Indian Defense Industry General News and Updates

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Defence ministry causes confusion, 'okays' project for which tenders were issued in March
 

Ashwin

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For the defence sector, Make in India ended before it began

Despite announcements almost every month, not one big project has taken off. With just about a year left, Modi govt unlikely to have much to showcase in 2019.
It is time to call a spade a spade. For the defence sector, which was supposed to be a cornerstone of the initiative, the Make in India story is over. In fact, it ended even before it began — not a single major project took off despite the best of efforts, or claims, in the last three years.
The Narendra Modi government’s biggest initiative — to involve the private sector in mega defence projects as ‘strategic partners’ — has gone through so many rounds of expectations, amendments and interpretations that its very concept is now on shaky grounds.
It can safely be said that in this tenure, and given the pace at which things are moving, the NDA government is unlikely to sign off on any of the mega plans it had to award contracts to the private sector for manufacturing fighter jets, submarines and tanks.
The aim was to initiate the process of creating India’s very own Boeings and Lockheed Martins to compete in a global market. But as things stand, Indian companies that invested in the defence sector are on the verge of bankruptcy, with some even facing insolvency litigation.
The problem is that there is just not enough time left. For the strategic partnership plan – involving multibillion dollar Make in India projects – the meagre one year and change that this government has will leave things hanging midway, if they take off at all.
Selecting an Indian private company for a mega project is a long process. From inviting bidders to starting financial evaluations, assessing technical capabilities and then getting involved in lengthy conversations on pricing and delivery, the process is not only long, but is fraught with the many perils of working in the defence sector – rigging, lobbying and heartburn.
The fastest that India has perhaps selected a major military system in recent years was the emergency purchase of basic trainers for the Air Force. With the HPT-32 aircraft grounded due to safety issues, the IAF pressured the UPA government into an emergency purchase at breakneck speed in 2009. It still took three years from issuing tenders to signing.
For the strategic partnership plan – set to face teething troubles due to its unique, untested model – even tenders to start a selection are yet to be approved. It is a different story of course that the super-fast basic trainer deal – eventually won by Swiss company Pilatus in 2012 – is currently facing a CBI inquiry on allegations of undue favours by the Air Force in the selection process; an inquiry that has incidentally raised alarms in the bureaucracy as well as the Air Force top brass.
A careful bureaucracy is unlikely to push through projects without due process, well aware of recent scams and scandals such as the AgustaWestland VVIP helicopter case that put a former IAF chief behind bars. Therefore, a mega project taking off – resulting in the actual signing of a contract – is unlikely in the short timeframe left for the government in power.
The AON story
So, what is this buzz about the defence sector that makes it sound so exciting? Announcements about some major project or the other have been made almost every month in the past years, often in the thousands of crores, getting ‘cleared’.
A running joke in the industry is on the big ‘AON scam’. Mind you, this is no corruption scandal involving middlemen and commissions, but an optical illusion that shows that all is well. An AON or ‘Acceptance of Necessity’ is the very first stage of a military procurement.
Simply put, it means that the government agrees in principle that the particular service requires what it is asking for, say a new rifle or a fleet of submarines. It is also a go-ahead to start exploring the process for acquisition. Not all AONs result in tenders being issued, and most lapse several times as the service is unable to move ahead due to technical or financial issues.
Yet, most AONs granted and re-granted by the ministry are celebrated as mini events, heralding a new dawn for Make in India. In a recent answer in Parliament, when asked for achievements on Make in India, the defence ministry again came out with a list of AONs it has ‘accorded’ in the past three years.
The number seems impressive – 148 capital acquisition proposals have been cleared (granted AON) by the government in the past three years, of which 105 proposals worth approximately Rs 2.33 lakh crore have been categorised as Make in India.
The reply also states that the broad timeframe to execute and sign these is between one-and-a-half and two-and-a-half years. However, not a single one of these proposals under Make in India has managed to make it through to full approvals.
As far as private industry is concerned, defence is now a stagnant sector. Companies that took the plunge and hired big in anticipation for orders are now retrenching staff, many of them taken from public sector unit assignments. At least one shipyard is on the verge of getting shut down, while others are incurring unsustainable losses.
It is a sector not for the faint-hearted. And as things stand, the story is over for now and in the hands of the new government that will take power in 2019.

For the defence sector, Make in India ended before it began
 

Himanshu

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Dec 3, 2017
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Statisticians from Kolkata help soldiers take better aim

KOLKATA: Faculty members at the city-based Indian Statistical Institute (ISI) are busy with a study of a different kind — whether the guns and ammunition used by our armed forces are precise enough for optimal performance.
The Ordnance Factory Boardhas approached the premier institute to statistically work out improvisation strategies to rectify production errors in the weapons and shells it manufactures. The ISI, however, is only looking at tactical weapons (used during warfare) and not strategic ones (manufactured in anticipation of future wars).

While the 42 ordnance factories across the country use sophisticated machines to manufacture weapons and ammunition, chances of err-ors remain. Often shells (both short and long range) end up not bursting on time or not following the intended trajectory.

After the shells are manufactured, they are tested randomly at test ranges. Based on their performance, it is presumed that the rest of the lot is ready for use. "This is where the problem lies. There are minor errors/differences among shells manufactured by different machines and as a result they perform below par. Our job is to statistically analyse these differences/errors at the manufacturing stage itself and suggest process control checks to ensure foolproof production," said Amitabha Bandyopadhyay, faculty member at the statistical quality control and operations research department (SQC&OR). He is working on the weapon and ammunition efficiency project, along with another faculty member of the department, Ranjan Sett.

