I guess the MoD has to create alternate Indian suppliers for pretty much everything, then they can corporatise.
I guess the MoD has to create alternate Indian suppliers for pretty much everything, then they can corporatise.
MoD on a mission to simplify acquisition
Defence Minister Rajnath Singh has lately been in the news for some strong statements on Pakistan warning that India’s no first use’ policy on nuclear weapons could be revised in future and that Pakistan Occupied Kashmir was the only issue for discussion.
He has also been walking the talk within the ministry. Especially as he now faces one of the biggest challenges how to fix the Ministry of Defence’s (MoD) notoriously lethargic acquisition process and the stalled Make in India’ initiative for the defence sector. The MoD’s procurement bible is the Defence Procurements Procedure (DPP), a handbook which is revised once every few years. Singh has announced the setting up of a committee headed by Director General (Acquisition) Apurva Chandra to review the DPP 2016 and the Defence Procurement Manual (DPM) 2009.
The terms of reference for the 11-member high level committee are to remove procedural bottlenecks and hasten defence acquisition, align and standardise provisions of the DPP and the DPM and include new concepts like life cycle support for equipment, simplify policy and procedures to facilitate participation of Indian industry and incorporate new concepts like life-cycle support, performance-based logistics, ICT, lease contracting and include provisions to promote Indian start-ups and R&D.
Sources say one major thrust area for the committee will be to enhance private sector participation and leveling the playing field with the public sector.
Removing preferential treatment for the public sector is going to be a major area of concern. Other areas the committee needs to look at are on linking the Armed Forces Long Term Integrated Perspective Plan with the DPP and DPM. Serious work needs to be done on issues in the New Make’ category that has yet to kick off. The DPP needs new policies on IT and IT-enabled services, communication and Artificial Intelligence-based programmes as the current timeframes do not suit the new-age offerings.
There is a need for obsolescence management norms and modification in defence offsets, faster acquisition of weapon systems by user-trial harmonisation to reduce trial times. The MoD also needs to solve issues of bank guarantees and inclusion of escrow account payments for large programs.
Clearly, the committee which has to submit its report to the defence minister in the next six months, has a lot on its agenda.
In memory of a departed Naval pilot
The Indian Navy has instituted a trophy named after one of its promising young pilots who died young.
The Lt Simon George Pynummootil trophy recognises the most outstanding pilot officer attending the Dornier Operational Flying Training Course in Kochi.
Lt Simon George, part of the navy’s oldest air squadron, INAS 550 died in a plane crash while flying from Kochi to Kanyakumari in 1985. He hailed from a family of distinguished military aviators, his father Air Marshal PS George had the distinction of flying 45 fighter aircraft types. His uncle CGI Philip was a Group Captain in the IAF and his brother Rear Admiral PG Pynummootil is the present Flag Officer Commanding Goa Naval Area and Naval Aviation.
New Defence secy named
In a major shakeup in the defence ministry, Ajay Kumar took over as defence secretary from Sanjay Mitra who retired on August 23. Mitra was given a three-month extension in May to allow the new defence minister, Rajnath Singh, time to settle in.
Kumar, a 1985 batch Kerala cadre IAS officer has been secretary (defence production) since December 2017. His replacement in the department of defence production, Subhash Chandra, a 1986 batch Karnataka cadre IAS officer is an old MoD hand. He was earlier special secretary in the MoD and also served as joint secretary (Ground and Air Systems) and additional secretary in the DoDP.
Ordnance strike ends
The MoD heaved a sigh of relief when close to 80,000 Ordnance Factory Board (OFB) employees called off their month-long strike on the fourth day after the ministry assured them of taking their concerns on board. On August 20, The OFB unions had embarked on the largest strike in their history protesting the Modi government’s corporatisation plans.
The unions met with Secretary DODP Subhash Chandra on August 24 where it was agreed to recommend to the government, the setting up of a High Level Official Committee to interact with Employees Federations to examine their concerns and other aspects of the proposed new entity.
Corporatising the mammmoth OFB the world’s largest department attached to a defence ministry was an unfinished agenda item of the Modi government’s first term which it is now pursuing with a single-minded focus.
South Block
Defence Minister Rajnath Singh has lately been in the news for some strong statements on Pakistan warning that India’s no first use’ policy on nuclear weapons could be revised in future and that Pakistan Occupied Kashmir was the only issue for discussion.
He has also been walking the talk within the ministry. Especially as he now faces one of the biggest challenges how to fix the Ministry of Defence’s (MoD) notoriously lethargic acquisition process and the stalled Make in India’ initiative for the defence sector. The MoD’s procurement bible is the Defence Procurements Procedure (DPP), a handbook which is revised once every few years. Singh has announced the setting up of a committee headed by Director General (Acquisition) Apurva Chandra to review the DPP 2016 and the Defence Procurement Manual (DPM) 2009.
The terms of reference for the 11-member high level committee are to remove procedural bottlenecks and hasten defence acquisition, align and standardise provisions of the DPP and the DPM and include new concepts like life cycle support for equipment, simplify policy and procedures to facilitate participation of Indian industry and incorporate new concepts like life-cycle support, performance-based logistics, ICT, lease contracting and include provisions to promote Indian start-ups and R&D.
Sources say one major thrust area for the committee will be to enhance private sector participation and leveling the playing field with the public sector.
Removing preferential treatment for the public sector is going to be a major area of concern. Other areas the committee needs to look at are on linking the Armed Forces Long Term Integrated Perspective Plan with the DPP and DPM. Serious work needs to be done on issues in the New Make’ category that has yet to kick off. The DPP needs new policies on IT and IT-enabled services, communication and Artificial Intelligence-based programmes as the current timeframes do not suit the new-age offerings.
There is a need for obsolescence management norms and modification in defence offsets, faster acquisition of weapon systems by user-trial harmonisation to reduce trial times. The MoD also needs to solve issues of bank guarantees and inclusion of escrow account payments for large programs.
Clearly, the committee which has to submit its report to the defence minister in the next six months, has a lot on its agenda.
In memory of a departed Naval pilot
The Indian Navy has instituted a trophy named after one of its promising young pilots who died young.
The Lt Simon George Pynummootil trophy recognises the most outstanding pilot officer attending the Dornier Operational Flying Training Course in Kochi.
Lt Simon George, part of the navy’s oldest air squadron, INAS 550 died in a plane crash while flying from Kochi to Kanyakumari in 1985. He hailed from a family of distinguished military aviators, his father Air Marshal PS George had the distinction of flying 45 fighter aircraft types. His uncle CGI Philip was a Group Captain in the IAF and his brother Rear Admiral PG Pynummootil is the present Flag Officer Commanding Goa Naval Area and Naval Aviation.
New Defence secy named
In a major shakeup in the defence ministry, Ajay Kumar took over as defence secretary from Sanjay Mitra who retired on August 23. Mitra was given a three-month extension in May to allow the new defence minister, Rajnath Singh, time to settle in.
Kumar, a 1985 batch Kerala cadre IAS officer has been secretary (defence production) since December 2017. His replacement in the department of defence production, Subhash Chandra, a 1986 batch Karnataka cadre IAS officer is an old MoD hand. He was earlier special secretary in the MoD and also served as joint secretary (Ground and Air Systems) and additional secretary in the DoDP.
Ordnance strike ends
The MoD heaved a sigh of relief when close to 80,000 Ordnance Factory Board (OFB) employees called off their month-long strike on the fourth day after the ministry assured them of taking their concerns on board. On August 20, The OFB unions had embarked on the largest strike in their history protesting the Modi government’s corporatisation plans.
The unions met with Secretary DODP Subhash Chandra on August 24 where it was agreed to recommend to the government, the setting up of a High Level Official Committee to interact with Employees Federations to examine their concerns and other aspects of the proposed new entity.
