Going great guns


Senior Member
May 6, 2009
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International defence biggies are interested in India more than everStaring out of his panoramic office window over New Delhi's Parliament Street, Dr Vivek Lall looks pleased, and rightfully so. With him as vice-president and country head, Boeing Defense Space and Security had got a big slice of India's defence budget. Boeing recently won the $2.1 billion contract for the P-8I long-range maritime reconnaissance and anti-submarine aircraft. The P-8I is a variant of the US Navy's P-8A Poseidon. And Boeing is just one of the many defence companies wooing New Delhi.

In the next decade, Boeing will bid for $20-billion worth defence projects in India, including the $10 billion Medium Multi-Role Combat Aircraft (MMRCA) contract. The MMRCA deal will give the Indian Air Force 126 fighter aircraft, a much-needed boost to its ageing fleet.
Lall came to India eight years ago on a short assignment and had no plans to stay on. But the short stint changed his perception about business opportunities in India. Said he: "We looked at India's commitment to modernise its forces and saw a wide range of opportunities. Worldwide, India is being recognised as a big market. Everybody wants to be here."

Lall and his competitors are banking on India's endeavour to modernise and overhaul its old Soviet military hardware. At DEFEXPO India 2010, as many as 650 companies from 35 countries displayed their products. India has signed arms deals worth $50 billion in the last decade and will spend as much in the next 20 years, making it the world's most sought after arms buyer.

2001 was the crucial year for Indian defence companies, because the Centre opened the defence sector to 100 per cent Indian private sector participation. Foreign direct investment was permissible up to 26 per cent. Under the offsets clause, for any defence deal worth over Rs 300 crore, foreign vendors had to invest 30 per cent of the total worth back into the Indian defence industry.

The department of industrial policy and promotion under the ministry of commerce and industry has issued 119 letters of intent and industrial licences to Indian and foreign defence manufacturing companies. R.K. Singh, secretary (defence production), said defence offset contracts valued at over Rs 8,000 crore have so far been signed and offset contracts worth Rs 49,000 crore are in the pipeline.

"The new policy of buy and make in India has given an impetus to defence manufacturing in India," said Singh. Under this policy introduced in 2009, acquisitions are classified 'Indian buys' and 'global buys'. An 'Indian buy' must have minimum 30 per cent indigenous content, if the systems are being integrated by an Indian vendor. Now foreign firms are offering sophisticated weapons, attractive offers of technology sharing and joint ventures with Indian companies.

Under the Indian government's $10-billion defence offset programme, aerospace giant Rolls-Royce will do half of its research and development requirements in India. Rolls-Royce is rolling out a series of new engine designs, analysis and development programmes under the offset programme.

BAE Systems, the UK defence company, has signed a deal with Mahindra & Mahindra to develop a five-seat light aircraft. The National Aerospace Laboratories, Bangalore, will cooperate on this project. Another major player from Europe is the Netherlands-based European Aeronautic Defence and Space Company N.V. (EADS). Airbus and Eurofighter Typhoon are EADS companies. Airbus will set up the Airbus Engineering Centre India in Bangalore, which will hire over 200 engineers.

Indian defence engineering company Larsen & Toubro (L&T) and EADS will set up a joint venture in India to develop and manufacture high-end defence electronics products. The joint venture will be based in Talegaon, near Pune. L&T also has deals with Raytheon and Boeing.
Aviation pioneers in India, the Tatas have inked deals with several international companies, including Boeing and Israel Aerospace Industries (IAI). Tata Motors will develop and manufacture a wide range of defence and aerospace products, including missiles, unmanned aerial vehicles (UAVs), radar, electronic warfare systems and homeland security systems. V.S. Noronha, head (defence business), Tata Motors, said the company would also look at research and development.

A key Indian player in high-tech products, Samtel Display Systems will pair with the Thales Group to manufacture helmet-mounted sight displays for the MiG-29K fighters. A carrier-based multi-role fighter, the MiG-29K is supposed to be deployed on the INS Vikramaditya and the indigenous aircraft carrier (See THE WEEK cover, January 17).

India's IT base is a plus for newer defence projects as most of them are IT-enabled and need specialised engineering, research and design capabilities. For Indian firm InfoTech Enterprises, 97 per cent of its business comes from aerospace firms like Boeing, Dassault Systemes, Pratt & Whitney and Bombardier.

Wipro, India's third largest software services company, is providing systems integration and simulation-based solutions for war gaming and a range of defence platforms. It is also building electronic warfare systems, radar and flight simulators for US defence contractors such as Lockheed Martin and Northrop Grumman. Wipro is also providing design and development software for flight control systems, maintenance simulators and communication systems.

