Eye on Defence October 2017

Contents title
Contents subjects
Dear readers,
In continuation with our efforts to provide in-depth analysis of the defence
industry in India, this edition of the Eye on Defence covers a significant
development — the issue of an RFI for the Project-75(I) program. The edition
also highlights the main features of the offset policy in India while attempting
to identify takeaways from Israel’s offset policy. With the growth in air travel in
India, this edition highlights how India is gearing up to meet the demand and the
current state of the supply chain in the civil space.
The Navy has capable design bureaus and a vibrant industrial base serving the various needs
of Indian shipyards engaged in manufacture of warships and other auxiliary vessels. However,
one area in which the capability of the naval force is found wanting is the force projection of
submarines. Following the recent RFI for the P-75(I) program as part of the larger Strategic
Partnership policy, our first article attempts to provide insights on the program and highlights the
major Indian players involved along with their capabilities.
The second article summarizes India’s offset policy and attempts to use Israel as a benchmark
to identify key takeaways from the latter’s policy and implementation procedure. We
have attempted to highlight avenues that can be considered to further enhance the policy
implementation in India.
The third article compares which aircraft manufacturers dominate the civil space globally and in
India, while also sharing a brief on India’s own Saras aircraft. We have also attempted to highlight
the key Indian players that are currently part of the global supply chain for commercial aircraft.
Among the other regular sections, we have the global A&D industry buzz, the domestic industry
news, RFIs/RFPs released, new projects and investments, joint ventures and alliances and
country-level deals. On the industrial licensing front, there seem to be no fresh industrial licenses
issued.
I hope you find this issue useful. It has been our constant endeavor to make this publication
increasingly relevant to you, and we will appreciate your comments and suggestions in this
regard.
Wishing you a happy and prosperous Diwali!
K. Ganesh Raj
Partner and Leader
Contents
Introduction
Project 75(I) RFI –
another step in fully
equipping the Indian Navy
Offsets Policies and
Implementation – not
really a low hanging fruit!
Passenger aircraft – a
tale of ever increasing
demand
Request for information
(June 2017—August
2017)
Request for proposal
(June 2017 – August
2017)
New projects/
investments/contracts
JVs and alliances
Country-level deals and
initiatives
Industry buzz
Global industry buzz
Analysis of M&A trends
Eye on Defence
October 2017
02
14
18
22
28
30
34
36
38
40
42
44

2 | Eye on Defence
Introduction
Today, the Indian Armed Forces are at an important juncture
as far as war preparedness is concerned, and the Indian
defence procurement process is also evolving. Policies are
being formulated to increase accountability and efficiency
without further delaying decision-making. A step in a similar
direction, the strategic partnership (SP) policy is an initiative
to achieve self-reliance and propel India into becoming a
defence manufacturing hub.
P-75(I) is likely to be the first project under this model.
Submarines are a vital part of the naval fleet and ideal for
sea-denial operations, safeguarding maritime borders,
particularly during wartime situation. India’s threat
perception and vast coastline make a robust mix of nuclear/
diesel-electric submarines critical for defending the
country. Ideally, the Navy has a requirement of a fleet of
25-30 submarines; however, it currently has only 13 at
present with not a very encouraging vintage spread. The
desired level of combat capability requires a steady inflow
of replacements and there is urgent requirement to induct
submarines into service.
The share of near obsolete and near obsolescence platforms
is large. By 2017, 57% will have completed their operational
life. By 2021, 88% would have completed their operational
life.
Project-75(I) RFI — Another step in
fully equipping the Indian Navy
8%
40%
8%
30%
84%
30%
Existing age profile Desired age profile
20+ years
10-20 years
0-10 years
India submarine fleet

3Eye on Defence |
Procurement pipeline
The Cabinet Committee on Security (CCS) approved a
comprehensive 30-year submarine-building plan for the
Indian Navy in July 1999, envisaging the induction of
12 new submarines by 2012, followed by another 12
by 2030. All the ongoing and also the future submarine
procurement programs are seen facing delays coupled
with cost escalation. The current position is as under:
India’s submarine fleet
Type Desired Held Remarks
SSK 20 13 • Life extension program of four Kilo class and Type 209 submarines underway
SSN 6 1 on lease • INS Chakra was leased at a cost of ~$1billion in 2012 for 10 years.
• Lease of an Akula class SSN from Russia is under negotiation for a 10-year
period from Russia in a ~US$1.5-2 billion deal
SSBN 3-5 0 • Three more SSBNs being built after Arihant at Vizag under the Advanced
Technology Vessel Program
• INS Aridhaman (S-2) currently undergoing sea trials with its active nuclear
reactor
• S-3 and S-4 under construction; S-5 has been approved for construction; all the
three vessels being built and are expected to be commissioned by 2023
P-75 6 - • 6 Scorpene diesel-electric submarines being built at Mazagon Docks under the
US$4.6 billion Project-75, to be delivered by 2021
• INS Kalvari, the first Scorpene class stealth submarine built under Project-75,
expected to be commissioned sometime this year, while INS Khanderi, the
second indigenous Scorpene-class submarine, recently launched at MDL

4 | Eye on Defence
P-75(I)
In order to select a foreign original equipment manufacturer
(OEM) as technology partner, a request for information
(RFI) was issued on 19 July 2017 to companies that have
independently designed and constructed a modern submarine
that is either currently in service or is undergoing sea trials.
The companies that have been issued the RFI based on the
platform that can be offered for this program are:
Entity Platform
Rosoboronexport Rubin Design Bureau (Russia) Amur 1650
French Naval Group (France) Scorpene
ThyssenKrupp Marine Systems (Germany) Type 214
Navantia (Spain) S80
Kockums AB - Saab (Sweden) A26
MHI, KHI (Japan) Soryu
The foreign OEMs were expected to respond to the Indian
Navy’s request by 15 September 2017. The Navy would
then formulate the Naval Staff Qualitative Requirements
(NSQRs) before the formal request for proposal (RFP) is
issued for submitting their technical and commercial bids
for evaluation.
The P-75(I)-class submarines will have a vertical launch
system (VLS) to enable them to carry multiple Brahmos
supersonic cruise missiles, making the submarines fully
capable of anti-surface and anti-ship warfare missions.
Submarines will also be armed with torpedoes and will
feature advanced stealth capabilities such as a greater
ability to suppress noise and acoustic signatures. They will
also be outfitted with air-independent propulsion (AIP)
fuel cells, which can significantly increase their submerged
endurance and operational range.

5Eye on Defence |
Platform/Project Qty. Estimated cost
(US$ million)
Status
Nuclear power submarines 4 12,000 INS Arihant was commissioned in October 2016.
Remaining 3 submarines are under development.1
Diesel electric submarines
Project-75I
6 9,700 RFI issued
2
Diesel electric submarines —
Scorpene
6 4,600 Already under production at MDL
3
Nuclear powered submarine (on
lease)
1 1,500-2,000 The second SSN will replace the existing INS
Chakra4
Midget submarines 2 400 HSL has been awarded the contract to build the
midget submarines5
Market projection
The Indian submarine market with the projected
requirement as given below, is expected to increase at a
CAGR of ~6% during the next decade, compared to a 4.7%
CAGR for the global market.
Indian strategic partner (SP)
The Indian shipyard for the strategic partnership will be
chosen through a selection process. The SP has to be an
Indian company with maximum 49% FDI. The minimum
qualification criteria (MQC) includes having a system of
systems integration capability along with the required
financial parameters, whose threshold limits would be
specified in the expression of interest (EOI)/RFP. The
segment-specific criteria for submarine segments include:
• Infrastructure: Availability of at least one suitable dry
dock or building bay and at least two slots for water
frontage
• Successful delivery of a warship/ship as a prime
contractor in the past five years
The partnership would require an SP to tie up with an OEM;
the policy has left it to the concerned parties to come to
an arrangement among themselves on the nature of the
tie-up. It can be in the form of a JV, an equity arrangement,
technology sharing or any other mutually acceptable
arrangement.
What needs to be ensured is that the winning shipyard is
well versed with technical know of submarine construction
in the long run after execution of P-75(I) for life cycle
support. Larsen and Toubro and Reliance Defence and
Engineering Ltd. (RDEL) are likely to be the two key private
sector contenders for becoming the Indian SP.
1
http://www.thehindubusinessline.com/economy/ins-arihant-commissioning/article9235728.ece
2
http://www.thehindubusinessline.com/news/national/six-in-fray-for-navys-83billion-advanced-submarine-project/article9779029.ece
3
https://www.globalsecurity.org/military/world/india/project-75-schedule.htm
4
http://www.business-standard.com/article/current-affairs/second-russian-nuclear-submarine-to-replace-ins-chakra-116102300780_1.html
5
http://www.thehindubusinessline.com/economy/logistics/hsl-hyundai-to-join-hands-in-ship-construction/article9857617.ece

Past experience and orders
INS Arihant • Design engineering
• 3D modeling
• Pressure hull, outer hull and structure
• Special equipment and sub-assemblies
• Outfitting, equipment, piping and
cabling
• System integration and trials
6 | Eye on Defence
L&T Shipbuilding
L&T Shipbuilding operates two modern shipyards: one on
the east coast at Kattupalli, near Chennai, and the other
one on the west coast of India at Hazira, near the city of
Surat in Gujarat.
The Hazira shipyard has the capability to build sophisticated
mid-sized ships up to 20,000 tons deadweight capacity and
160 meters in length. The shipyard is equipped with plate
stockyard, automatic blasting and priming line, plasma
cutting machines and automatic panel making line. The yard
maximizes pre-outfitting at the block level. Marine coating
shops and pipe shops are designed to handle the complete
load of the yard. A sloping berth enables controlled side-
way launching of vessels.
The Kattupalli shipyard has overall 20,500 tons of handling
capacity and also undertakes repairs and refits of both
defence and commercial ships.
Key infrastructure facilities
• Ship lift
• Length: 200m (can be extended to 260m)
• Width: 46m
• Lifting capacity: 21,050 tonnes (upgradable to
23,000 tonnes)
• Wet and dry berths
• 4 wet berths (200m long)
• 6 dry berths (200m long)
• In-house capabilities for designing and developing
critical equipment and systems, including:
• Torpedo complex
• SONAR domes
• Valves
• Switchboards
• Heat exchangers
• Hull equipment
• Propulsion shafting
• Capability in hull construction
• Development of technology for hull construction
including submarines, without transfer of
technology (ToT) through extensive mock-up trials
• Reliable welding techniques including metallurgy of
the weldment
• High productive processes such as SAW, GMAW,
GTMAW and Pulse MIG
• Distortion control at all stages of construction
• Development of special jigs and fixtures to enhance
production
• Varieties of high strength low alloy steels and
aluminum technology developed to be reliable and
repeatable
• Developed processes and specifications for
different type of steels
Design and engineering capability
L&T has developed in-house design and engineering
capabilities and has deployed tightly integrated digital
solutions. Its shipbuilding leverages digital tools for
enhancing productivity, reducing cycle time and improving
quality. L&T Shipbuilding’s design centers provide solutions
for commercial ships and warships and have implemented
ERP solutions for digital control and monitoring of
construction processes. Closely integrated with design data,
the system provides for document management, revision
control, change management, work authorization etc. L&T
is the first private shipyard in India to introduce the virtual
reality studio for design and production functions. Large
touch-screens, ruggedized palmtops, wireless networks etc.
add to its productivity.
L&T Shipbuilding has also entered into a comprehensive
technical collaboration with Mitsubishi Heavy Industries,
Japan, for design and construction of modern, eco-friendly
and fuel-efficient specialized ships. This enables L&T
Shipbuilding to deliver customized solutions for the marine
industry at competitive prices.
Past experience and orders
L&T has gained valuable expertise in outfitting and systems
integration through design and development of naval
systems and integration of on-board naval platforms.
The company also recently won a US$154 million contract
from Qatar to supply platform supply vessels.

