Air Force’s single-engine fighter needs and this unmatched US-Indian industry partnership directly supports India’s initiative to develop private aerospace and defence manufacturing capacity in India. This unprecedented F-16 production partnership between the world’s largest defence contractor and India’s premier industrial house provides India the opportunity to produce, operate and export F-16 Block 70 aircraft, the newest and most advanced version of the multi-role fighter.

Higher thrust is translated to better performance – at an empty weight of 8,000 kg, Gripen E is rated for maximum takeoff weight of 16.5 tons can carry over five tons of ordnance carried on 10 hardpoints, plus 3,400 kg of fuel on a mission. Defined by Saab as the ‘smart fighter’, Gripen E uses newly designed avionics and software package designed for quick modification and upgrading. These include a new and agile Active Electronically Scanned Array (AESA) radar and infraRed Search Track, and advanced Electronic Warfare (EW) capabilities.

“This agreement builds on the already established joint venture between Lockheed Martin and Tata, and underscores the relationship and commitment between the two companies,” Tata Sons Chairman N. Chandrasekaran said. F-16 production in India supports thousands of Lockheed Martin and F-16 supplier jobs in the US, creates new manufacturing jobs in India, and positions Indian industry at the center of the most extensive fighter aircraft supply ecosystem in the world, a statement from Lockheed Martin said.

Brazil and Sweden placed orders for 36 and 60-70 of these advanced jets. Brazil will receive newly built aircraft beginning 2019 and Sweden will modernize 60 Gripen C models. Saab expects other opportunities in India, Finland and Belgium, which already announced their plans to buy modern fighter jets. Saab has not given up hope on Switzerland that has canceled plans to buy 22 Gripen Es in the past.

With more than 4,500 produced and approximately 3,200 operational aircraft worldwide being flown today by 26 countries, the F-16 remains the world’s most successful, combat-proven multi-role fighter ever produced. The F-16 Block 70 is the newest and most technologically advanced F-16 ever offered.

July 2017 | DefInsights | 17

Business buzz

Defence Production Secretary Ashok Kumar Gupta inaugurating the BDL Marketing Office in New Delhi on 16 June 2017 in the presence of BDL Chairman-and-Managing Director V. Udaya Bhaskar.

BDL to boost exports, ecosystem New Delhi (India), June 16: India’s largest missiles-maker Bharat Dynamics Limited (BDL) has opened a new marketing office in New Delhi. Defence Production Secretary Ashok Kumar Gupta declared the office open. The new Marketing Office, which has come up at Okhla Phase - 1, would provide an impetus to the business expansion plans of the company and tap the company’s potential to export its products in the international market. BDL Chairman and Managing Director V. Udaya Bhaskar was present on the occasion.

BDL, a ‘Mini-Ratna’ Defence public sector undertaking, has achieved a record turnover of Rs. 4,872 crore (~US$755 million) in 2016-17 and a Compound Annual Growth Rate of 39.89 per cent over the last three years. Gupta noted that BDL is the forerunner among DPSUs in outsourcing and manpower utilisation. He asked the DPSUs to be proactive and be strong practitioners of “Make in India” initiative with technology ownership through Indigenously Designed Developed and Manufactured (IDDM) category.

In Hyderabad on June 27, BDL top brass met with the company’s civil vendors at its corporate office. The objective was to enhance the vendor base of BDL, required to address the company’s expansion plans. BDL has three manufacturing units. To meet the increasing demands of the Indian armed forces and to tap the export potential of its products, BDL is setting up two more manufacturing facilities in India.

18 | DefInsights | July 2017

BDL CMD V. Udaya Bhaskar lighting the lamp to mark the inauguration of Vendors Meet at BDL Corporate Office in Hyderabad on 24 June 2017.

Representatives from over 55 companies from civil and infrastructure sectors from all over the country participated in the meeting, inaugurated by Chairman and Manaing Director V. Udaya Bhaskar. Deliberations were held on Goods and Services Tax (GST), Energy Conservation in Building Code and Facility Management, and Project Management.

Business buzz

DCNS is now Naval Group New Delhi (India), June 28: This new identity is a natural step in the Group’s history, aimed at supporting our ambitions to guarantee our exposure and credibility in international markets, the company said in a statement.

