Indian Defense Acquisitions - Co- Developments and Production

Armand2REP

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$100 million vs $1 billion... it must not include any combat systems.
 

Dark Sorrow

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MoD sidelines private sector in Tactical Communications System project

The Ministry of Defence is poised to deliver a disheartening blow to India’s nascent private defence industry. After inviting private companies into the Rs 10,000 crore project for developing the Indian Army’s futuristic Tactical Communications System (TCS), the MoD is abandoning competitive bidding and handing over the project to a defence public sector undertaking, Bharat Electronics Limited (BEL). The reason cited by the MoD: secrecy.

Left in the lurch are six private companies --- Wipro, Mahindra Defence Systems, Tata Power, L&T, Rolta and HCL --- which the MoD had vetted in detail before categorising the TCS project as “Make --- High Tech”. In this category, the government funds 80% of the R&D cost, while the selected vendor contributes 20%. Also sidelined for the TCS are two non-defence PSUs, ECIL and ITI.

The TCS will be a fully mobile network, which can be transported anywhere during war, even into enemy territory, providing the military with a backbone network on which it can communicate and transfer data. The TCS operates much like a cellular phone network, but with two major differences. While cellular phone transmission towers are fixed onto buildings, the TCS’s exchanges and switches will be installed in high-mobility vehicles, allowing them to be transported and set up anywhere. Secondly, messages sent out over the TCS cannot be easily intercepted or jammed since they will not remain on a single frequency; instead, transmissions will hop frequencies, dozens of times every second, in a pre-programmed sequence.

It is to maintain the secrecy of this “hopping algorithm”, or the sequence in which the TCS hops frequencies, that BEL is being handed over the project. The MoD is citing a new cyber policy formulated by the apex National Technical Research Organisation (NTRO) --- a secretive body that functions under the Cabinet Secretariat, overseeing electronic intelligence. The NTRO had mandated that the “hopping algorithm” must remain the exclusive preserve of the government.


The NTRO’s interpretation has been shaped by guidelines issued by Shekhar Dutt, while he was Deputy National Security Advisor. Now the governor of Chhatisgarh, Shekhar Dutt has earlier served as Defence Secretary and as Secretary of Defence Production, with close and longstanding links to BEL.

Now, based on that NTRO interpretation, a special MoD committee is about to recommend that the TCS procurement be categorized as, “Make --- Strategic, Complex and Security Sensitive Systems”. Under the Defence Procurement Policy, this will automatically gift the TCS project to DRDO and BEL.

The six private sector rivals for the TCS project are fighting back against what they consider an unfair proposal. Last Wednesday and Thursday, they huddled together with industry bodies, FICCI and CII, formulating their response to the MoD. Their argument: if the MoD ignores the private sector’s world-acknowledged competence in software, IT and communications, and continues sidelining them to benefit DPSUs, it will be hard to convince shareholders to continue investing into defence.

“We fully agree with the need for security”, explains a senior executive from one of the TCS contenders, “but secrecy can be fully preserved by reserving the ‘hopping algorithm’ for the DRDO and BEL. To safeguard the secrecy of a Rs 20,000 microchip, which contains the ‘hopping algorithm’, the MoD is handing them an entire Rs 10,000 crores project.”

An MoD Feasibility Study Group for the TCS has already discussed the issue of secrecy last year. It was decided that top-secret algorithms in the TCS would be developed by the DRDO’s Centre for Artificial Intelligence and Robotics (CAIR), but the private sector could develop the rest of the project.

Indian private companies have played pivotal roles in some of India’s most secret defence projects. Larsen & Toubro, one of the companies being sidelined in the TCS project, built most of India’s nuclear submarine, INS Arihant, and will have a similar role in building successors to the Arihant. Another private company, Tata Power, which built crucial command systems for the Arihant, also designed the core of the top secret Samyukta Electronic Warfare system.