7
RDEL
RDEL, formerly known as Pipavav Defence and Offshore
Engineering Company Limited, has developed the
engineering and fabricating facilities. It has the largest dry
dock in India, measuring 662m x 65m, with state-of-the-art
infrastructure suitable for construction of a wide range of
warships and submarines. The shipyard is the first in India
to use modular and integrated shipbuilding technology.
The company has developed an integrated shipbuilding,
ship/rig repair and conversion, defence ship production
and offshore construction and heavy engineering facility
at the port. The manufacturing facility has a highly modern
fabrication piping, painting shops of 12,000 tons per month
capacity, together with the largest dry dock with 2 x 600
ton SWL Goliath cranes.
It is the only shipyard in India to build large bulk carriers
with Performance Standard for Protective Coatings (PSPC)
compliance. The dry dock and surrounding facilities are
located on 104 hectares (257 acres) of land adjoining a
dedicated waterfront. The dry dock site has been approved
as an export-oriented unit (EOU).
Adjacent to the dry dock is a pre-erection berth 980 meters
long and 40 meters wide that is fully reinforced to enable
mega blocks to be assembled on the land berth before
being lowered into the dry dock. To facilitate afloat fit-out
and commissioning of ships, including afloat repairs, a
1,300-meter long dual berthing quay has been constructed
with adequate draft and services by a level-luffing crane.
7Eye on Defence |
Key infrastructure facilities include:
• 2x 600 MT Goliath cranes
• 662m x 65m dry dock
• 750m x 265m Offshore fabrication yard
• Fit-out berths
• 144,000 MTPA steel fabrication unit
• 2x Level Luffing cranes with a combined lifting capacity
of 80 tons
Projects
RDEL is in the process of design and construction of five
offshore patrol vessels (OPVs) for the Indian Navy, an INR
2,500 crore order inherited after the acquisition of Pipavav.
Two of the five naval OPVs, “Shachi” and “Shruti,” have
been launched while work on the other three is progressing.
RDEL has recently won a contract worth US$141.5 million
to design 14 fast patrol vessels for the Indian Coast Guard.
The SP policy has a clause where the Ministry of Defence
(MoD) may consider the role of defence public sector
undertakings (DPSUs) at an appropriate stage keeping
in view the order book position, capacity and price
competitiveness. Hence, we believe the existing players also
are contenders:

8 | Eye on Defence
Naval ships Merchant ships Submarines
Corvettes Trailing suction hopper dredger INS Shalki
Nilgiri class frigates General cargo vessel INS Shankul
Missile boats Multipurpose support vessel Scorpene
Godavari class frigates Offshore supply vessels
Patrol vessels Special trade passenger cum cargo vessel
Destroyer 45T bollard pull voith tug
Leander class frigates BOP vessel
Mazagon Dock Limited
Mazagon Dock Limited manufactures warships and
submarines for the Indian Navy and offshore platforms and
associated support vessels for offshore drilling. It operates
facilities at Alcock, Mumbai, and at Nhava Yard. Its product
range also includes tankers, cargo bulk carriers, passenger
ships and ferries.
Repair and maintenance jobs on offshore rigs are
undertaken at Alcock and jackets up to 80 m length and
2,200 tonne weight can be constructed. At Nhava, jackets
up to 80 m length and 2,300 tonne weight, main decks up
to 550 tonne weight and helipads of 160 tonne weight can
be constructed.
The yard builds specialist vessels able to clean oil spills and
also fight fires on offshore drilling platforms.
Key infrastructure facilities include:
• 4 dry docks
• 274 x 26.21 wet basin
• 3 slipways
• Design CAD center
• CNC underwater plasma cutting machine
• Hancock gas-cutting machine
• Hausler plate bending machine
• Shipyards rolls
• Crawler cranes
• Thick pipe-bending machine
Projects
8 | Eye on Defence

9Eye on Defence | 9Eye on Defence |
Down selecting OEMs
It may take around four years for the OEM-Indian shipyard
combine to be down-selected and the contract to be signed,
as shown in the figure below.
While down selecting OEM, the stress will be on ToT from
the OEM and indigenization. The selection of OEMs will
include the quantum and the scope of technology transfer
as under:
• Range, depth and scope of transfer
• IC proposed
• Extent of ecosystem development proposed
• Measures to support SP in establishing systems for
integration of platforms
• Future R&D planned in India
• Plans to train skilled manpower
The OEMs would have to spell out measures to support
the strategic partnership model by setting up a system for
integrating military platforms. Submarine equipment and
systems include gas turbines, engines, propulsion plants,
prime-movers for power generation, air conditioning and
refrigeration plants, auxiliary equipment ship-borne radar
and equipment, power generating equipment, ship-borne
radio transmitters and receivers and workshop machinery,
tools and equipment.
Proposed timeline
The Indian industry will also need to collaborate on these
products and systems designs:
• Design engineering
• Manufacturing/Construction technologies
• Co-production of marine equipment
• Lifecycle support
The focus should be on ensuring maximum IC in the project
through stipulations in the RFI such as usage of Indian
steel in the submarines without compromising on their
standards and giving details on industries and submarine
equipment developed by the DRDO that can be considered
for the project. The submarines, to be built with indigenous
steel, should also be less maintenance-intensive to ensure a
better operational cycle with minimal downtime.
Contenders Evaluation
Site
verification
Issue of RFP to
shortlisted Indian
entity followed by
selection and winner
will become SP
RFI /
Response
QR
EoI and
response
evaluation
Dec 2018 to Dec 2021
Selection of
Indian entity
Shortlisting
July-Dec 2017 Jun 2018 Dec 2018 Jun 2019
Selection of Indian contendors
Selection of OEM contendors
The first new submarine will roll out only 5-7 years after the final contract is inked.
Proposed timeline for the submarine program under the SP
program

10 | Eye on Defence10 | Eye on Defence
Existing supply chain for submarines
Indian micro, small and medium enterprises (MSMEs) currently have capabilities as tier-I/II suppliers to the submarine
platform, as can be evinced from the current P-75 Scorpene submarine program, wherein the major contributions include:
Indian company Capabilities Contribution on the Scorpene submarine
platform
Flash Forge India Private Limited Manufacture of customized special
material forgings used for severe
service conditions
Ventilation system in the submarine
HBL Power Systems Limited Manufacture and test of critical
command consoles
Integrated Platform Management System
(IPMS)
Kineco Composite sonar dome -
SEC Industries Manufacture of equipment, including hull hatches, cofferdam doors, knuckle hoses,
ballast vent valves, high pressure air cylinders and weapon handling and storage system
Exide Industries Ltd. Main batteries for Scorpene submarines
P-75(I) similarly enhances the scope for Indian MSMEs to be local partners to the SP and thereby develop an indigenous
supply chain in the process.
Conclusion
The Indian Navy is likely to have the fleet of submarine
required to perform its operations in the Indian Ocean
region effectively by 2040. While the Indian Navy is yet to
reassess its submarine requirements till 2050, the estimates
are it will require 12 nuclear attack submarines in the long
term and another 30 conventional submarines for carrying
out patrol both in the Arabian Sea and the Bay of Bengal
and in international waters of the Indian Ocean region.
The Naval Staff Qualitative Requirements (NSQR) would
need to be realistic, keeping in view the Indian ground
realities on industrial capabilities and resources — something
that could be realized through technology absorption — and
then making a path for upgrades.
To involve the private sector in defence manufacturing,
through the newly announced SP policy, is a step in the
right direction and should give a boost to the realization of
the P-75(I) project. However, it will depend a lot on the MoD
streamlining the issues concerned with managing of JVs,
extent/ level of ToT and related approvals, bid evaluation
criteria and of course how strong the intent of the MoD is to
see the project through.

11Eye on Defence | 11Eye on Defence |
References
• https://www.navantia.es/
• http://saabgroup.com/
• http://ckb-rubin.ru/en/projects/naval_engineering/
nuclear_powered_ballistic_missile_submarines/
• http://www.defproac.com/?p=786
• https://www.indiannavy.nic.in/content/submarines-
active
• http://pib.nic.in/newsite/PrintRelease.
aspx?relid=154068
• http://pib.nic.in/newsite/PrintRelease.
aspx?relid=156049
• https://www.indiannavy.nic.in/content/procurement-06-
conventional-submarines-under-project-75i
• http://www.thehindubusinessline.com/news/mazagon-
docks-dcns-keen-on-making-3-more-scorpeneclass-
submarines/article9591479.ece
• The websites of companies referred in the text

12 | Eye on Defence
Offset policy and implementation — not
really a low-hanging fruit!
Background
India has traditionally followed a system of supporting the
strategic sectors through state-run and state-administered
entities. The Ordnance Factories were a British legacy,
while in the post-Independence era the policy was guided
by Prof. PMS Blackett’s recommendation to follow a two-
phase defence strategy — in the short term to meet local
adversaries and in the long run for more sophisticated arms.
His recommendations were to build a limited manufacturing
capability and rely more on diplomatic efforts. The Indian
defence sector therefore remained within the confines of
state entities.
Opening up of the defence sector for private sector
participation was reinforced by the Press Notes in 2001 and
2002. We have since come a long way. The offset policy was
introduced as part of the Defence Procurement procedures
for the first time in 2005 with a detailed guideline for
implementation in DPP 2006.
Parameter Latest change Impact
Threshold limit Increased to US$300 million from US$45
million
Foreign firms more inclined to invest as the low threshold limit
acted as a deterrent
Selection of Indian offset
partner (IOP)
Freedom to select IOP Enabled foreign firms to select their offset partner as per the
required capabilities
Services as a medium of
offset
Re-introduction of services as a medium of
offset implementation
Resulted in increased discharge avenue options for foreign
firms
Offset obligations Re-phasing allowed within the period
of offset contract
Provides foreign firms a certain level of flexibility to implement
their obligations
Change of IOP / offset
component
Option provided to foreign firms to change
their IOP or the offset component provided
the DOMW is convinced
Made it further convenient for foreign firms to efficiently meet
the requirements without impacting the main contract
Progress on India’s offset
policy
Offset is a form of industrial participation with few
restrictions and government regulations applied,
in consonance with international norms. While the
Government of India included offsets as part of the
procurement procedures in 2005, there were already more
than 130 countries that were practicing offsets.
The first attempt at the offset guidelines incorporated a
direct execution of offsets in the defence sector through
licensed companies in India. This was later relaxed to
include all Indian companies in compliance with the norms
of Department of Industrial Policy and Promotion (DIPP).
Further, in sync with global practices, multipliers for
technology transfer for small companies and offset banking
were included to make it more attractive for foreign OEMs,
besides bringing in an element of flexibility.
However, efforts from the Government have not resulted in
the desired outcome coupled with only ~US$5 million in FDI
inflow in the sector since 2000.
The latest amendments to the policy intend to ensure
a more enabling atmosphere for foreign firms without
impacting the domestic growth trajectory.