Corporatising the mammmoth OFB the world’s largest department attached to a defence ministry was an unfinished agenda item of the Modi government’s first term which it is now pursuing with a single-minded focus.
South Block
Astra Rafael, Indo-Israel JV in defence starts ops in Hyderabad
DECCAN CHRONICLE. | ARCHAK SENGUPTA
Published Aug 28, 2019, 2:22 am IST
Updated Aug 28, 2019, 2:22 am IST
The JV, set up on a 51:49 per cent basis, with all regulatory approvals, will initially focus on in the manufacture of software-dependent radios.
MoS G. Kishan Reddy takes a tour of the facility. (Photo: DC)
Hyderabad: Within a span of a week, the city of Hyderabad witnessed the inauguration of the third state-of-the-art facility, marking yet another major investment, this time a defence joint venue that is likely to generate over 100 jobs.
Close on the heels of Amazon and OnePlus inaugurating their facilities in the city, Astra Rafael Communication System, a JV between Astra Mircowave and the Israel-based Rafael Advanced Defence Systems, on Tuesday, inaugurated its facility that would specialise in the manufacture and design of high-end tactical communication systems for the Indian armed forces.
Speaking to Deccan Chronicle, Astra Microwave Products’s managing director S. Gurunatha Reddy said, “Currently, the facility has an engineering staff count of 15. By October-end, we would be hiring 35 more people to meet the current order book of $30million from Rafael. However, the headcount is likely to rise to 100 people by the end of next year.”
The JV, set up on a 51:49 per cent basis, with all regulatory approvals, will initially focus on in the manufacture of software-dependent radios. It would later graduate onto the development of different equipments for defence communications and also get into electronic warfare and signal intelligent system. Rafael’s president and CEO Maj Gen (Ret) Yoav Har-Even said that the facility will make BNET software-defined radios, the world’s most advanced battle communication system in use by advanced military forces around the world. The JV will also set up an R&D centre in the next 18 months.
Astra Rafael, Indo-Israel JV in defence starts ops in Hyderabad
DECCAN CHRONICLE. | ARCHAK SENGUPTA
Published Aug 28, 2019, 2:22 am IST
Updated Aug 28, 2019, 2:22 am IST
The JV, set up on a 51:49 per cent basis, with all regulatory approvals, will initially focus on in the manufacture of software-dependent radios.
MoS G. Kishan Reddy takes a tour of the facility. (Photo: DC)
Hyderabad: Within a span of a week, the city of Hyderabad witnessed the inauguration of the third state-of-the-art facility, marking yet another major investment, this time a defence joint venue that is likely to generate over 100 jobs.
Close on the heels of Amazon and OnePlus inaugurating their facilities in the city, Astra Rafael Communication System, a JV between Astra Mircowave and the Israel-based Rafael Advanced Defence Systems, on Tuesday, inaugurated its facility that would specialise in the manufacture and design of high-end tactical communication systems for the Indian armed forces.
Speaking to Deccan Chronicle, Astra Microwave Products’s managing director S. Gurunatha Reddy said, “Currently, the facility has an engineering staff count of 15. By October-end, we would be hiring 35 more people to meet the current order book of $30million from Rafael. However, the headcount is likely to rise to 100 people by the end of next year.”
The JV, set up on a 51:49 per cent basis, with all regulatory approvals, will initially focus on in the manufacture of software-dependent radios. It would later graduate onto the development of different equipments for defence communications and also get into electronic warfare and signal intelligent system. Rafael’s president and CEO Maj Gen (Ret) Yoav Har-Even said that the facility will make BNET software-defined radios, the world’s most advanced battle communication system in use by advanced military forces around the world. The JV will also set up an R&D centre in the next 18 months.
Astra Rafael, Indo-Israel JV in defence starts ops in Hyderabad
Saurav Jha (@SJha1618) Tweeted:
My latest for @DeccanHerald , where I say:
'To boost defence exports sustainably, New Delhi needs to 'Buy Indian' first.
Def exports: Let’s ‘buy Indian’ ourselves first ( )
My latest for @DeccanHerald , where I say:
'To boost defence exports sustainably, New Delhi needs to 'Buy Indian' first.
Def exports: Let’s ‘buy Indian’ ourselves first ( )
L&T Displays New SHARANG RWS – Asian Aerospace latest industry news & Asia Defence Technology trends
June 30, 2019
Larsen & Toubro Defence is displaying a new Remote Weapon System (RWS) at the ongoing IMDEX, as it seeks to make a greater mark in the export market for defence equipment. The new SHARANG compact RWS has been developed for land based military vehicles, but is being displayed at IMDEX as the company seeks to bring about a greater awareness of its military portfolio.
“L&T developed the SHARANG weapon mount with the vision of filling in a perceived gap for a cost-effective weapon mount. It is cost effective solution for land systems,” a company official tells Daily News.
The indigenously designed and developed weapon system does not use an export restricted parts of systems.
The SHARANG RWS supports 5.56mm and 7.62 PKT machine guns and this modular system is configurable and can be installed in different configurations on tracked and wheeled Infantry Combat Vehicles (ICV); Armoured Personnel Carriers (APCs), mine resistant vehicles and 4X4s.
It can also be deployed in static installations like bunkers.
The weapon system is being showcased for the 1st time at any show and it has a major advantage in terms of size as it is 2/3rds the weight of traditional Remote Controlled Weapon Systems(RCWS), in addition to taking less space and being more compact. It weighs only 100 kg.
L&T Displays New SHARANG RWS – Asian Aerospace latest industry news & Asia Defence Technology trends | Asia Trade News and Views
June 30, 2019
Larsen & Toubro Defence is displaying a new Remote Weapon System (RWS) at the ongoing IMDEX, as it seeks to make a greater mark in the export market for defence equipment. The new SHARANG compact RWS has been developed for land based military vehicles, but is being displayed at IMDEX as the company seeks to bring about a greater awareness of its military portfolio.
“L&T developed the SHARANG weapon mount with the vision of filling in a perceived gap for a cost-effective weapon mount. It is cost effective solution for land systems,” a company official tells Daily News.
The indigenously designed and developed weapon system does not use an export restricted parts of systems.
The SHARANG RWS supports 5.56mm and 7.62 PKT machine guns and this modular system is configurable and can be installed in different configurations on tracked and wheeled Infantry Combat Vehicles (ICV); Armoured Personnel Carriers (APCs), mine resistant vehicles and 4X4s.
It can also be deployed in static installations like bunkers.
The weapon system is being showcased for the 1st time at any show and it has a major advantage in terms of size as it is 2/3rds the weight of traditional Remote Controlled Weapon Systems(RCWS), in addition to taking less space and being more compact. It weighs only 100 kg.
L&T Displays New SHARANG RWS – Asian Aerospace latest industry news & Asia Defence Technology trends | Asia Trade News and Views
India carpet bombs a slew of multi-billion dollar defence deals
$7 B order for 83 LCA fighters by year-end; $3 B deal for Airbus C295 transport aircraft, $768 M Akash missiles "in weeks"
Published : September 6, 2019
By Vishal Thapar
HAL LCA Tejas (Photo courtesy: By ADA)
Clearance for long-delayed deals, including the one for 83 LCA Mk 1A fighters, is expected to energise India's Defence Industry and give a big push to the Make in India agenda.
An estimated $7 Billion contract for 83 indigenous Tejas Light Combat Aircraft (LCA) Mark 1A fighters for the Indian Air Force (IAF) will be among a slew of several long-stalled multi-billion dollar defence deals which will be signed by India by the end of this year, the head of India's Defence Acquisitions declared in New Delhi on September 5.