The Kelkar Committee had recommended that such companies, with a track record and potential in defence production, should be designated Raksha Udyog Ratnas (RuRs) and treated at par with DPSUs in the award of projects like the TCS. But, in an inexplicable volte-face after preparing a short list of candidate companies, the MoD decided against nominating RuRs.

If BEL is awarded the TCS project, that windfall will lead to many more. Applying the NTRO’s logic to other command and control projects in the pipeline --- such as the Battlefield Management System (BMS); the Operational Data Link (ODL); and the Net-Centric Operations (NCO) system --- BEL seems likely to be awarded all of these on a single-vendor basis.

The Ministry of Defence has not responded to an emailed questionnaire from Business Standard on the TCS.

“It is particularly ironic that BEL is expected to safeguard security, when it is well known that BEL systems are built mainly from foreign components”, points out an official from a private company that is bidding for the TCS. “BEL’s Artillery Combat Command and Control System (ACCCS), a system similar to the TCS, has computers and software from Israeli company, Elbit. Whether these have come with malware or switches to render the entire system inoperable will only be known in the future.”

Parliament’s Standing Committee on Defence, too, has raised concerns about such “false indigenization”, where DPSUs have allegedly fronted for foreign companies. The Standing Committee’s report of December 2009 notes that, “a sizeable proportion of procurement takes place through the Ordnance Factories and DPSUs, which are indigenous sources, but have to depend on imports for manufacturing the finished product.”
 

p2prada

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This is certainly bad. Perhaps a JV between the DPSUs and a private company is more suited.
 

nitesh

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For this project it was decided long time back that BEL will be the principal integrator why crying now?
 

anoop_mig25

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The Ministry of Defence is poised to deliver a disheartening blow to India’s nascent private defence industry. After inviting private companies into the Rs 10,000 crore project for developing the Indian Army’s futuristic Tactical Communications System (TCS), the MoD is abandoning competitive bidding and handing over the project to a defence public sector undertaking, Bharat Electronics Limited (BEL). The reason cited by the MoD: secrecy.

Left in the lurch are six private companies --- Wipro, Mahindra Defence Systems, Tata Power, L&T, Rolta and HCL --- which the MoD had vetted in detail before categorising the TCS project as “Make --- High Tech”. In this category, the government funds 80% of the R&D cost, while the selected vendor contributes 20%. Also sidelined for the TCS are two non-defence PSUs, ECIL and ITI.

The TCS will be a fully mobile network, which can be transported anywhere during war, even into enemy territory, providing the military with a backbone network on which it can communicate and transfer data. The TCS operates much like a cellular phone network, but with two major differences. While cellular phone transmission towers are fixed onto buildings, the TCS’s exchanges and switches will be installed in high-mobility vehicles, allowing them to be transported and set up anywhere. Secondly, messages sent out over the TCS cannot be easily intercepted or jammed since they will not remain on a single frequency; instead, transmissions will hop frequencies, dozens of times every second, in a pre-programmed sequence.

It is to maintain the secrecy of this “hopping algorithm”, or the sequence in which the TCS hops frequencies, that BEL is being handed over the project. The MoD is citing a new cyber policy formulated by the apex National Technical Research Organisation (NTRO) --- a secretive body that functions under the Cabinet Secretariat, overseeing electronic intelligence. The NTRO had mandated that the “hopping algorithm” must remain the exclusive preserve of the government.


The NTRO’s interpretation has been shaped by guidelines issued by Shekhar Dutt, while he was Deputy National Security Advisor. Now the governor of Chhatisgarh, Shekhar Dutt has earlier served as Defence Secretary and as Secretary of Defence Production, with close and longstanding links to BEL.

Now, based on that NTRO interpretation, a special MoD committee is about to recommend that the TCS procurement be categorized as, “Make --- Strategic, Complex and Security Sensitive Systems”. Under the Defence Procurement Policy, this will automatically gift the TCS project to DRDO and BEL.