“The creation of a strong, unifying brand, that embodies both our heritage and our expertise will enable us to meet two major objectives: continue to attract and retain the best and brightest talent for our workforce to ensure we have the critical skills required to maintain our clients’ sovereignty, and increase our international reach and win new markets in an extremely competitive landscape,” Naval Group CEO Hervé Guillou said.

Why this name?

“Naval Group clarifies both who we are and as well as our mission: help safeguard the sovereign interests of our customers at sea and make the most of our naval skills to support their energy transition. As a global leader in naval defence and marine renewable energy, we are working every day to safeguard security interests by delivering state-of-the-art value and performance to our customers.”

We are also paving the way towards a cleaner, greener energy for the society of tomorrow and are committed to building a more stable and sustainable world. Naval Group also pays tribute to the pride and concern for excellence of our teams all over the world (India, Malaysia, Brazil, Australia and more), uniting them around a same mission.

“Simple, international and comprehensible in all languages, our new name focuses on the fundamentals of our identity: the heritage of 400 years of experience-, established in the 17th century and passed down from generation to generation allowing France to become and remain a great naval power, today exporting its know-how to support the sovereign interests of its international partners at sea,” Naval Group Communications Director Claire Allanche said.

Why change now?

"In a world of profound changes, with the acceleration of innovation cycles and a growing competitive landscape in the military market, it is necessary for our group to assert its identity through the creation of a powerful brand. This is the right time, after the success achieved in 2016 with our selection by Australia as its preferred international partner for the design and build of 12 future submarines, and the creation of our subsidiary in marine renewable energy. It only seemed natural to take advantage of the unprecedented level of visibility we achieved as a result of this to further raise our profile."

About Naval Group Naval Group is the European leader in naval defence and a major player in marine renewable energy. The Group’s success as an advanced technology company with global reach is built on meeting customer needs by deploying exceptional know-how, unique industrial resources and an ability to develop innovative strategic partnerships. Naval Group designs and builds submarines and surface combatants, develops associated systems and infrastructure, and offers a full range of services to naval bases and shipyards. The Group has also expanded its focus into marine renewable energy. Aware of its corporate social responsibilities, Naval Group is a member of the United Nations Global Compact. Naval Group generates annual revenues of €3.2 billion and employs around 12,800 people (2016 data).

Naval Group in India

Naval Group in India is a 100 per cent owned subsidiary of Naval Group (previously DCNS), which is headquartered in Paris, France. Established in September 2008 as DCNS India, it has its presence felt in 2 major cities: Mumbai and New Delhi. The main purpose of Naval Group to be in India would be to support the Indigenisation through ‘Make in India’ activities for Scorpene® submarine equipment, to develop the Indian defence eco-system, as well as to develop design services in India with talented Indian engineers. The endeavour of Naval Group in India is to be a visionary and to further its involvement in empowering more and more industries by creating a robust eco-system that can cater to the varied defence needs of the country.

July 2017 | DefInsights | 19

Business buzz

Reliance, Daher join hands for aerospace components Reliance, Yugoimport tie-up for ammunition manufacturing Reliance Group Chairman Anil Ambani with Daher President Patrick Daher and Daher CEO Didier Kayat in Paris on 22 June, 2017.

Paris (France), June 22: Indian company Reliance Defence Limited, a fully owned subsidiary of Reliance Infrastructure Limited, has signed a Memorandum of Understanding (MOU) at the Paris Air Show with French firm Daher Aerospace, a leading supplier of integrated systems for Aerospace and Advanced Technologies.

Daher Aerospace is a tier-1 manufacturer in aerostructures segment comprising Fuselage Sections and Fairings made of composites as well as conventional metals for Dassault Aviation and other leading global aircraft manufacturers. In India, Dassault has 50 per cent offset obligation for 36 Rafale aircraft, a contract valued close to €8 billion. Relince Defence is a key partner with Dassault Aviation for the largest ever offset programme in India. This offers a great opportunity for both the companies to work together for aerospace composites parts manufacturing. There is an increasing demand in aerospace sector for the composite components.

Signing this MOU, Reliance Defence envisages a strategic partnership with Daher with an aim to jointly explore opportunities in design and manufacture of composite parts; design and build of welded ducts, metal conduits, swaged pipes and cable harness supports; aerostructure components, integrated logistics, airframes/ assemblies and related industrial activities.

