EY India's quarterly defence newsletter

1. Contents title
Contents subjects
Dear readers,
In the recent past we have witnessed improved Indo-US defence relations
at the back of increased dialogue between the two government. Signing
of some key defence programs under the FMS agreement has opened
doors for a more strategic oriented relations . The first article for this issue
focuses on the subject of changing dynamics in the Indo-US relations. We have covered key
agreements under discussion between the two nations, details on the foreign military sales
(FMS) program, initiatives under the DTTI and a list of few pathfinder projects, which can
benefit from the change of events. In addition, we have tried to provide an insight into the
implications of these new developments from an Indian standpoint.
Our second article is focused on Unmanned Aerial Vehicles (UAVs). The article throws light
on the product description, industry capabilities and overall market size of UAVs from a
global market perspective. In product description we have tried to categorize the UAV into
sub-segments and list out various UAVs currently employed by the Indian forces or targeted
in the future. Within local industry capabilities we have detailed out the private players who
have specific products of their own. An estimation of the market has also been done based
on various RFIs/RFPs released and several large ticket programs to be announced in future.
A new addition to our magazine this quarter is the global A&D perspective focused on US
companies for the current version in terms of key themes that drove their business and
various new developments that were observed in recent times.
Among the regular sections, we have industrial license applicants, RFIs/RFPs released, new
projects and investments, joint ventures and alliances, country-level deals and the latest
buzz in the industry.
I hope you find this issue useful. It has been our constant endeavor to make this publication
increasingly relevant for you, and we will appreciate your comments and suggestions in this
regard.
K. Ganesh Raj
Partner and Leader
Contents
Introduction 1
Indo-US Defence Relations
and DTTI 2
Unmanned Aerial
Vehicles (UAVs) 7
Request for Information 15
Request for Proposal 16
List of Industrial Licenses
(ILs) filed 21
New projects/investments/
contracts 22
JVs and alliances 24
Country-level deals and
initiatives 26
Industry buzz 27
Key themes from leading
US based A&D players 30
Global industry buzz 33
Analysis of M&A trends 36
Eye on Defence
October 2016

2. 2 | Eye on Defence
Indo-US relations have their distinct dynamics and
imperatives. The ties between two countries have witnessed
rapid expansion in different fields from trade to science,
technology and defence in the recent past. In 2001, both
countries affirmed their commitment to transform the
bilateral relationship and build inherent strength. The civil
nuclear energy cooperation, the new “Framework for India-
U.S. Defense Relations” and the resulting intensification
in defence trade, joint exercises, personnel exchanges,
collaboration and cooperation in maritime security and
counter-piracy, and exchanges between each of the three
services were inked in 2015. The two countries were
collaborating in other sectors also apart from defence.
Foundational agreements
Currently, Indo-US bilateral relations have developed into
“global strategic partnership” and their defence relationship
has now been extended till 2025. The latter is evident
from the recent outcome of the Indian PM’s visit to the
US, which is the “third major bilateral summit”, after
September 2014 and January 2015. Apart from securing
entry into Missile Technology Control Regime (MTCR), the
US has assured full support for the membership of Nuclear
Suppliers Group (NSG). A significant achievement has been
the recognition of India as a “major defence partner” by
the US and its readiness to share defence technologies
to a level commensurate with that of its closest allies and
partners. The US has also re-affirmed its support for India’s
early membership of the Australia Group and Wassenaar
Arrangement.
Under the Defense Technology and Trade Initiative
(DTTI), the US has made proposals in specific areas for
participation in multinational operations, expanding two-
way defence trade, expanding collaboration on missile
defence, conducting exchanges on defence strategy,
increasing intelligence cooperation and to co-manufacture
and co-develop modern defence equipment with India. Both
countries have signed logistics exchange memorandum of
agreement (LEMOA) and are moving toward signing the
other two “foundational agreements” that will facilitate
cooperation and ease the transfer of high-technology from
the US. These are:
Indo-US Defence Relations and DTTI
LEMOA
The standard agreement was modified to be named as the
LEMOA. It will provide access to supplies, spare parts and
services from each other’s land facilities, air bases and
ports, which can be reimbursed and it does not provide
automatic access to the use of military bases.
Communication and
Information Security
Memorandum of Agreement
(CISMOA)
The CISMOA will enable India to get encrypted
communications equipment and systems allowing military
commanders to communicate with aircraft and ships
through a secure network, as the advanced radio needed for
an aircraft to talk to the submerged submarine is protected
by CISMOA. The US insists on CISMOA as a condition
for supplying this equipment because it is afraid that its
advanced technology may be leaked to India’s other defence
partners, especially Russia. Just like LSA was renamed to
LEMOA, CISMOA is expected to be renamed to COMCASA —
or Communications Compatibility and Security Agreement.
Basic Exchange and
Cooperation Agreement
(BECA)
The BECA would provide India with topographical and
aeronautical data and products, which will aid geospatial
intelligence, navigation and targeting. This also relates
to digital mapping especially accurate targeting with long
range missiles.
The other relevant agreements are:
• The Navies of both sides will continue discussions
to identify specific areas for expanding maritime
cooperation. Inaugural Maritime Security Dialogue held
in May 2016; second one expected later this year.

3. 3Eye on Defence |
• Vehicle-based mines scattering system
• Scorpion mutation bomb with in-built sensors that allow
command centers to accurately target enemy convoys
• Micro-observers or unattended ground sensors for
deployment on the border
• MH-60R helicopters and drones
• Hot-engine technology for indigenous light combat
aircraft Mark II
• Signature Aperture Radar that can penetrate thick
forests
• Stealth-coating technology that deadens radar images
for minimum radar profile and maximum survivability in
hostile conditions
• Long-endurance high-altitude Global Hawk UAV
• Hand-held Unmanned Ariel Vehicles (UAVs) RQ-11,
“Raven” for tactical surveillance
• Specialized surveillance and intelligence gathering
equipment “roll-on roll-off” for the C130-J transport
planes
• Mobile Electric Hybrid Power Sources (MEHPS), a non-
grid-tied smart power system with output ranging from
300W to 800KW, to augment traditional generators on
the battlefield
• Uniform Integrated Protective Ensemble, a configured
head-to-toe individual fighting system, for land-based
soldiers
• High-end counter-IED technologies
• 30-40mm AA gun
Identified pathfinder projects
However, in terms of tangible deliverables, the two countries
have identified and formalized “pathfinder projects” for
co-production and co-development understandings and are
likely to be ice-breakers. The “pathfinder projects” include:
• Next-generation Raven mini-unmanned aerial vehicles
(also called micro-UAVs) that infantry platoons can
launch for battlefield surveillance. The AeroVironment
RQ-11 Raven, 10 km range, hand-launched surveillance
UAV, which was inducted into the US army in 2001
and is currently used by 23 countries including
Pakistan and Saudi Arabia are most widely used UAV
• Knowledge partnership in defence studies between the
US and Indian National Defence Universities will help
shape the next generation of military leaders.
• The agreement will facilitate cooperation in defence
research and development
• Agreements to help enhance joint military exercises and
increased cooperation in cyber security.
• It will help to cooperate on India’s efforts to establish a
Defence Industrial Base (DIB) in India, through initiatives
such as “Make in India”.
• It should deepen collaboration to combat the full
spectrum of terrorist threats.
Defence Trade and
Technology Initiative (DTTI)
DTTI, launched in 2012, is an unprecedented joint endeavor
that brings sustained leadership focus to the bilateral
defence trade relationship, creates opportunities for the US
and India to develop new areas of technology cooperation
in the defence sector including co-production and co-
development, and fosters more sophisticated science and
technology cooperation between the two countries.
DTTI aims at enhancing the existing relationship under
the Defence Policy Group, which lays out the path for
future defence cooperation and will be significant, since
it could take the Government’s “Make-in-India” initiative
further. In September 2014, both governments decided to
establish a task force to expeditiously evaluate and decide
on unique projects and technologies, which would have a
transformative impact on bilateral defence relations and
enhance India’s defence industry and military capabilities.
The US is said to have offered India some hi-tech items of
military hardware for co-production and co-development
under DTTI. Although the details of technologies for the co-
development and co-production on offer are not known; the
following is the unconfirmed/probable list:
• Shift of production line of Boeing twin-engine F-18
• Shift of production line of Lockheed Martin single-engine
F-16
• Co-development of Javelin, an infra-red guided missile
• Electro Magnetic Aircraft Launch System (EMALS) for
aircraft carriers
• M777 155 mm Howitzer

4. 4 | Eye on Defence
for tactical surveillance. AeroVironment developing
the next generation Cheel UAV along with Dynamatic
Technologies. The prototype is expected to be ready in
12 months.
• Roll-on, roll-off kits for US-supplied C-130J Super
Hercules transport aircraft, which are changeable
aircraft interiors that allow the C-130J to be quickly
configured for different missions such as para-
dropping, cargo-carrying, intelligence surveillance and
reconnaissance and medical evacuation.
• Mobile electric hybrid power (MEHP) non-grid-tied smart
power system with output ranging from 300W to 800KW
to augment traditional generators on the battlefield.
Source for various utilizations, which could potentially
be scaled up into an “air-independent power system” for
submarines.
• Uniform Integrated Protection Ensemble Increment II or
protective clothing for soldiers in nuclear, chemical or
biologically contaminated battlefields.
• General Atomics Electro-Magnetic Aircraft Launch
System for India’s second indigenous aircraft carrier;
• Possible cooperation on development of advanced jet
engine technology.
• Digital Helmet Mounted Display (DHMD): Provides the
necessary operational data/tactical intelligence through
the helmet display
• Joint Biological Tactical Detection System (JBTDS):
System to detect and identify biological warfare agent
attacks
Indian requirement
projections
India has requested for detailed proposals and
license requirements under the bilateral DTTI for the
undermentioned key advanced technologies:
• Hot-engine technology for indigenous light combat
aircraft Mark II - This technology allows fighters to
operate in hot weather conditions such as in deserts
without any possibility of an engine failure.
• Radar system equipped with Signature Aperture Radar
that can penetrate thick forests.
• Stealth-coating technology - The coating deadens radar
images and would give Indian jets minimum radar profile
and maximum survivability in hostile conditions.
• Long-endurance high-altitude UAV - Equipped with
synthetic aperture radar, the drone can fly at an altitude
of 65,000 feet, stay air-bound for more than 14 hours
and survey up to 40,000 sq. km terrain in a day.
• Textron-manufactured Scorpion mutation bomb, used
for protecting military installations.
• India has made a renewed pitch to acquire armed drones
from the US during defence minister Manohar Parrikar’s
visit, to meet a requirement of the air force for a stealth
cross border strike option.
Foreign Military Sales (FMS)
Most of the projects under DTTI are likely to be under
government-to-government (G2G) deal, also known as
Foreign Military Sales (FMS) program or inter-governmental
agreements. Moreover, in cases where there is an urgent
strategic and operational need for particular weaponry to
meet immediate requirements of the defence service, then
G2G seems to be a preferred route. A comparison between
the competitive procurements and those through G2G
clearly depicts that in recent years most of the deals by
India have taken this route. Rather out of the total overall
defence procurements initiated by India around 70% of them
have been through G2G. (Refer Fig.) The Indian Ministry of
Defence is adopting this route to make up for the shortfall in
overall deficiency of equipment and preparedness profile of
the services.
The G2G procurements, which account for 70% of all
procurements, have mainly been from three countries
— Russia, the US and Israel. However, the US has the
major portion of the G2G pie. India, till date, has procured
weaponries amounting approximately US$22 billion through
the G2G route and more are expected to be signed in the
coming years. The share of these three countries is depicted
in figures. The bilateral trade between India and the US