"The biggest poser with shell testing is that it involves a lot of wasteful expenditure. We are also trying to tackle this while looking to mini-mize production errors," Sett said. There are 40 different types of shells of varying ranges that the duo is inspecting and rectifying.

Though their work started with ammunition, the statistics-based solutions that the duo offered worked so well that they were also given the responsibility of looking at improving the quality of different categories of guns manufactured at the ordnance factories. Till now, they have worked with light field guns, that are used to lob shells between 6km to 40km. These field guns can be used to hurl shells weighing between five and seventy kilos; the last ones are usually meant to reach targets that are beyond 40km.

"In case of guns, the main problems are with recoil, jamming and unsmooth firing. If there is too much recoil, it will impact the soldier handling the field gun inside a tank or a covered combat vehicle where the gun is mounted. In a battlefield, a gun has to keep firing shells one after the other but often the system is not ready to lob a shell after a particular firing. These are the things we are trying to minimize by taking a relook, right from the production stage," Bandyopadhyay said.

Every gun is tested for defects after manufacturing and those that fail the test are sent back for rectification. While Bandyopadhyay and Sett are looking at these guns individually, they are also inspecting the freshly manufactured ones to see if the fault is in the data system or in the sub-assembly stage and if there are any sub-characteristics that might have triggered the defect.

Saurabh Kumar, member of the Ordnance Factory Board who was instrumental in bringing ISI on board, said: "ISI is helping us introduce proactive and preventive systems in sync with the global manufacturing practices rather than following the usual inspection-based methodology. We are sure to bring about major improvements in the quality and productivity of our weapons and ammunition."
 
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STEPHEN COHEN

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Dec 4, 2017
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I found a Recent Article ; on the Subject of Indian Ordnance factories
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Creeping privatisation
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The Narendra Modi government is keen to break the monopoly of the Indian ordnance factories, which are viewed by defence pundits as white elephants that must be restructured to keep pace with changing technology.

But OFB officials and employees’ unions seek a level playing field to perform better. By RAVI SHARMA recently in Chennai and Medak

SUPPLYING the Haubits FH77 (Bofors) artillery guns for the Kargil war against Pakistan in 1999, rushing engines for the T-90 tanks during the Indian Army’s “surgical strikes” inside Pakistan-occupied Kashmir in 2016, ramping up production of armoured personnel carriers and dispatching them to the Indian Army’s Eastern Sector during the recent standoff with China on the Doklam plateau, even bullet-proofing the offices of more than one Chief Minister of Andhra Pradesh.

The Indian Ordnance Factories organisation, a group of 41 ordnance factories that function under the Ordnance Factory Board (OFB), Kolkata, has, in its history dating back to 1775, assisted both in the march of the British empire in India and in the wars fought by independent India, delivering, on more occasions than one, at short notice.

By far the oldest government organisation, predating even the Indian Railways by over half a century, the Indian ordnance factories trace their origins to the British East India Company when the British authorities accepted the establishment of a Board of Ordnance at Fort William, Calcutta, in 1775.

But being the sole supplier of ordnance to the Army and a crucial element in the country’s war efforts can be akin to tiptoeing through a minefield, a daunting responsibility even for an organisation that has had a monopoly over catering to the Army’s needs—from berets and boots and parachutes to assault rifles, howitzers and battle tanks. Operating under the aegis of the Department of Defence Production in the Ministry of Defence, the 41 ordnance factories “form an integrated base for indigenous production of defence hardware and equipment, with the primary objective being self-reliance in equipping the armed forces with state-of-the-art battlefield equipment”, according to the OFB website.

The ordnance factories’ numero uno status as far as supplies to the Army was concerned has been the accepted norm. But to many defence pundits, these factories are a labyrinth, a white elephant that must be broken up, restructured and hived off.

In July, Lieutenant General Sarath Chand, the Vice Chief of the Army Staff, set the cat among the pigeons when, rather out of character and throwing “official correctness” to the winds, he said that Indian ordnance factories had not only failed to keep pace with changing technology but also did not have the capability to absorb it in the event of a transfer of technology, and “in some cases they had even failed to assemble products that had been imported”. In short, according to the three-star general, the ordnance factories were “an unsuccessful method of supporting [India’s] defence requirements”.

Speaking at AMICON 2017, a conference organised by the Army and the Confederation of Indian Industry (CII), he lamented whether the below-par functioning of ordnance factories was because of the assured orders they had since “there was no competition whatsoever” or because of the lack of accountability. The Vice Chief openly stated what many in the upper echelons of the armed forces had been saying privately for years, that the ordnance factories supplied substandard and overpriced equipment, were unable to support a product, and suffered grossly from time and cost overruns. Nothing can be more glaring than the numerous criticisms against the battle tank Arjun and the assault rifle INSAS (Indian New Small Arms System). Bent barrel, inaccurate firing, chamber burnt, failures in high altitude, the grouses against INSAS are many. The criticism Arjun faces is that its heaviness affects its manoeuvrability, endurance and speed, and makes moving it over bridges a logistic nightmare. The Army is reluctant to place repeat orders for Arjun after receiving the initial 124 tanks manufactured by the Heavy Vehicles Factory (HVF) at Avadi in Chennai between 2004 and 2016. A senior officer said: “Deep into enemy territory and your equipment fails. That can be a disaster.”