13Eye on Defence |
open ended while some are more measured in approach.
However, the tailored approaches all intend to build an
indigenous industry.
There are different models in each country, each attempting
to satisfy the requirements of that geography. Some are
How do the other countries measure up?
Country Minimum threshold
US$ million
Level of offset
% obligation
Offset preference Discharge of offset requirements
Brazil 1 100% Primarily direct Focus on the aeronautics industry
Greece 12 80% to 100 % Direct and indirect Defence-related only; multipliers from 1 to 10
Hungary 5 100% Direct and indirect Contract period plus one year
Israel 5 35% for civil 50%
and for defence
Open Within the contract period
Italy 6 70% to 100% Direct and indirect Defence-related only and should be fulfilled within
the contract period
Kuwait 9 35 % Direct and indirect 8 years
Malaysia 12 100% Direct and indirect
accepted; direct
preferred
To be discharged during the period of the main
contract and multipliers only if programs result in
high-end technologies
Portugal 12 100% Direct and indirect Priority sectors for indirect offsets are aerospace,
automotive, CIS and energy (renewables); 6 to 8
years for fulfilment of obligations
Saudi Arabia 107 Minimum of 35%,
though typically
more than 40%
Direct and indirect 10 years for compliance
Singapore 10 Seeks industrial
participation of
25% to 30%
Typically up to 10 years
South Korea 10 50% Direct and indirect FDI in new or existing local defence companies
permitted (limited to 40 %); technology transfer and
collaboration in R&D projects also permitted
UAE 10 60% Indirect Channels defence-related investments into profitable
projects in various sectors to help diversify the
economy; to be discharged in ~7 years

The objectives are clearly enunciated:
(a) Long-term cooperation leading to competitive
production of Israeli products. The goal is to develop new
markets of high-quality goods and create a framework
for bi-lateral and multi-lateral industrial and trade
cooperation between OEMs, their subsidiaries and Israeli
industry
(b) Emphasis on regional job creation on top of receiving
direct R&D grants
(c) Furthering international cooperation in industrial R&D
(d) Encouragement of technological entrepreneurship
(e) Development of future technologies through increased
academia—industry cooperation.
There are two aspects of the offset policy in Israel:
• Offset programs that are created as a result of
government purchases
• Offset programs that are created out of private sector
procurement activity
The Israeli Government has mandated offsets on its
procurements. However, the volume is greater than that
of the mandatory offset required by the commercial
activities of the Government. The ICA actively supports and
encourages innovative ideas and out-of-the-box proposals
for fulfilment of offset obligations. A foreign supplier on
winning a contract in Israel is required to sign an “Umbrella
Agreement” with ICA, clearly specifying (i) all business
activities of the supplier in Israel and (ii) all purchases
and investments in Israel, without the need for obtaining
separate undertakings for each purchase. The entire activity
is then guided by such an umbrella agreement.
One of the larger and more successful offset programs
finalized by the Israeli Government was the US$2 billion
purchase of combat aircraft. Mc Donnell Douglas agreed to
provide a liberal offset package of ~100% of the sale value.
The technology transfers that came out of these offsets have
helped Israeli companies such as Israel Aircraft Industries,
Cyclone Aviation Products, Israel Military Industries and TAT
Aero to develop their own weapons and systems that now
enable them to compete for export orders.
The Industrial Cooperation Authority (ICA) at the Ministry
of Economy and Industry administers offsets in Israel. The
ICA is responsible for offset management in Israel and
handles industrial cooperation agreements with more than
200 foreign companies and corporations in areas such as
defence, aviation, energy, electronics, medical equipment
and vehicles.
The ICA helps the Israeli industry by making connections
between Israeli manufacturers and foreign suppliers that are
required to engage in industrial cooperation in Israel. The
focus is on encouraging foreign OEMs to develop long-term
partnerships with the local industry. They internally focus on
skill development to keep pace with the industrial progress
to bring about a synergy for overall development.
In total, foreign suppliers have fulfilled more than ~US$10
billion over their obligations against contracts valued at
~US$25 billion. The offset activity is directed toward more
than 500 Israeli industries each year. Over 200 Israeli
government and public entities are potentially required to
include industrial cooperation requirements in their tenders.
The definition of Israeli-made goods is indeed interesting:
“Goods manufactured in Israel or in another region or place,
with the approval of the ICA, in one transaction or in several
consolidated transactions or during a period that shall be
determined, all at the discretion of the ICA, provided that
the price of the Israeli content therein constitutes at least
35 % of the Bid Price or a lesser value, pursuant to criteria
published by the ICA in the Official Gazette.”
For this reason, the Israeli offset policy is quite lenient in
several respects. There is no clause for liquidated damages
or other formal penalties. A reasonable percentage
(minimum 35% in the case of civil procurements and 50%
in the case of military procurements) is asked for by way of
offsets. The policy does not lay down precisely what sectors
the offsets are to be directed at; the general principle is of
direct or other high-tech technology transfer and defence
industry investments. This gives the country the required
flexibility to take advantage of any good proposal that may
come its way.
How does Israel implement its offsets?

15Eye on Defence |Eye on Defence |15
The fundamentals of India’s defence offset policy are fairly
sound and require a decent timeframe to evolve and mature.
The shortcomings in the policy are more structural and
regulatory, leading to less efficient implementation:
• Inadequacy in compensating for India’s huge purchasing
power is leading to insignificant growth of the
indigenous industries.
• Lack of a manufacturing infrastructure base to absorb
the offsets has resulted in a delayed implementation
plan.
• Given that the body governing the offset contracts is
not independent of the MoD, it does not have complete
control on the execution of the offset contracts. The
contracts are administered by one department (DG
Acquisition under the DoD) but offsets are administered
by the DOMW under the DDP, each under a different
Secretary. This further reduces the accountability of the
members of the body governing the offset contacts.
What avenues can be
considered to further
enhance the policy
implementation in India?
• The existing ecosystem is a collegiate system of
discussions and decision making with no single official
or organization accountable for decisions taken (if
any). There needs to be a clear accountability, directly
nominating officials, with devolution of power.
• The returns on investments are not predictable, both
in terms of offset credit values and accrual of those
credits. At the same time, implementation of offset
banking has been discouraging for foreign firms.
• Lower offset credit multiplier on capital investments for
manufacturing coupled with a small timeframe for the
discharge of offsets obligations is another discouraging
factor for foreign firms.
• The major changes have happened in the policy in
the last few years only, whereas the emerging issues
are from contracts signed nearly 6-10 years ago.
This mismatch will take time to resolve, and some
accountability should be placed on the authorities as
well.
• A large emphasis is placed upon the documentation
of the offsets-related work-packages and not on the
overall impact in economic and strategic terms that the
proposed project will have on the nation.
Conclusion
India and Israel are two different countries with different
cultures, capabilities, skill sets and geo-politic dynamics.
Therefore, a direct comparison is not possible. We believe
instead of making fundamental changes to our offset policy,
we could focus on the regulatory and/or structural aspects
in order to make the system more efficient. We also do
make an attempt to suggest some key features of Israel’s
offset policy that can be implemented in India in a way that
benefits the country.
Independent regulatory body: An independent and
consultative body, outside of the MoD (like Israel’s ICA),
could be set up to monitor offsets and their implementation.
This would enable more efficient fulfilment of offset
obligations by making the office bearers more accessible.
These office bearers should be from a professional body that
can accurately gauge the overall “economic benefit” of an
offset project and be accountable for the result as well.

16 | Eye on Defence
• Distribution of offsets by areas of discharge can also
be considered. A proposed re-distribution is provided
below. This could be made applicable for the signed
contracts as well.
• FDI inflows in the defence sector in India added up to an
insignificant ~US$5 million from April 2000 to March
2017 out of a total of ~US$330 billion worth of inflows
into the country in the same time period. Comparing it
with the other sectors in India, we see a huge gap and
hence believe that offsets should be focused on the
aerospace and defence sector:
Proposed avenue for offset execution Proposed % share of offsets
On the platform (goods and services such as maintenance) 30%
R&D in high-technology areas (as identified by the professional body) 15%
Procurement of manufactured goods from defined sectors (a sub-limit for MSMEs
to be included)
25%
Investment in projects of national importance 20%
Investment in creation of national infrastructure 10%
Sector FDI inflows (from April 2000 to March 2017)
Services sector ~US$59.5 billion
Computer software and hardware ~US$24.7 billion
Automobile industry ~US$16.7 billion
Power industry ~US$11.6 billion
Defence industries ~US$5.1 million
*EY analysis
*Source: DIPP
16 | Eye on Defence
• India’s Defence Procurement Policy 2016 (DPP-2016)
• Country-specific offset policies
• Market report
References:

17Eye on Defence |Eye on Defence | 17

18 | Eye on Defence
Passenger aircraft — A tale of ever-
increasing demand
Status quo — The global commercial aircraft manufacturing
industry
In continuation of our recent initiative to address the
commercial aerospace market in India, in this edition we
attempt to highlight the major aircraft manufacturers. This
segment is a highly capital-intensive segment that requires
assembly lines to be set up where the OEMs play the role of
integrators. Hence, the number of players in this segment
is also few. Largely dominated by Airbus and Boeing, which
together make up more than 50% of the in-service fleet,
the segment has seen more players such as Embraer and
Bombardier gradually carve a market share for themselves.
A comparison of the 2016 (as of June 2016) fleet with
the expected fleet in 2025 reveals that the total fleet is
expected to rise from ~31,700 aircraft to ~42,600 aircraft.
Airbus and Boeing are expected to maintain their supremacy
in the commercial aircraft space with close to a 75% market
share.
For the most part of the last two decades, Airbus and Boeing
have dominated the world market. More recently, however,
newer aircraft with capacity ranging from 150—200
passengers and with a range of up to 3,300-3,500 miles are
targeting the market. However, in the wide-body segment, it
is Airbus and Boeing all the way through.
38.0% 40.0%
28.0%
36.0%
8.0%
6.0%6.0%
5.0%4.0%
4.0%
16.0%
9.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2016 2025
Others
ATR
Bombardier
Embraer
Airbus
Boeing
Existing
market
share
Expected
market
share
Source: http://aviationweek.com/site-ﬁles/aviationweek.com/ﬁles/up-
loads/2016/06/17/avd_06_20_2016_cht1.pdf

Eye on Defence | 19
Comparing the global fleet with the fleet in the Indian
ecosystem, we can see that Airbus is a predominant supplier
(largely courtesy Indigo’s operations within the country).
Global ecosystem Indian ecosystem
38.0%
28.0%
8.0%
6.0%
4.0%
16.0%
Boeing
Airbus
Embraer
Bombardier
ATR
Others
34.1%
52.8%
3.9%
8.6%
0.6%
Boeing
Airbus
Bombardier
ATR
Others
Source:
http://aviationweek.com/site-ﬁles/aviationweek.com/ﬁles/uploads/2016/06/17/avd_06_20_2016_cht1.pdf
Directorate General of Civil Aviation (DGCA)
Even within Airbus and Boeing, the legacy narrow-body
aircraft are expected to gradually make way for the “Neo”
and the “Max” versions respectively.
Europe,
1,227
Europe,
772
Rest of the
World, 3815
Rest of the
World, 2928
A320neo
737 Max
Source: Flightglobal
However, with the Regional Connectivity Scheme gathering
pace, the domestic dynamics would shift toward smaller
aircraft such as of ATR. For example, Indigo ordered 50
Orderbook spread
ATR 72-600s worth ~US$1.3 billion to meet the growing
demands of domestic travel as 100 new airports are
expected to be created by the end of this decade.

New aircraft in the
ecosystem
The commercial/regional aircraft that could potentially
strive for market share and give competition to Airbus and
Boeing in the coming decade or so, include:
MC-21 (Russia):
Available in two variants (165- seater and 211-seater)
and with two engine options (Aviadvigatel’s PD-14 and
P&W’s PW1400GTF), Irkut’s MC-21 has received firm
orders for ~185 units largely by Russian airlines and
leasing companies. The aircraft is claimed to be 30% carbon
composite, resulting in it being ~3 tonnes lighter than
the 737. The first deliveries of the aircraft are expected
sometime in late 2018 or early 2019.
C919 (China):
This 168-seater aircraft manufactured by China’s COMAC
has received orders for ~600 units, with the majority
coming from Chinese operators. The aircraft is expected to
make its first flight next year and a planned introduction by
around the end of this decade. CFM is the sole supplier with
its Leap-1C engines.
The enormity of the C919 program stems from the fact
that more than 200 entities in close to 22 provinces and
cities in China were reportedly involved in the research and
development of this aircraft.
MRJ (Japan):
Mitsubishi’s MRJ aircraft is available in two variants — an
80-seater and a 90-seater — representing a potential
domestic alternative in the future for Japan whose civil
aviation ecosystem has historically been dominated by
Boeing. The aircraft is reportedly 20% more fuel efficient
as a result of its new aerodynamic design and advanced
engines. The aircraft with around 400 orders is expected to
enter service sometime in 2018.
E-Jet E2 (Brazil):
Embraer’s E2 range of aircraft comprises three variants:
88-seater E175-E2, 106-seater E190-E2 and 132-seater
E195-E2. Powered by two variants of P&W engines and with
around 250 orders, the aircraft is expected to be in service
in 2018.
C-Series (Canada):
Bombardier’s C-Series aircraft has two variants — the
133-seater and the 160-seater — and is powered by the
PW1500 GTF. The aircraft entered service in 2016.
Bombardier reported an order backlog of around 346
aircraft as on June 2017.
What these new manufacturers contribute to the ecosystem
is an alternative to global airlines and a more efficient
aircraft compared to the current legacy passenger aircraft.
Their existence in the ecosystem would help bridge the
demand-supply dynamics of the growing civil aviation
industry. The situation is no different for India. The new
aircraft would serve the same purpose here as Indian
airlines strive to reduce carbon footprints in the face of eve-
increasing environmental challenges.

How is India shaping up to
the increased demand for air
travel?
The Indian airlines’ current fleet is a skewed spread, with
the majority being narrow-body aircraft. However, with air
travel, especially domestic air travel, growing at 15%—20%
y-o-y and expected to surpass 100 million passengers
India’s Saras
Courtesy the regional connectivity initiative, India’s National
Aerospace Laboratories (NAL) has reportedly revived its
three civil aircraft projects: 14-seater Saras, 5-seater CNM-
5 and 70-seater RTA-70.
Saras, India’s first multipurpose civilian aircraft in the light
aircraft category, was designed by NAL. However, after the
fatal accident of the second prototype in 2009, the program
took a back seat. The re-engined and modified version
of this 14-seater aircraft has now been revived with the
Government’s regional connectivity policy in play. A total
investment of INR400 crore—INR500 crore is reportedly
required for the two prototypes of Saras.
Existing order backlog of Indian airlines
Airline ATR-72 Q400 737 MAX A330 787-900 A320
family
Potential future
orders
Total
Indigo 50 408 458
Spicejet 50 205 255
Jet
Airways
75 5 10 1001
190
Vistara 6 1002
106
Go Air 142 142
Air India 10 12 22
Total 60 50 280 5 10 568 200 1,173
in FY17, it is imperative that more efficient aircraft are
brought into the ecosystem. This is reflected by the existing
backlog of Indian airlines, constituting a mix of variants
from narrow body to wide body.
P.S. The aircraft order quantity include MoUs signed and firm orders both
1
The new order for 100 aircraft is intended for expansion.

2
For its 50 narrow-body and 50 wide-body order, Vistara is expected to opt for a combination of either A320s and A350s, or 737s and 777s.
Going forward, the low cost carriers (LCCs) are expected to
have a domestic share of 75-80% in the next 2 years, and
the major driver would be at what pace these new aircraft
are inducted into the system.
The aircraft will now undergo test flights with the Indian
Air Force. The modified version now boasts of multi-role
capabilities, including air ambulance, executive aircraft,
aerial survey and cargo aircraft among others. The changes
made to this version from the earlier one include:
• Upgraded propulsive system
• New landing gear actuators
• New brake systems
• Improved flight control systems
The Indian Air Force has reportedly shown interest to
acquire 15 aircraft.

Indian aero structures
ecosystem
There are a few Indian players in the aero structures
segment who are integral to the supply chain of both Airbus
and Boeing aircraft. These companies have been supplying
components for almost all variants of commercial aircraft.
the frequency of flights and the number of routes. All this
will require a strong infrastructure, and a robust domestic
supply chain coupled with a strong MRO capability, which
would in turn require a skilled workforce. This is why the
aerospace industry is expected to drive growth in the
economy going forward.
Interesting times ahead!
Entity Brief profile
Dynamatic Technologies (DTL) • DTL is a manufacturer of aircraft structures and precision aerospace components.
• DTL is a single source supplier for flat-track beams for the A320 family of aircraft and
also supplies the same component for the A330s. The company recently inaugurated
its new Airbus facility at the KIADB Aerospace Park next to the Bengaluru International
Airport.
• DTL intends to further expand manufacturing for the A330s and has added state-of-the-
art manufacturing technologies for it.
Tata Advanced Materials Ltd (TAML) • TAML provides composite parts for the wings of the A350XWB and the A320 family of
aircraft.
• The product range for the A320 family includes aileron sharklets, trailing edge and
aileron composite panels. TAML is also a supplier of cargo door parts for the 787-8/9
aircraft variants through Saab Aerostructures.
• TAML also manufactures fixed leading edge wing components for the A350 aircraft,
acting as a supplier to Spirit Aerosystems.
TAL Manufacturing Solutions Ltd. • TAL’s facility is located in MIHAN SEZ, Nagpur, and its products range includes metallic
and composites manufacturing and assembly.
• TAL manufactures complex composite floor beams for the 787 Dreamliner and has also
partnered with RUAG Aerostructures to supply over 500 sheet metal and machined
parts and sub-assemblies for the A320 program.
Hindustan Aeronautics Limited
(HAL)
• A government-owned defence entity, HAL also manufactures forward passenger doors
for the A320 family of aircraft and has delivered more than 2,500 shipsets till date.
Aequs Aerospace • Aequs’s capabilities in the aerospace domain include machining, sheet metal, forging,
surface treatment and aerostructure assembly.
• Aequs also has a 74:26 JV with Saab called Aerostructures Assemblies India (AAI),
which manufactures aerostructure assemblies for the A321, A330 and A380 aircraft.
• More recently, Aequs received an order for over 100,000 titanium-machined parts for
the A320neo aircraft.
Given the growth in air travel, coupled with the gradual
removal of legacy aircraft and introduction of more
efficient aircraft into the global ecosystem – it is more
likely that India’s role as a tier-I/II supplier will gain further
prominence.
With a ~5.5x times increase expected in domestic passenger
flows between now and 2036, the demand for aircraft
is going to increase exponentially within India and so will
For instance, Airbus exceeded US$500 million in annual
procurement from India in 2015 (~15% y-o-y growth) across
both commercial and defence segments — a first for any
foreign aerospace and defence OEM.