5. 5Eye on Defence |
stood at US$62 billion in 2013–14; the US is targeting to
increase it eight fold to US$500 billion by 2025. According
to major defence contracts signed during the last three
years, the share of the US is 82% as compared to 11% of
Russia.
The defence procurement from the US over the last one
decade has been to the tune of around US$15 billion, both
through the FMS and Direct Commercial Sales (DCS) route.
The equipment and platforms procured by India from the
US includes aerial cargo and surveillance platforms, land-
based radars, ship-based helicopters, weaponry, engine
technology, and one amphibious transport dock (ex-USS
Trenton), heavy lift and attack helicopters. The industry
trends indicate that this trade could touch US$25 billion
over the next decade. The projected deals under the FMS
program in coming years could include Hawkeye E-2D
aircraft, self-protective suite, additional Harpoon block II
missiles for P-8Is, special operating forces equipment, Aegis
Missile Defence System, multi-role, new generation carrier-
based fighter aircraft, ANTPQ 37 fire finder counter battery
radars, submarine deep sea rescue vehicle case.
Differences in focus
India being the top importer of defence item makes it
attractive for defence manufacturers to do business;
however, the significant import bills and foreign dependency
are the issue of concern. India’s quest for self-reliance in
defence and its initiative “Make in India” intends it to focus
on research and development and in-house manufacturing.
In the last two years the MoD accorded Acceptance of
Necessity (AoN) for defence acquisition schemes for more
than US$33billion (INR2,000 billion). Out of these more
than 80% fall in “Make in India” categories, for which RFP
(Request for Proposal) will be issued to only Indian Vendors.
Therefore, it leaves very limited options for Foreign OEMs
but to collaborate or co-produce with Indian industry
through suitable technology transfer or technical support
or joint venture arrangements with the Indian Industry. The
Indian defence industry has been trying their best to build
a strong defence industrial base but is limited, mainly due
to lack of technology. Hence, transfer of technology comes
into picture, where present “buyer-seller” relationship
will change to co-development and co-production
model encouraging high-technology joint research and
development.
Exhibit1. G2G vs. competitive procurements
in last decade
Source: SIPRI and Complied by Q-Tech synergy
G2G
Procurement
70%
Competitive
Procurement
30%
Total
overall
procurement
Exhibit 2. Percentage share of countries in G2G
Contracts in last decade
Source: Complied by Q-Tech synergy
Russia, 36%
Israel, 9%
US, 55%
Percentage
share

6. 6 | Eye on Defence
The US’ recognition of India as a “major defence partner”
has made the US defence companies eyeing the Indian
market for prospective multi-billion dollar ”Make in India”
deals. The US defence majors are ready to offer and make
their products in India; hence, will boost the Indian defence
industry’s integration into the global supply chain of major
original equipment manufacturers. On the one hand, the US
will encash the opportunity in the Indian defence market,
on the other hand, Indian private and public players will
enjoy the participation in manufacturing and share in
technology. With the US looking more at trade and India at
technology, the initiative will not only bring high technology
but also upgrade the Indian defence manufacturing sector
by familiarizing Indian companies with best global practices,
while giving a boost to Indian defence exports.
Implications for India
India is diversifying its acquisition sources beyond Russia
to western countries with the aim that future defence
acquisitions must simultaneously lead to a transformative
change in the country’s defence technology base and
manufacturing prowess. However, none of the recent deals
with the US have included transfer-of-technology (ToT)
clauses.
The Government’s “Make in India” campaign is to co-
manufacture and co-develop weaponry, rather than simply
buying them from the US. However, the US’s rigid export
control regimes, which lays conditions for technology
transfer, are too time consuming and may not be acceptable.
Although DTTI was set up in 2012 to bridge this gap and
to jointly identify opportunities for defence cooperation,
not much progress has been made in this direction. The
other stumbling block is the US’ insistence on the FMS
route, which becomes a single vendor case without any
competition.
The FMS route is ideal in respect of high-tech, low volume
systems, which no other country possesses or is ready to
offer. This route is also better for complex weapon systems,
since India can get them duly integrated and configured.
Although the FMS route has the additional advantages of
fixed prices, sovereign guarantees and after sales support
but it should be always followed as an exception rather
than the rule. It should be an option for the acquisition of
weapons and equipment for urgent needs of the military
and not be taken as an escapism mechanism of tedious
competitive bidding.
Through these new initiatives and agreements the ties
between these two nations will only become stronger
because of the huge economic potential of both the
countries.
References
• “India keen to acquire US ‘predator’ armed drones after entry
into the MTCR,” The Economic Times, 27 August 2016, via
Factiva
• “India’s hopes of procuring three Boeing C-17 aircraft appear
bleak,” Business Line, 30 November 2015, via Factiva
• “US set to be India’s biggest arms supplier,” The Times of India,
13 July 2015, via Factiva
• Indian Ordnance Factories website
• “Indo-US Defence Agreement,” Defence Pro-Ac, http://www.
defproac.com/?p=1934, accessed 5 September 2016
• SIPRI Databases, https://www.sipri.org/databases, accessed 12
June 2016

7. 7Eye on Defence |
Unmanned Aerial Vehicles (UAVs)
Unmanned Aerial Vehicles (UAVs), also referred to as
Drones and Remotely Piloted Vehicles, (RPVs) and more
recently termed as Unmanned Aircraft System (UAS),
can be described in simple term as aerial vehicles, which
operate without a human pilot and is either autonomous or
remotely operated. The principal aim of UAVs is real-time
reconnaissance and surveillance. In addition, UAVs have
varied uses that include intelligence collection, power line
and pipeline inspections in inaccessible regions or high
altitude terrain, surveillance and data relay during natural
calamities, disaster management, border patrol and trans-
border refugee tracking, border monitoring and maritime
surveillance and coast guard operations, detection and
monitoring of radiation leaks or oil spillage (both at sea
and along the coastlines), land surveying, film making,
inspection of labor forces.
The modern military UAVs, known as Unmanned Combat
Aerial Vehicles (UCAVs), are armed versions and have been
equipped with weaponry (missiles and bombs) keeping in
mind the future network-centric battlefield scenario. The
UCAV have a range of capabilities and have entered the
domains of electronic attack, strike missions, suppression
and destruction of enemy air defence, communications
relays, combat search and rescue, and derivations of these
themes. These will be the major force multipliers in the
future battles, since they are not only economical to develop
and maintain the conventional war fighting machines but
also reduce the risk of human life. Well-known combat UAVs
include Predator, Harop and Eagle. Due to their capability
of seamlessly integrating all three key areas of defence
systems encompassing the sensor, shooter and command
and control network, the military role of UAV is growing at
an unprecedented pace.
Market structure
The diversity of applications has resulted in the development
of a wide range of different types of UAV. However,
currently, there is no accepted classification system for
UAVs. These are typically grouped into three categories
based on range, which includes:
• Long range: High Altitude Long Endurance (HALE), Mid
Altitude Long Endurance (MALE), Vertical Take Off &
Landing (VTOL).
• Mid-range: Tactical UAV (TUAV), VTOL.
• Short range: Small UAV (UAVs), Micro UAV (MUAVs),
VTOL.
Furthermore, another way of classification and tierization
can be on the basis of roles:
• Control
• Aerial targets and decoy
• Surveillance/reconnaissance
• Combat
• Altitude
The diagram below shows various classification with
examples.
High Altitude
Long Endurance
but Low Obserable
High Altitude
Long Endurance
UAV (HALE/HAE)
Medium Altitude
Long Endurance
UAV (MALE)
Low Altitude
Long Endurance
UAV
Small/Micro
UAV
Tier III
RQ-170
Centinel
Tier II+
Global Hawk,
RQ-4 PA-B
Tier II
MQ/1
Predator,
IAI Heron
Tier I
IAI Searcher,
RQ-2 Pioneer
Tier
Netra,
Batmav
A
L
T
I
T
U
D
E

8. 8 | Eye on Defence
The global UAV market is highly compact and consolidated
with several companies; however, the major share still
lies in the hand of large OEMs. GA-ASI (the US), Northrop
Grumman Corporation (the US), Aero Vironment Inc. (the
US), Elbit Systems Ltd. (Israel), and IAI Ltd. (Israel) are
key players for UAVs accounting for more than 57% of the
total market share. Apart from these, companies such as
Lockheed Martin (the US), Boeing (the US), BAE Systems Plc
(the UK), Textron (the US), Aeronautics Ltd. (Israel), Safran
SA (France), SAAB AB (Sweden), Thales Group (France),
TAI Inc. (Turkey), and Aviation Industry Corporation of
China are other prominent players in the UAV market.
Country-wise, the North American, APAC and the Middle
Eastern markets are expected to contribute largely in terms
of procurement and manufacturing, among the analyzed
regions. The emerging economies in the Asia-Pacific
region, Latin America, and Africa are expected to be the
prospective markets. Rather, after China and Japan, India
is emerging as one of the key markets for UAVs in the Asia-
Pacific region. The UAVs range in cost from a few thousand
dollars to millions of dollars, and vary in size from a Micro
Air Vehicle (MAV) weighing less than one pound to large
aircraft weighing over 40,000 pounds. A large growth is
expected from the Asia-Pacific region, especially from China
and India, who are investing in these highly useful aircraft
on a massive scale, either by buying foreign designs or by
producing indigenously.
As far as India is concerned, UAVs form a critical layer in
the integrated defence system that the three Indian Defence
Services are now implementing in coordination with one
another. Constrained for a long time by technical limitations
of the defence industry and by chronic delays of Defence
Research and Development Organization (DRDO) projects,
India was forced to import off-the-shelf models, mostly from
Israel, since late 1990s.Although UAVs have been in service
with the three defence services in small numbers since
1990s; however, their mass scale adoption and integration
with existing and projected fighting systems has begun in
earnest only in the last couple of years. Therefore, we can
say that the Indian UAV market is still in its early stages of
lifecycle with robust growing prospects.
The Indian Army (IA) was the first to acquire UAVs followed
by the Indian Air Force (IAF) and Indian Navy (IN). Currently,
the inventory of approximately 200+ UAVs of the Indian
Armed Forces comprises mainly of Israeli Searcher and
Heron in reconnaissance role and Harpy Fire and Forget
Ground Attack Drones. Israel is the leading supplier for UAV
systems and related equipment in the Indian market as of
now. Last year, the Government of India approved another
purchase from Israel for ten armed Heron TP UAVs worth
US$400 million for the IAF; but, the deal is still to be inked.
However, with increasing requirements and procurements of
UAVs by India’s Defence Forces, players from countries such
as the UK, France, Russia and Germany are expected to tap
the Indian market in coming years.
Apart from the foreign procurement, the Armed Forces have
also inducted DRDO developed indigenous drones “Lakshya”
and ”Nishant”. The Indian military is employing these
inducted UAV systems for operations, disaster management
and aid to civil power. DRDO has also supplied around 25
Netra micro UAVs to the Paramilitary Forces.