The six private sector rivals for the TCS project are fighting back against what they consider an unfair proposal. Last Wednesday and Thursday, they huddled together with industry bodies, FICCI and CII, formulating their response to the MoD. Their argument: if the MoD ignores the private sector’s world-acknowledged competence in software, IT and communications, and continues sidelining them to benefit DPSUs, it will be hard to convince shareholders to continue investing into defence.

“We fully agree with the need for security”, explains a senior executive from one of the TCS contenders, “but secrecy can be fully preserved by reserving the ‘hopping algorithm’ for the DRDO and BEL. To safeguard the secrecy of a Rs 20,000 microchip, which contains the ‘hopping algorithm’, the MoD is handing them an entire Rs 10,000 crores project.”

An MoD Feasibility Study Group for the TCS has already discussed the issue of secrecy last year. It was decided that top-secret algorithms in the TCS would be developed by the DRDO’s Centre for Artificial Intelligence and Robotics (CAIR), but the private sector could develop the rest of the project.

Indian private companies have played pivotal roles in some of India’s most secret defence projects. Larsen & Toubro, one of the companies being sidelined in the TCS project, built most of India’s nuclear submarine, INS Arihant, and will have a similar role in building successors to the Arihant. Another private company, Tata Power, which built crucial command systems for the Arihant, also designed the core of the top secret Samyukta Electronic Warfare system.

The Kelkar Committee had recommended that such companies, with a track record and potential in defence production, should be designated Raksha Udyog Ratnas (RuRs) and treated at par with DPSUs in the award of projects like the TCS. But, in an inexplicable volte-face after preparing a short list of candidate companies, the MoD decided against nominating RuRs.

If BEL is awarded the TCS project, that windfall will lead to many more. Applying the NTRO’s logic to other command and control projects in the pipeline --- such as the Battlefield Management System (BMS); the Operational Data Link (ODL); and the Net-Centric Operations (NCO) system --- BEL seems likely to be awarded all of these on a single-vendor basis.

The Ministry of Defence has not responded to an emailed questionnaire from Business Standard on the TCS.

“It is particularly ironic that BEL is expected to safeguard security, when it is well known that BEL systems are built mainly from foreign components”, points out an official from a private company that is bidding for the TCS. “BEL’s Artillery Combat Command and Control System (ACCCS), a system similar to the TCS, has computers and software from Israeli company, Elbit. Whether these have come with malware or switches to render the entire system inoperable will only be known in the future.”

Parliament’s Standing Committee on Defence, too, has raised concerns about such “false indigenization”, where DPSUs have allegedly fronted for foreign companies. The Standing Committee’s report of December 2009 notes that, “a sizeable proportion of procurement takes place through the Ordnance Factories and DPSUs, which are indigenous sources, but have to depend on imports for manufacturing the finished product.”
with this kind of attitude how can someone think of developing indigenous military hardware and for secrecy.whats grantee that bhel would be able to develop the project secrectly. i think is some kind of ploy by our BAbus`s working ib defence ministry when BHEL would not be able to complete the project in time or cost then their will be globe tender for the same project and india company woulds be sidelined.
 

sayareakd

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plus BEL is going fine job in this area, yeah P2P we should have public and private sector partnership that will be of great help.
 

nitesh

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For this project it was decided that prime contractor will be BEL so no direct contract will be given to any other company
 

Agantrope

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For this project it was decided that prime contractor will be BEL so no direct contract will be given to any other company
Better BEL can outsource some work to other companies it might be a win-win situation rather than crying hue over this.
 

sayareakd

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yeah we have got L&T and TATA as trusted companies. GOI can rely on them.
 

Rage

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For this project it was decided long time back that BEL will be the principal integrator why crying now?
nitesh, hook me up with a source please.