References
1) “List of Air Operator Certificate/Permit (Scheduled)”
DGCA website, http://dgca.nic.in/operator/sch-ind.htm,
accessed 1 September 2017
2) Airbus Global Market Forecast 2017-36
3) CAPA India Aviation Outlook 2017-18
4) “India’s aircraft orders to exceed 1,000 with Jet Airways’
imminent order; infrastructure a problem,” CAPA, 29 June
2017 via Factiva
5) “NAL to revive SARAS, two other civil passenger aircraft,”
Business Line, 16 February 2017, via Factiva
6) “BACKGROUNDER,” Bombardier website, http://www.
bombardier.com/content/dam/Websites/bombardiercom/
supporting-documents/BA/Bombardier-Aerospace-
20170630-C-Series-Program-Status-en.pdf, accessed 2
September 2017
7) “Sharp-nosed Japanese jetliner could be game changer for
U.S. flyers,” CNN Money, 20 June 2017, via Factiva
8) “The driving force behind China’s C919 jet,” Shanghai
Daily, 31 August 2017, via Factiva
9) “Is it a Boeing? Is it an Airbus? It’s an MC-21,” The Indian
Express, 16 June 2017, via Factiva

24 | Eye on Defence
Request for information
(June 2017-August 2017)
Issue date Details Response date Issued authority Service
18-08-2017 EoI for technical collaboration and transfer of technology
for manufacturing of advanced mine protected vehicles
in India — DDP
11-09-2017 Director, Ordnance
Development
Centre, VFJ,
Jabalpur
DDP
17-08-2017 Picatiny rail top for rifle 5.56 mm Excalibur; Qty: 3,244
OFB
15-09-2017 Rifle Factory
Ishapore
OFB
08-08-17 RFI for medium-range anti-ship missiles 20-09-17 Integrated
Headquarters of
Indian Navy
08-08-17 Procurement of helmet mounted night vision devices
(HMNVDs)
04-10-17 IHQ (Navy) Indian Navy
08-08-17 Indigenization/upgrade/refurbishment of utility portion
of armored recovery vehicle (ARV) VT-72B
28-09-17 EME Dte Indian Army
27-07-17 EoI for indigenous development of tools testers and
ground equipment (TTGE) for Mirage-2000 aircraft of IAF
25-09-17 CIMD C/o 11 BRD Indian Air Force
17-07-17 RFI For SIGINT AND COMJAM Aircraft (SCA) 18-09-17 NA Indian Air Force
15-07-17 Global RFI for safe and environmental friendly plant
and machinery for disposal of medium high caliber
ammunition that are 51 mm to 155 mm, on turnkey
basis
18-08-17 Ordnance Factory,
Badmal, Bolangir
OFB
15-07-17 Steel 32 mm (-.05 mm) To Specn. BS 970 PT- I 1983, GD
708 M40 T COND. or EN-19A; Qty: 16,605.9 kg
04-08-17 Rifle Factory
Ishapore
OFB
10-07-17 EoI for collaboration for co-production-co-development
of 9 x 19 mm sub machine gun, OFB
31-07-17 SMALL ARMS
FACTORY,
KANPUR
OFB
10-07-17 Corner shot weapon system 15-07-17 HQ Northern Comd
(Arty)
Indian Army
05-07-17 RFICs and devices-DRDO 01-08-17 Director DEAL DRDO
03-07-17 GPS/GIS based minefield recording system 17-08-17 E-in-C Br Indian Army

Issue date Details Response date Issued authority Service
20-06-17 Preparation of detailed project report (DPR) and
consultancy for naval aviation management system
(NAMS)
26-07-17 DTE OF AIR
PROJECTS AND
PLANS
Indian Navy
16-06-17 QRs of global positioning system (GPS) NA DG BSF BSF
15-06-17 Land based training facility (LBTF) for RCS of NOPVs 20-07-17 Dte of Marine
Engineering
Indian Navy
01-05-2017 Damage control and firefighting training facility for
submarines
12-07-2017 Principal Director
Submarine
Acquisition
Indian Navy
25Eye on Defence |

26 | Eye on Defence
Request for proposal
(June 2017 – August 2017)
Issue date Details Response
date
Issued authority Service
21-08-17 QRs of PTZ (35 x 140 mm) D/N all weather camera with
wireless transmission system
NA DG BSF BSF
21-08-17 50 caliber (12.7 mm) long-range sniper rifle with day and
night sight and accessories; Qty: 16
20-09-17 GOC-IN-C Indian Army
21-08-17 338 Lapua Magnum Sniper (8.45 mm) rifle with day and
night sight and accessories: Qty: 24
21-09-17 GOC-IN-C Indian Army
18-08-17 Static/vehicle mounted VHF radio; Qty: 08 07-09-17 Officers Training
Academy, Gaya
Indian Army
18-08-17 Hand held explosive detector; Qty: 05. 07-09-17 Officers Training
Academy, Gaya
Indian Army
18-08-17 Installation of Repeater VHF radio Station, Qty: 04 07-09-17 Officers Training
Academy, Gaya
Indian Army
18-08-17 Radio telephone interface (RTI) for static station, Qty: 04 07-09-17 Officers Training
Academy, Gaya (Bihar)
Indian Army
18-08-17 24 x hand-held VHF radio set 07-09-17 Officers Training
Academy, Gaya (Bihar)
Indian Army
17-08-17 3D Visualizer and projection system 31-08-17 OIC ATG, Air Force
Station, Tezpur
Indian Air Force
17-08-17 Procurement of set of multipurpose vibration acoustic
diagnostic machine vibrometer
29-08-17 AOC, 14Wing AFS
Chabua Dist-Dibrugarh
Assam
Indian Air Force
17-08-17 Procurement of NVG compatible portable helipad lights 14-09-17 AOC, AF STN Bagdogra Indian Air Force
17-08-17 Procurement of hand-held thermal imager-binocular
(cooled version), Qty: 355
26-09-17 Commandant(Proc)
FHQ BSF New Delhi
BSF
17-08-17 Procurement of NBC decontamination suit 26-09-17 Material Organisation,
Karwar
Indian Navy
17-08-17 Procurement of multimedia projector, Qty: EA-20; and
LCD projector ultra-short throw, Qty: EA-09
07-09-17 AOC, Air Force Station
Tambaramv
Indian Air Force
17-08-17 B axis direct encoder; make: Heidenhain, Germany 12-09-17 Rifle Factory Ishapore DDP
17-08-17 Hammer MK-2 (through MIM route) for 9 mm auto pistol 15-09-17 Rifle Factory Ishapore DDP
17-08-17 Software defined radio (SDR) kit 30-08-17 Deputy Director Plan
and Contract
Indian Navy

27Eye on Defence |
date
16-08-17 Supply of baggage scanning machine 06-09-17 HQKNA, Naval Base
Karwar
Indian Navy
16-08-17 Corner shot weapon system, Qty: 08 05-09-17 GOC-IN-C Indian Army
15-08-17 Multi-purpose water proof rain poncho 04-09-17 Group Centre CRPF
Bilaspur
CRPF
14-08-17 Inverted fluorescence microscope 15-09-17 Director DRL Tezpur DRDO
14-08-17 Solar Simulator (UV protection factor analyzer) 15-09-17 Director DRL Tezpur DRDO
14-08-17 Long-Range Reconnaissance and Observation System
(Lorros)
01-09-17 DTE GEN ITBP ITBP
12-08-17 Doppler radar unit with velocity analyzer 21-09-17 Ordnance Factory
Bhandara
OFB
09-08-17 Triaxial ICP accelerometer, Qty: 10 — Dept. of Defence
Production
30-08-17 RCI DCMM, Hyderabad DRDO
08-08-17 Development of dynamic fusing system, Qty: 10 23-08-17 RCI DCMM, Hyderabad DRDO
08-08-17 Development of magnetoelectric based magnetic field
sensors and microwave tunable devices
28-08-17 DMRL DRDO
08-08-17 Procurement of air rifle and air pistol-IA (OSCC) 22-08-17 Basic TRG Regiment
ACC
Indian Army
08-08-17 Procurement of GPS 17-08-17 CPRO/MOK Naval Base
Kochi
Indian Navy
08-08-17 Electro mechanical actuation system components, Qty:
15
08-08-17 Tender Call For Safety Fuze No. 11 MK2/LA 07-09-17 Commandant SPT BN
ITBP
ITBP
07-08-17 9 x 19 mm Glock-17 pistol along with its spares and
accessories as per the manufacturer list
13-09-17 Proc cell Dte. Genl,
CRPF
CRPF
04-08-17 Procurement of BR Helmet, Qty: 14,000 29-09-17 Commandant (Proc)
BSF HQ
BSF
04-08-17 Procurement of advanced version of Deactivator Nistejak
in Manpack Role, Qty: 20
11-08-17 DGAR Assam Rifles

date
04-08-17 Communication system for command center (CSC) and
communication system for launcher (CSL) , Qty: 1
03-08-17 Integrated navigation system for INS Deepak 21-08-17 Navy Material
Organisation
Indian Navy
03-08-17 Self-centering muzzle bore sight and gun MBT Ar06 09-08-17 MMD ARDE DRDO
02-08-17 Development of sub systems of equipment onboard in
ships and aircrafts in partnership with Russian industry,
issued by Directorate of Indigenisation IHQ
11-08-17 Integrated
Headquarters Of
Ministry Of Defence
(NAVY)
Indigenisation
Integrated
Headquarters
(IHQ)
02-08-17 Procurement of Lt. Wt. helmet with hands free 23-08-17 D G Assam Rifles Assam Rifles
28-07-17 Consultancy contract for design and development of
super cavitating projectile system
31-08-17 The Director NSTL DRDO
28-07-17 Manufacture and supply of ARV WZT-3, Qty: 03 08-08-17 IHQ of Mod. Army Indian Army
28-07-17 Navigation bag, Qty: 50 10-08-17 Air Force Station
Yelahanka
Indian Air Force
28-07-17 Assault rifles (7.62 X 39 mm), Qty: 14,659; fixed butt,
Qty: 10,994; and folded butt, Qty: 3,665
26-09-17 (Procurement Cell) HQ,
DG, BSF
BSF
26-07-17 Thermal imager under two bid system 16-08-17 AOC Air Force Station Indian Air Force
25-07-17 Two type design, manufacturing and supply of a common
functional fixture for Amogh and assault rifle
25-08-17 Small Arms Factory,
Kalpi
OFB
24-07-17 Turret Elec. Eqpt (KIT-A) DRG 675-95-CD3 08-09-17 Ordnance Factory
Medak
OFB
21-07-17 High resolution binoculars, Qty: 1000 10-08-17 COL ACSFP Indian Army
21-07-17 Robot unmanned ground sensors, Qty: 10 23-08-17 DG NSG NSG
21-07-17 Procurement of bomb blanket 14-08-17 Commandant SS BN
ITB Police
ITBP
20-07-17 Tactical jacket, Qty: 75 07-08-17 STN Security Offr. Indian Air Force
20-07-17 5 Watt digital hand-held VHF transceiver, Qty: 69 sets;
25 Watt digital VHF base/mobile transceiver, Qty: 34
sets
28-08-17 SSB Guwahati SSB
20-07-17 Procurement of robot unmanned ground sensors 24-08-17 Group Comdr (Prov)
HQ NSG
NSG
20-07-17 Thermal insulated overall for AFV crew IA (OSCC) 27-07-17 Project Officer Indian Army
20-07-17 Procurement of security related equipment (SRE) IA
(OSCC)
10-08-17 Project Officer Indian Army
20-07-17 Network/communication Equipment 02-08-17 Material Organisation Indian Navy
19-07-17 Passive night vision binocular, Qty: 270 08-08-17 GOC-IN-C Indian Army
19-07-17 Passive night sight for RIF AK-47, Qty: 560 (185+375) 08-08-17 GOC-IN-C Indian Army