Flaws and delays
Explained Lt Gen. V.A. Bhat, who retired as the Director General of Quality Assurance (DGQA): “There is a mismatch between what the Army wants and what the OFB can produce. If the Army gives the ordnance factories a GSQR [general staff qualitative requirement] they are unable to meet even 98 per cent accuracy. Both the raw material and the manufacturing process [machining, surfacing, etc.,] are substandard. There are also huge delays in placing orders on vendors. For example, the Army is not happy with the indigenously designed and produced INSAS rifle. The management cannot do much since labour laws are welfare oriented.” A Comptroller and Auditor General (CAG) of India report in July criticised the OFB for supplying “inadequate quality of ammunition to the Army since March 2013” and for the “shortfall in meeting the production target set by OFB [itself]”. The report stated that despite an earlier high-level report (in 2015) on “ammunition management in the Army” highlighting the concerns about the quality and volume of supplies from the ordnance factories, no significant improvements had taken place. But it is also a moot point that the “majority of the procurement cases from other than OFB [sources], which were initiated by the Army headquarters during 2009-13, were pending as of January 2017”.

Modi’s doctrine
The Vice Chief’s public diatribe was also probably in line with the thinking in the corridors of South Block, which houses the office of the Defence Ministry. In February, largely in keeping with the Narendra Modi government’s official doctrine to usher in privatisation or hive off public assets in every conceivable entity, a letter went from the Prime Minister’s Office to the Secretary (Defence Production) asking all ordnance factories to “provide a complete listing of products manufactured, along with a photo description of each product, number of items... produced and their value”, and also lists of plant and machinery and, most pointedly, the land held by each of the 41 factories.

Ordnance factories are in possession of around 60,000 acres (24,281 hectares) out of the 17.3 lakh acres (seven lakh hectares) that comes under the nomenclature “defence land”, with the most valuable OFB parcels being in Kolkata, Pune, Jabalpur, Kanpur, Medak, Avadi and Dehradun. Further indications of the Modi government’s line of thinking—to break the monopoly of the ordnance factories—came in April, when the private sector was invited to participate in tenders to supply nine types of ammunition for tanks and howitzers, hitherto a preserve of the ordnance factories. On April 27, the Ministry issued a circular listing 143 items that could be sourced from the trade (read private sector). These items were to be categorised as non-core, and the armed forces would be allowed to buy them from the open market. Of the items, 48 are troop comfort articles such as blankets, socks, boots and rain capes, while 39 fall under the weapons category and include 12 types of ammunition boxes, seven types of empty shells, three types of bombs, two types of binoculars and three types of vehicles, including the Stallion MK-IV truck.

While declaring the 39 items “non-core”, the Ministry’s circular of April 27 stated: “These can be sourced from the trade.... The Army can procure them without a no-objection certificate [NOC] from the OFB.” This was a sharp departure from the prevalent norm wherein the Army was required to get an NOC to procure these items from sources other than the ordnance factories. The circular further indicated that the Ministry could “identify non-core activities [of the ordnance factories] that can be either closed down or put on the public-private partnership (PPP) model for optimal use of the OFB’s vast infrastructure and skilled manpower”. In June, the Ministry proposed that another 39 items, designated as non-core, be outsourced in a phased manner. These include Army logo jackets, man dropping and supply dropping parachutes, and extreme climate clothing and tents (Arctic), to name a few.

Unions protest
These decisions have naturally not gone down well with defence employees’ unions. According to C. Srikumar, secretary of the All India Defence Employees Federation (AIDEF), the largest federation of trade unions of defence civilian employees, “the government’s game plan is to dismantle the ordnance factories”. He said: “The decision to completely outsource these items is going to affect 25 ordnance factories and more than 20,000 employees. The former Defence Minister Manohar Parrikar had given the OFB a turnover target of Rs.20,000 crore by the end of 2017. The OFB was making good progress with a turnover of over Rs.15,000 crore in 2016-17. But this categorisation of 143 items as non-core will impact the OFB by around Rs.3,500 crore. All these decisions are taken to encourage private corporates in the name of ‘Make in India’. Making the existing state-owned defence industries sick and redundant and bringing in their place the private corporate sector, whose sole intention is profit, is against the security interests of the country. [State-owned] defence industries cannot be treated as commercial entities.”

Srikumar further said: “The fact remains that the Army takes its own time to decide its future requirements/equipment because of its own problems. The Army wanted an assault rifle to replace the 5.56 mm INSAS rifle. Accordingly, the ordnance factories in Tiruchi [Tamil Nadu] and Ishapur [near Kolkata] developed an assault rifle in the 5.56 version. After numerous trials, lasting more than two years, the Army decided that it wanted an assault rifle in the 7.62 mm × 51 mm mode. [The Indian Army has decided to go back to the lethal power of the 7.62 mm bore instead of the 5.56 mm it had opted for earlier.] And a global tender was floated. The OFB has developed the 7.62 version, and after a lot of persuasion, the Army will hopefully begin its first round of user trials. This is just one example. There is no delay on the part of the OFB in supplying items to the Army. Delays take place only in identifying standard and reliable vendors for uninterrupted supply of raw materials and components.”

Defence officers also agree that the Army keeps changing its GSQRs. On the INSAS, the Army wanted a switch from a sheet metal to a machine-forged body and from a hinged cover to a sliding cover, thereby necessitating drastic changes in the design of the rifle’s body.

Now with the Army issuing a request for proposal, there is no guarantee that the order for around 1.85 lakh assault rifles will go to the ordnance factories. Punj Lloyd Raksha Systems (PLR), a joint venture between Israel Weapon Industries (IWI) and Punj Lloyd (India’s first small arms manufacturing venture in the private sector), is offering the Israeli Tavor, made by IWI. Tavor is already in use by the Indian Army’s specialised units and sets the stage for Israel to capture the small arms market in India.