The list approved for signature includes the $3.15 Billion deal for 62 Airbus C295 Medium Transport Aircraft (MTA) for the IAF and Indian Coast Guard (ICG), which "should move fast in weeks".
"The pricing for 83 LCAs was finalised on September 3 in a meeting chaired by the Secretary Defence Production. Talks are now on for the pricing of the support package. Contracts for the LCAs and 15 Light Combat Helicopters (LCHs) will be signed in 3-to-4 months' time," Apurva Chandra, Director-General (Acquisition) in the Ministry of Defence declared at an international seminar on 'Energising Indian Aerospace Industry: Flight Plan for the Future'.
Orders for the LCAs and LCHs will go the state-owned Hindustan Aeronautics Limited, which is controlled directly by the Ministry of Defence.
The procurement of 83 LCA Mk 1A fighters has been pending since an approval in November 2016 of the benchmarked price of 50,025 Crore ($7 Billion). The unit price is reported to have been negotiated around $40 Million.
Chandra also announced that the 5,500 Crore ($767.8 Million) contract for an estimated 6 squadrons of the indigenously-developed Akash surface-to-air missile (SAM) shall be signed "in a couple of weeks". This was approved by the Government last week, an apparent reference to a go-ahead by the Cabinet Committee on Security headed by Prime Minister Narendra Modi. The missile will be manufactured by the public sector Bharat Dynamics Limited, the radar and electronic systems by Bharat Electronics Limited (BEL), also public sector, while the launchers will be made by the private sector L&T and Tata groups.
Defence Secretary Ajay Kumar, who is accompanying Defence Minister Rajnath Singh on a tour to East Asia, expressed his delight at the announcement of the slew of impending deals. "LCA manufacturing ecosystem of @DefProdnIndia will get a big boost with the new order," he Tweeted.
The IAF expects HAL to deliver 16 LCA Mk 1A fighters every year. HAL's MS Velpari announced that an elaborate ecosystem had been established for the timely manufacture of the LCA. "HAL will only be the integrator. Not one of the 5,000 components for the fighter aircraft will me machined at HAL," he declared. "The wings will be made by L&T, front fuselage by Dynamatic Technolologies, the middle section by VEM and the rear section by Alpha Design," Velpari said later at the same seminar, while claiming that HAL was capable of delivering between 16 to 20 LCAs annually.
The Defence Secretary also publicly applauded the go-ahead for the Akash missile contract. "Big boost to @DefProdnIndia as the indigenous missile production involves Defence PSUs and no. of Indian MSMEs," he Tweeted.
The DG Defence Acquisitions also announced that the tender for the 21,738 Crore ($3 Billion) for supplying 111 Naval Utility Helicopters (NUH) under the ambitious Strategic Partner Model will be issued by the end of 2019.
"(Contracts for) the (200) Ka-226 Light Utility Helicopters for an estimated $3 Billion and the Avro replacement (Airbus C295 Medium Transport Aircraft) are also under serious consideration," Chandra said.
Later, speaking at the same event, the IAF's Assistant Chief for Projects Air Vice Marshal J Chelapati said the contract for the 62 C295 aircraft "should move in weeks". Price negotiations were concluded earlier this year with Tata Advance Systems Limited (TASL), which will deliver the C295 through a joint venture with Airbus. Sixteen of these aircraft will be directly imported while 46 will be license produced at a facility set up by the TASL-Airbus JV near Bengaluru.
Air Vice Marshal Chelapati also declared that the contract for the second phase of the Modernisation of Air Field Infrastructure (MAFI 2) running into "several thousand Crore Rupees" will be signed "in the next few weeks".
India carpet bombs a slew of multi–billion dollar defence deals
$7 B order for 83 LCA fighters by year-end; $3 B deal for Airbus C295 transport aircraft, $768 M Akash missiles "in weeks"
Published : September 6, 2019
By Vishal Thapar
HAL LCA Tejas (Photo courtesy: By ADA)
Clearance for long-delayed deals, including the one for 83 LCA Mk 1A fighters, is expected to energise India's Defence Industry and give a big push to the Make in India agenda.
An estimated $7 Billion contract for 83 indigenous Tejas Light Combat Aircraft (LCA) Mark 1A fighters for the Indian Air Force (IAF) will be among a slew of several long-stalled multi-billion dollar defence deals which will be signed by India by the end of this year, the head of India's Defence Acquisitions declared in New Delhi on September 5.
The list approved for signature includes the $3.15 Billion deal for 62 Airbus C295 Medium Transport Aircraft (MTA) for the IAF and Indian Coast Guard (ICG), which "should move fast in weeks".
The IAF expects HAL to deliver 16 LCA Mk 1A fighters every year. HAL's MS Velpari announced that an elaborate ecosystem had been established for the timely manufacture of the LCA. "HAL will only be the integrator. Not one of the 5,000 components for the fighter aircraft will me machined at HAL," he declared. "The wings will be made by L&T, front fuselage by Dynamatic Technolologies, the middle section by VEM and the rear section by Alpha Design," Velpari said
"The pricing for 83 LCAs was finalised on September 3 in a meeting chaired by the Secretary Defence Production. Talks are now on for the pricing of the support package. Contracts for the LCAs and 15 Light Combat Helicopters (LCHs) will be signed in 3-to-4 months' time," Apurva Chandra, Director-General (Acquisition) in the Ministry of Defence declared at an international seminar on 'Energising Indian Aerospace Industry: Flight Plan for the Future'.
Orders for the LCAs and LCHs will go the state-owned Hindustan Aeronautics Limited, which is controlled directly by the Ministry of Defence.
The procurement of 83 LCA Mk 1A fighters has been pending since an approval in November 2016 of the benchmarked price of 50,025 Crore ($7 Billion). The unit price is reported to have been negotiated around $40 Million.
Chandra also announced that the 5,500 Crore ($767.8 Million) contract for an estimated 6 squadrons of the indigenously-developed Akash surface-to-air missile (SAM) shall be signed "in a couple of weeks". This was approved by the Government last week, an apparent reference to a go-ahead by the Cabinet Committee on Security headed by Prime Minister Narendra Modi. The missile will be manufactured by the public sector Bharat Dynamics Limited, the radar and electronic systems by Bharat Electronics Limited (BEL), also public sector, while the launchers will be made by the private sector L&T and Tata groups.
Defence Secretary Ajay Kumar, who is accompanying Defence Minister Rajnath Singh on a tour to East Asia, expressed his delight at the announcement of the slew of impending deals. "LCA manufacturing ecosystem of @DefProdnIndia will get a big boost with the new order," he Tweeted.
The IAF expects HAL to deliver 16 LCA Mk 1A fighters every year. HAL's MS Velpari announced that an elaborate ecosystem had been established for the timely manufacture of the LCA. "HAL will only be the integrator. Not one of the 5,000 components for the fighter aircraft will me machined at HAL," he declared. "The wings will be made by L&T, front fuselage by Dynamatic Technolologies, the middle section by VEM and the rear section by Alpha Design," Velpari said later at the same seminar, while claiming that HAL was capable of delivering between 16 to 20 LCAs annually.
The Defence Secretary also publicly applauded the go-ahead for the Akash missile contract. "Big boost to @DefProdnIndia as the indigenous missile production involves Defence PSUs and no. of Indian MSMEs," he Tweeted.
Later, speaking at the same event, the IAF's Assistant Chief for Projects Air Vice Marshal J Chelapati said the contract for the 62 C295 aircraft "should move in weeks". Price negotiations were concluded earlier this year with Tata Advance Systems Limited (TASL), which will deliver the C295 through a joint venture with Airbus
The DG Defence Acquisitions also announced that the tender for the 21,738 Crore ($3 Billion) for supplying 111 Naval Utility Helicopters (NUH) under the ambitious Strategic Partner Model will be issued by the end of 2019.