9. 9Eye on Defence |
With the growing importance of UAVs in the 21st century
battlefield, the Indian Armed Forces are looking forward to
reduce the high ratio of manned platforms from present
95% to 50% by 2027 and beyond in a phased manner as
depicted below:
Existing capabilities
Apart from outright purchase from Israel in the last
few years, there were indigenous development efforts,
which have met limited success. Earlier only Government
agencies such as DRDO (the major agency involved in the
development of UAVs), National Aeronautics Laboratory
(NAL), Hindustan Aeronautics Limited (HAL) and Bharat
Electronics Limited (BEL) had been involved with the
development of UAVs for the defence services. Till date,
DRDO has developed just two UAVs, known as ”Lakshya”
and ”Nishant”. However, the indigenous development
of nearly two decades old Nishant UAV program worth
INR0.9 billion faced a major setback when the Indian
Army lost its entire fleet of Nishant drone to a series of
accidents even before entering full-fledged production in
November 2015. While four of the UAVs were inducted in
2011 after a long delay, at least three are confirmed to
have crashed. The Army has cancelled any further orders.
The DRDO is now working on an indigenous MALE drone
Rustom and the short-range Pawan and Gagan with help
from Israel Aerospace Industries. Moreover, in the pipeline
is development of Rustom-II, along with an aeronautical
test range at Chitradurga, which was approved in February,
2011, at a cost of INR16.5 billion with completion date
slated for February, 2017. Various other UAV programs
such as AURA and Solar UAVs are also in the pipeline.
Exhibit 3. Manned vs Unmanned Aero platforms: India
Source: Q-Tech synergy
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012-17 2017-22 2022-27
Manned Unmanned
15%
30%
50%
50%
70%
85%
Indigenous DRDO programs underway
Indian Air Force Three Rustom UCAVs and one ground station at a cost of US$60 million
Two stealth UCAVs called Autonomous Unmanned Research Aircraft (AURA) and one ground station
for US$75 million
30 Nirbhay UAVs
Unspecified numbers of Lakshya-II remotely piloted high speed target drones at a cost of
US$531,687 per unit
Indian Navy Three Rustom UCAVs and one ground station for US$60 million with 12 more to come
10 MALE Rustoms at a cost of US$225 million
Four Pawan mini UAVs for US$33 million; 50 air- and ship-launched Nirbhay UAVs
Three rotary UAVs at a cost of US$232 million; unspecified numbers of Netra micro UAVs for
US$50,000 per unit
Gagan tactical UAVs at a cost of US$55 million with help from Israel
Indian Army Three Rustom UCAVs and one ground station at a cost of US$60 million and 12 more in the future
10 Rustom-2 UCAVs for US$342 million
12 Nishant UAVs at a cost of US$5 million each
Three hybrid mini-UAVs and one ground station for US$350,000

10. 10 | Eye on Defence
Private industry participation
The domain of UAVs is emerging as a focus area for
indigenous military development and production efforts.
The domestic UAV programs are serving as a draw for the
private sector with participation from both medium and
small scale enterprises (MSME) as well as large companies.
The private sector has also shown a keen interest in the
design and development and production of UAVs. The
drive toward formation of JVs with some major global UAV
manufacturers substantiates this fact. Currently many SMEs
such as Speck, Alpha Design, Dynamatic Technologies and
Coral Digital Technologies Pvt. Ltd. are building drones
in partnership with Israeli firms and NAL; while some
companies such as Anjani Technoplast, Idea Forge, Mukesh
Kumar Udyog, Taneja Aerospace and Aviation and Jubilant
Aeronautics have taken steps to develop UAVs on their own
or with technology collaboration with foreign firms. Some
specific details as under:
Dynamatic Technologies Limited
The company designs and builds highly engineered
products for automotive, aeronautic, hydraulic and security
applications. It is India’s largest private sector company,
which develops exacting airframe structures and precision
aerospace component. It has developed Wing and Rear
Fuselage of the LAKSHYA UAV. Their domain is Airframe
Structures and Precision Aerospace Components, for all
UAVs including Patang VTOL UAV.
Dynamatic Technologies has teamed with US company Aero
Vironment, Inc. to manufacture a next-generation micro-
UAV called the Cheel. The company also has an agreement
with Israel’s Bluebird Aero Systems to manufacture and
market mini and micro tactical, unmanned aerial vehicles in
India. The company is participating in 95 UAVs tender for
IAF and IN and also for man-portable mini UAVs for IA.
Aurora Integrated System (AIS)
The company is developing indigenous technology,
manufacturing and integrating state-of-the-art airborne
system with the focus on small UAS. AIS is supported and
funded by the TATA group and by the Ministry of Science
and Technology. Interest lies in Unmanned Aerial Systems
for custom Applications.
UAVs offering:
• Aquilon Mini UAV
• Urban View – Mini UAV
• Altius Mk-II – Tactical UAV
Last year, Aurora Integrated System (AIS), a subsidiary of
TASL has been awarded the tender worth around 50 Lakhs
for supply of 49 mini UAVs (+ Option Clause) to Indian Army
having qualified through a competitive bidding process. AIS
have received the supply order from Northern Command for
its system Aquilon.
Alpha design
Alpha is active in the segment besides other and has signed
a teaming agreement with Elbit-ISTAR and Adani Aero
Defence Systems & Technologies for the production and
marketing of mini-Unmanned Aerial Systems (UAS) in India.
The agreement covers local production of IAI’s Bird-Eye 400
and Bird-Eye 650 mini UAS as well as other mini-unmanned
aerial systems. The company is likely to participate in man-
portable mini UAVs for IA.
Asteria Aerospace Pvt. Ltd.
Asteria Aerospace is a MSME registered with the National
Small Industries Corporation. Its focus area is development
of Unmanned Aerial Systems and related technologies.
UAVs and related technologies offering:
• ATOM Autopilot Flight Control System
• CYGNUS A10 Long Range UAS for military and civilian
surveillance
• A400 mini VTOL UAS for surveillance and security
applications
Asteria has an MoU with National Aerospace Labs (CSIR-
NAL) for collaboration in research and development of
unmanned aerial systems.

11. 11Eye on Defence |
Speck Systems Limited (Speck)
Manufacturer of products and developer of strategic,
tactical and developmental solutions enabling geospatial
technologies with strengths in UAVs and system integration,
optoelectronics, mapping and GIS, containerization and
ruggedization, communication, software.
UAV offering:
• The BIRD-EYE 400
• I View MK50 Light & Mobile Tactical UAV System
• The BIRD-EYE 600
• The BIRD-EYE 650
Speck has entered a strategic teaming agreement with
Israel’s Malat, IAI for manufacturing and Service support of
IAI’s mini and micro UAV product range in India along with
home-based support and maintenance.
Jubilant Enpro
Jubilant Enpro is the strategic “venture business” segment
of Jubilant Bhartia Group. It is one of the leading high
technology products and services companies with business
interests in aerospace; oil and gas; financial services;
trading; and homeland and mega-city security systems.
The company has formed JV, Jubilant Aeronautics, with
Israel’s Aeronautics Defense Systems addressing the
growing need for UAVs and aerostat systems in India.
The team has already responded to several Requests for
Information (RFIs) submitted by different Indian authorities.
Aeronautics will be offering various versions of its Orbiter
mini-UAV.
Idea Forge Technology Pvt. Ltd.
Idea Forge Technology Pvt. Ltd. develops and manufactures
unmanned aerial systems and alternative energy products.
NETRA VTOL UAV is the flagship product of Idea Forge
developed in collaboration with DRDO and has been
inducted by BSF and CRPF. The company also offers
CARBON, an autonomous hovering unmanned aerial
vehicle.
The other companies who are also keen in the segment and
have obtained ILs for manufacturing of UAVs include:
• BF Utilities Limited
• Ashok Leyland
• Teneja Aerospace & Aviation Limited (TAAL)
• Avaana Software & Services
• SASMOS HET Technologies Ltd.
• Punj Lloyd
• MKU
• Nova Integrated Systems Ltd.
• Varisis Advanced Engineering & Software Technology
India Pvt. Ltd.
• Unique Fire Protection & Fabrication Consultants
• ICOMM Tele Ltd
• Swallow Systems Pvt. Ltd
• OM UAV Systems
• TSL Technologies Pvt. Ltd
• Tara Systems & Technologies Ltd
In addition a plethora of opportunities exist for the private
sector in sub-assemblies and major sub-systems such as
sensor payloads, radars, control systems, engines and
other on-board equipment that are being increasingly
sourced from the Indian industry and would continue to
do so in future as well. Even more-exotic technologies and
development of nano-technology applications will expand
the conventional supplier base further.
Market size
The UAV industry is one of the fastest-growing military
aviation markets. Till date, India has bought UAV platforms
worth approximately US$1.5 billion (INR82.5 billion). There
exists a significant demand for UAVs in not just the defence
but also in homeland security and for civilian use as well.
Keeping in mind, the projected and growing requirement
of the three defence services during the next 10–12 years,
there will be substantial requirement of small UAVs by the
defence services. The Indian Army proposes to equip UAVs
down to the battalion level in the next three to five years,
while the Air Force plans to have fully operational squadrons
of surveillance UAVs and UCAV. The plan includes the
induction of many man-portable mini and micro UAVs for

12. 12 | Eye on Defence
short-range surveillance, and nuclear, biological, chemical
detection in the battlefield. The Indian Army, Air Force and
Navy propose to buy tactical UAVs, HALE UAVs, VTOL
UAVs, and MALE UAVs. There is an anticipated demand of
around 50 MALE UAVs, 60 Navy UAVs, 70 Air Force tactical
UAVs, 100 Army tactical UAVs and more than 1,000 mini-
UAVs over the next decade. Moreover, of late, clearance
has been given to the acquisition for 65 micro UAVs or spy
Exhibit 4. Anticipated share of UAV in Indian Defence
Expenditure (in %)
Source: Compiled by Q-Tech synergy
30%
1%
4%
15%15%
10%
25%
Air
UAV
C4ISR
NavalLand
R&D
Others
Exhibit 5. India UAV market till 2028 (in billion)
Source: Compiled by Q-Tech synergy
Years
Billion
1.50
1.65
1.82
2.00
2.20
2.42
2.66
2.92
3.22
3.54
3.89
4.28
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24 24-25 25-26 26-27 27-28
IA needs
1500-2000 UAV’s
IAF needs
300-500 UAV’s
IN needs
60-100 UAV’s

13. 13Eye on Defence |
drones worth INR270 million for IAF’s Garud Commando
Force. Briefly the net requirement emerging is, IAF: 300-
500, IA: 1500-2000 and IN: 60-100. The UAV segment,
therefore, promises an overall opportunity of around 1% of
capital expenditure, to US$4 billion (INR240 billion) approx.
in capital procurement by year 2027. As for the Civil UAV
market in India, which is estimated at only 3% of the total
UAV market; the civil UAV segment promises an opportunity
around US$60–120 million (INR3.3–6.6 billion) over the
next 10–12 years (2015–2027).
Some of the recently issued RFIs/RFPs for acquisition of
various types of UAV platforms by the MoD include:
Additionally, there would be some upcoming foreign
programs in the near future, since India is in talks with the
US to purchase General Atomic manufactured Predator
XP surveillance drones for the Indian Navy through the
government-to-government route. The Indian Navy’s letter
of request (LoR) to the US for purchasing 22 unarmed
high-tech multi-mission predator Guardian UAV to fulfill
maritime surveillance requirements is under inter agency
process in the US DoD for speedy approval. The General
Atomics MQ-9B Guardian is a large and heavy aircraft than
MQ-1 Predator. They are likely to be equipped with Seavue
radar system that provides inverse synthetic aperture
radar and weather detection and avoidance capabilities,
MTS-B electro-optical/infrared sensor with laser illuminator/
rangefinder, and an automatic identification system (AIS).
RFIs/RFPs issued Quantity Approx. Cost
Mini & Macro UAV for Army 500 US$85 million
High Altitude Long Endurance (HALE) UAV for IA, IN --- More than US$200–250 million
UAV Mission Simulator for Army 1 US$30 million
Unmanned Combat Aerial Vehicle for IAF --- More than US$30 million
Micro Unmanned Aerial Systems for IAF and IN 95 US$10 million
Small VTOL MINI UAS for IAF --- More than US$30 million
Vertical Take Off and Landing Unmanned Aerial Vehicle for IN --- More than US$30 million
NRUAV for IN 3 US$290 million
Man-Portable Mini UAVs for IA 20 US$7–10 million
Short Range Unmanned Aerial Vehicle (SR UAV) --- More than US$30 million
Mini UAV for High Altitude for IA 20 US$100,000
Hand Held UAVs for TAC Training for IA 3 ---
Medium Altitude Long Endurance (MALE) UAVs for three Defence
Services
100 ---
Source: Compiled By Q-Tech Synergy
Upcoming programs
Recently, the Government has finalized a blueprint to
procure more than 5,000 UAVs for the Indian Defence
Forces over the next 10 years for around US$3 billion
(INR180 billion) with the tenders to be restricted to domestic
companies that can tie up with foreign firms. In addition,
the DRDO also has an independent unmanned surveillance
air vehicle on the drawing board, which is similar to the
X-45 and X-47 developed in the US and is also scouting for a
partner to develop a solar-powered HALE UAV. Furthermore,
the Government has undertaken a concept study on
development of a bomber UAV and a fighter UAV.