I know of several private companies that were bidding for the project. Including the TATA group that leveraged a new umbrella company- TATA Advanced systems-- with EADS Defence, US-based Raytheon and Precision Electronics to bid for the army's communication system.
 

nitesh

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nitesh, hook me up with a source please.

I know of several private companies that were bidding for the project. Including the TATA group that leveraged a new umbrella company- TATA Advanced systems-- with EADS Defence, US-based Raytheon and Precision Electronics to bid for the army's communication system.
Rage unfortunately I don't have source but information is based on the words from BEL people and IA people who are involved in this project. BEL is going to be prime contractor they will outsource the work to private companies for certain components.
 

Agantrope

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Rage unfortunately I don't have source but information is based on the words from BEL people and IA people who are involved in this project. BEL is going to be prime contractor they will outsource the work to private companies for certain components.
This will be very much similar to the Samyuktha EW systems; BEL is prime contractor and TATA and L&T are major sub-contractors. I see no problem in this as all will benefit from this thing.
 

pavanvenkatesh

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If this project was to be handed to BEL then why was there a tender in the first place?
 

nitesh

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If this project was to be handed to BEL then why was there a tender in the first place?
The tender was invited so that the products can be chosen between competitors but they ultimately have to sub contract with BEL, that's my impression from the officials I have spoken with
 

gogbot

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The tender was invited so that the products can be chosen between competitors but they ultimately have to sub contract with BEL, that's my impression from the officials I have spoken with
That's not so bad, The project is till proceeding and there is Private Company participation
 

Yusuf

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Defence Procurement Policy Discussion

Defence procurement in India as we all know is something that has marred the Indian forces forever. Be it the time taken to get clearance for funds, issuing tenders, deciding the winner and then the most important of all allegations of kickbacks.

The kickbacks part is the most important thing these days. The current MoD, in his bid to protect his clean image is sitting on all files that involve large purchases. Even if the process of acquisition is on, he cancels it on the first smell of scam. More often than not these are just rumors spread from the companies that lost the bids. I see it in one more light. Anti National forces who want to prevent the modernization of Indian forces, coming up with all these kickbacks thing so that the process is delayed or put on back burner.

I asked a senior army officer if we can have a system that by passes political problems so that the army can directly use the funds it has to buy new weapons. He said, no its a democracy and accountability is something that will come only from the political face. In spite of this, there is large scale corruption, i told that army officer. I asked him why not take it in the stride and move on? At least we will get some good weapons than not have anything at all?

We have now put in place an offset system which will help the domestic industry. So a big company say like Boeing comes in, it will only help India.

I would like members to share their thoughts on how to go about reforming the procurement process. May be we can discuss how other countries esp in the west go through their process and how we can adapt it for India.
 

gogbot

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I like the NEW DPP-09

http://mod.nic.in/dpm/DPP-2008/DPP2008-AMENDMENT.pdf

DEFENCE PROCUREMENT PROCEDURE – 2008 (AMENDMENT- 2009)

1. After careful consideration and detailed discussion in DAC on 29 Sep 2009,
the following amendments to DPP-2008 have been finalised:-

(a) Introduction of new category for acquisition – “Buy & Make (Indian)”.

(b) Sharing of information with Indian Industry.

c) Enhancing role of Independent Monitors.
(d) Removal of ambiguity regarding EMD in signing the Integrity Pact.

(e) Formulation of SQRs including issue of Request for Information (RFI).

(f) Offsets requirement in ‘Option Clause’ cases and change of offset
partner in exceptional cases.

2. The amendments to DPP-2008 are being issued in the form of Defence
Procurement Procedure – 2008 (Amendment - 2009), details of which are given in
the Annexure enclosed. These amendments are incorporated to the existing
DPP-2008 in relevant pages/paragraphs as mentioned and will take effect from
01 Nov 2009.
They have a new “Buy & Make (Indian)”. acquisition system.