"(Contracts for) the (200) Ka-226 Light Utility Helicopters for an estimated $3 Billion and the Avro replacement (Airbus C295 Medium Transport Aircraft) are also under serious consideration," Chandra said.
Later, speaking at the same event, the IAF's Assistant Chief for Projects Air Vice Marshal J Chelapati said the contract for the 62 C295 aircraft "should move in weeks". Price negotiations were concluded earlier this year with Tata Advance Systems Limited (TASL), which will deliver the C295 through a joint venture with Airbus. Sixteen of these aircraft will be directly imported while 46 will be license produced at a facility set up by the TASL-Airbus JV near Bengaluru.
Air Vice Marshal Chelapati also declared that the contract for the second phase of the Modernisation of Air Field Infrastructure (MAFI 2) running into "several thousand Crore Rupees" will be signed "in the next few weeks".
India carpet bombs a slew of multi–billion dollar defence deals
Indian defence SME beats out global giants to deliver command system to Malaysian warships
C2C DB has developed a new-generation CMS for two Malaysian Navy frigates, including KD Jebat and KD Leiku
By Ajai Shukla
Business Standard, 11th Sept 19
Cruise missile targeting and trajectory mapping station(Indian Navy)
On Monday, the Royal Malaysian Navy (RMN) cleared a combat management system (CMS) that a small, but cutting-edge, Indian electronics company has developed for two of its frontline warships – the British-origin RMN frigates, KD Leiku and KD Jebat.
A warship’s CMS is the brain of its combat capability. The CMS continuously interacts with all the ship’s sensors and weapons – including radar, sonar, missiles, rockets and torpedoes – and assesses the threats that they detect. Then, the CMS suggests weapons to neutralise the threat; and it fires and controls those weapons.
In addition, the sophisticated CMS software collaborates with friendly warships’ command systems over a real time datalink. This develops a “common operating picture” for fleet operations.
Validating the truism that high-technology is mostly developed by micro, small and medium enterprises (SMEs), C2C DB Systems is the only Indian firm that has developed a complete CMS, including tactical datalink capability and warfighting modules (which navies guard zealously).
For example, the Indian Navy’s warfighting modules are developed secretly by an in-house department called the Weapon and Electronics Engineering Establishment (WESEE). The CMS’ supporting modules are developed by companies like Bharat Electronics Ltd and Tata Power (Strategic Engineering Division).
C2C DB Systems is based in Bengaluru and has a total strength of 50, including senior management, hardware and software engineers and mechanical design engineers. Its annual turnover is around Rs 25 crore.
Yet, this small firm partnered with a Malaysian firm, Marine Crest Technologies, to wrest the tightly contested RMN contract from global competitors such as Thales of France, Saab of Sweden and UK-headquartered BAE Systems.
Photo : KD Lekiu (FFG 30)
RMN placed the order for the two CMSs and tactical datalink systems in April 2018, stipulating a delivery period of just nine months for the first system. Typically, developing a similar system in India takes about two years.
With C2C DB demonstrating the complete functionality of the CMS and datalink during “factory acceptance trials” in January 2019, and the system shipped to Malaysia the next month, C2C DB Systems became the only Indian entity to have developed a complete CMS, along with a tactical datalink. It is also the only Indian entity to have exported such a system.
The complete system was installed on board the first RMN frigate in March, after being fully integrated with the warship’s weapons and sensors. “Harbour acceptance trials” of the tactical datalink were unconditionally cleared on Monday, while CMS trials are under way. Next will come “sea acceptance trials” at the end of this month.
C2C DB Systems is tightly integrated into India’s warship production eco-system. It has worked with WESEE to develop the complete front-end software for the CMS of India’s first indigenous aircraft carrier, INS Vikrant. It has also done classified work for the nuclear missile submarine, INS Arihant.
Broadsword: Indian defence SME beats out global giants to deliver command system to Malaysian warships
C2C DB has developed a new-generation CMS for two Malaysian Navy frigates, including KD Jebat and KD Leiku
By Ajai Shukla
Business Standard, 11th Sept 19
Cruise missile targeting and trajectory mapping station(Indian Navy)
On Monday, the Royal Malaysian Navy (RMN) cleared a combat management system (CMS) that a small, but cutting-edge, Indian electronics company has developed for two of its frontline warships – the British-origin RMN frigates, KD Leiku and KD Jebat.
A warship’s CMS is the brain of its combat capability. The CMS continuously interacts with all the ship’s sensors and weapons – including radar, sonar, missiles, rockets and torpedoes – and assesses the threats that they detect. Then, the CMS suggests weapons to neutralise the threat; and it fires and controls those weapons.
In addition, the sophisticated CMS software collaborates with friendly warships’ command systems over a real time datalink. This develops a “common operating picture” for fleet operations.
Validating the truism that high-technology is mostly developed by micro, small and medium enterprises (SMEs), C2C DB Systems is the only Indian firm that has developed a complete CMS, including tactical datalink capability and warfighting modules (which navies guard zealously).
For example, the Indian Navy’s warfighting modules are developed secretly by an in-house department called the Weapon and Electronics Engineering Establishment (WESEE). The CMS’ supporting modules are developed by companies like Bharat Electronics Ltd and Tata Power (Strategic Engineering Division).
C2C DB Systems is based in Bengaluru and has a total strength of 50, including senior management, hardware and software engineers and mechanical design engineers. Its annual turnover is around Rs 25 crore.
Yet, this small firm partnered with a Malaysian firm, Marine Crest Technologies, to wrest the tightly contested RMN contract from global competitors such as Thales of France, Saab of Sweden and UK-headquartered BAE Systems.
Photo : KD Lekiu (FFG 30)
RMN placed the order for the two CMSs and tactical datalink systems in April 2018, stipulating a delivery period of just nine months for the first system. Typically, developing a similar system in India takes about two years.
With C2C DB demonstrating the complete functionality of the CMS and datalink during “factory acceptance trials” in January 2019, and the system shipped to Malaysia the next month, C2C DB Systems became the only Indian entity to have developed a complete CMS, along with a tactical datalink. It is also the only Indian entity to have exported such a system.
The complete system was installed on board the first RMN frigate in March, after being fully integrated with the warship’s weapons and sensors. “Harbour acceptance trials” of the tactical datalink were unconditionally cleared on Monday, while CMS trials are under way. Next will come “sea acceptance trials” at the end of this month.
C2C DB Systems is tightly integrated into India’s warship production eco-system. It has worked with WESEE to develop the complete front-end software for the CMS of India’s first indigenous aircraft carrier, INS Vikrant. It has also done classified work for the nuclear missile submarine, INS Arihant.
Broadsword: Indian defence SME beats out global giants to deliver command system to Malaysian warships
Part 1: Public defence shipyards bag 85-95% of warship orders without tendering
Ficci asks Rajnath Singh for level playing field for private shipyards
By Ajai Shukla
Business Standard, 5th Aug 19
(Photo: Mazagon Docks' modular infrastructure, built at public expense)
The Federation of Indian Chambers of Commerce and Industry (Ficci) has written a strongly-worded note to Defence Minister Rajnath Singh, asking the ministry of defence (MoD) to end the practice of “nominating” defence public sector undertaking (DPSU) shipyards to build warships for the navy and coast guard.
“Nomination” involves placing orders for warships on chosen public sector shipyards, without competitive tendering. Ficci’s note asks for a level playing field for private shipyards by permitting them to participate in all warship tenders.