‘Give more autonomy’
This is what angers officials in the OFB. Said a general manager: “In terms of procedures, give us a level playing field with the private sector. The Ministry of Defence gives the private sector 10-year stable projections in the request for proposal for ammunition, but the OFB has been denied such a projection. How can you run a business with too many controls and checks from the Ministry? Give us the freedom to choose our partners from the trade. We are too procedure-oriented and monitored by too many super structures [agencies]—the Central Bureau of Investigation [CBI], the Central Vigilance Commission [CVC], the DGQA—and constrained by design IPR [intellectual property rights] issues.

“The OFB still works as a department of the government. Give it more autonomy and at the same time make it more accountable in the manner of the Railway Board, the Indian Space Research Organisation or the Department of Atomic Energy.

“The government is ready to consider requests from the private sector for tax breaks. The same has not been given to the OFB. The Defence Ministry has stalled several OFB projects in the name of Make in India. Can the armed forces be left to the mercy of private corporate houses and multinational corporations for their strategic requirements?”

And it is not as if the private sector does not delay supply. The CAG report on the Army Base Workshops (Report No 36 of 2016) points out the failure of a private sector entity in supplying the ordered items, which were subsequently supplied by ordnance factories.

Srikumar denies that the items are overpriced. “The demand in military acquisitions is generated by the government. The price is decided by the government. The OFB works on a no-profit no-loss basis to ensure war insurance. The volume of T-90 tanks manufactured in Russia is far greater than those made in India. The price of any item is related to the volume. Give the OFB the same volumes and we can match the price of imports.

Price is not the sole reason, as any monopoly supplier tries to make unholy profits from the life supply of spares. Troop comfort items such as uniforms, blankets, boots and jerseys may be costlier than those available in the trade. But if you want quality products you have to pay. In the name of cost, the Army procured many of these items at a cheaper rate from many private sector firms. In many instances, the Army had to return to the ordnance factories since soldiers were unhappy with the quality of the products supplied by private players. Ordnance factories have stringent quality control systems in place and all raw materials and components are subjected to different types of testing in the NABL [National Accreditation Board for Testing and Calibration] accredited labs before the items are sent for production.”

An officer at the HVF said: “It is a misnomer that the OFB is loss making. Owned by the government and created for national security, the OFB does not take commercial considerations for any decisions in manufacture. Ordnance factories are not meant to make profits. The price the customer pays is decided mutually between the user and the producer. Moreover, the need for war reserves, idle investment to take care of surge production, social and welfare schemes, residential colonies, hospitals, schools, other statutory and non-statutory obligations, and the image of the government as an ideal employer are unavoidable factors. Further, the ordnance factories face orders that are of an uneconomical quantity.”

Officials at ordnance factories also lamented about sporadic orders and a lack of repetitive orders. One official said: “In 2008, Ordnance Factory, Medak, was asked to manufacture an AAD [armoured amphibious dozer]. We made one and are still waiting for an order. Similarly, an NBCRV [nuclear biological and chemical reconnaissance vehicle] was designed in 2007. We are still awaiting an order. That the private sector can supply at cheaper costs is a myth. One of India’s leading industrial houses is attempting to sell to the Army a wheeled armoured personnel carrier. At 22.5 tonnes, it is too heavy to be conveniently air-lifted, and the cost at Rs.32 crore is way above the international cost of similar vehicles that are around Rs.15 crore. Our ordnance factory manufactures tracked armoured troop carriers under Rs.6 crore.”

Said Bharat Singh, Senior General Manager at Ordnance Factory, Medak: “We need to strive for a strong industrial defence base. But you cannot build a defence manufacturing industry on borrowed technology. We are on a par with others in terms of infrastructure and machinery and even for the manufacture of defence products. But the items are not our design. So we don’t understand it, we are not authorised to inspect or improve it, are incapable of giving suggestions even, and hence are unable to make enhancements, leave alone the next generation of the product.

There is a clear gap between design R&D and manufacturing, and we continue to be capable of only licence production. The DRDO [Defence Research and Development Organisation] has not given the ordnance factories any new designs after the Arjun tank. For decades, we followed the dictum that the DRDO will design, the OFB will produce, the DGQA will inspect, defence finance and defence accounts will exercise control. The manual has not changed since the British set up the defence industry.

No defence industry can work without R&D. Since 2006, we have been given powers to do R&D and our products are giving revenues. Dhanush howitzer, L-70 gun upgrade, pump action gun, mine protection vehicle and the BMP-2 [armoured troop carrier] upgrade. For the BMP 2 upgrade, the Army tried to import the technology from the Russian OEM for 13 years. But could not. We developed the technology in two years and in July, the Defence Acquisition Council cleared an order for 693 BMP 2 upgrades worth Rs.2,400 crore. We needed a design base. The BMP 2 offered us a good platform and we had the design documents. We need to do reverse engineering.”

Bharat Singh said: “Take the example of tank design and development. There are around 15 crucial technologies which make a difference. The armament, the weapon systems, the sighting systems. But no one is working to develop an indigenous tank. Everybody wants to be an integrator. We in India are trying to develop front-end technologies without engine design capabilities or the expertise.”

The ordnance factory at Medak has started the path-breaking system of barcoding every item it produces. A reading of the barcode will divulge the complete history of the product; when, where and year of manufacture and all sources of suppliers. The Medak factory is also developing a Futuristic Infantry Combat Vehicle (FICV).