14. 14 | Eye on Defence
The MQ-9B Guardian will not be armed. Furthermore, India
is also keen to acquire US “Predator” C Avenger Armed
Drones for IAF and is likely to make a renewed offer to the
US during the Indian Defence Minister’s visit to the US in
September 2016. Earlier attempt by India to acquire the
drones could not proceed as the US referred to international
regulations that made it impossible to export the armed
Predator. In addition, in pipeline is the offer by the IAI for
local manufacture of the Heron TP as part of the ”Make-in-
India“ program.
India’s present holding of UAVs is meager and there is an
urgent requirement to equip the military with increased
quantities and more advanced unmanned technologies to
gather intelligence as well as boost its firepower along the
vast land and coastal borders it shares with neighboring
countries and also keeping in mind the increasing
insurgencies. While the requirements are clear, the moot
point is to build a road map for the procurements. Both
indigenization and additional foreign procurements is the
need of the hour to bolster the UAV capabilities of the
Armed Forces. The growing need and application of UAVs
will create substantial opportunities for UAV vendors, from
large defence contractors to small service companies. Given
the diverse and urgent needs it will be imperative that India
invests in its own R&D in this segment and also take help
in form of foreign collaborations to deliver systems to help
build those capabilities now, so that in the not-too-distant
future, they can manufacture more advanced and expensive
systems indigenously. Steps are being taken with various
tenders being issued under “Buy-Make (India)“ category
lately. However, more such steps and funding from the
Government’s end to the private sector is required in coming
years as well.
References
• “India in talks to buy U.S. Predator drones, has eye on
China, Pakistan” Reuters, 11 April 2016, via Factiva
• “Proliferated Drones - A Perspective on India” CNAS
Organization, http://drones.cnas.org/wp-content/
uploads/2016/06/A-Perspective-on-India-Proliferated-
Drones.pdf, accessed 8 September
• “Defence indigenisation needs private sector
participation” Deccan Herald, 20 March 2016, via
Factiva
• “Unmanned Aerial Vehicles Market”, Markets
and Markets Research Reports , http://www.
marketsandmarkets.com/Market-Reports/unmanned-
aerial-vehicles-uav-market-662.html, accessed 5
September 2016

15. 15Eye on Defence |
Request for Information
(1 June 2016 – 9 September 2016)
Date of
Issue
RFI Details Response
Date
Issued By Remarks
31-Aug-16 Bird Detection and Monitoring Radars 30-Sep-16 Principal Director C4ISR IAF
30-Aug-16 High Resolution Binocular with Graticule - QR --- Dy Commandant (MoD) For BSF
30-Aug-16 High Resolution Binocular with Graticule - QR --- Dy Commandant (MoD) For BSF
23-Aug-16 Aerostat Systems; Qty: 04 Nos. 22-Sep-16 PD C4 ISR IAF
21-Aug-16 Gun-Shot Detection System (GDS) -QR --- DG BSF For BSF
19-Aug-16 Full Mission Simulator for AN-32 RE Aircraft 19-Sep-16 Dte of plans For IAF
17-Aug-16 Spatial Disorientation Simulator for Training of
Aircrew
18-Sep-16 Dte of plans For IAF
08-Aug-16 Construction and delivery of six next generation
missile vessel
05-Sep-16 Directorate of Information
Tech
For IN
29-Jul-16 Five diving support craft 26-Aug-16 Directorate of Ship
Production
For IN
12-Jul-16 EoI for procurement of VIS-NIR hyper-spectral
imaging system
30-Aug-16 DLJ Defence Laboratory Issued by DRDO
04-Jul-16 Setting up Twin Test Cell for development Aero
Gas Turbine Engines up to 130 kN Thrust Class
26-Aug-16 The Director, GTRE Issued by DRDO
01-Jul-16 QINR and TDs of "Hovercraft (8 Men Capacity)” -- DTE General Border Security
Force
For BSF
27-Jun-16 Medium Altitude Long Endurance (MALE)
Unmanned Aerial Vehicles (UAVs)
30-Sep-16 Air HQ (Vayu Bhavan) For three defence
services
24-Jun-16 Comprehensive upgrade of BMP-2/2K 18-Aug-16 DGMF For IA
08-Jun-16 QINR of "Through Wall Radar (2D)" --- HQ DG BSF, Prov Dte (Ord
Sec)
For BSF
08-Jun-16 QINR of "HHTI Binocular System to N - cross with
five sensors in One”
--- HQ DG BSF, Prov Dte (Ord
Sec)
For BSF
08-Jun-16 EoI for development of Optronic Mast for
Submarine Periscope
26-Jul-16 Instruments Research &
Development Establishment
Issued By DRDO

16. 16 | Eye on Defence
Request for Proposal
(March 2016–May 2016)
Date of
Issue
RFP Detail/Equipment Response
Date
Issued By Remarks
9 Sep 2016 “Bullet Proof Jacket (Level III+) 30-Sep-16 GM OFB
8 Sep 2016 “7.62 x 39mm API BZ Ammunition and 7.62 x 51mm
AP(WC core) Ammunition -2000 Nos each
25 Oct 2016 DMRL DRDO
01-Sep-16 Low Tech Ammunition ((a) Bicat Strip - 15504 Nos. (b)
Grenade No.90 - 45466 Nos. (c) Matches Fuzee - 2268
Nos.)
22-Sep-16 DG AR For Assam Rifle
01-Sep-16 Solid Carbide Ground Rod 30-Sep-16 Gun and Shell Factory,
Cossipore
Issued by OFB
01-Sep-16 Design and development of prototype locking mechanism
for Su-30 helmets with the supply of 5 prototypes
21-Sep-16 Defence Bio-Engineering &
Electro Medical Laboratory
Issued by DRDO
30-Aug-16 Hand-held communication Set; Qty: 1348 Nos. 26-Sep-16 HQ WAC IAF For IAF
30-Aug-16 Hand-held communication Set; Qty: 1348 Nos. 26-Sep-16 HQ WAC IAF For IAF
26-Aug-16 Voice communication system for 155mm x 52 Cal
Advanced Towed Artillery Gun System ATAGS
02-Sep-16 ARDE Issued by DRDO
26-Aug-16 Tactical Vest; Qty: 10,000 Nos. 16-Sep-16 DG AR For Assam Rifle
26-Aug-16 Bullet Resistant Vests 05-Oct-16 AIG/PROV For CISF
26-Aug-16 Bullet Resistant Vests 05-Oct-16 AIG/PROV For CISF
24-Aug-16 Supply, Installation and Integration of Marine Grade Ship
Board Automatic Weather Station (AWS)
28-Sep-16 Naval Physical
Oceanographic Laboratory
Issued by DRDO
23-Aug-16 Hand Held Thermal Imaging Camera With Wireless System DG BSF For BSF
23-Aug-16 Multipurpose Night vision Monocular DG BSF For BSF
22-Aug-16 High Dynamics, Triple RF, IRNSS
(L5&S)+GPS(L1)+Glonass(L1) and Gagan, Fast TTFF
Receiver; Qty: 10 Nos.
30-Aug-16 Research Centre Imarat Issued by DRDO
20-Aug-16 Development of Light Bullet Proof Vehicle 25-Sep-16 Vehicle Factory, Jabalpur Issued by OFB
20-Aug-16 Goggle Protective Field Type; Qty: 80 Nos. 06-Sep-16 AOC, 13BRD, AF For IAF
19-Aug-16 Face Pad Complete of 84 MM CGRL; Qty:400 Nos. and
Grip Hand Assy of 51 Mm Mortar; Qty: 500 Nos.
19-Sep-16 Inspector General, BSF HQ
South Bengal Frontier
For BSF
17-Aug-16 Altimeter and Binoculars; Qty: 04 Each 13-Sep-16 AOC, Air Force Station
Srinagar
For IAF
17-Aug-16 Jacket Tactical; Qty: 60 Nos. 13-Sep-16 AOC, Air Force Station
Srinagar
For IAF
16-Aug-16 Procurement and Installation and Commissioning of
Marine Radar with Accessories
01-Sep-16 Commander Coast Guard
Region (A&W)
For ICG
16-Aug-16 Carbine (SMG) 9mm With Access Spares, Qty: 3123 Nos. 20-Oct-16 DG ITBP For ITBP
13-Aug-16 81mm Mortar Simulator; Qty: 05 Nos. 06-Sep-16 Directorate General For Assam Rifle
12-Aug-16 DSMD (Deep Search Mine/Metal Detector; Qty: 55 Nos. 02-Sep-16 DG ITBP For ITBP
12-Aug-16 Light Bullet Proof Vehicles; Qty: 13 Nos. 22-Sep-16 DG NSG For NSG

17. 17Eye on Defence |
Date of
Issue
RFP Detail/Equipment Response
Date
Issued By Remarks
12-Aug-16 Automatic Grenade Launcher Along With Gauges And
Accessories; Qty: 02 Nos.
26-Sep-16 DG NSG For NSG
10-Aug-16 Design & Dev. of GPS/Glonass Avionic Antenna; Qty: 25
Nos.
24-Aug-16 Research Centre Imarat Issued by DRDO
09-Aug-16 LWI Helmet Jaguar Aircrew 2016; Qty: 02 Nos. 23-Aug-16 Logistics Section Air Force
Station Ambala Cantt
For IAF
08-Aug-16 Vehicle Mounted Surveillance System; Qty: 01 No. 27-Sep-16 Commandant (Proc) For BSF
06-Aug-16 6 Lane Advance Weapon Training Simulator of Small Arms 09-Sep-16 Recruit Training Centre,
Sivagangai
For ITBP
06-Aug-16 Repair of Gallet Helmets LH250 (NVG Compatible); Qty:
05 Nis.
26-Aug-16 Air Force Station
Mohanbari, Dibrugarh,
Assam
For IAF
05-Aug-16 Sports Air Weapons, Pellets, Accessories, Arms And
Ammunition
29-Aug-16 Air Force Sports Control
Board
For IAF
04-Aug-16 NSC Processor Unit Raytheon NSC Radar 24-Aug-16 OIC Procurement INS
Venduruthy
For IN
04-Aug-16 Development & Supply of Face Mask & Biological
Protective Hood
19-Aug-16 DRDE Issued by DRDO
04-Aug-16 Six Lines NBC Test Jigs and Test Equipment 31-Aug-16 Dte of Armt & Safety Eqpt For IAF
03-Aug-16 GPS; Qty 200 Nos. 30-Aug-16 Directorate General,
Assam Rifles
For Assam Rifle
02-Aug-16 Fuze for Adrushy Mine MK II (Assy); Qty: 2731 Sets 29-Aug-16 Ordnance Factory Chanda
Dist
Issued by OFB
01-Aug-16 Multi Grenade Launcher Along With Accessories Spares
And Gauges; Qty 28 nos.
13-Sep-16 DG NSG For NSG
01-Aug-16 Body Mine for 1B DIR. With Adapter 22-Aug-16 Ordnance Factory, Chanda Issued by OFB
01-Aug-16 Ship Sonar Dome 07-Sep-16 Naval Physical
Oceanographic Laboratory
Issued by DRDO
28-Jul-16 NBC Filter FAS 200M 29-Aug-16 Controllerate of
Procurement
For IN
27-Jul-16 Multimode Hand Grenade (filled); Qty 200 Nos. 04-Aug-16 Terminal Ballistics
Research Laboratory
Issued by DRDO
27-Jul-16 Cartridge Practice N2MK I and Cartridge Service N12 MK I
for Limpet Mine Disposal Equipment (LMDE)
04-Oct-16 Naval Armament Depot
Mumbai
For IN
26-Jul-16 Propellant for 5.56 MM Ball Ammn; Qty: 72 09-Sep-16 Ordnance Factory
Varangaon
Issued By OFB
26-Jul-16 LWI Helmets 08-Aug-16 Air Force Station, IAF
26-Jul-16 Propellant for 7.62 MM Ammn; Qty: 30 09-Sep-16 Ordnance Factory
Varangaon
Issued by OFB
25-Jul-16 Communication Equipment 15-Sep-16 DG NSG For NSG