Capital Acquisitions are categorized as under: -
(a) Acquisitions Covered under the ‘Buy’ Decision. Buy would mean an
outright purchase of equipment. Based on the source of procurement, this category
would be classified as ‘Buy (Indian)’ and ‘Buy (Global)’. ‘Indian’ would mean Indian
vendors only and ‘Global’ would mean foreign as well as Indian vendors. ‘Buy Indian’
must have minimum 30 % indigenous content if the systems are being integrated by
an Indian vendor.

(b) Acquisitions covered under the ‘Buy & Make’ decision would mean purchase
from a foreign vendor followed by licensed production / indigenous manufacture in the
country.

(c) Acquisitions covered under the ‘Buy & Make (Indian)’ decision would mean
purchase from an Indian vendor including an Indian company forming joint venture /
establishing production arrangement with OEM followed by licensed production /
indigenous manufacture in the country. ‘Buy & Make (Indian)’ must have minimum
50 % indigenous content on cost basis.

(d) Acquisitions covered under the ‘Make’ decision would include high technology
complex systems to be designed, developed and produced indigenously.

A New Para 25a to be Added to Chapter I of DPP-2008
25a. ‘Buy and Make (Indian)’.
(i) In cases categorized as ‘Buy and Make (Indian)’, RFP will be issued to only
Indian vendors, who are assessed to have requisite technical and financial capabilities
to undertake such projects.

(ii) For selection of such cases, SHQ will prepare a Capability Definition Document
which outlines the requirement in operational terms and briefly describes the present
capabilities determined on the basis of the existing equipment, manpower etc. This
document should also indicate long term requirement in terms of numbers, time
schedule, immediate fund availability and the critical technologies to be absorbed by
Indian partner. The critical technologies will be identified in consultation with DRDO.

(iii) Capability Definition Document will be examined by the SCAPCHC before
identification of the project under ‘Buy and Make (Indian)’ category. DAC will decide
selection of a project under ‘Buy and Make (Indian)’ on the recommendation of the
SCAPCHC.

(iv) The Capability Definition Document would be floated to Indian firms who are
known to have requisite technical and financial capabilities to undertake such projects.
These Indian firms will be short-listed on the basis of the responses to RFI and
through interaction with representatives of Industry Association by SHQ through
HQ IDS.

(v) The Indian firms would be required to give a Detailed Project Proposal which
will outline the roadmap for development and production of the item either by
themselves or with the help of any production arrangement with foreign manufacturer.
The production arrangement must be clearly spelt out giving details of the workshare,
TOT in range and depth of the technology, and any other detail considered
important/relevant. The Indian partner should absorb the critical technologies, 50% of
which will be in category I and II as given at Para 1 (k) (i) and (ii) of Appendix L to
Schedule I of DPP-2008.

(vi) The Detailed Project Proposal will be appraised by a Project Appraisal
Committee (PAC) constituted by the Acquisition Wing and those found acceptable will
be short listed by the Committee. The PAC will verify the credentials of the foreign
partner while confirming acceptability of the JV / production partner(s). The Committee
will also firm up technical requirements for inclusion in the RFP. The PAC will be
headed by an officer nominated by DDP with members from DRDO, SHQ and MoD
(Fin). The PAC report will be approved by DG (Acq), on recommendations of
Technical Manager. The PAC Report, duly approved by DG (Acq), will be forwarded to
SHQ. Thereafter, SHQ will prepare and process the RFP for issue by the Acquisition
Wing. From this stage onwards the procedure described for ‘Buy and Make’ category
will apply.

(vii) In cases involving large quantities and where multiple technological
solutions are acceptable, on approval of DAC/DPB, an option may be provided for
procurement from more than one vendor on the condition that other vendors accept
the price and terms & conditions quoted by the L1 vendor.