The FICV’s capability matches that of BMP 4. India is, therefore, skipping the BMP 3 version, which Russia had offered to sell. The FICV’s designs have been frozen. It is in the soft model stage, with production expected to start in late 2019. It will have increased mobility and firepower, night capability and better protection levels.

Arjun tank
Deflecting criticism away from the Arjun tank, an official at the HVF said that for a better product, it was important that the user be involved right from the design stage. “We are hoping the Army will place an order for Arjun Mk2: initial trials have been completed and it is on the verge of going into limited series production.

The Army has asked for a demonstration of missile firing, which we hope to undertake in 2017. Arjun Mk2 is as accurate and as manoeuvrable as the Russian designed T-90 [India has manufactured more than 700 T-90s]. Mk2 will also have automatic target locating, tracking and destruction capabilities,” said an officer. “The Army’s GSQRs are many times too optimistic, so design agencies find it difficult to meet them. Most of the time the user and the integrator are not on the same page. The user has to treat the manufacturer as a partner, not a vendor.”

At the Engine Factory, Avadi, officers are aghast at the fact that while the Army screams about delays in the delivery of engines for the battle tanks in their arsenal, it does not understand the modalities of the manufacturing process.

Explained an official: “The Army’s orders are inconsistent. Take the case of the V-46 engine manufactured for the T-72 battle tank. In 2007, the Army wanted 111 engines, in 2008 it wanted 170, in 2009 it wanted 317 and in 2010, 71. No orders were placed in 2011 and 2012. In 2013, the Army wanted 418 and in 2016, it ordered 257. There is no continuity in the requirement and planning. How do we plan? It takes six months just to get quotations from the Russian OEM for spares.

We need to order and then they will supply the spares. That is why it takes two years to deliver an engine. At meetings in the Ministry, Army officers do not address issues such as better planning; rather, they railroad the agenda using the emotional line that troops are at risk and are being killed. All we are saying is place the indent in time and with advance planning, we will deliver.”

Many officers expressed the hope that creation of an Army Design Bureau, akin to the Naval Design Bureau, will help remove the disconnect between the user and the manufacturer.

It is yet unclear what the government wants to do with its ordnance factories. Official sources disclosed that four ordnance factories—the Rifle Factory in Ishapore, the Small Arms Factory in Kanpur, the Ordnance Factory Project in Korwa and the Ordnance Factory in Tiruchi have been identified as possible choices for PPP ventures. Corporatisation of the OFB by turning the 41 factories into a conglomerate along the lines of other defence public sector undertakings, such as Hindustan Aeronautics Ltd, has been suggested as a possible panacea by at least two Defence Ministry-appointed committees, one headed by former Revenue Secretary Vijay Kelkar in 2005 and another headed by Vice Admiral Raman Puri in 2016. But the unions, which control the 88,000 employees in the ordnance factories, are dead against any form of corporatisation.

Said Srikumar: “We are against corporatisation. Corporatisation is just a step away from privatisation. Five successive Defence Ministers have said that there will not be any corporatisation of the OFB.”
 

Bharath

Technical Staff
Dec 1, 2017
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“In terms of procedures, give us a level playing field with the private sector.
isnt a tender open to all? was the OFB denied from participating on any tender process?

also - how can there be "level playing field" when there are items that only OFB is authorized to build? the playing field is "leveled" when we open the manufacturing to any and all INDIAN companies and see who comes up with the best product for the least price - how is that for giving a level playing field?

or do you mean "the private sector should have quotas, reservations, unions, pensions, no authority to lay off workers" and then you have a level playing field with private sector then you can show that they are not better than OFBs?
social and welfare schemes, residential colonies, hospitals, schools, other statutory and non-statutory obligations, and the image of the government as an ideal employer are unavoidable factors. Further, the ordnance factories face orders that are of an uneconomical quantity.

exactly - so for every defense related equipment the govt (which is the tax payer) buys from the OFB, on top of the manufacturing and raw material costs, we have to pay for hospitals, schools, obligations, welfare schemes, residential colonies and be the "ideal employer" - which NONE of the private sector employees get and THEY STILL seem to make better products!
 
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Ashwin

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Simplified ‘Make-II’: Major Steps Towards ‘Make in India’ in Defence Production

As a major boost to ‘Make in India’ in Defence, the Defence Acquisition Council, chaired by Raksha Mantri Smt Nirmala Sitharaman, in its meeting on 16 January 2018, has cleared a simplified ‘Make-II’ procedure which will enable greater participation of industry in acquisition of defence equipment. This process will greatly help import substitution and promote innovative solutions. This simplified ‘Make-II’ procedure will amend the existing ‘Make Procedure’ in Defence Procurement Procedure (DPP)-2016.