The competition in the Indian defence market is so fierce that foreign companies are ready to share their technology with Indian firms, to beat their competitors. "While our competitors keep their technologies a closely guarded secret, and do not even share it with their alliance partners, we live cross-border cooperation every day and will extend this spirit of trust and technology sharing to India," said Dr Matthias Schmidlin, Eurofighter Typhoon's campaign director in India.

He said Eurofighter Typhoon had signed more than 20 MoUs with major Indian defence companies. EADS will also build an engineering centre for defence-related projects in Bangalore. "Our industrial partnership goes way beyond merely meeting the mandatory local assembly of imported parts," said Schmidlin.

Over the years, Israeli defence companies such as Elmo Tech, Elbit Systems Ltd, ISDS, Netafim and Max-Security have been making a beeline for India. IAI, Israel's largest aerospace and defence company, is leading the campaign.
A senior official at the embassy of Israel in Delhi told THE WEEK that demand for homeland security solutions had increased in India after the 26/11 attack. Said he: "Israeli companies are doing pretty good business in India. But they do not want to be in the limelight because many in India have negative impressions about Indo-Israeli defence ties."

Israel will supply India with 18 low-level, quick-reaction Spyder missile systems for Rs 1,800 crore, four more EL/M-2083 aerostat-mounted radar for Rs 145 crore, UAVs and EL/M-2075 Phalcon radar for the airborne warning and control systems. Among several other systems being jointly developed is the Rs 10,000-crore medium-range surface-to-air missile.

Now, traditional arms suppliers like Russia, Israel and Europe are facing tough competition from the US, a relatively new entrant in the Indian defence market. In addition to the P-8I deal won by Boeing, Lockheed Martin bagged the $962-million deal for six C-130J Super Hercules military transport aircraft. The stage is also set for the $2.2 billion deal for ten Boeing C-17 Globemaster III strategic airlift aircraft.

During the Cold War, India relied on Soviet arms, and Russia continues to be India's biggest supplier. Now US companies want to cash in on the warmer Indo-US ties. "India's growing relationship with the US is giving us an advantage," said Lall. "When you are signing a deal like MMRCA, it is not just a defence deal, it is strategic deal. It has the potential to bring two countries closer." At Rs 55,000 crore, the MMRCA deal is the world's most pricey fighter aircraft deal.

Secretary-General of the Federation of Indian Chambers of Commerce & Industry, Dr Amit Mitra called the Indian defence industry "a recession-proof sunrise industry". The Associated Chambers of Commerce and Industry (Assocham) expects India's arms imports to touch $30 billion by 2012 with the domestic defence market poised to grow to ?$700 million in five years.

"Joint ventures between foreign and Indian companies have given a tremendous boost to the defence industry," said Koteshwar Prasad Dobhal, director (PR), Assocham. But he wants the foreign direct investment to be raised to 49 per cent from the current 26.
Brigadier (retd) Khutub A. Hai, CEO, Mahindra Defence Systems (MDS), said MDS was planning to open manufacturing facilities outside India. "The government's offset policy has given a boost to our business. But there is need to be more open when it comes to foreign direct investment," he said.

At the MDS manufacturing plant outside Delhi, workers are busy building armoured vehicles. Some are repairing howitzers and fabricating surveillance platforms. "Once it was unthinkable for us to do all this," said Hai. "Today, we and other Indian defence companies are building weapon systems to defend ourselves. It is a great advancement."

Sunrise sector
Defence companies in India agree that the market for internal security has grown, especially after the 26/11 attacks. The home ministry is readdressing its internal security strategy and this has led the ministry to fast-track its new technology procurements.
The homeland security market in India is said to be worth $1 billion. According to a senior home ministry official, the Commonwealth Games alone will see over Rs 100 crore spent on X-ray scanners, door-frame metal detectors, hand-held metal detectors and communication systems.

The untapped internal security market is attracting giants like Honeywell International. The company has five manufacturing plants in India, with the most recent one established in Gurgaon in 2008 for its system sensor and analytics division. The company's presence has grown from 1,000 employees in 2002 to more than 10,000 today.

Hundreds of small companies across India have joined the fray. Parmod Verma, managing director of Noida-based Vantage Integrated Security Solutions, said a couple of years back there was no concept of having security gadgets like CCTVs. His company, which runs a small security gadget manufacturing unit, recently won contracts to install CCTV cameras in the Golden Temple in Punjab and Akshardham Temple in Delhi.



Regular Member
Apr 10, 2010
International defence biggies are interested in India more than ever
- They still aren't giving us latest tech.
- They are showing this interest because their economies suck and we have money to help it.
- They want India on their side and not on Russia's.

No other reason....

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