(viii) Defence Production Board will monitor the implementation of projects taken
up under this category. A multi-disciplinary Project Monitoring Team (PMT) will also be
constituted by the Defence Production Board for each project to regularly monitor the
implementation including aspects such as absorption of Transfer of Technology (ToT)
by the firm, work-share and indigenous content as per the agreed plan.
 

nandu

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'75% of our defence equipment is redundant'
New Delhi: At a time when the nation should be bracing for war on a ‘minimum’ of two fronts, 75 per cent of the military hardware available to the Indian armed forces is redundant, believes Bharat Verma, editor of Indian Defence Review.

In an interview to Manu Sood, editor of 8ak.in during Def Expo 2010 which concluded in Delhi February 13, Verma slammed ‘non-accountable’ bureaucrats for letting things come to such a pass. The Numerous fault lines and prevalent ‘babu culture’ in the Ministry of Defence had compounded the mess, he said.

Strongly advocating more FDI in the defence sector, he said no international company was willing to transfer key technology to India, since the 26 per cent ceiling was not a lucrative enough figure to attract them.

If the figure was increased to 49 per cent, international arms companies would willingly come with the latest technology, since it would create a level playing field for them. Apart from that, successful JVs would marginalise tough sanction regimes automatically
over a period of time, he argued.

Attacking the Defence Ministry’s ‘obsession’ with indigenisation, he said: “Against offsets, import of technology must be allowed as we need basically technology more than anything else. However, the Ministry of Defence’s contention that it is unable to evaluate technologies to put a price on them is weird. All you have to do is create military cell comprising of three services and scientist to identify sunrise technologies and evaluate what is the price you are willing to give depending upon how critical that technology is to helping the armed forces in meeting the future threat. Otherwise, India will remain import-dependent always – imports have gone up from 70 per cent to 75 per cent because of the MoD’s lopsided policies!”

Describing this as a ‘strange policy’, he said the need was to have technology, and whether it was imported or local should not be a cause of concern.”

The Defence Research and Development Organisation, or DRDO, had failed India and its armed forces in a big way, and the government should give a new thrust to encourage the private sector and allow more joint ventures in the field of defence, he said.

As for the Def Expo, Verma said that even though the event was satisfactorily organised, the dilly-dallying over whether the FICCI or the CII would organise the event had caused a lot of inconvenience to the vendors, especially foreign vendors, who plan for such things at least a year in advance. This clearly exhibits the lack of decision making ability in executing an event that has been planned a year in advance, he said.
Source:sifynews
 

nandu

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Indian Army Scouts For New Heavy Machine Gun

Indian Army Scouts For New Heavy Machine Gun

Along with active tenders for virtually the entire gamut of infantry weapons, here's the latest. The Indian Army has just sent out requests for information (RFIs) on a potential new Heavy Machine Gun (HMG) for its forces -- 12.7mm x 99mm with a minimum effective range of not less than 2,000-metres. According to the RFI, the weapon should have the capability to be used from a Light Strike Vehicle/Infantry Fighting Vehicle and in a ground role while mounted on vehicle and tripod respectively. It continues: The weapon should be easy to carry by the three men crew in dismantled condition and be assembled with ease while being used in the ground role. The weapon should be robust enough to withstand rough usage and simple to maintain in operational conditions normally encountered in India including high altitude areas, jungles and desert. The gun should of course be capable of firing High Explosive Incendiary (HEI), Armour Piercing High Explosive (APHE), Armour Piercing Discarding Sabot (APDS), Target Practice (TP) and corresponding tracer ammo.

The specs put out are in fact almost identical to the superb Browning M2HB HMG already in service with the Indian Army, and which the new guns will replace. The other 12.7mm vehicle-mounted HMG in service with India is the Russian NSV 12.7mm HMG. RFIs for a new HMG have been sent to agencies that include Rosoboronexport for the Degtyarev Kord 12.7mm HMG, General Dynamics for the still in-development M806 HMG and also the Browning M2E50 (a modernised variant of the venerable M2).

http://livefist.blogspot.com
 

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