The new facility with Daher Aerospace fosters a comprehensive defence manufacturing ecosystem through backward integration under the government’s ‘Make in India’ programme for indigenous manufacturing of aerospace components. Total aerospace demand for composites is estimated to be 18,100 MT by year 2020.

Global demand for composite is estimated to rise from US$18 billion to US$43 billion by year 2032, with a CAGR of more than 4 per cent.

20 | DefInsights | July 2017

New Delhi (India), June 20: Reliance Infrastructure Ltd. (RInfra) promoted Reliance Defence Ammunition has entered into a strategic partnership with Yugoimport of Serbia for ammunition manufacturing in India.

Reliance Group Chairman Anil D. Ambani, after his meeting with Serbia President Aleksandar Vucic, announced the partnership with Yugoimport, covering wide areas of cooperation in the defence sector. Amongst other present in the meeting included Serbia Defence Minister Zoran Dordevic; Assistant Minister of Defence Nenad Moloradovic and CEO of Yugoimport.

Two companies will work together in the field of ammunition amongst others, with projected minimum requirement of Rs. 20,000 crore over next 10 years from Indian armed forces.

In addition, there is a large requirement, which is currently being met through imports and there is a potential for greater indigenisation.

Given the large Indian market size, economies of scale offer option for exports. Indian government recently issued eight Request for Proposals (RFPs) for different grade of ammunition, opening the field to the private sector for the first time.

The proposal envisages transfer of technology by the original equipment manufacturer (OEMs) and indigenous manufacturing in India.

Yugoimport, a state-owned enterprise, is a market leader in the field of ammunition and has offered a fully compliant technical solution to meet the ‘Make in India’ requirements of the Indian government. Ammunition manufacturing by Reliance is proposed at a greenfield facility, catering to the current and future requirements.

Reliance Defence Ammunition will also undertake joint development of next generation ammunition to meet the future requirements of the Indian armed forces. India currently imports nearly 50 per cent of its ammunition requirements by value term, with an annual spending of more than Rs. 10,000 crore on ammunition. With new inductions of Air Defence and Artillery guns, this requirement is bound to increase significantly.

Business buzz

Reliance, Dassault building vendor base for Rafale offsets New Delhi (India), June 14: French aviation major Dassault Aviation, along with its key partner Reliance Defence, hosted close to 200 delegates from the aerospace industry, from different parts in India representing over 60 Indian companies and 25 French companies.

The event, in cooperation with Rafale industrial partners Thales, Safran and MBDA, was to promote Business-to-Business (B2B) interactions between the French and Indian aerospace manufacturers.

In keeping with the ‘Skill India’ plan of the Indian government, the B2B interface between the French and domestic Indian entrepreneurs aimed to deepen existing links, create new opportunities of collaboration and work towards establishing a full-fledged defence manufacturing eco-system in India.

The ambition is to develop a complete supply chain allowing the completion of the existing ambitious Rafale offsets obligations under the Rafale contract signed in September 2016, representing 50 per cent of the total amount of the acquisition contract of 36 Rafale, and build a strong base for the success of Rafale under the ‘Make in India’ initiative of the Indian government.

As part of this cooperation between the Indian and French companies, Indian partners will benefit in a unique way from the technological know-how transfers

opportunities while thousands of Indian engineers and technicians will benefit from a massive skills transfer opportunity. The Dassault Reliance Aerospace Limited will be part of the planned aerospace park in Nagpur, and plans to develop an indigenous value-added supply chain, thereby building a strong base for success of the Rafale programme under the ‘Make in India’ initiative.

The B2B event to connect with industry and exchanges in New Delhi envisioned key partnerships with Micro, Small, and Medium Enterprises (MSMEs) that will position India as an international supplier in the global aerospace domain. The impetus for ‘Make in India’ will charter a progressive path for French and Indian industrial partners to help India meet key strategic defence requirement and pave the way for a successful induction of the Rafale aircraft in the Indian Air Force.

Thales, Reliance to form JV in India

Paris (France), June 21: French major Thales and Indian company Reliance Defence have announced their intent to form an Indian Joint Venture (JV) with the proposed shareholding of 49 per cent and 51 per cent respectively.