Private defence shipyards are in dire straits, with two of them – Bharati and ABG Shipyards – facing foreclosure; and sparse order books for the others, despite L&T’s Rs 3,500 crore construction of a Greenfield shipyard at Katupalli, Tamil Nadu, and Reliance Naval and Engineering’s Rs 2,000 crore purchase of Pipavav Shipyard.
Ficci has presented figures to highlight that, over the last two decades, the four DPSU shipyards – Mazagon Dock Ltd, Mumbai (MDL), Garden Reach Shipbuilders & Engineers (GRSE), Goa Shipyard Ltd (GSL) and Hindustan Shipyard Ltd, Visakhapatnam (HSL) – along with Kerala state’s Cochin Shipyard Ltd (CSL), garnered all the high-value orders through “nomination”.
Between 2000-2010, PSU yards were “nominated” for over 95 per cent by value of all warship orders, amounting to Rs 76,794 crore. Only 4.9 per cent of orders were competitively tendered. Of those, PSU yards won 1.9 per cent (worth Rs 1,500 crore) while private yards won the remaining three per cent, worth Rs 2,446 crore.
The MoD counters that most warship orders are competitively tendered. It says PSU yards were “nominated” to build only 56 ships, while the private sector was allowed to participate in the tendering for 90 ships – 62 per cent of the total numbers.
While that is so, the 38 per cent of orders that were “nominated” to PSU yards included all the high-value warships, adding up to 95 per cent of the monetary value. The 62 per cent where the private sector competed involved small, low-value auxiliary vessels.
Ficci further contends that, with PSU yards having pocketed 95 per cent of orders through “nomination”, they possessed ample resources to cross-subsidise their bids in the remaining orders that were competitively tendered. Consequently, private shipyards had to resort to “gross underbidding just to remain in business,” says Ficci.
In November 2010, then defence minister AK Antony had pledged: “From January 2011onwards, the Defence Acquisition Council (DAC) will not give any nominations to the defence shipyards for naval projects and they will have to compete with the private shipyards for the tenders.”
Yet, little changed in practice. Between 2011-19, PSU shipyards were “nominated” for 85 per cent by value of shipbuilding contracts, constituting Rs 146,261 crore. The private sector participated in just 15 per cent of the tenders, worth Rs 25,758 crore.
With huge contracts already in hand, says Ficci, “The PSUs began resorting to rampant cross subsidization to win 10.4 per cent programmes, leaving a meagre 4.6 per cent for the private sector.”
Once again, absolute figures are misleading. Between 2011-19, contracts to build 73 warships were awarded after competitive bidding, while 69 warships were “nominated” to public sector yards. However, the latter included all the lucrative warship contracts, leaving private shipyards to compete only in orders for low-value, auxiliary vessels.
Ficci has also raised another point with operational implications: The large volume of “nominated” orders placed on PSU shipyards has created such a huge order backlog that the navy and coast guard will have to wait many years for delivery of warships.
Last week Business Standard reported (July 30, Garden Reach builds 100th warship; order book full for next 20 years) that GRSE would take 20 years to discharge its order book of Rs 27,500 crore, at its current annual turnover of Rs 1,386 crore.
According to MoD figures, the combined value of production in 2017-18 of MDL, GRSE, GSL and HSL added up to just Rs 7,600 crore. Yet they were “nominated” during the last two decades for warship orders worth Rs 223,055 crore.
“With this rate of execution, gross delays are inevitable in liquidation of existing order book thus affecting warship induction plans and force readiness levels of the Indian Navy,” said Ficci.
Citing a report that the Prime Minister’s Office has mandated that all future warship contracts will be competitively bid, Ficci has requested that no new orders should be “nominated” to PSU shipyards. Further, on-going “nominated” procurements in which contracts have not yet been awarded must be re-categorized and re-bid, with private shipyards participating.
As a key enabler for private shipbuilding, Ficci has requested that the Strategic Partnership (SP) procurement model be fast-tracked for Project 75-I, which involves constructing six conventional submarines for the navy. That would require the MoD to choose an Indian private shipyard to build the six submarines in India in technology partnership with a global “original equipment manufacturer” (OEM).
Ficci has cautioned against allowing DPSU yards into SP projects, which the MoD is considering. Instead the MoD is urged to stick with the “original intent of SP model being reserved for participation by the private sector only.”
The original SP concept that the Dhirendra Singh Committee (2015) and VK Aatrey Task Force (2016) envisioned has the primary objective of developing private sector capabilities in defence manufacturing. However, the SP policy that the MoD eventually drew up for the Defence Procurement Procedure of 2016 (DPP-2016), left the door open for DPSUs to compete in SP category procurements.
Ficci argues that private shipbuilders cannot compete on level terms with PSU yards. The latter have benefited from hundreds of crores of government funds spent on their modernisation and on technology transferred over earlier “nominated” contracts.
“In case [the Project 75-I procurement on the SP model cannot be restricted to the private sector], the competing DPSU bids must be loaded for the cross-subsidy arbitrage in the form of free access to government funded assets and past repeated ToTs (transfer of technology),” says Ficci.
Broadsword: Part 1: Public defence shipyards bag 85-95% of warship orders without tendering
Ficci asks Rajnath Singh for level playing field for private shipyards
By Ajai Shukla
Business Standard, 5th Aug 19
(Photo: Mazagon Docks' modular infrastructure, built at public expense)
The Federation of Indian Chambers of Commerce and Industry (Ficci) has written a strongly-worded note to Defence Minister Rajnath Singh, asking the ministry of defence (MoD) to end the practice of “nominating” defence public sector undertaking (DPSU) shipyards to build warships for the navy and coast guard.
“Nomination” involves placing orders for warships on chosen public sector shipyards, without competitive tendering. Ficci’s note asks for a level playing field for private shipyards by permitting them to participate in all warship tenders.
Private defence shipyards are in dire straits, with two of them – Bharati and ABG Shipyards – facing foreclosure; and sparse order books for the others, despite L&T’s Rs 3,500 crore construction of a Greenfield shipyard at Katupalli, Tamil Nadu, and Reliance Naval and Engineering’s Rs 2,000 crore purchase of Pipavav Shipyard.
Ficci has presented figures to highlight that, over the last two decades, the four DPSU shipyards – Mazagon Dock Ltd, Mumbai (MDL), Garden Reach Shipbuilders & Engineers (GRSE), Goa Shipyard Ltd (GSL) and Hindustan Shipyard Ltd, Visakhapatnam (HSL) – along with Kerala state’s Cochin Shipyard Ltd (CSL), garnered all the high-value orders through “nomination”.
Between 2000-2010, PSU yards were “nominated” for over 95 per cent by value of all warship orders, amounting to Rs 76,794 crore. Only 4.9 per cent of orders were competitively tendered. Of those, PSU yards won 1.9 per cent (worth Rs 1,500 crore) while private yards won the remaining three per cent, worth Rs 2,446 crore.
The MoD counters that most warship orders are competitively tendered. It says PSU yards were “nominated” to build only 56 ships, while the private sector was allowed to participate in the tendering for 90 ships – 62 per cent of the total numbers.
While that is so, the 38 per cent of orders that were “nominated” to PSU yards included all the high-value warships, adding up to 95 per cent of the monetary value. The 62 per cent where the private sector competed involved small, low-value auxiliary vessels.
Ficci further contends that, with PSU yards having pocketed 95 per cent of orders through “nomination”, they possessed ample resources to cross-subsidise their bids in the remaining orders that were competitively tendered. Consequently, private shipyards had to resort to “gross underbidding just to remain in business,” says Ficci.
In November 2010, then defence minister AK Antony had pledged: “From January 2011onwards, the Defence Acquisition Council (DAC) will not give any nominations to the defence shipyards for naval projects and they will have to compete with the private shipyards for the tenders.”