The revised procedure has been finalized after a series of consultations held with industry. The salient features of the new ‘Make-II’ procedure include the following:
  • The industry can suggest projects, especially among those items which are currently being imported. Start-ups or individuals can also suggest proposals. Service Headquarters will also list out a series of projects which can be undertaken as ‘Make-II’ projects under the new procedure.
  • The potential ‘Make-II’ projects will be approved by a collegiate comprising of DRDO, HQ (IDS), Department of Defence under a committee chaired by Secretary (Defence Production). Based on the in-principle approval agreed by this committee, the projects will be hosted on Ministry of Defence/Department of Defence Production’s website inviting industry to participate.
  • There will be no limit to the number of industry who may respond to the EoI for development of the prototype subject to meeting the minimum qualification criteria. The design and development time of 12 to 30 weeks is granted to industry to offer the prototypes.
  • There is no limit to the number of industry players who may show interest and offer prototype.
  • After this period, a commercial RFP will be issued. Once the RFP is issued, it shall not be retracted. The industry who wins the bid, is assured of an order.
  • Service Headquarter (SHQ) will constitute a Project Facilitation Team for facilitating the process under this procedure.
  • The case will be progressed even if there is single entity offering an innovative solution.
  • The industry who develops the product will retain the title and ownership and all other rights in intellectual property. However, for some specified reasons like National Security, Government shall have ‘March-in’ rights.
  • Normally, there shall be no negotiations by Contract Negotiation Committee (CNC) in multi-vendor contracts.
  • ‘Make-II’ procedure reduces the total time from in-principle approval to placing of order by 50 percent. The estimated time to finish the whole process has come down to 69 to 103 weeks.
  • Projects involving developmental cost of less than three crores will be reserved for MSME.
NAo/Rajib

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@randomradio @vstol Jockey @Aashish @Nick @Abingdonboy @Parthu
 

randomradio

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Nov 30, 2017
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For the defence sector, Make in India ended before it began

Despite announcements almost every month, not one big project has taken off. With just about a year left, Modi govt unlikely to have much to showcase in 2019.
It is time to call a spade a spade. For the defence sector, which was supposed to be a cornerstone of the initiative, the Make in India story is over. In fact, it ended even before it began — not a single major project took off despite the best of efforts, or claims, in the last three years.
The Narendra Modi government’s biggest initiative — to involve the private sector in mega defence projects as ‘strategic partners’ — has gone through so many rounds of expectations, amendments and interpretations that its very concept is now on shaky grounds.
It can safely be said that in this tenure, and given the pace at which things are moving, the NDA government is unlikely to sign off on any of the mega plans it had to award contracts to the private sector for manufacturing fighter jets, submarines and tanks.
The aim was to initiate the process of creating India’s very own Boeings and Lockheed Martins to compete in a global market. But as things stand, Indian companies that invested in the defence sector are on the verge of bankruptcy, with some even facing insolvency litigation.
The problem is that there is just not enough time left. For the strategic partnership plan – involving multibillion dollar Make in India projects – the meagre one year and change that this government has will leave things hanging midway, if they take off at all.
Selecting an Indian private company for a mega project is a long process. From inviting bidders to starting financial evaluations, assessing technical capabilities and then getting involved in lengthy conversations on pricing and delivery, the process is not only long, but is fraught with the many perils of working in the defence sector – rigging, lobbying and heartburn.
The fastest that India has perhaps selected a major military system in recent years was the emergency purchase of basic trainers for the Air Force. With the HPT-32 aircraft grounded due to safety issues, the IAF pressured the UPA government into an emergency purchase at breakneck speed in 2009. It still took three years from issuing tenders to signing.
For the strategic partnership plan – set to face teething troubles due to its unique, untested model – even tenders to start a selection are yet to be approved. It is a different story of course that the super-fast basic trainer deal – eventually won by Swiss company Pilatus in 2012 – is currently facing a CBI inquiry on allegations of undue favours by the Air Force in the selection process; an inquiry that has incidentally raised alarms in the bureaucracy as well as the Air Force top brass.
A careful bureaucracy is unlikely to push through projects without due process, well aware of recent scams and scandals such as the AgustaWestland VVIP helicopter case that put a former IAF chief behind bars. Therefore, a mega project taking off – resulting in the actual signing of a contract – is unlikely in the short timeframe left for the government in power.
The AON story
So, what is this buzz about the defence sector that makes it sound so exciting? Announcements about some major project or the other have been made almost every month in the past years, often in the thousands of crores, getting ‘cleared’.
A running joke in the industry is on the big ‘AON scam’. Mind you, this is no corruption scandal involving middlemen and commissions, but an optical illusion that shows that all is well. An AON or ‘Acceptance of Necessity’ is the very first stage of a military procurement.
Simply put, it means that the government agrees in principle that the particular service requires what it is asking for, say a new rifle or a fleet of submarines. It is also a go-ahead to start exploring the process for acquisition. Not all AONs result in tenders being issued, and most lapse several times as the service is unable to move ahead due to technical or financial issues.
Yet, most AONs granted and re-granted by the ministry are celebrated as mini events, heralding a new dawn for Make in India. In a recent answer in Parliament, when asked for achievements on Make in India, the defence ministry again came out with a list of AONs it has ‘accorded’ in the past three years.
The number seems impressive – 148 capital acquisition proposals have been cleared (granted AON) by the government in the past three years, of which 105 proposals worth approximately Rs 2.33 lakh crore have been categorised as Make in India.
The reply also states that the broad timeframe to execute and sign these is between one-and-a-half and two-and-a-half years. However, not a single one of these proposals under Make in India has managed to make it through to full approvals.
As far as private industry is concerned, defence is now a stagnant sector. Companies that took the plunge and hired big in anticipation for orders are now retrenching staff, many of them taken from public sector unit assignments. At least one shipyard is on the verge of getting shut down, while others are incurring unsustainable losses.
It is a sector not for the faint-hearted. And as things stand, the story is over for now and in the hands of the new government that will take power in 2019.

For the defence sector, Make in India ended before it began

It's a dumb article. All the Make in India programs for defence were aimed towards Modi's second term, not this term. This term focused on laying the foundation for MII.