“The strategic partnership with global leader Thales is another major milestone in our march towards best in the class manufacturing at support facilities for Military hardware in India. Reliance is committed to ‘Make in India’ and ‘Skill India’ initiatives of the Government and will continue to remain in the fore front, partnering with the best in the world,” Reliance Group Chairman Anil Ambani said.

Leveraging Thales offset commitment as part of the Rafale contract in India, the JV is to develop Indian capabilities to integrate and maintain the Radar and Electronic Warfare sensors. The JV will develop skills and activity in the Special Economic Zone of Mihan near Nagpur, together with an Indian supply chain for the manufacturing of microwave technologies and high performance airborne electronics.

“This JV resonates with our strategy to strengthen our industrial footprint in the country by building collaborations with the Indian industry.” Thales Chairman and CEO Patrice Caine said.

July 2017 | DefInsights | 21

Business buzz

L&T launches first India-built Floating Dock at Kattupalli Chennai (India), June 20: The first indigenously built Floating Dock (FDN-2) for the Indian Navy was launched by Anjali Deshpande, wife of Vice Admiral D. M. Deshpande, the Controller of Warship Production & Acquisition, at an impressive ceremony at Larsen & Toubro Limited (L&T) Shipyard at Kattupalli. Larsen & Toubro Senior Executive Vice President & Whole time Director (Designate) - Defence J.D. Patil was present on the occasion.

After formal welcome by Vice Admiral B. Kannan (Retd), Managing Director and CEO for L&T Shipbuilding, in accordance with the tradition, Anjali Deshpande applied ‘Kumkum’ on the Floating Dock. She wished the dock good luck and launched the vessel. Vice Admiral Deshpande commended L&T for their efforts in the design and construction of FDN-2. He brought out that launching of the indigenously built Floating Dock, bears testimony to the capabilities available in India for realising the ‘Make in India’ vision.

The Floating Dock, 185-metre long and 40-metre wide, is an indigenously designed and built platform with state-of-the-art machinery and control systems capable of docking warships of up to 8,000-tonne displacement with draughts of upto seven metre, during both day and night.. It has high capacity Ballast Pumps, along with advanced automated Ballast Control System. The dock covers provided with the FDN-2 facilitate repair and refit activities in inclement weather conditions. The launch of Floating Dock (FDN-2), Yard 55000, was designed in-house and built by L&T Shipyard at Kattupalli.

L&T was mandated by the Ministry of Defence in May 2015 to design and build the FDN-2 for an order value of Rs. 468 crore. The Floating Dock will be delivered at Port Blair well within contracted schedule, the company said. On completion of its launch at Kattupalli, FDN-2 would be put through a series of harbour trials before delivery. Once operationalised, it would enhance the technical repair infrastructure of the Navy for ships based at the Andaman and Nicobar Islands, as well as for visiting naval ships. Simultaneous docking of multiple ships, and off-center docking options are also feasible.

“While winning our first mandate from the Indian Navy was satisfying, I am particularly delighted that we have also been able to execute and deliver the FDN-2 well within schedule. We are pleased to have delivered on the faith reposed in us by the Indian Navy for our in-house capabilities of design and construction of Naval platforms, meeting stringent standards and 22 | DefInsights | July 2017

specifications and at the same time achieving them with exemplary Program Management practices well-within contracted timelines,” L&T Managing Director (Designate) and President S. N. Subrahmanyan said.

“It is an affirmation of the in-house capabilities and track record of L&T that we are launching the FDN-2 for the Indian Navy ahead of schedule today, as a sequel to having already delivered 32 interceptor boats to Indian Coast Guard. This has been made possible by dedication and commitment of the team at L&T, our relationship of trust with Indian Navy across the value chain for Naval platforms and the forward-looking policies pursued by the Government to facilitate procurement of indigenous equipment for our Armed Forces. L&T has invested in building state-of-the-art facilities at Kattupalli, and we look forward to continued service to the Indian Navy in endeavors of National capability building,” Patil said.

The entire design and construction process has been progressively certified by Lloyds Register of Shipping Society and overseen by the Navy’s resident team at Kattupalli. The dock, which conforms to internationally accepted norms, incorporates a fully automated ballast control system, inducting state-of-the-art technology in its equipment.