Yet, little changed in practice. Between 2011-19, PSU shipyards were “nominated” for 85 per cent by value of shipbuilding contracts, constituting Rs 146,261 crore. The private sector participated in just 15 per cent of the tenders, worth Rs 25,758 crore.
With huge contracts already in hand, says Ficci, “The PSUs began resorting to rampant cross subsidization to win 10.4 per cent programmes, leaving a meagre 4.6 per cent for the private sector.”
Once again, absolute figures are misleading. Between 2011-19, contracts to build 73 warships were awarded after competitive bidding, while 69 warships were “nominated” to public sector yards. However, the latter included all the lucrative warship contracts, leaving private shipyards to compete only in orders for low-value, auxiliary vessels.
Ficci has also raised another point with operational implications: The large volume of “nominated” orders placed on PSU shipyards has created such a huge order backlog that the navy and coast guard will have to wait many years for delivery of warships.
Last week Business Standard reported (July 30, Garden Reach builds 100th warship; order book full for next 20 years) that GRSE would take 20 years to discharge its order book of Rs 27,500 crore, at its current annual turnover of Rs 1,386 crore.
According to MoD figures, the combined value of production in 2017-18 of MDL, GRSE, GSL and HSL added up to just Rs 7,600 crore. Yet they were “nominated” during the last two decades for warship orders worth Rs 223,055 crore.
“With this rate of execution, gross delays are inevitable in liquidation of existing order book thus affecting warship induction plans and force readiness levels of the Indian Navy,” said Ficci.
Citing a report that the Prime Minister’s Office has mandated that all future warship contracts will be competitively bid, Ficci has requested that no new orders should be “nominated” to PSU shipyards. Further, on-going “nominated” procurements in which contracts have not yet been awarded must be re-categorized and re-bid, with private shipyards participating.
As a key enabler for private shipbuilding, Ficci has requested that the Strategic Partnership (SP) procurement model be fast-tracked for Project 75-I, which involves constructing six conventional submarines for the navy. That would require the MoD to choose an Indian private shipyard to build the six submarines in India in technology partnership with a global “original equipment manufacturer” (OEM).
Ficci has cautioned against allowing DPSU yards into SP projects, which the MoD is considering. Instead the MoD is urged to stick with the “original intent of SP model being reserved for participation by the private sector only.”
The original SP concept that the Dhirendra Singh Committee (2015) and VK Aatrey Task Force (2016) envisioned has the primary objective of developing private sector capabilities in defence manufacturing. However, the SP policy that the MoD eventually drew up for the Defence Procurement Procedure of 2016 (DPP-2016), left the door open for DPSUs to compete in SP category procurements.
Ficci argues that private shipbuilders cannot compete on level terms with PSU yards. The latter have benefited from hundreds of crores of government funds spent on their modernisation and on technology transferred over earlier “nominated” contracts.
“In case [the Project 75-I procurement on the SP model cannot be restricted to the private sector], the competing DPSU bids must be loaded for the cross-subsidy arbitrage in the form of free access to government funded assets and past repeated ToTs (transfer of technology),” says Ficci.
Broadsword: Part 1: Public defence shipyards bag 85-95% of warship orders without tendering
Part 2: L&T shows private shipbuilders can deliver on time: an analysis of previous Offshore Patrol Vessel contracts
By Ajai Shukla
Business Standard, 7th Aug 19
ICGS Vikram, which L&T delivered on schedule in April 2018
When L&T delivered Indian Coast Guard Ship (ICGS) Vikram in April 2018, the first of seven offshore patrol vessels (OPVs) ordered by the Coast Guard, the event was remarkable for two reasons: First, the delivery was on schedule, pleasantly surprising the services that have long complained about lengthy time overruns by defence public sector undertaking (DPSU) shipyards.
Second, L&T’s Kattupalli shipyard took just 36 months to build and deliver that OPV, even though this was the first OPV it had ever built.
In contrast, when Goa Shipyard Ltd (GSL), the public sector’s premier OPV builder, got an order in April 1990 for four OPVs, it took twice as long to deliver the first. The delay in delivering those four OPVs ranged from two years to eight and a half years.
Over the next 25 years, GSL delayed delivery in six consecutive OPV orders. It was only in 2015-17 that GSL managed to deliver six Coast Guard OPVs on schedule.
L&T, however, is on course to deliver all seven Coast Guard OPVs ahead of time. Coast Guard officials, speaking off the record, pronounced the build quality as “excellent”.
Below: (corrected heading): OPVs built by PRIVATE SECTOR
The confidence generated from this demonstrated capability has led the Federation of Indian Chambers of Commerce and Industry (Ficci) to petition Defence Minister Rajnath Singh to allow private sector shipyards, including L&T and Reliance Naval and Engineering (RNaval), to compete on equal terms with defence public sector undertaking (DPSU) shipyards for warship orders.
Ficci’s petition points out that, over the last two decades, the four DPSU shipyards – Mazagon Dock Ltd, Mumbai (MDL), Garden Reach Shipbuilders & Engineers (GRSE), Goa Shipyard Ltd (GSL) and Hindustan Shipyard Ltd, Visakhapatnam (HSL) – along with Kerala state’s Cochin Shipyard Ltd (CSL), were handed 85-95 per cent of warship building orders (by value) through “nomination” – which means without competitive tendering.
During this period, the only orders the defence ministry placed on private sector shipyards were for low-value auxiliary vessels that did not require advanced engineering skills.
This bias continues, despite L&T’s success with the Coast Guard OPV order, and in building sophisticated hulls and systems for India’s nuclear submarine programme. Ignoring the claims of private shipyards, the defence ministry “nominated” GSL to build two Krivak III frigates with technology from Russia.
Defence ministry officials argue that L&T has never built a frigate earlier. Neither has GSL.
Ficci has pointed out that the defence ministry’s practice of “nominating” PSU yards for warship orders has starved private shipbuilders, leading to the closure of two private shipyards – ABG and Bharati Shipyards. The remaining two – L&T and RNaval’s Pipavav Shipyard – are grappling with mounting losses.
The defence ministry argues that private shipyards too have failed to deliver. They point to on-going difficulties with RNaval, which is over four years late in delivering an order for five OPVs for the navy.
The navy, as well as private industry bodies, feel a line must be drawn under failures of previous years and a healthy competition encouraged between PSU shipyards and those in the private sector.
Ficci has requested a “level playing field” competition in building the next generation of warships over the coming years: the eponymous “next-generation OPVs”, next-generation missile boats”, “next-generation frigates” and “next-generation destroyers”. All these are currently being designed by the navy’s design directorate.
Ficci has further requested that on-going warship procurements in which PSU yards have been “nominated”, but actual contracts not yet been awarded; must be re-categorized and re-bid, with private shipyards participating.
Broadsword: Part 2: L&T shows private shipbuilders can deliver on time: an analysis of previous Offshore Patrol Vessel contracts
By Ajai Shukla
Business Standard, 7th Aug 19
ICGS Vikram, which L&T delivered on schedule in April 2018
When L&T delivered Indian Coast Guard Ship (ICGS) Vikram in April 2018, the first of seven offshore patrol vessels (OPVs) ordered by the Coast Guard, the event was remarkable for two reasons: First, the delivery was on schedule, pleasantly surprising the services that have long complained about lengthy time overruns by defence public sector undertaking (DPSU) shipyards.
Second, L&T’s Kattupalli shipyard took just 36 months to build and deliver that OPV, even though this was the first OPV it had ever built.
In contrast, when Goa Shipyard Ltd (GSL), the public sector’s premier OPV builder, got an order in April 1990 for four OPVs, it took twice as long to deliver the first. The delay in delivering those four OPVs ranged from two years to eight and a half years.