But we did see movement on MII as a whole. The 464 new T-90Ms. New weapons from Russia in order to bring up the army's reserves. Rafale offsets, it is worth billion after all. P-17A contract. More recently we saw the 6 SSNs given the go ahead along with the follow on LCA contract.

Overall a good term considering the finances.
 
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bonobashi

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Dec 3, 2017
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isnt a tender open to all? was the OFB denied from participating on any tender process?

also - how can there be "level playing field" when there are items that only OFB is authorized to build? the playing field is "leveled" when we open the manufacturing to any and all INDIAN companies and see who comes up with the best product for the least price - how is that for giving a level playing field?

or do you mean "the private sector should have quotas, reservations, unions, pensions, no authority to lay off workers" and then you have a level playing field with private sector then you can show that they are not better than OFBs?


exactly - so for every defense related equipment the govt (which is the tax payer) buys from the OFB, on top of the manufacturing and raw material costs, we have to pay for hospitals, schools, obligations, welfare schemes, residential colonies and be the "ideal employer" - which NONE of the private sector employees get and THEY STILL seem to make better products!

Please, cut the crap.

Which product has the private sector been making that is better? With the complete freedom in the electronics sector, has anyone even come close to the output that BEL does, year after year after year, with effortless ease? With huge automobile 'manufacturing' going on, including the laughable cartoons that Mahindra and Tata produce, has it been able to make any original design, for any of the very wide range of wheeled vehicles that the services need? Step outside and take a look at the 4WD vehicles used by the Army, for instance; MM 440, MM 540, MM 550. Now step back inside and figure out where these are in terms of vehicular technology. Or look at what else there is: only what Osamu-san gifted us. Take a look at the medium vehicles of 4x4, and the next category of 6x6; tell me what these 'indigenous' manufacturers have done. While you are at it, just remind us when multi-axle trucks and tractor-trailers came in, replacing the "12 MT" (ROTFL) bridge-breakers that ruined Indian roads for decades by overloading.

Where do you want to start? There is a huge market for replacing the Tatra and other specimens; look what a cock-up there was because some sharpie went off to the Czech Republic and cut a deal whereby (in effect) he floated a joint venture that was solely empowered to sell to India.

And, of course, instead of hospitals, schools, obligations, welfare schemes, residential colonies and such drags on profits, we have the ultimate endorsement of private sector economies - ladies and gentlemen, welcome to Antilla.
 

bonobashi

Well-Known member
Dec 3, 2017
856
411
It's a dumb article. All the Make in India programs for defence were aimed towards Modi's second term, not this term. This term focused on laying the foundation for MII.

But we did see movement on MII as a whole. The 464 new T-90Ms. New weapons from Russia in order to bring up the army's reserves. Rafale offsets, it is worth billion after all. P-17A contract. More recently we saw the 6 SSNs given the go ahead along with the follow on LCA contract.

Overall a good term considering the finances.

And now we hear from His Majesty's Loyal Opposition.

The single success among the three services is the Navy, in spite of being strategically confused and a doctrine of drift until it's retirement time. The Army recognises the only good technology as whatever takes the key people out of the country, or whatever takes key resources into the pockets of the key people. The Air Force - the less said, the better. Every single Chinese rip-off, based on stolen plans and research, performs significantly worse than the original, but the PLA, its arm, the PLAN, and its other arm, the PLAAF, have no hesitation whatsoever using those and progressively improving those. But not our Air Force; unless we can design and make, on our bullock-cart economy, the equivalent of the Rafale, it isn't good enough.

Sickening isn't the word.

All this in the background; the foreground, with its cast of greasy, self-oriented politicians intent on building fortunes in the crores reminds one of Eliot: one doesn't know of anything closer to a literary re-creation of our defence procurement history than the Lovesong of J. Alfred Prufrock. Read it for yourself.
 

randomradio

Senior Member
Nov 30, 2017
9,451
7,117
India
And now we hear from His Majesty's Loyal Opposition.

The single success among the three services is the Navy, in spite of being strategically confused and a doctrine of drift until it's retirement time. The Army recognises the only good technology as whatever takes the key people out of the country, or whatever takes key resources into the pockets of the key people. The Air Force - the less said, the better. Every single Chinese rip-off, based on stolen plans and research, performs significantly worse than the original, but the PLA, its arm, the PLAN, and its other arm, the PLAAF, have no hesitation whatsoever using those and progressively improving those. But not our Air Force; unless we can design and make, on our bullock-cart economy, the equivalent of the Rafale, it isn't good enough.

Sickening isn't the word.

All this in the background; the foreground, with its cast of greasy, self-oriented politicians intent on building fortunes in the crores reminds one of Eliot: one doesn't know of anything closer to a literary re-creation of our defence procurement history than the Lovesong of J. Alfred Prufrock. Read it for yourself.

There is not a single ounce of truth in what you said.

The Chinese make stuff that have minimum acceptability standards. Even their ripoffs should comfortably match our MMRCA requirements. It's because they ripoff quality products that they get satisfactory capability, which they then make up with numbers. I'm pretty sure their J-10C will meet the IAF's expectations from SE MII.

Otoh, the IAF is straddled with such poor designs that there's nothing one can say or do to improve it without actually redesigning said product. However those that do meet minimum standards are accepted. We saw that with the Dhruv, now we are seeing that with the new LCH. LCA Mk1A will join that list soon.

Regardless, the IAF has a lot of indigenous equipment in their kitty which they are supporting and have been successful. Look at our brand new SAM inventory that's coming up. DRDO's QRSAM, Akash, BMD and XRSAM. All indigenous. They are also focusing on indigenization of their AWACS fleet.