date
19-07-17 Kit drone (UAVs) with survey drone (UAVs), Qty: 2 each 09-08-17 INMAS DRDO
19-07-17 Full body protector, Qty: 4,750 sets 10-08-17 DIG (Proc) Dte. Genl
ITBP
ITBP
19-07-17 Passive night sight for RIF AK-47-IA (OSCC) 10-08-17 GOC-IN-C HQ Northern
Comd.
Indian Army
18-07-17 Procurement of propeller blade (RH) for CPP and stern
gear Of LSTL
29-08-17 Material Organisation Indian Navy
18-07-17 Procurement of CPP and stern gear for LSTL ships 18-08-17 Material Organisation Indian Navy
18-07-17 Riot helmet with visor, Qty: 4,750 10-08-17 DIG (Proc) ITBP
17-07-17 SCA, Qty: ~7 18-09-17 Dte. of Plans Indian Air Force
14-07-17 Design and development of laser based long-range
aiming system
11-08-17 SDD, Secunderabad Indian Army
14-07-17 Manufacture and supply of armored personnel carrier
(APC) wheeled infantry carrier armed Class II, Qty: 08
10-08-17 IHQ OF MOD ARMY Indian Army
12-07-17 NBCD permanent items for CGSD Porbandar 03-08-17 Headquarters ICG
region
Indian Coast
Guard
11-07-17 Procurement of FR anti-G suit for SU-30 and MIG series
aircrew
03-08-17 Procurement AIR HQ
VB
Indian Air Force
10-07-17 Day binoculars, Qty: 25 25-07-17 Station Security Officer Indian Air Force
10-07-17 Portable high-precision thermal imaging system 17-07-17 ANURAG DRDO Min of
Defence
DRDO
10-07-17 Procurement of goggles protective field type F 26-07-17 Station Logistics
Section
Indian Air Force
10-07-17 CVRDE-procurement of electrical harnesses of Ar06
MK – II
10-08-17 CVRDE, Avadi DRDO
10-07-17 Portable high precision thermal imaging system 18-07-17 Director, DRDO,
Hyderabad
DRDO
07-07-17 Procurement of tactical boot PU sole 27-07-17 DIGP, Group Centre CRPF
07-07-17 120 mm HESH ammunition and components, Qty: 530 09-08-17 MMD ARDE DRDO
05-07-17 Laser range finder (LRF) integrated with digital magnetic
compass
07-08-17 DLJ - DRDO DRDO
04-07-17 Sound velocity profiler (SVP), Qty: 07 sets 12-07-17 MoD Navy , “C” Wing
Sena Bhawan
Indian Army
04-07-17 Aircraft modification (LCA) for radar installation and
flight testing
02-08-17 LRDE - DRDO DRDO
04-07-17 Multi-Function laser range finder 24-07-17 O IC ATG Indian Air Force
04-07-17 Proc. of non-lethal training amn., protective clothing and
weapon system for Tavor assault rifle
25-07-17 ARTY BR-Northern
Comd.
Indian Army

date
04-07-17 Hand-held wireless sets, repeater station and self-
supported tower with accessories
20-07-17 TBRL DRDO
04-07-17 Indigenous development and supply of seven items for
Bofors weapon system
29-08-17 IHQ of MoD (Army) Indian Army
04-07-17 Bomb detection and disposal (BDD) equipment, Qty: 13
items
10-08-17 NA BSF
03-07-17 Indigenous development and supply of eight items for
Soltam and Bofors weapon systems
29-08-17 IHQ of MoD (Army) Indian Army
03-07-17 Procurement of boot anti mine (infantry) 25-07-17 HQ Northern Command
Engrs. Branch (Comb
Engrs.)
Indian Army
01-07-17 EPD FUZE PCBS (PCB-I&) 21-07-17 Machine Tool
Prototype FY,
Ambarnath - MM
OFB
30-06-17 Indigenous development of spares or items for AGS and
MSGL weapons
29-08-17 IHQ of MoD (Army)
EME / Dte. of
Indigenisation
Indian Army
30-06-17 CVRDE — procurement of manufacture of assy. hull and
turret structure
25-07-17 The Director, CVRDE DRDO
29-06-17 Bulletproof jacket, Qty: 7,348 06-07-17 Dir OS GS Indian Army
29-06-17 Medium bulletproof vehicles (light armored troop
carrier), Qty: 67
22-08-17 Prov Dte FHQ BSF BSF
29-06-17 Design of integrated pod for guided Pinaka rocket 13-07-17 The Director ARDE DRDO
28-06-17 QR for vehicle mounted surveillance system NA DG BSF BSF
28-06-17 ToT of zeroing thermal target 10-08-17 DLJ - DRDO DRDO
28-06-17 Online invitation of bids for customized 3CX VOIP and
ROIP integrated unified communication application
development
18-07-17 Centre for Airborne
System
DRDO
28-06-17 Aircraft refueller (4 Kl) each, Qty: 02 24-07-17 Joint Director AS ATM
SE
Indian Coast
Guard
25-06-17 Request for quotation (RFQ) surveillance radar system
for advanced light helicopter
05-07-17 Integrated Materials
Management
HAL
24-06-17 Hand-held metal detector as per TE 14-07-17 DG CRPF CRPF
23-06-17 Pnv. binocular, Qty: 42 18-07-17 Dte Gen., ITBP ITBP
23-06-17 Long-range communication link 03-07-17 R and D E Engrs DRDO
22-06-17 Two-seat powered hang glider (PHG) TRIKE with 4-stroke
engine, wing and accessories for ENC Aero Adv. Club
04-07-17 EXO/INS DEGA NAD
Post Visakhapatnam
Indian Navy

date
21-06-17 Eye protection goggles corded, Qty: 60 06-07-17 Station LGS Section Indian Air Force
21-06-17 Development of THD 1955 Radar Simulator, Qty: 18 12-07-17 AF Stn. Jalahalli Indian Air Force
20-06-17 One-man HAPO Chamber MK-II, Qty: 642 on limited
tender enquiry
20-07-17 Master Gen of
Ordnance Branch Army
Indian Army
20-06-17 Combustible cartridge for SCCC of 125 Mm (pre-bid meet
date : 12-07-2017)
08-08-17 Ordnance Factory,
Badmal
OFB
20-06-17 PNV monocular, Qty: 88 13-06-17 DG ITBP ITBP
19-06-17 QRs of passive night telescopic sight for 5.56 mm INSAS
rifle and LMG
NA DG BSF BSF
19-06-17 All-terrain vehicle, Qty: 08 18-07-17 ADG OS CV Indian Army
16-06-17 Thermal camera 04-07-17 DRDO DRDO
16-06-17 Procurement of goggle GS MK-II, Qty: 7,190 17-07-17 BSF BSF
16-06-17 Installation of reflex shooting range system at the Duder
(East Camp) Mahajan Field Firing Range
17-07-17 7 MARATHA LI, C/o 56
APO.
Indian Army
15-06-17 Corrigendum issued: Design fabrication supply erection
and commissioning of automatic machine for assembly
and burring operation of detonator 356 mg Fuze DA5A
and 117 MK: 20, Qty: 01
06-07-2017
Date extended
to 03-08-2017
Ordnance Factory,
Bolangir
OFB

32 | Eye on Defence
New projects/investments/contracts
Name of entity Project details Value*
MoD and the Indian
Coast Guard
• The MoD has approved a five-year plan to strengthen the force-
levels of Coast Guards.
• The plan aims to make the Coast Guard a 175-ship and 110-aircraft
strong force by 2022, including the acquisition of 30 helicopters
costing INR50 billion. In addition, the MoD has also ordered 16
indigenous Dhruv choppers, 14 twin-engine EC-725 tactical
choppers and five air stations/enclaves for the Coast Guard.
INR317.5 billion
Defence Acquisition
Council (DAC) and the
Indian Army
• DAC has cleared a proposal for the purchase of six Apache attack
helicopters for the Indian Army. The order follows the previous
purchase of 22 Apache and Chinook helicopters from Boeing in
2015, which are expected to be delivered to IAF from July 2019
onward.
• The helicopters will come with associated equipment, including
spares, training and ammunition.
INR41.7 billion
DAC and HAL • DAC has approved 15 light combat helicopters (LCHs) for IAF and
the Indian Army. HAL has commenced the production after the
approval.
• The LCH are equipped with 20 mm turret gun, 70 mm rocket,
air-to-air missile and helmet pointing system. The helicopter is
capable of operating in extreme weather conditions and at different
altitudes.
INR29.1 billion
Indian Navy and Boeing • The Indian Navy signed has a contract with Boeing to maintain P-8I
aircraft spare parts and personnel in India for ensuring increased
operational capability and ready response to any defects or failures
in the aircraft over the next three years.
• The contract requires Boeing to continue the warranty services it
has so far provided under an initial production contract, which will
expire in October 2017.
INR6.9 billion

33Eye on Defence |
Name of entity Project details Value*
MoD and Ultra
Electronics Holdings PLC
• MoD has awarded Ultra Electronic’s Maritime Systems business a
contract to supply the Indian Navy with defence systems based on
Ultra’s Sea Sentor product.
• Under the contract’s terms, Ultra Electronics Maritime Systems,
with the support of Command and Sonar Systems and Indian
Mahindra Defence Systems Ltd, will deliver defence system, to be
executed over the next three years.
NA
*The values of the deals have been converted to Indian rupees using the following conversion rate: US$1 = INR69.
Sources:
1. “Govt clears purchase of six Apache attack helicopters in Rs 4,168-cr deal,” Business Standard, 17 August 2017, via Q-tech Synergy Newsletter
2. “Desi combat chopper to begin production; Jaitley to inaugurate unit on Saturday,” Times of India, 24 August 2017, via Factiva
3. “Govt sanctions Rs 31,748 cr for upgradation of Coast Guard with increased manpower, enhanced fleet,” First Post, 16 August 2017, via Q-tech
Synergy Newsletter
4. “Ultra Electronics Signs Defence Systems Contract For Indian Navy,” Morningstar, 24 July 2017, via Q-tech Synergy Newsletter
5. “Boeing signs US$100 mn contract to keep Indian Navy’s P-8I Aircraft flying,” Defense Update, 20 June 2017, via Q-tech Synergy Newsletter