“The main challenge faced on this project, as it would characteristically be in any first ship of a class, pertained to managing design and production activities concurrently,” elaborated Vice Admiral B. Kannan. “We have achieved a high level on this through Digital Shipbuilding technologies as well as through a focused approach of ‘getting it right first time’ duly reinforced by the rich work ethics of L&T.” The Floating Dock has been designed as a versatile dock that can be installed either along a jetty or moored in calm waters enabling round-the-year operation. It is provided with a hauling-in system to handle a ship’s docking and undocking operations. It can also support ships berthed along its side and meet their logistics requirements.

L&T has also been mandated by the Coast Guard to design and build seven Offshore Patrol Vessels (OPVs). Two of these OPVs are to be launched in the second half of this financial year, on schedule. In addition, L&T is also undertaking repairs and refits of Naval and Coast Guard ships regularly and delivered six refit ships (including the largest Logistics Tanker ship INS Jyoti) from its shipyard at Kattupalli, which now is focusing only on defence orders.

NEWS YOU CAN USE

EVENTS Industry Interaction:

Make Projects – 30mm Ammunition for BMP 2/2k Tuesday; 11 July 2017 at Army Headquarters, Directorate General of Mechanised Forces, Conference Hall, Sena Bhawan, New Delhi

The Indian Army/Mechanised Forces is planning to undertake Advanced 30mm Cannon Ammunition for BMP -2/2K under the ‘Make Category’ of Defence Procurement Procedure (DPP 2016). The ammunition should be capable of being fired from existing 30mm 2A42 Main Gun without any modification to gun design, feeding mechanism and stowage.

The ammunition being offered should have the following characteristics: 30mm AP Ammunition: Minimum penetration requirement of advanced 30mm AP ammunition to be greater

than or equal to 30mm at an angle of 60 degree at 1,000 metres on Rolled Homogenous Armour/ Specified target.

HE Ammunition: New enhanced HE ammunition to be equipped with proximity fuse to engage targets in defiladed position.

The interaction will focus primarily on preliminary assessment of technical capability of the companies, Conduct of feasibility study and formulation of requisite Staff Qualitative Requirements (SQR).

Acquisition Management Course:

20th Defence Acquisition Management Course

Confederation of Indian Industry (CII) is organizing the 20th Defence Acquisition Management Course (DAMC) on 8-9 August 2017, Gulmohar, India Habitat Centre, New Delhi.

This course is designed to meet the needs of the Industry to understand the changes in procurement and acquisition related processes and procedures of the Defence establishments. Over 700 participants have benefitted from DAMC since 2003 and have significantly impacted their defence business.

In addition to the understanding of the defence procurement structures, the course would also cover access to technologies developed

by DRDO, Outsourcing/Vendor Development Guidelines for DPSUs and OFB, access to Test facilities of DRDO/DPSUs/DGQA/Army and also discussion on how to respond to RFIs, RFPs and submitting Bids and Outsourcing/Vendor Development Guidelines for DPSUs and OFB. This course will provide the participants with an appreciation of the size and nature of opportunities for the private industry as well as underlying processes to plug into the defence sector.

OPPORTUNITIES SL. No.

TENDER DESCRIPTION

CLOSING DATE

TENDER NUMBER

1.

New vendors required for special processes and heavy machining facility for valve components

31st August 2017

NIT - 28889

2.

Mobile DAS Lab

12th July 2017

DIPR/Tender/INT/17-18/16

3.

Pressure Sensors

2nd August 2017

CFEES/18FET007/17-18/019

4.

Procurement of 500 nos float smoke and flame for Indian navy

1st August 2017

AS/5473/FS AND F

5.

Supply, installation and commissioning of Thermal Imaging System, with Control Software and accessories

17th July 2017

SHAR/MSA/2017E0627601

6.

Supplying aluminium composite sheet -3mm thick

1st August 2017

KAPS/C&MM/EMG/12923

For more comprehensive list of opportunities please reach Sugosha Advisory at info@sugosha.com July 2017 | DefInsights | 23

Sugosha Advisory redefines advisory in the Aerospace & Defence domain, with in-depth insights into the policy, regulatory, integrating MSME’s with T1’s and OEM’s as supply chain partners and business information tailored with market intelligence.

Sugosha Advisory, is founded on the principle of providing “Value Based Consulting” to our clients, partnering with them, so as to create an impact on their growth.

Beyond advisory and business development, Sugosha intends to be knowledge repository for our clients.

SUGOSHA ADVISORY

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