Over the next 25 years, GSL delayed delivery in six consecutive OPV orders. It was only in 2015-17 that GSL managed to deliver six Coast Guard OPVs on schedule.
L&T, however, is on course to deliver all seven Coast Guard OPVs ahead of time. Coast Guard officials, speaking off the record, pronounced the build quality as “excellent”.
Below: (corrected heading): OPVs built by PRIVATE SECTOR
The confidence generated from this demonstrated capability has led the Federation of Indian Chambers of Commerce and Industry (Ficci) to petition Defence Minister Rajnath Singh to allow private sector shipyards, including L&T and Reliance Naval and Engineering (RNaval), to compete on equal terms with defence public sector undertaking (DPSU) shipyards for warship orders.
Ficci’s petition points out that, over the last two decades, the four DPSU shipyards – Mazagon Dock Ltd, Mumbai (MDL), Garden Reach Shipbuilders & Engineers (GRSE), Goa Shipyard Ltd (GSL) and Hindustan Shipyard Ltd, Visakhapatnam (HSL) – along with Kerala state’s Cochin Shipyard Ltd (CSL), were handed 85-95 per cent of warship building orders (by value) through “nomination” – which means without competitive tendering.
During this period, the only orders the defence ministry placed on private sector shipyards were for low-value auxiliary vessels that did not require advanced engineering skills.
This bias continues, despite L&T’s success with the Coast Guard OPV order, and in building sophisticated hulls and systems for India’s nuclear submarine programme. Ignoring the claims of private shipyards, the defence ministry “nominated” GSL to build two Krivak III frigates with technology from Russia.
Defence ministry officials argue that L&T has never built a frigate earlier. Neither has GSL.
Ficci has pointed out that the defence ministry’s practice of “nominating” PSU yards for warship orders has starved private shipbuilders, leading to the closure of two private shipyards – ABG and Bharati Shipyards. The remaining two – L&T and RNaval’s Pipavav Shipyard – are grappling with mounting losses.
The defence ministry argues that private shipyards too have failed to deliver. They point to on-going difficulties with RNaval, which is over four years late in delivering an order for five OPVs for the navy.
The navy, as well as private industry bodies, feel a line must be drawn under failures of previous years and a healthy competition encouraged between PSU shipyards and those in the private sector.
Ficci has requested a “level playing field” competition in building the next generation of warships over the coming years: the eponymous “next-generation OPVs”, next-generation missile boats”, “next-generation frigates” and “next-generation destroyers”. All these are currently being designed by the navy’s design directorate.
Ficci has further requested that on-going warship procurements in which PSU yards have been “nominated”, but actual contracts not yet been awarded; must be re-categorized and re-bid, with private shipyards participating.
Broadsword: Part 2: L&T shows private shipbuilders can deliver on time: an analysis of previous Offshore Patrol Vessel contracts
Corporatising OFB – how serious are we?
By Lt. General P.C. Katoch(Retd)
September 5, 2019
OFB's Dhanush 155mm/45 caliber artillery gun(Photo courtesy: By SP Guide Pubns)
National dailies reported on August 22, government's decision to turn the Ordnance Factory Board (OFB) into a public sector corporate for increasing exports, self-reliance, add latest technologies and innovations.
OFB, comprising of 41 Ordnance factories, nine training institutes, three Regional Marketing centres and four Regional Controllers of Safety, is subordinate to the Department of Defence Production (DoDP) under MoD. Presently, annual budgetary support to OFB is around 6,500 crore, both through indents by Army and direct defence budgetary support. OFB has 82,000 employees and holds over 60,000 acres of land. More than 80% orders for OFB come from the Army though OFB barely meets 50% of Army requirements.
OFB's archaic structure is not conducive to productivity. Every decision from modernising plant and machinery to entering joint ventures is subject to government regulations and red tape, reducing leverage and flexibility needed by any dynamic production unit. In addition, OFB lacks technical and managerial flexibility, making competition with private industry difficult. There is little scope for innovation and modernising within the existing structure. There is un-accountability and the work culture leaves much to desire.
In 2001, OFB was to set up a plant in Nalanda to manufacture bi-modular charges for the Army with an initial investment of 600 crore, which later went up to 2000 crore. However, the plant has still not been set up.
OFB products hardly match those available commercially-off-the-shelves (COTS) and are exorbitantly expensive, which the military has to accept. For example : Army has been suffering casualties because of faulty ammunition ; thousands of crore worth of rejected ammunition is lying around, and Vehicle Factory Jabalpur, only 'assembles' Tata trucks for the military that costs much more than the trucks supplied by Tata Motors directly to the military. The high cost of OFB products is due to high overhead charges and there's minimal innovation and technology development.
Since the past decade and a half, three government committees had suggested corporatising OFB : Year 2000 - TKA Nair Committee recommended converting OFB to Ordnance Factory Corporation Limited; Year 2004 - Vijay Kelkar Committee recommended corporatisation with 'Nav Ratna' status, like BSNL; and in Year 2015 - Vice Admiral Raman Puri Committee recommended corporatising OFB and splitting it into 3-4 segments - each specialising in distinct area like weapons, ammunition and combat vehicles. As Defence Minister in NDA-1, Arun Jaitley was keen on privatising OFB.
Some instructions for part-privatisation were issued but these efforts came to naught due to strikes and threats by employee unions. However in 2018, government notified 275 non-core items which the Armed Forces could buy from the open market.
Fearing more such 'privatisation', some 60,000 OFB employees launched a month-long strike from August 20, 2019. The strike was called by the Confederation of Defence Registered Associations comprising multiple unions, including the BJP-affiliated Bhartiya Pratiraksha Mazdoor Sangh (BPMS), Left Front-affiliated All India Defence Employees' Federation (AIDEF) and Congress-affiliated Indian National Defence Workers' Federation (INDWF). OFB's 1,500 Class 'A' officers attended office but some 6,000 'junior works managers' though not part of the strike, did not come to work.
Government announcement of corporatisation of OFB came concurrent to the strike. Following several rounds of talks between government and employees union, the strike was called off through a statement by the employees union that read, "After considering the statement/assurance of the Secretary DP (Defence Production) that no final decision has been taken yet about converting the OFB into a corporation and that a high level official committee will be constituted by the government…....employees will resume work from 6 AM on 26/08/2019."
Government is now setting up a committee to examine aspects of corporatising OFB and work out modalities. A government official says, "A high-level committee will study the issue and take a call on what needs to be done". MoD visualises that corporatising the OFB will increase annual turnover from the current 14,000-16,000 crore to above 30,000 crore by 2025. Also, the move will need little government investment since Indian private and foreign firms will invest in joint ventures. Government has allayed employee union fears of privatization; corporatisation will not mean privatisation but will bring about functional autonomy and make them accountable. This appears to the best option, given that political and systemic considerations would not permit complete privatisation of the defence industry like in America and other western nations.
On 'face value' the government move to corporatise OFB is good but multiple questions remain, like:
Periodic CAG reports point to sub-standard products, exorbitant prices and governmental defence-industrial complex not meeting demands of Armed Forces. CAG reports also indicate rampant corruption in the governmental defence-industrial complex, which is hardly possible without complicity of DoDP and MoD officials.
In such an environment, how much corporatisation of OFB will be possible remains a question mark. Will it meet the fate of earlier committees?
At best, the government could open 49% FDI in all entities of the OFB to retain control, leaving rest of the changes in OFB to later years. This would not amount to much but representation of private firms in the boards of management should gradually force structural changes, boost innovation, R&D and productivity. Till that happens, not much benefit would accrue to the Armed Forces.