34 | Eye on Defence
JVs and alliances
Name of the entities Nature of transaction Value
Reliance Defence
Limited and Yugoimport,
Serbia
• Reliance Defence has entered into a partnership with Yugoimport,
Serbia, for ammunition manufacturing in India, which will include
production through transfer of technology by the OEMs.
• The two companies have a projected minimum requirement of
INR200 billion over the next 10 years from the Indian Armed Forces.
INR200 billion
Reliance Defence
Limited and Thales,
France
• Reliance Defence Limited and Thales have entered into a 51:49 JV
aimed at setting up a supply chain for radars and electronic warfare
sensors.
• The JV is expected to develop skills and activity in the SEZ of Mihan,
Nagpur, together with an Indian supply chain for the manufacturing
of microwave technologies and high-performance airborne
electronics.
NA
Reliance Defence
Limited and Daher
Aerospace, France
• Reliance Defence Limited has signed a Memorandum of
Understanding (MoU) with Daher Aerospace for aerospace
equipment manufacturing in India.
• Both the companies are expected to jointly explore opportunities in
the design and manufacture of composite parts, welded ducts, metal
conduits, swaged pipes and cable harness supports, aerostructure
components, integrated logistics, airframes/ assemblies and related
industrial activities.
NA
Garware-Wall Ropes
(GWRL) and Aero-T,
Israel
• GWRL has signed an MoU with Aero-T to combine their capabilities
for manufacturing and supplying advanced aerostats for the Indian
defence industry.
• Under the agreement, GWRL will establish an aerostat envelope
production facility and Aero-T is expected to provide the technology,
knowhow, integration, acceptance and continuous support for
aerostats development and production.
NA
BAE Systems,
Ordnance Factory
Board (OFB) and
BEML
• BAE Systems, OFB and BEML have signed an MoU to manufacture
155 x 52 mm artillery guns at the Gun Carriage Factory (GCF) at
Jabalpur, Rajasthan.
• Under the agreement, BAE will share technology with OFB while
BEML will provide the Tatra vehicle on which the gun will be
mounted.
NA

35Eye on Defence |
Sources:
1. “Thales, Reliance Defence seal deal for joint venture for radars, electronic warfare,” The Economic Times, 22 June 2017, via Q-tech Synergy
Newsletter
2. “Reliance Defence enters into partnership with Yugoimport of Serbia,” Business Standard, 20 June 2017, via Q-tech Synergy Newsletter
3. “Reliance Defence to partner with Daher for aerospace components,” The Economic Times, 22 June 2017, via Q-tech Synergy Newsletter
4. “Garware Wall Ropes in pact with Israel’s Aero–T for making advanced Aerostats for defence industry,” The Times of India, 5 July 2017, via Q-tech
Synergy Newsletter
5. “BAE to join hands with ordnance factories to make high range artillery guns,” The Times of India, 29 August 2017, via Q-tech Synergy Newsletter
6. “HAL signs MoU with government; aims at Rs 17,900 crore revenue for 2017-18,” The Economic Times, 12 July 2017, via Q-tech Synergy
Newsletter
7. “Mou Signed between Department of Defence Production and BDL,” Press Information Bureau, 18 July 2017, via Q-tech Synergy Newsletter
8. “MDL signs MoU with department of defence production,” Governance Now, 8 July 2017, via Q-tech Synergy Newsletter
9. “IAI expands JV with Kalyani Group for Advanced Air Defense Systems,” Indian Defence Review, 6 July 2017, via Q-tech Synergy Newsletter
10. “Lockheed Martin teams up with Tata to make F-16 Fighters in India,” The Economic Times, 20 June 2017, via Q-tech Synergy Newsletter
Name of the entities Nature of transaction Value
MoD with other DPSUs • The MoD has signed an MoU with HAL targeting revenue from HAL’s
operations at INR179 billion and HAL capital expenditure of INR13
billion during 2017-2018. The company also aims to achieve 5%
increase in IC under its Make in India initiatives.
• MoD has signed an MoU with Bharat Dynamics Limited (BDL)
targeting revenue from BDL’s operations at INR53 billion in 2017—
18, with a 20% increase y-o-y.
• In addition, the MoD has signed an MoU with Mazagon Dock
Shipbuilders Ltd. (MDL) targeting revenue from MDL’s operations at
INR45 billion in 2017—18.
NA
Kalyani Strategic
Systems Limited (KSSL)
and Israel Aerospace
Industries (IAI)
• IAI and KSSL have expanded their MoU for establishing a
maintenance center for advanced air defence systems and expanding
their joint operations to develop, manufacture and market precise
ammunition systems. The center will be based in Hyderabad,
Telangana.
• In February 2017, IAI signed an MoU with Kalyani Group to develop,
build, market and manufacture selected Air Defence Systems and
lightweight special purpose munitions.
NA
Tata Advanced
Systems Limited
(TASL) and Lockheed
Martin, US
• TASL has entered into an agreement with Lockheed Martin for joint
production of the F-16 fighter aircraft, provided the F-16 aircraft is
selected by the Indian Air Force as the single aircraft fighter with an
order of at least 100 units.
• Besides providing full service support for the F-16, the agreement is
expected to enable TASL to offer all future upgrades for the aircraft
on its own.
NA

36 | Eye on Defence
Country-level deals and initiatives
Country Nature of transaction Additional details
Russia • During the 17th India-Russia inter-governmental
commission on military-technical cooperation,
the two counties finalized a roadmap to further
boost bilateral defence cooperation, ranging from
joint development of futuristic weapon systems
to a major upgrade of military-to-military ties.
• In addition, Russia and India aim to sign a
contract worth INR379.5 billion in 2017 for
S-400 missile systems.
• India and Russia also aim to enhance cooperation in
the field of political and military dialogue, exercises,
exchange of visits, military cooperation and training.
• During the Paris Air Show, Russia also offered three
levels of modernization, namely, weapons systems,
radar and electronics and engine, to the Indian Air
Force’s 200 Su-30MKI fighter jets.
Israel • During the meeting of the India-Israel CEOs
Forum in Tel Aviv in July 2017, Indian companies
signed 12 strategic agreements for air defence
systems, radars, anti-ship missiles and medium
altitude long endurance UAVs under technology
transfer worth INR29.7 billion.
• Dynamatic Technologies and Elcom have signed a
Strategic Teaming Agreement to produce, assemble
and support UAVs in India with IAI.
• Alpha Design has signed a JV with Elbit Security
Systems worth INR34.5 billion to provide indigenously
manufactured thermal image-based sights and fire
control systems, UAVs, and other defence equipment
under technology transfer.
The US • The US has approved the sale of 22 Guardian
drones in India, a deal estimated to be worth at
least INR138 billion.
• The US Department of Defense has also
authorized a possible C-17 transport aircraft sale
to the Government of India valued at INR25.27
billion.
• The US has released the critical Category One UAV
technology from US-based General Atomics, acceding
to India’s strong request.
• The Indian Air Force has also requested for 100 units
of Predator C Avenger aircraft worth INR552 billion.

37Eye on Defence |
Country Nature of transaction Additional details
Japan • India is looking to strengthen its military
cooperation with Japan during the Japanese
Prime Minister Shinzo Abe’s September 2017
visit and is interested in sourcing defence
technologies for domestic manufacture of arms
and equipment.
• India also seeks participation of Japanese defence
companies in the Make in India projects as well as
reviving talks on INR113.8 billion sale of ShinMaywa
Industries US-2i amphibious aircraft to the Indian
Navy.
South Korea • India and South Korea are ready to close a deal
worth INR326.4 billion for 12 minesweepers for
the Indian Navy.
• The Navy uses minesweepers to secure harbors
by locating and destroying mines.
• According to the deal, the ships would be
manufactured in India under transfer of technology.
• The first ship is expected to be delivered three years
after the contract is signed.
Sources:
1. “India and South Korea ready to finalise pact for 12 mine detectors for the Navy,” Indian Defence News, 31 May 2017, via Q-tech Synergy Newsletter
2. “Russia to Cooperate With Italy to Modernize Indian Su-30MKI Fighters,” Sputnik News, 19 June 2017, via Q-tech Synergy Newsletter
3. “India, Russia finalize new roadmap for defence cooperation,” The Times of India, 24 June 2017, via Q-tech Synergy Newsletter
4. “India, Russia to ‘Soon’ Set Delivery Date for S-400 Missile Air Defense Systems,” The Diplomat, 21 June 2017, via Q-tech Synergy Newsletter
5. “India, Israel Ink Deal for Air Defense System, Radars, UAVs Worth US$4.3 Bln,” Sputnik news, 7 July 2017, via Q-tech Synergy Newsletter
6. “India and Israel joint statement: Full text,” The Economic Times, 5 July 2017, via Q-tech Synergy Newsletter
7. “US approves sale of 22 Guardian drones to India,” Hindustan Times, 23 June 2017, via Q-tech Synergy Newsletter
8. “US Approves US$366Mln C-17 Transport Aircraft Sale to India,” Sputnik News, 26 June 2017, via Q-tech Synergy Newsletter
9. “Work with India in cyber, space operating domain; Pentagon told,” Financial Express, 19 July 2017, via Q-tech Synergy Newsletter
10. “US releases UAV technology to India, mulls Predator deal,” Financial Express, 21 July 2017, via Q-tech Synergy Newsletter
11. “Shinzo Abe visit: India, Japan to forge closer defence ties,” Defence News India, 23 August 2017, via Q-tech Synergy Newsletter