18. 18 | Eye on Defence
Date of
Issue
RFP Detail/Equipment Response
Date
Issued By Remarks
25-Jul-16 Life Jackets; Qty: 1301 Nos. and Life Bouy; Qty: 109 Nos. 06-Sep-16 DG BSF For BSF
22-Jul-16 Propellant for 5.56 MM Ball Ammn. 29-Jul-16 Controllerate of Quality
Assurance (Ammunition),
Khadki
Issued by OFB
22-Jul-16 Pyro Cartridges PC 100 DQ; Qty: 500 Sets 12-Aug-16 Research Centre Imarat Issued by DRDO
22-Jul-16 CCTV Bullet Camera with IR 30-Aug-16 IRDE Issued by DRDO
22-Jul-16 Speed Radar Gun With Digital Inbuilt Printer 16-Aug-16 Ins Kalinga For IN
21-Jul-16 Fore Sight for 12 Bore Pump Action Gun; Qty: 8023 Nos. 17-Aug-16 Rifle Factory Ishapore Issued by OFB
21-Jul-16 Rear Sight For 12 Bore Pump Action Gun; Qty: 7102 Nos. 17-Aug-16 Rifle Factory Ishapore Issued by OFB
21-Jul-16 12 Station Infantry Weapon Training Simulator 03-Aug-16 RVC Centre And College,
Meerut
IA
16-Jul-16 High Speed Motor Boat 12-Aug-16 Gun and Shell Factory,
Cossipore
Issued By OFB
15-Jul-16 Advanced Land Navigation System For BMP IIK 27-Jul-16 Ordnance Factory, Medak Issued By OFB
15-Jul-16 Procurement of Fuze T and P 213 MK 5 M-R ARDE 2020;
Qty: 1195.000 Nos. + 50% Qty. Under Option Clause
29-Jul-16 Ammunition Factory
Khadki Pune
Issued By OFB
15-Jul-16 Navigational Radar, Furuno, Model-FAR 2127 01-Aug-16 Naval Science &
Technological Laboratory
Issued By DRDO
15-Jul-16 Explosive Detection Kit 04-Aug-16 DG ITBP For ITBP
14-Jul-16 Detonator Plug to Drg. No ARM 1138: Qty - 2410.000 No.
+ 50% Qty. Under Option Clause
02-Aug-16 Ammunition Factory
Khadki
Issued By OFB
14-Jul-16 Night Vision Binocular; Qty: 20 Nos. 21-Jul-16 CPRO Kochi For IN
11-Jul-16 LWI Helmet 09-Aug-16 AF STN Chabua Dibrugarh
Assam
For IAF
11-Jul-16 Binocular prismatic; Qty 2 Nos. 27-Jul-16 Station Logistics Section For IAF
09-Jul-16 HHTI - Binocular (UnCooled) Long Range Version; Qty:
175 Nos.
30-Aug-16 DG BSF For BSF
09-Jul-16 Cartg Trg for 81MM Mor Bomb 3B 20160330; Qty 5898
Set + 50% Qty. Under Option Clause
19-Aug-16 Ammunition Factory
Khadki
Issued by OFB
09-Jul-16 Cartg Trg for 81MM Mortar Bomb 3A 20160329; Qty:
12371 Set + 50% Qty. Under Option Clause
19-Aug-16 Ammunition Factory
Khadki
Issued by OFB
08-Jul-16 Mine APM Consisting of Body, Spool etc. 12-Aug-16 Ammunition Factory,
Kirkee
Issued by OFB
08-Jul-16 Reflex Sight; Qty: 3450 Nos. 01-Aug-16 HQ DGAR Laitkor Shillong For Assam Rifle
08-Jul-16 Light Bullet Proof Vehicle; Qty: 25 Nos. 19-Aug-16 Dte. Genl., ITB Police For ITBP
06-Jul-16 Integration of NGARM Missile 25-Jul-16 Director DRDL Issued By DRDO
05-Jul-16 Goggles Protective; Qty: 6,140 Nos. 27-Jul-16 Station Logistics Section For IAF
05-Jul-16 Hawk Flying Helmet and Oxygen Mask 22-Jul-16 ASTE, AF For IAF

19. 19Eye on Defence |
Date of
Issue
RFP Detail/Equipment Response
Date
Issued By Remarks
04-Jul-16 Tactical Vest; Qty: 71 Nos. 29-Jul-16 Senior Logistic Officer For IAF
02-Jul-16 Time and Impact Fuze Ffv-447 (Empty Assy) To Drg Pt
No. Iqx-69Ge Dc No. 36650-A Dt.26/2/00 Specn- F-1301-
910540-K (Cqa-0910) Dc 36613-A Dt 11/11/99; Qty:
13519 Nos.
15-Jul-16 Ordnance Factory
Khamaria
Issued by OFB
30-Jun-16 Prototype Engine Management System 01-Aug-16 Gas Turbine Research
Establishment
Issued by DRDO
29-Jun-16 Bullet Resistant Jacket; Qty: 2000+ 09-Aug-16 DG CISF For CISF
28-Jun-16 ACSIM - RT Aircraft Simulator 15-Jul-16 RCI Vignayana Issued by DRDO
28-Jun-16 Goggles Protective Field Type; Qty: 140 Nos. 15-Jul-16 Air Officer Commanding For IAF
27-Jun-16 Lame Retardant Overall Sage Green (Regular) S-11, S-12
(Customize Size) and Flame Retardant Display Overalls
Officers (Red Colour) (Customize Size)
12-Jul-16 Air Officer Commanding For IAF
24-Jun-16 Micro Unmanned Aerial Vehicle; Qty: 12 Nos. 27-Jul-16 DG AR , Provision Branch,
Shillong
For Assam Rifle
24-Jun-16 Variable Time FZ For Pinaka RKT (F) 18-Jul-16 Ordnance Factory, Chanda Issued by OFB
24-Jun-16 Limiting Signal System of Su-30 Aircraft; Qty: 01
Prototype
18-Jul-16 AOC, 9 BRD AF For IAF
23-Jun-16 Passive Night Vision Monocular; Qty: 250 Nos. 27-Jul-16 DG Sashastra Seema Bal For SSB
23-Jun-16 ACSIM - RT: Aircraft Simulator 15-Jul-16 Research Centre Imarat Issued by DRDO
23-Jun-16 Passive Day and Night Camera 02-Aug-16 LASTEC Issued by DRDO
23-Jun-16 Nose Fuze Type A-670 M Assembly Drawing (Filled) for
30MM BMP-II HE/I AMMN; Qty 281899 Nos. With 50%
Option Clause
12-Aug-16 Ordnance Factory
Khamaria
Issued by OFB
22-Jun-16 40 mm Under Barrel Grenade Launchers (UBGL); Qty:
1970 Nos.
23-Aug-16 Provisioning Dte.
(Procurement Cell)
For CRPF
22-Jun-16 Matching Ammunition/Grenades-Round 40 mm HE; Qty:
88062 Nos.
23-Aug-16 Directorate General, CRPF For CRPF
21-Jun-16 LWI Helmet and Mask Oxygen 11-Jul-16 Old Air Field, Air Force
Station
For IAF
20-Jun-16 Explosive Detectors 26-Jul-16 Commandant (Proc.) For CRPF
20-Jun-16 Explosion Proof IR Camera With Accessories 05-Jul-16 Air Force Station Tezpur,
Dist. Sonitpur
For IAF
20-Jun-16 Fuze T&P (Empty) M4 for 120mm ILLG 05-Jul-16 Ordnance Factory Dehu
Road-412101
Issued by OFB
20-Jun-16 Detonator Plug for Bomb Nos.56 MK2 etc. 01-Jul-16 Ammunition Factory,
Kirkee
Issued by OFB
19-Jun-16 LWI Helmet Size-2 AT 27-Jun-16 Wing commander Mou
Mondal
For IAF
17-Jun-16 Bomb detection and disposal (BDD) Equipment; Qty: 10
Items
28-Jul-16 Commandant
Procurement
For BSF

20. 20 | Eye on Defence
Date of
Issue
RFP Detail/Equipment Response
Date
Issued By Remarks
16-Jun-16 War gaming simulator 12-Jul-16 Joint Director IT
(Procurement)
For IAF
16-Jun-16 Anchorage Pontoons for Vikramaditya 29-Jul-16 Naval Dockyard, Lion Gate For IN
15-Jun-16 Passive Night Vision (Monocular), Qty: 600 Nos. 17-Aug-16 DG BSF For BSF
13-Jun-16 Diving items; Qty: 04 Types 20-Jul-16 Material Organisation,
Eastern Naval Command
For IN
13-Jun-16 FRP Single Engine Speed Boat with Four Strokes OBM,
Qty: 20 Nos.
26-Jul-16 DG BSF For BSF
10-Jun-16 Round Illuminating (Full Charge), Fuze RGM-2 and Fuze
T-90 For 122mm Howitzer Ammunition
06-Sep-16 MGO PPO For IA
10-Jun-16 Oxygen Mask (Hawk MK-132); Qty: 40 Nos. 21-Jun-16 Station Lgs Section,
Kharagpur
For IAF
10-Jun-16 Sniper Rifles; Qty: 252 Nos. 10-Aug-16 Procurement Cell of
Provisioning Directorate
For CRPF
09-Jun-16 Realization, Supply and Installation of Early Warning &
Advance Response Network System (e-WARN)
14-Jun-16 Research & Development
Establishment
Issued by DRDO
08-Jun-16 Impulse Cartridge As Per Drawing; Qty: 2000 Nos. 13-Jul-16 HEMRL Issued by DRDO
08-Jun-16 Flash Eliminator for 5.56MM LMG 29-Jun-16 Rifle Factory Ishapore For OFB
03-Jun-16 NBC Suit; Qty: 337 Nos. 07-Jun-16 The Material
Superindentend, Karwar
For IN
02-Jun-16 Bullet Resistant Jackets; Qty: 2700 Nos. 30-Jun-16 DIG (Proc) Dte. Genl. ITBP For ITBP
02-Jun-16 Vehicle Electronics Spares for Arjun MBT Mk I 21-Jul-16 CVRDE Issued by DRDO
02-Jun-16 Bird Scanning and Scaring Devices with Rechargeable
Cells and Charge; Qty: 03 Nos.
16-Jun-16 Station Aerospace Safety
&Inspection Officer
For IAF
02-Jun-16 Ballistic Shield 18-Jun-16 Garud Flight For IAF
01-Jun-16 Short Wave Infra Red (SWIR) Camera 07-Jul-16 Centre for High Energy
Systems and Sciences
Issued by DRDO
01-Jun-16 Hydraulic Puller Sets with Accessories; Qty: 02 Nos. 27-Jun-16 Naval Dockyard (Mumbai) For IN