The army, they have a requirement for 8 lakh assault rifles. Their requirement for rifles for frontline troops is so high that even global rifle producers are unable to meet them. But they have nevertheless opted to purchase INSAS derivatives to fill 5 lakh rifles. The army has also chosen a DRDO made bullet proof jacket along with an indigenous helmet. They want an indigenous BMS. Their focus on a new tank, FRCV, is through "Make" in the DPP, which means the contract will go to Indian companies. The FICV is indigenous as well. Ever heard of Pinaka, Dhanush and ATGS? We recently saw that the primary requirement of 3rd gen ATGMs will come in from DRDO and not just Israel.

I don't know what you are expecting from the army and air force. All these years, the industry was simply incapable of churning out products that the army and air force could use. The navy was no different. Whatever could be indigenized was indigenized, the rest were imported. That's why the firepower component of the navy is only 10% indigenous, it's all mostly sourced from outside the country. However, even after complaining a lot, the army has stuck with the INSAS for 2 decades and they could easily reach the 25 year mark by the time the gun is replaced, and this is only from frontline combat because the rifles failed to meet new requirements. So you can expect the INSAS to easily hit the 50 year mark eventually. Is that bad?

Although the IN started their indigenization process earlier, you will actually see all three services achieving very similar levels of indigenization over the next 10 years. This has nothing to do with the willingness of the services, it has all to do with the capability of the industry.

As a $12T economy, the Chinese are still importing many products, like the Su-35 and the S400. When we achieve that level in economic growth, you will notice India will be at a much better place than China is today. So you shouldn't see China as a benchmark for anything to do with the military.

You need to get your facts in order and then introspect.
 

Sathya

Senior member
Dec 2, 2017
1,992
1,111
India
Is our forces & industry & R&D improving compared to past ?

in relation to the Money spent
 

randomradio

Senior Member
Nov 30, 2017
9,451
7,117
India
Is our forces & industry & R&D improving compared to past ?

in relation to the Money spent

Too early to say. But we are headed in the right direction. Our R&D expenditure is too low, but the focus has shifted to indigenization now.

Plus there have been mass supersessions within DRDO since Modi came in. Younger scientists have been given promotions over their senior counterparts. That's playing a significant part in accelerating development. When promotions are not guaranteed based on seniority, accountability has increased. Promoting scientists based on merit is what's necessary. So now directors cannot delay projects in order to push their tenures beyond their retirement age.
 

Ashwin

Agent_47
Staff member
Administrator
Nov 30, 2017
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Defence Investor Cell

To promote Defence Sector manufacturing in India, in line with the “ Make in India ” initiative of the Government, there is a need to educate the investors about the opportunities available in Defence manufacturing Sector . To act as a single point of contact, a Defence Investor Cell is created under Department of Defence Production, Ministry of Defence, which will provide all necessary information including addressing queries related to investment opportunities, procedures and regulatory requirements for investment in the sector.


Following pro Industry initiatives have been taken, by Department of Defence Production to facilitate investment


  1. Level Playing Field -
    • > Exchange Rate Variation (ERV) protection made applicable for Indian private sector at par with Defence Public Sector Undertakings.
    • > The Excise Duty/Custom Duty regime made uniform for all segments of industry, viz., private sector as well as public sector.
  2. Defence Offsets -
    • > Provision of multiplier of 1.5 for MSMEs engaged as Indian offset Partner (IOP).
    • > Provision of multiplier upto 3, for critical technology transfer to DRDO.
    • > Foreign companies may indicate their IOPs and components for discharge of offsets even after signing of the contract.
  3. Non core Items-
    • > 143 items of Ordnance Factory Board categorized as Non Core to be sourced from vendors.
  4. ‘Make ‘ Procedure –
    • > To promote Design and Development by the vendors, revised and simplified Make-II procedure issued, with preferential treatment to MSMEs for prototype development costing Rs 3 Crs.
  5. FDI Policy –
    • > FDI upto 49% allowed under automatic route and above 49% with Government approval.
  6. Industrial Licensing Policy –
    • > Upto 70% of the items i.e. parts, components, subsystems, raw materials etc. removed from purview of industrial licensing.
    • > Initial validity of industrial license increased from 3 years to 15 Yr, further extendable upto 3 Yrs under IDR Act and lifetime validity under Arm's Act
  7. Outsourcing and Vendor Development of Defence Public Sector Undertaking's/Ordnance Factory Board –
    • > Comprehensive guidelines issued by Defence Public Sector Undertaking's/Ordnance Factory Board, which include vendor development for Indigenisation and import substitution.
  8. Defence Export -
    • > List of Munition items requiring authorization put in public domain to remove ambiguities.
    • > Requirement of End user Certificate to be countersigned/stamped by Government authorities dispensed with for exports of parts, components and sub-systems, etc.
    • > Applications are being received on-line.
    • > Standard Operating Procedure(SOP) for issue of authorization for export put in public domain. Specific time limit introduced for issue of authorization.
  9. Green Channel
    • > Green channel policy promulgated dispensing with the requirement of pre-dispatch inspection and acceptance of stores under supplier ”warranty/guarantee to the vendor”.
  10. Timely Payments
    • > Defence Public Sector Undertaking's mandated to pay upto 90% of the amount due on purchase of raw material and stores to vendors, specifically MSME within 30 days. Defence Public Sector Undertaking & Ordnance Factory Board making provisions for advance of 15% to MSME vendors.