Ironically, both MoD and DoPD too lack defence specialisation.
http://www.spsmai.com/experts-speak/?id=735&q=Corporatising-OFB-how-serious-are-we
By Lt. General P.C. Katoch(Retd)
September 5, 2019
OFB's Dhanush 155mm/45 caliber artillery gun(Photo courtesy: By SP Guide Pubns)
National dailies reported on August 22, government's decision to turn the Ordnance Factory Board (OFB) into a public sector corporate for increasing exports, self-reliance, add latest technologies and innovations.
OFB, comprising of 41 Ordnance factories, nine training institutes, three Regional Marketing centres and four Regional Controllers of Safety, is subordinate to the Department of Defence Production (DoDP) under MoD. Presently, annual budgetary support to OFB is around 6,500 crore, both through indents by Army and direct defence budgetary support. OFB has 82,000 employees and holds over 60,000 acres of land. More than 80% orders for OFB come from the Army though OFB barely meets 50% of Army requirements.
OFB's archaic structure is not conducive to productivity. Every decision from modernising plant and machinery to entering joint ventures is subject to government regulations and red tape, reducing leverage and flexibility needed by any dynamic production unit. In addition, OFB lacks technical and managerial flexibility, making competition with private industry difficult. There is little scope for innovation and modernising within the existing structure. There is un-accountability and the work culture leaves much to desire.
In 2001, OFB was to set up a plant in Nalanda to manufacture bi-modular charges for the Army with an initial investment of 600 crore, which later went up to 2000 crore. However, the plant has still not been set up.
OFB products hardly match those available commercially-off-the-shelves (COTS) and are exorbitantly expensive, which the military has to accept. For example : Army has been suffering casualties because of faulty ammunition ; thousands of crore worth of rejected ammunition is lying around, and Vehicle Factory Jabalpur, only 'assembles' Tata trucks for the military that costs much more than the trucks supplied by Tata Motors directly to the military. The high cost of OFB products is due to high overhead charges and there's minimal innovation and technology development.
Since the past decade and a half, three government committees had suggested corporatising OFB : Year 2000 - TKA Nair Committee recommended converting OFB to Ordnance Factory Corporation Limited; Year 2004 - Vijay Kelkar Committee recommended corporatisation with 'Nav Ratna' status, like BSNL; and in Year 2015 - Vice Admiral Raman Puri Committee recommended corporatising OFB and splitting it into 3-4 segments - each specialising in distinct area like weapons, ammunition and combat vehicles. As Defence Minister in NDA-1, Arun Jaitley was keen on privatising OFB.
Some instructions for part-privatisation were issued but these efforts came to naught due to strikes and threats by employee unions. However in 2018, government notified 275 non-core items which the Armed Forces could buy from the open market.
Fearing more such 'privatisation', some 60,000 OFB employees launched a month-long strike from August 20, 2019. The strike was called by the Confederation of Defence Registered Associations comprising multiple unions, including the BJP-affiliated Bhartiya Pratiraksha Mazdoor Sangh (BPMS), Left Front-affiliated All India Defence Employees' Federation (AIDEF) and Congress-affiliated Indian National Defence Workers' Federation (INDWF). OFB's 1,500 Class 'A' officers attended office but some 6,000 'junior works managers' though not part of the strike, did not come to work.
Government announcement of corporatisation of OFB came concurrent to the strike. Following several rounds of talks between government and employees union, the strike was called off through a statement by the employees union that read, "After considering the statement/assurance of the Secretary DP (Defence Production) that no final decision has been taken yet about converting the OFB into a corporation and that a high level official committee will be constituted by the government…....employees will resume work from 6 AM on 26/08/2019."
Government is now setting up a committee to examine aspects of corporatising OFB and work out modalities. A government official says, "A high-level committee will study the issue and take a call on what needs to be done". MoD visualises that corporatising the OFB will increase annual turnover from the current 14,000-16,000 crore to above 30,000 crore by 2025. Also, the move will need little government investment since Indian private and foreign firms will invest in joint ventures. Government has allayed employee union fears of privatization; corporatisation will not mean privatisation but will bring about functional autonomy and make them accountable. This appears to the best option, given that political and systemic considerations would not permit complete privatisation of the defence industry like in America and other western nations.
On 'face value' the government move to corporatise OFB is good but multiple questions remain, like:
- Will the high-level committee start afresh or use the earlier three reports as base to cut short time ?
- Will the committee working in concert with employee unions affiliated to political parties, commit to no layoffs on corporatisation due to vote-banking ?
- If there are no layoffs, how will it attract private and foreign investors ?
- How will the target of increasing annual turnover (from 14,000-16,000 crore to above 30,000 crore by 2025) be met when 80% of demand comes from the Indian Army, OFB cannot even meet 50% of these Army requirements and government has shown little inclination to hike the defence budget ?
- What is the plan to change the work culture in OFB ? Why does it not even meet 50% of Army's requirements ? and
- Is setting up another committee, a cover to delay taking hard decisions even though indigenous defence industry is vital for India ?
Periodic CAG reports point to sub-standard products, exorbitant prices and governmental defence-industrial complex not meeting demands of Armed Forces. CAG reports also indicate rampant corruption in the governmental defence-industrial complex, which is hardly possible without complicity of DoDP and MoD officials.
In such an environment, how much corporatisation of OFB will be possible remains a question mark. Will it meet the fate of earlier committees?
At best, the government could open 49% FDI in all entities of the OFB to retain control, leaving rest of the changes in OFB to later years. This would not amount to much but representation of private firms in the boards of management should gradually force structural changes, boost innovation, R&D and productivity. Till that happens, not much benefit would accrue to the Armed Forces.
Ironically, both MoD and DoPD too lack defence specialisation.
http://www.spsmai.com/experts-speak/?id=735&q=Corporatising-OFB-how-serious-are-we
Big push for Make in India in the Defence Acquisition Council meeting chaired by Raksha Mantri Shri Rajnath Singh
Posted On : 13 SEP 2019 5:28PM by PIB Delhi
The Defence Acquisition Council (DAC), chaired by Raksha Mantri Shri Rajnath Singh here today and accorded approval for Capital Procurement for the Services amounting to approximately Rs 2,000 crores.
Maintaining focus on the 'Make in India' initiative, the DAC accorded approval for indigenous development and production of the main gun 125mm Armour Piercing Fin Stabilised Discarding-Sabot (APFSDS) ammunition for T-72/T-90 tanks by the Indian Industry, which would substantially enhance the enemy armour penetration capability.
The DAC also approved procurement of Defence Research and Development Organisation (DRDO) developed and Industry manufactured Mechanical Mine Layer (Self Propelled) to improve automated mine laying capability with the Indian Army.
Big push for Make in India in the Defence Acquisition Council meeting chaired by Raksha Mantri Shri Rajnath Singh
Posted On : 13 SEP 2019 5:28PM by PIB Delhi
The Defence Acquisition Council (DAC), chaired by Raksha Mantri Shri Rajnath Singh here today and accorded approval for Capital Procurement for the Services amounting to approximately Rs 2,000 crores.
Maintaining focus on the 'Make in India' initiative, the DAC accorded approval for indigenous development and production of the main gun 125mm Armour Piercing Fin Stabilised Discarding-Sabot (APFSDS) ammunition for T-72/T-90 tanks by the Indian Industry, which would substantially enhance the enemy armour penetration capability.
The DAC also approved procurement of Defence Research and Development Organisation (DRDO) developed and Industry manufactured Mechanical Mine Layer (Self Propelled) to improve automated mine laying capability with the Indian Army.
Big push for Make in India in the Defence Acquisition Council meeting chaired by Raksha Mantri Shri Rajnath Singh