21. 21Eye on Defence |
List of Industrial Licenses (ILs) filed for
1 June 2016 – 9 September 2016
Application no.
and date
Name of the applicant Item of manufacture
66
28/06/2016
M/s Autostem Technologies India Pvt. Ltd. Autostem Safety Cartridge SII 36 MM (60-140 gm)
65
10/06/2016
M/s Siva Sakthi Industrial Explosives Pvt.
Ltd.
Explosives Class 2
64
10/06/2016
M/s Premier Explosives Limited Manufacturing energetic binders such as HTPB, GAP etc.
63
7/06/2016
M/s Premier Explosives Limited Manufacturing Potassium Perchlorate, Sodium
62
07/06/2016
M/s Neco Desert Tech Defence Private
Limited
Sniper Rifle and Assault Rifle
61
31/05/2016
M/s Rajasthan Explosives & Chemicals
Limited
Ammunition for medium and high caliber weapons
60
24/05/2016
M/s Sanauto Engineers India Pvt. Ltd. Manufacture of parts and accessories of the aircraft
59
24/05/2016
M/s Eirene Land Systems Pvt. Ltd. Rifles
58
24/05/2016
M/s Jindal Stainless (Hisar) Ltd. Light armored vehicle
57
24/05/2016
M/s Eirene Space Systems Pvt. Ltd. Missiles
56
24/05/2016
M/s Eirene Defence Technologies Pvt. Ltd. Radars
55
24/05/2016
M/s Eirene Aerospace Systems Pvt. Ltd. Airplanes
54
24/05/2016
M/s Eirene Naval Systems Pvt. Ltd. Commercial vessels
53
24/05/2016
M/s Black Diamond Explosive Pvt. Ltd. Bulk explosives
52
24/05/2016
M/s Eirene Optical Systems Pvt. Ltd. Radar equipment
51
24/05/2016
Eirene Systems Special Materials Pvt. Ltd. Protective safety equipment
50
24/05/2016
M/s Super Shiv Shakti Chemical Pvt. Ltd. Slurry and emulsion
49
18/05/2016
M/s Ideal Industrial Explosives Ltd. Manufacturing of S.M.S/S.M.E explosives
48
18/05/2016
M/s Jindal Stainless (Hisar) Ltd. Explosive reactive armor
47
18/05/2016
M/s Zen Technologies Ltd. Blank ammunition
46
18/05/2016
M/s Ideal Industrial Explosives Ltd. Manufacturing of S.M.S/S.M.E explosives

22. 22 | Eye on Defence
Name of entity Project details Value*
Ministry of Defence (MoD)
►
• ► The MoD has approved major acquisitions for the
Indian Armed Forces worth INR150 billion, which
have been forwarded for consideration of the Cabinet
Committee on Security (CCS).
• The acquisitions include procurement of ultralight
artillery guns, tracked SP gun, Dhanush guns, Akash
air defence systems and C-130J Super Hercules
aircraft.
INR150 billion
Defence Acquisitions Council
(DAC) and Indian Navy
►
• ► DAC granted AoN (Acceptance of Necessity) to
procure six next-generation missile vessels, for the
Indian Navy worth approximately INR136 billion. The
AoN will enable the Indian Navy to issue tenders under
the ”Buy Indian” category for the missile vessels.
• The council has also approved the request to procure
five diving support vessels at INR1.5 billion.
~INR140 billion
DAC and Indian Army
►
• ► DAC cleared the procurement of 145 M777 Ultra-
Light Howitzers (ULH) worth INR50 billion from the
US. The deal is cleared under the Foreign Military Sales
(FMS) channels.
• It also approved the bulk production of 18 indigenously
manufactured Dhanush 155mm howitzers. Each
howitzer is expected to cost INR140 million and the
army has demanded 114 Dhanush howitzers.
~INR55 billion
Larsen and Toubro (L&T)
►
• ► The MoD has finalized L&T for the largest private
order of 100 mobile artillery guns, K9 Vajra-T
howitzer, worth INR45 billion.
• The deal has been sent to the CCS for the final
approval, which is expected by October 2016.
INR45 billion
DAC and Indian Air Force (IAF)
►
• ► DAC approved the procurement of indigenous
simulators for the latest, DARIN-III version, of Jaguar
aircraft worth INR5 billion for IAF.
• The DAC also approved an electronic warfare
facility for the IAF worth INR14 billion, which will be
manufactured by Bharat Electronics Limited (BEL).
The facility will help IAF and BEL co-develop several
state-of-the-art electronic warfare systems.
~INR20 billion
New projects / investments / contracts

23. 23Eye on Defence |
ThyssenKrupp Marine Systems • ► Germany’s ThyssenKrupp Marine Systems has won a
contract to upgrade Indian Navy’s two Shishumar Class
submarines to fire Harpoon anti-submarine counter
measure missiles by 2018.
INR2.5 billion
Rafael and IAF • ► Rafael has won a contract to provide 164 lightening
targeting pod to the IAF that will be used on four types
of combat aircraft including Sukhoi Su-30 aircraft.
NA
► • The contract is part of the ~INR33.5 billion (US$500
million) defence cooperation agreement between India
and Israel.
NA
*The values of the deals have been converted to Indian Rupees. 1US$ = INR67.
Sources:
1. “Defence Ministry nod to buy 145 ultra-light howitzers worth INR 5,000 crore from US,” The Economic Times, 25 June 2016, via Q-tech
Synergy Newsletter
2. “Defence Acquisition Council (DAC) green lights 19 proposals worth over INR 28,000 crores,” IAD News, 26 June 2016, via Q-tech
Synergy Newsletter
3. “Defence Ministry Approves Buying Of C-130 J Super Hercules Aircraft,” NDTV, 25 August 2016, via Q-tech Synergy Newsletter
4. “India inks deal with ThyssenKrupp,” The Financial Express, 1 July 2016, via Q-tech Synergy Newsletter
5. “India acquires Lightening targeting pod,” Flight Global, 29 June 2016, via Q-tech Synergy Newsletter
6. “Defence ministry concludes deal with Larsen & Toubro, gives much needed ammunition to private sector,” The Economic Times, 1 July
2016, via Q-tech Synergy Newsletter

24. 24 | Eye on Defence
Name of the entities Nature of transaction Value
Texmaco Rail & Engineering and
ROSOBORONEXPORT
• ► Texmaco Rail & Engineering has signed an MoU with
ROSOBORONEXPORT, a Russian state-owned agency
for exports and imports of defence-related products.
• ► The MoU has been signed for cooperation in carrying
out joint projects for modernization of armored
vehicles operated by the Indian Army, co-production
of BMP-3, R&D and production of futuristic armoured
vehicles and spare parts.
NA
Wipro Infrastructure Engineering
(WIN) and H R Givon
• ► WIN has acquired H R Givon, an Israel-based supplier
of metallic parts and assemblies to the aerospace
industry, in an all cash deal.
• ► This acquisition will help WIN broaden its product
portfolio and expand its global footprint. Givon
manufactures structural parts and assemblies for the
fuselage, wings and empennage of an aircraft and
is a key supplier to global firms such as Boeing and
Hindustan Aeronautics Ltd.
NA
Reliance Defence and Gujarat
Maritime Board (GMB)
• ► Reliance Defence signed an agreement with the GMB
granting Reliance Defence to build, operate and
manage defence and commercial shipyard activities at
Pipavav port in Gujarat.
• ► Reliance Defence is the first Indian private company to
obtain a license and contract to build naval warships.
NA
Tata Power SED, Lockheed
Martin and Raytheon
• ► Tata Power SED has signed an agreement with
Raytheon and Lockheed Martin’s Javelin Joint Venture
(JJV) to co-develop and produce the Javelin anti-
armor missile system.
• ► The missile system will be developed for ground
combat vehicle, dismounted infantry and rotorcraft
applications. The missile system has been approved for
15 foreign military sales customers.
NA
Centum Electronics and Adetel
Group
• ► Centum Electronics has acquired a controlling stake of
51% in France’s Adetel Group.
• ► Adetel Group specialises in design, development and
industrialisation of embedded electronic systems for
defence, aerospace, industrial, transportation and
energy sectors.
NA
JVs and alliances

25. Defence Research and
Development Organisation
(DRDO) and Indian Institute of
Technology (IIT)
• ► The DRDO has signed a Memorandum of Agreement
(MoA) with IIT-Bombay and Madras to establish a bi—
nodal “Centre of Propulsion Technology” (CoPT) at the
two institutions.
• ► The MoA is aimed at achieving synergy between
DRDO and IITs for channelizing the research efforts
toward developing critical products for the aerospace
industry.
NA
Safran and Hindustan
Aeronautics Limited (HAL)
• ► Safran and HAL have formed a JV to support engines
used on HAL-produced helicopters and HAL Shakti
engines (Indian designation for the Ardiden 1H1).
• ► The Shakti engines powers HAL’s Dhruv and the new
Light Combat Helicopter (LCH), while the Ardiden 1U
will power the future Light Utility Helicopter (LUH).
NA
Thales and Elettronica • ► Thales and Elettronica signed an agreement to explore
initiatives and pursue growth business opportunities in
the electronic warfare segment.
• ► The agreement will aim to strengthen their industrial
and commercial operations in the defence business.
NA
Sources:
1. “Texmaco Rail signs pact with Russian ROSOBORONEXPORT,” Business Standard, 26 July 2016, via Q-tech Synergy Newsletter
2. “Wipro Infrastructure to acquire Israel’s H R Givon,” The Economic Times, 1 August 2016, via Factiva
3. “Reliance Defence in pact with Gujarat Maritime Board to manage shipyard activities at Pipavav,” The Economic Times, 22 July 2016, via
Q-tech Synergy Newsletter
4. “Thales and BTSL partner to jointly develop PHAROS fire control radar,” Market Line, 4 May 2016, via Factiva
5. “Centum Electronics picks up 51% stake in France’s Adetel Group,” The Financial Express, 17 June 2016, via Q-tech Synergy Newsletter
6. “DRDO inks pact with IITs for Centre for Propulsion Technology,” The Financial Express, 9 July 2016, via Q-tech Synergy Newsletter
7. “Safran, HAL form engine MRO joint venture,” Vayu Aerospace & Defence Review, 4 August 2016, via Factiva
8. “Thales and Elettronica MoU for Electronic Warfare,” VADR, 4 August2016, via Factiva
25Eye on Defence |

26. 26 | Eye on Defence
Country Nature of transaction Additional details
France • France is likely to invest INR75 billion
(€1 billion) on India’s combat jet engine
program, Kaveri.
• French experts assessed an additional
25%–30% of additional work to make the
engine ready.
• The proposal is to use offset credits that is expected
to come from the planned Rafale fighter jet deal to
revive the indigenous jet engine project.
Russia • Russia and India have signed some key
deals including upgrade of 10 KA-28
helicopters and Su 30 MKI aircraft.
• The total value of the deals is expected to
be around INR40 billion, INR20 billion each
KA-28 and Su 30 MKI.
• The upgrade of the Su-30's will include adding new
avionics, sensors and radar, improving its stealth
capability and modernization of the cockpit while
KA-28 will receive state-of-the-art western weapons
and sensors and the upgrade is to be completed by
2020.
The US • India and the US have signed the “Logistics
Exchange Memorandum of Agreement”
(LEMAO). The agreement make the two
countries logistical allies and enable both
the militaries to use each other's assets
and bases.
• The Indian Defence Minister, Manohar Parrikar
has also discussed possibility of co-development
and co-production of advanced defence products,
including aircraft carriers, as part of DTTI with the
US Defence Secretary Ashton Carter.
Afghanistan • India has agreed to extend military support
under different scopes to Afghanistan.
• Afghanistan’s army chief Gen. Qadam Shah
Shaheem presented his military wish-list to the
Indian authorities.
Country-level deals and initiatives
Sources:
1. “India, US sign logistic exchange pact boosting defence ties,” The Times of India, 30 August 2016, via Q-tech Synergy Newsletter
2. “France offers EUR 1 billion to revive India’s combat jet engine project,” The Economic Times, 4 July 2016, via Q-tech Synergy Newsletter
3. “India’s navy to upgrade 10 Ka-28 helicopters,” Flight Global, 4 August 2016, via Factiva
4. “India to Upgrade Russian-Made Su-30 Fighter Jets Amid Delay in Rafale Deal,” Sputnik, 16 August 2016, via Factiva
5. “India To Extend Military Cooperation To Afghanistan, Under US Demand,” Bakhtar News, 5 September 2016, via Factiva

27. 27Eye on Defence |
Anti-submarine torpedo,
Varunastra joins the Indian
Navy
Indigenously-built anti-submarine torpedo Varunastra
has been successfully inducted in the Indian Navy. With
this induction, India becomes the eighth country globally
to have such heavyweight anti-submarine torpedo. It is
developed by a premier laboratory of DRDO, Naval Science
and Technological Laboratory (NSTL). The torpedo weighs
around 1.25 tonnes and carries around 250 kg of explosives
at a speed of around 40 nautical miles an hour.
(Source: “Anti-submarine torpedo Varunastra inducted in navy,” The
Economic Times, 29 June 2016, via Factiva)
Medium range surface-to-air
missile tested successfully
The Indo-Israeli Medium Range Surface-to-Air Missile
(MRSAM) was tested successfully by DRDO at Chandipur
in Odisha. The missile had been jointly developed by Israel
Aerospace Industries, DRDO and Israel’s Administration
for the Development of Weapons and Technological
Infrastructure. The MRSAM is nuclear capable and can
carry a payload of 60 kg. It also includes a multi-functional
surveillance and threat alert radar for tracking, detection
and guidance of the missile.
(Source: “Indo-Israeli medium range missile test fired,” Business
Standard, 30 June 2016, via Q-tech Synergy Newsletter)
DRDO test fires indigenous
glide bombs
The DRDO successfully test fired precision-guided smart
glide bombs, Garuthmaa and Garudaa, at the Pokhran firing
range in Jaisalmer from a Su-30 MKI aircraft. Garuthmaa
is a 1,000-kg winged smart glide bomb and have a 100-km
range while Garudaa is a non-winged glide-bomb and have a
range of 30 kilometres.
(Source: “DRDO successfully tests ‘glide bombs’ in Pokhran,” The
Times of India, 20 August 2016, via Q-tech Synergy Newsletter)
DRDO successfully tests
Advanced Artillery Gun
System
The DRDO successfully conducted the proof firing of
Armament system for 155 mm x 52 calibre Advanced Towed
Artillery Gun System (ATAGS) during the technical trials
conducted at Proof & Experimental Establishment (PXE),
Balasore. ATAGS is a fully indigenous towed artillery gun
system project developed by DRDO as a part of its artillery
modernization program of the Indian Army.
(Source: “DRDO Embarked Major Success in Advanced
Artillery Gun System,” PIB, 14 July 2016, via Factiva)
Autonomous Underwater
Vehicle (AUV) tested by
DRDO
The DRDO owned, Naval Science and Technological
Laboratory (NSTL), has successfully completed all trials of
the Autonomous Underwater Vehicle (AUV). The AUV is
critical for underwater mine sweeping, mine laying and also
to gather intelligence and surveillance of enemy vessels. The
one developed by NSTL’s scientists can perform tasks at a
depth of around 300 m to 500 m under the sea, relatively
noiselessly and without being detected by enemy vessels.
(Source: “Underwater vehicle tested by Naval Science and
Technological Laboratory,” Deccan Chronicle, 28 July 2016, via
Factiva)
BrahMos missile successfully
integrated with Su-30 MKI
aircraft
BrahMos Aerospace successfully tested the integration of
India’s supersonic cruise missile system BrahMos on Su-
30MKI aircraft. The tests were carried out at HAL’s Nashik
facility in Maharashtra. The integration makes IAF the only
Air Force in the world, which possesses a supersonic cruise
missile system. The BrahMos missile has a strike range
of 290-km and can travel at a speed of Mach 2.8 and is
capable of being launched from land, sea, sub-sea and air
against sea and land targets.
(Source: “Integration of BrahMos missile with Su-30MKI
demonstrated successfully,” The Indian Express, 25 June 2016, via
Q-tech Synergy Newsletter)
Industry buzz

28. 28 | Eye on Defence
India’s basic trainer jet, HTT-
40 makes inaugural flight
India’s indigenous basic trainer aircraft, HTT-40, made its
inaugural flight in Bengaluru. The aircraft is developed by
HAL and will be used for the first stage training for all flying
cadets of the three services, Air Force, Army and Navy.
IAF is expected to procure 70 HTT-40 aircraft. The aircraft
has more than 80% indigenous content with more than
75 systems of the total 90 are procured from within the
country.
(Source: “Indigenous Trainer Aircraft HTT-40 Makes Inaugural
Flight,” NDTV, 17 June 2016, via Factiva)
HAL successfully tests the
upgraded Mirage-2000
HAL tested the upgraded Mirage-2000 aircraft in its final
operational configuration (FOC) design. The upgraded
Mirage 2000’s FOC configuration covers the integration
of India-specific weapons, sensors and EW system and
gives additional capability of air-to-ground weapon,
training, helmet mounted display etc. The initial operation
configuration (IOC) was designed by Dassault and Thales
while FOC design and development activities were taken by
HAL.
(Source: “HAL flies upgraded FOC Mirage 2000; boost for IAF,” The
Financial Express, 29 July 2016, via Q-tech Synergy Newsletter)
MoD working on establishing
venture capital funds in
defence sector
The MoD is working on setting up an INR300 billion corpus
for defence production by foreign companies. According to
the initial proposal, the foreign defence companies that have
sold equipment to India can invest in VCFs as part of their
offset obligations (at least 30% of the contract value must be
invested back in India). Foreign companies can invest up to
25% of their offset obligations in such funds and such VFCs
will be cleared by the MoD.
(Source: “Government working on INR 30,000 crore corpus for
venture capital funds in defence sector,” The Economic Times, 15
July 2016, via Factiva)
MoD formed an internal
committee to finalize
strategic partnership model
The MoD has formed an internal committee for finalizing
the DIPP-2016 final chapter of strategic partners regarding
the number of government contracts. The Government
is to select a private player to exclusively make a military
platform for a specified period of time.
(Source: “Defence manufacturing: Another panel to finalise
strategic partner model,” The Indian Express, 15 July 2016, via
Factiva)
Secret Data on India’s
Scorpene submarine
program leaked
Sensitive data relating to combat capability of the six
Scorpene class submarines that are under development
for the Indian Navy has been leaked. Mazagon Dock
Limited, in collaboration with the French shipbuilder DCNS,
is developing six Scorpene submarines under Project 75
worth US$3.5 billion with the first of the Scorpene class
submarines to be inducted by year-end and the remaining to
be delivered by 2020. The leaked DCNS data has sensitive
information around the stealth capabilities, intelligence
gathering frequencies, diving depths, noise levels, and
magnetic, electromagnetic and infra-red data.
(Source: “French submarine builder in massive leak scandal,” The
Australian, 15 July 2016, via Q-tech Synergy Newsletter)
HCL Infosystems develops
Defence Communication
Network (DCN) for Indian
Armed Forces
HCL Infosystems has developed an indigenous converged
communications network for the Armed Forces. The network
is the largest single satellite network in the Indian defence
forces, spread across the country. DCN will bolster the
prowess of the defence forces during both critical operations
and rescue missions.
(Source: “Indian armed forces get converged communication
network,” Hindustan Times, 30 June 2016, via Q-tech Synergy
Newsletter)

29. Global Aerospace & Defence News
29Eye on Defence |

30. 30 | Eye on Defence
Key themes from leading US
based A&D players
This section covers the top themes discussed in the
2Q16 earnings releases of seven of the largest US-based
A&D companies: Boeing, General Dynamics, Honeywell,
Lockheed Martin, Northrop Grumman, Raytheon and United
Technologies.
Defence spending and macroeconomic conditions, share
repurchases and dividends, and cost control were the top
themes discussed. The other key themes discussed included
market demand, new products and programs, international
business and improving cash flows. In addition, companies
also discussed pensions, manufacturing efficiencies
including production rates and exchange rate. Lockheed
Martin, Northrop Grumman, Raytheon and Honeywell
discussed most of the top-ranked themes in their earnings
calls.
Boeing General
Dynamics
Honeywell Lockheed
Martin
Northrop
Grumman
Raytheon United
Technologies
Defence spending and
macroeconomic conditions
Cost control (cost-cutting
measures implemented by
the company)
Market demand:
commercial and military
New products/programs
International business
Manufacturing efficiencies,
including production rates
Exchange rate
High priority themes Low priority themes
Moderate priority themes Themes not discussed
Summary matrix for the top themes in 2Q16

31. 31Eye on Defence |
Rank Theme Description
1 Defence spending and
macroeconomic conditions
• Leading A&D players
are expecting a modest
growth in the US
defence spending; they
do not expect Brexit to
be a major threat to their
business
• ► In medium to long term, Boeing, Lockheed Martin and United Technologies
expect a modest growth in the US defence budget, while Northrop
Grumman and Raytheon are concerned by the continuing resolution in
FY17 by the US Government.
• ► Honeywell, General Dynamics, Northrop Grumman and Raytheon see no
significant impact on their businesses in the short to medium term due to
Brexit, largely because of prevailing uncertainties and lower share from
the UK.
2 Cost control
• Companies are focusing
on reducing costs to
improve affordability
while maintaining
profitability
• ► Lockheed Martin announced two cost-reduction initiatives: one in
the production run of aircraft and the other in the form of a regional
sustainment center. The two programs are expected to save US$5 billion
by 2021.
• ► All the leading A&D players involved in the production of the F-35 aircraft,
including Northrop Grumman and Lockheed Martin, have partnered to
implement cost-reduction initiatives to make the aircraft more affordable.
• ► Both Honeywell and United Technologies are focusing on reducing their
indirect spends and implementing their restructuring plans.
3 Commercial and military
market demand
• Passenger traffic growth
is driving the demand
for commercial aircraft;
the military market is
expected to improve
globally
• ► Air traffic growth and rising replacement demand is expected to result in
modest growth in the A&D industry. Passenger traffic (RPK) is expected to
witness a growth of 6.2% in 2016.
• ► The A&D players are expecting a period of modest growth in defence
spending over the next five years, driven by increased defence spending in
Asia-Pacific and the Middle East.
4 New products and programs
• The key programs of
major A&D companies
are on track
• ► In July 2016, Raytheon delivered its first Air and Missile Defense Radar
(AMDR) to the US Navy’s Pacific Missile Range Facility.
• ► In 2Q16, Lockheed Martin developed three test CH-53K helicopters for
test runs. Recently, it successfully lifted a 27,000 pound external load,
satisfying the contractual requirement. Northrop Grumman successfully
implemented the US Navy’s Surface Electronic Warfare Improvement
Program (SEWIP) and developed a new jammer JCREW for the Navy
during 2Q16.
Description of the top themes discussed by A&D executives

32. 32 | Eye on Defence
Rank Theme Description
5 International business
• Most of the companies
registered an increased
international sales
• ► Raytheon’s international revenues increased by 8% in 2Q16, accounting
for 32% of the company’s total revenue.
• ► Lockheed Martin’s international business revenues are growing, driven
by the delivery of F-35 aircraft, including the delivery of two units to the
Netherlands and one to Israel. Denmark also cleared the purchase of 27
F-25 aircraft in 2Q16.
6 Production rates
• Companies are ramping
up production as orders
for key programs pick up
globally
• ► Boeing is ramping up the production of the 737 aircraft from 42 units
per month in 2016 to 47 units per month in 2017, and further plans to
increase it to 57 units per month by 2019.
• ► Lockheed has ramped up the F-35 aircraft production rate from 45 units
per year in 2015 to 53 units per year in 2016, and plans to increase it to
145 units per year by 2020.
• ► Northrop Grumman is reaching an inflection point where planned ramp-
ups on production programs are beginning to outpace declines on mature
legacy programs. The growth in manned and autonomous systems drove a
4% increase in 2Q16.
7 Exchange rate
• Operating in a
number of countries
across continents,
A&D companies
are susceptible to
fluctuations in foreign
currency exchange rates
• ► In 2Q16, General Dynamics and Northrop Grumman reported negative
foreign exchange impacts of US$100 million and US$30 million,
respectively.
• ► Honeywell has hedged approximately 75% of the 2017 euro P&L exposure
at US$1.15 and roughly 50% of the 2017 British pound P&L exposure at
$1.44 to protect its pound—euro based earnings.
• ► During 2Q16, the US dollar appreciated by 2.5% against the euro and 6.8%
against the British pound.
Note: The ranking of the themes was decided based on the number of companies discussing the themes. The scope of this
ranking was limited to examining transcripts and presentations that were part of 2Q16 earnings conference calls.

33. 33Eye on Defence |
Impact of Brexit on the A&D sector
Most of the leading A&D
players do not see a
significant impact of Brexit
• Leading players such as Honeywell and Raytheon see no impact of Brexit in short
run.
• However, analyst firm IHS Janes forecasts that foreign direct investment in UK
defense assets could dry up. It projects a US$3 billion (£2.3 billion) cut in annual
spending on the British Armed Forces in 2020.
NATO countries to increase defense spending
The collective defense
spending of NATO members
is expected to rise by US$8
billion in 2016
• The collective defense spending of the NATO members, excluding the US, is expected
to rise by 3%.
• In 2016, 22 countries in the NATO will increase defense spending in real terms,
while 18 countries are expected to increase their defense expenditures on major
equipment and research and development.
A&D developments in foreign countries
The US foreign military
sales likely to reach US$40
billion in FY16, down by
US$6.6 compared to FY15
• The US Government is expected to approve foreign military sales worth ~US$40
billion in FY16 ending October 1, down by ~14.2% from $46.6 billion in FY15.
• The Government has launched 40 separate initiatives to streamline the foreign arms
sales approval process.
• Global demand for US helicopters remained strong in FY16.
The US Air Force (USAF)
funds for sixth generation
combat aircraft engine
• The USAF has awarded a set of contracts to GE Aviation and Pratt & Whitney to
progress its Adaptive Engine Transition Program (AETP). Both companies together
received contracts worth US$1.01 billion, with a period of performance ending in
2021.
• The next generation aircraft engine is expected to have a 30% increase in range, a
25% improvement in fuel consumption and a 10% boost in thrust compared to the
fifth generation combat aircraft engine.
Germany plans to invest
US$150 billion by 2030 for
military modernization
• Germany is planning to invest approximately US$150 billion (€130 billion) by 2030
on modernizing military equipment and enabling the military to better fulfill its
foreign missions.
• The country is expected to spend ~US$16 billion on replenishing its depleted
stockpile of ammunition. The current stocks have fallen to a two-day supply, far
below NATO's Cold War requirement of 30 days.
• It will also increase the size of its armed forces by ~11,400 troops for the first time
since the end of the Cold War.
Global industry buzz

34. 34 | Eye on Defence
After developing the world’s
largest military transport
aircraft, China is focusing
on its indigenous aircraft
engine
• China has developed an indigenous military transport aircraft, Y-20. It is the world's
largest military transport aircraft and will be primarily used for marine missions.
China now becomes third country after the US and Russia to develop its own
transport aircraft.
• China has also invested ~US$20 billion in an aircraft engine manufacturing plant.
The facility will develop both commercial and military aircraft that will power its own
aircraft, including C919.
Japan Air Self-defense
Force (JASDF) is focusing
on strengthening its aircraft
fleet
• Japan is planning to deploy ~100 fifth-generation fighter aircraft worth US$40
billion. The Japanese defense ministry is expected to award a contract by the end of
2018, with delivery of all aircraft expected by 2030.
• The Japanese defense ministry is considering three options for the contract: develop
an all-new fighter indigenously, collaborate with a foreign partner for a new aircraft,
or buy or upgrade an existing aircraft.
The UK orders aircraft
and helicopters worth
~US$6 billion during the
Farnborough Air Show
• During the Farnborough Air Show, held in July 2016, the UK defense ministry
ordered nine military surveillance jets (P8-A) worth US$3.9 billion and 50 AH-64E
Apache attack helicopters worth ~US$2.3 billion from Boeing.
• The deals have been cleared by the US State Department under the government-to-
government sale route.
Major updates from US-based defense contractors
Lockheed Martin is likely
to finalize a contract worth
~US$15 billion with the US
Department of Defense
(DoD)
• Lockheed Martin expects to reach an agreement with the US DoD for a deal for 160
F-35 fighter jets valued at around US$15 billion.
• The company has also won key contracts worth US$733 million from the US Army
for aerial intelligence, surveillance and reconnaissance work, and a joint contract
with Raytheon worth US$649.7 million for the modification of Paveway II laser-
guided bombs.
Northrop plans to start
the production of second
Japanese E-2D Advanced
Hawkeye airborne early
warning (AEW) and
surveillance aircraft
• Northrop Grumman has received a contract from the US Navy to begin production of
the second Japanese E-2D Advanced Hawkeye AEW and surveillance aircraft.
• The first Japanese E-2D is in production and will be delivered in 2018.
• The company also received an order from the USAF worth ~US$200 million for the
maintenance of Global Hawk surveillance drones.
Raytheon wins key
contracts from the US Navy
(worth ~US$3.2 billion) and
is about to finalize a US$5
billion deal with Poland
• Raytheon has won three key contracts from the US Navy: a US$2.6 billion contract
for missile interceptors, a US$300 million contract for sidewinder missiles and a
US$350 million contract for the Aegis weapons system.
• The company is also finalizing a US$5 billion contract with Poland for a missile
defense system.
BAE Systems enters into
a 10-year partnership with
the UK Ministry of Defense
(MoD) to support the
Typhoon fleet
• BAE Systems entered into a 10-year deal worth US$2.7 billion with the UK Ministry
of Defense to support the Typhoon fleet. The deal could generate savings of more
than US$658 million for the UK MoD.
• The company has also partnered with General Dynamics to compete in a program for
the British Army’s Challenger 2 main battle tank fleet.

35. 35Eye on Defence |
Sources:
1. “House Passes Defense Appropriations”, Defense News, 16 June 2016, via AIA Daily News.
2. “US Air Force Funds Next Advanced Engine Stage”, Defense News, 1 July 2016, via AIA Daily News.
3. “U.S. arms sales approvals on track to reach nearly $40 billion”, Reuters, 13 July 2016, via AIA Daily News.
4. “House passes $576B defense spending bill”, The Hill, 16 June 2016, via Factiva.
5. “USAF Has Big Plans, But Little Money, For ‘Warthog’ Replacement”, Defense News, 15 June 2016, via AIA Daily News.
6. “US Navy Faces $848 Million Ops & Maintenance Shortfall”, Defense News, 26 May 2016, via AIA Daily News.
7. “European allied defence spending to rise in 2016, predicts NATO”, IHS Janes, 5 July 2016, via AIA Daily News.
8. “Defense spending shows ‘further increase’ in 2016, says NATO chief”, DW, 13 June 2016, via Factiva.
9. “Japan Secures SM-2 Missiles for Destroyers”, Defense News, 21 July 2016, via Factiva.
10. “Tokyo speaking with industry about futuristic F-3 fighter”, Flight Global, 30 June 2016, via AIA Daily News.
11. “Japan’s Air Force to Receive 100 New Stealth Fighter Jets”, The Diplomat, 7 July 2016, via AIA Daily News.
12. “China Rolls Out World’s Largest Amphibious Aircraft”, Miltary.com, 24 July 2016, via Factiva.
13. “China vows to use market forces to boost defence capabilities”, Reuters, 21 July 2016, via Factiva.
14. “The World’s Largest Military Plane in Production is China’s Y-20”, Popular Science, 20 June 2016, via Factiva.
15. “Raytheon cleared for likely $2.6 billion in new missile orders”, Boston Globe, 20 July 2016, via Factiva.
16. “Raytheon gets $291M Sidewinder missile contract mod”, UPI, 5 July 2016, via AIA Daily News.
17. “Raytheon awarded $365 million Aegis contract”, UPI, 31 May 2016, via AIA Daily News.
18. “Raytheon Co. nears big missile deal with Poland”, Lowell Sun, 11 July 2016, via AIA Daily News.
19. “Northrop to support Air Force drone operations”, C4ISR net, 28 June 2016, via AIA Daily News.
20. “Northrop Grumman to continue maintenance of Global Hawk surveillance drones”, Washington Business Journal, 22 June 2016, via
Factiva.
21. “Lockheed Martin wins $733 million aerial ISR contract”, UPI, 21 June 2016, via AIA Daily News.
22. “Lockheed Martin, Raytheon units win $649.7 million defense contract: Pentagon”, Reuters, 9 May 2016, via AIA Daily News.
23. “Lockheed sees deal soon with Pentagon for 160 more F-35 fighter jets”, Reuters, 9 May 2016, via Factiva.
24. “German defence needs to spend billions to rebuild munition stocks -source”, Reuters, 6 July 2016, via Factiva.
25. “BAE, Industry Partners Team Up for Challenger 2 Race”, Defense News, 3 June 2016, via Factiva.
26. “Northrop Grumman Begins Work on Second Japanese E-2D Advanced Hawkeye”, Global news wire, 3 August 2016, via Factiva.
27. “Poland closer to clinching $5 bln missile deal with Raytheon :minister”, Reuters, 11 April 2016, via Factiva.

36. 36 | Eye on Defence
Analysis of M&A trends
A&D highlights: 2016
1
Deal value
• Deal value in 2Q16 (US$2.6 billion) was 23% less than
that in 2Q15 (US$3.4 billion).
Exhibit 6. A&D deals yearly view (2011—YTD2016*)
Source: Compiled by Q-Tech synergy
30,696
11,497 9,708
15,625
56,655
5,571
235 240
215
250
234
101
0
10,000
20,000
30,000
40,000
50,000
60,000
0
50
100
150
200
250
300
2011 2012 2013 2014 2015 2016
A&D Value ($b) A&D deals
Exhibit 7. A&D quarterly view (1Q11—2Q16*)
Source: Compiled by Q-Tech synergy
A&D Value ($b) A&D deals
0
10
20
30
40
50
60
70
80
90
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Q1
11
Q2
11
Q3
11
Q4
11
Q1
12
Q2
12
Q3
12
Q4
12
Q1
13
Q2
13
Q3
13
Q4
13
Q1
14
Q2
14
Q3
14
Q4
14
Q1
15
Q2
15
Q3
15
Q4
15
Q1
16
Q2
16
Q3
16
Numberofdeals
DealvalueUS$b
• There were two deals of over US$1b in 2016: KKR’s
acquisition of Airbus’s Defence Electronics unit and
TransDigm’s acquisition of ILC Holdings.
1 Thomson One (01 January 2011 — 08 August 2016)

37. 37Eye on Defence |
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