38 | Eye on Defence
Industry buzz
Indian Army is carrying out field trials with
Indian ammunition on Ultra-Light Howitzers
(ULHs)
The Indian Army is carrying out exhaustive field trials on
two long-range ULHs in Pokhran. The test-firing of the guns
is primarily aimed at collating and determining various
critical data such as trajectory, speed and frequency of fire
of the M-777 A-2 ULHs.
(Source: “Ultra-light howitzers: Exhaustive field trials on in Pokhran,”
The Economic Times, 16 July 2017, via Q-tech Synergy Newsletter)
The DRDO successfully test-fires its nuclear-
capable Prithvi-II missile
The DRDO has successfully test-fired the indigenously
developed nuclear-capable Prithvi-II missile from a test
range in Odisha, as part of a user trial by the Indian Army.
The trial of the surface-to-surface missile was carried out
from a mobile launcher. The missile is capable of carrying
500 kg to 1,000 kg of warheads and is thrusted by liquid
propulsion twin engines.
(Source: “Prithvi-II missile successfully test-fired,” The Hindu, 2 June
2017, via Q-tech Synergy Newsletter)
The DRDO test-fires quick reaction surface-to-
air short-range missile in Odisha
The DRDO has successfully test-fired an indigenously
developed quick reaction surface-to-air short-range missile
from a test range along the Odisha coast. The missile has
a strike range of 20 to 30 km and is capable of engaging
multiple targets. It is an all-weather weapon system capable
of tracking and firing.
(Source: “India test-fires quick reaction surface-to-air short range
missile in Odisha,” Hindustan Times, 4 June 2017, via Q-tech Synergy
Newsletter)
The DRDO successfully test-fires anti-tank
missile Nag in Rajasthan
The DRDO has successfully test-fired anti-tank guided
missile (ATGM) Nag in the western sector of Rajasthan. The
missile is equipped with a highly advanced imaging infrared
radar (IRR) seeker with integrated avionics as well as
technology that is possessed by very few nations.
(Source: “DRDO Successfully Test-fires Anti-tank Missile Nag in
Rajasthan,” News 18, 13 June 2017, via Q-tech Synergy Newsletter)
The DRDO is ready to test New Generation Anti-
Radiation Missile (NGARM)
The DRDO is preparing to conduct the first test of
indigenously developed NGARM soon. The missile is
capable of destroying enemy radars, tracking systems and
communication facilities. The high-speed missile will be first-
of-its-kind in the country’s arsenal. It will pick up signals or
radiation emitted from the radars or tracking networks from
a certain distance and target the communication systems.
(Source: “Maiden test of anti-radiation missile soon,” The Indian Express,
16 June 2017, via Q-tech Synergy Newsletter)
The DRDO’s indigenous unmanned tank
completes trials
The DRDO has developed an unmanned, remotely operated
tank called Muntra, which has three variants: surveillance,
mine detection and reconnaissance in areas with nuclear
and bio threats. The vehicle has been tested and validated at
the Mahajan field firing range in Rajasthan.
(Source: “Muntra, country’s first unmanned tank, rolls out from the
Chennai lab,” The Times of India, 29 July 2017, via Q-tech Synergy
Newsletter)

39Eye on Defence |
Indian Navy expects delivery of INS Vikrant by
2020 and commissioning of INS Kalvari in July—
August 2017
The Navy expects to receive INS Vikrant, India’s first
indigenous aircraft carrier being made at the Kochi
shipyard, by 2020. The Indian Navy chief also confirmed
that the country’s first indigenous conventional submarine,
INS Kalvari, will be commissioned in July or August 2017.
INS Kalvari is the first of six submarines being built at the
Mazgaon Docks in collaboration with DCNS of France under
Project 75.
(Source: “Hopeful of getting INS Vikrant by 2020, says Navy chief,” The
Indian Express, 1 June 2017, via Q-tech Synergy Newsletter)
The Indian Navy intends to grow the current
strength of 145 ships to 200 by 2027
As part of an expansion and modernization plan, the Indian
Army intends to increase its fleet size from the current 145
ships to 200 ships by 2027. This amounts to an investment
of approximately INR2 trillion.
(Source: “200-strong fleet in 10 years, asserts top naval officer,” The
Times of India, 11 August 2017, via Q-tech Synergy Newsletter)
The MoD adds the chapter on Strategic
Partnerships in the Defence Procurement
Procedure (DPP) 2016
The MoD has added the finalized chapter on strategic
partnership policy in the DPP 2016. The strategic
partnership model will allow local private sector companies
to form manufacturing JVs with foreign defence equipment
makers and take forward the Government’s Make in India
program for defence equipment business.
(Source: “Chapter on strategic partnership is now part of DPP 2016,”
Defence Aviation Post, 31 May 2017, via Q-tech Synergy Newsletter)
The MoD issues RFIs worth INR538.2 billion for
the Indian Navy’s P-75(I) program
The MoD has asked six foreign shipbuilders to respond to the
P-75(I) program, which is a follow-on program of the Indian
Navy to the already undergoing construction of six Scorpene
class diesel-electric submarines through technology
transfer from France. An RFI has been sent to Russia’s
Rosoboronexport Rubin Design Bureau, France’s Naval
Group, Germany’s ThyssenKrupp Marine Systems, Japan’s
Mitsubishi Heavy Industries and Kawasaki Heavy Industries,
Spain’s Navantia, and Sweden’s Saab for details about locally
building six diesel-electric submarines under which India’s
private defence shipbuilder will collaborate with a foreign
manufacturer.
(Source: “Russia, Germany in Race for Indian Navy’s US$7.8 Billion
Submarine Tender,” 24 July 2017, via Q-tech Synergy Newsletter)
The MoD delegates financial powers to the
armed forces for perimeter security of sensitive
military installation
The MoD has delegated financial powers to the Army,
the Navy and the IAF to strengthen perimeter security at
sensitive military installations across the country. Following
the decision, each of the three vice chiefs will be able
to spend at least INR8 billion annually in strengthening
perimeter security at the sensitive bases.
(Source: “In big move, Narendra Modi government empowers Army,
Navy, IAF, hands over financial power to boost security at installations,”
Financial Express, 27 July 2017, via Q-tech Synergy Newsletter)

OFB develops a new rifle weighing 4.5 kg with
two firing modes
OFB has developed a 7.62 mm INSAS (Indian National Small
Arms System) rifle for the Indian Army, weighing 4.5 kg.
The rifle is fully automatic and has two firing modes — single
shot and automatic — with lethal firing range of 500 meters.
The OFB has so far supplied over 10 lakh INSAS rifles to the
Indian Army.
(Source: “Army to get new assault rifle which has lethal firing range of
500 meters,” One India, 5 June 2017, via Q-tech Synergy Newsletter)
Government of India approves Defence
Innovation Fund (DIF) for academia
In order to encourage innovation in the defence sector, the
Indian Government has announced a scheme of DIF, which
can be availed by different stakeholders, including MSMEs.
Under the DIF scheme, HAL and Bharat Electronics Limited
(BEL) will act as the funding agencies for the project,
extending INR50 million each.
(Source: “Govt approves Defence Innovation Fund for Academia-MSMEs
to carryout innovation,” KNN India, 22 July 2017, via Factiva)
Government of India is considering path-
breaking FDI reforms for defence sector
A more liberal FDI policy is currently under consideration to
attract FDI in the defence sector. It aims to attract INR350
billion investment in the next five years to give a flip to
defence production in India and create more jobs. Under
the new norms, the Government is expected to allow 100%
FDI under the automatic route for the production of tanks,
armored vehicles and military transport aircraft in India. In
addition, 76% FDI under the automatic route is proposed for
fighter aircraft and helicopters and 51% for submarines and
warships.
(Source: “Government considering path-breaking FDI reforms for
defence sector,” The Economic Times, 24 July 2017, via Q-tech Synergy
Newsletter)
India looks for intelligence-gathering and
communication-jamming aircraft
India is seeking to acquire seven aircraft with signals
intelligence and communication-jamming capabilities with
a budget of about INR39.3 billion. An RFI has been sent to
various foreign OEMs seeking details of the aircraft and the
signals-intelligence and commutations-jamming systems
available.
(Source: “India looks for intelligence-gathering aircraft,” Defence News,
27 July 2017, via Q-tech Synergy Newsletter)

42 | Eye on Defence
Global industry buzz
The US military preparedness
The US is partnering with
foreign countries to develop
critical weapon systems
• ► The US has partnered with Australia to research and pilot hypersonic missiles and weapons (that
are able to fly at least five times faster than the speed of sound). The joint initiative involves the
US Air Force (USAF), Boeing, the Australian Department of Defence, BAE Systems Australia and
the University of Queensland.
• ► The US has also agreed in principle to create a trilateral coalition built around the P-8 maritime
aircraft with the UK and Norway. The UK plans to buy nine P-8s, while Norway has agreed to
purchase five of the P-8 aircraft.
Increasing defence expenditure by NATO countries
The NATO members foresee
an increase in the defence
spending for the third
consecutive year
• ► Canada and NATO members from the European region have increased defence spending by
almost US$46 billion over the last three years. The NATO members foresee an annual real
increase of 4.3% in defence spending in 2017.
• ► Countries such as Poland, Romania and Estonia have increased their defence spending and joined
the NATO directive of spending 2% of their GDP for defence purpose. More countries from the
European region, such as Lithuania and Latvia, are planning to boost their budgets to reach the
NATO directive in 2018.
• ► The Eastern European NATO allies plan to modernize their aircraft fleets by replacing Soviet-
designed jets with US-made aircraft. Countries such as Poland, Croatia and Bulgaria are planning
new fighters, while Lithuanian and Czech defence forces plan to purchase new helicopters.
Romania’s Government has plans to buy missile systems
A&D developments in foreign countries
The UK to buy joint light
tactical vehicles (JLTVs)
from the US
• ► The US State Department has approved the sale of JLTVs worth ~US$1 billion to the UK through
the US Foreign Military Sales (FMS) program.
• ► The deal includes 2,747 JLTVs and accessories such as B-kit armor, engine arctic kits, fording
kits, run-flat kits, spare tire kits, silent watch kits, power expansion kits cargo cover kits,
maintainer and operator training, technical support and other benefits.
• ► The prime contractor for the JLTVs is Oshkosh Defense. These JLTVs are also partially replacing
the Humvee utility vehicle used by the US armed forces.
Qatar strengthens defence
capabilities amid the Gulf
diplomatic crisis
• ► Qatar has signed a deal to buy F-15 fighter jets from the US in a contract worth US$12 billion.
Boeing will be the prime contractor for the deal. The contract is a foreign military sale (FMS)
contract and Boeing will work with the USAF.
• ► Qatar also finalized a €5 billion deal (US$5.9 billion) with Italy to acquire seven naval warships.
The contract includes four corvettes, an amphibious vessel and two patrol boats.
UAE to purchase missiles
worth US$2 billion from the
US
• ► The US State Department has approved a contract worth US$2 billion for missiles to the UAE.
• ► The contract includes 60 Patriot PAC-3 missiles made by Lockheed Martin and 100 GEM-T
missiles made by Raytheon.

43Eye on Defence |
Sources:
1. “Pentagon seeks increased P-8 ties with Norway, UK,” Defense News, 3 July 2017, via AIA Daily News.
2. “Nato Allies Raise Defense Spending, But Not To Please Trump,” News Week, 28 June 2017, via AIA Daily News.
3. “Britain approved for US$1.035 billion U.S. military vehicle buy,” UPI, 11 July 2017, via Factiva.
4. “Qatar signs US$12 billion deal to buy F-15 jets from U.S.,” Reuters, 15 June 2017, via AIA Daily News.
5. “U.S. US$2 billion sale of missiles to Emirates approved: Pentagon,” Reuters, 11 May 2017, via AIA Daily News.
6. “Lockheed scores US$1 billion in F-35 maintenance,” Flight Global, 28 February 2017, via Factiva.
7. “Boeing Takes Order Crown at Paris Salon,” AIN Online, 24 June 2017, via AIA Daily News.
8. “GE Aviation lands US$31 billion in orders,” Aviation Week, 22 June 2017, via AIA Daily News.

Major updates from US-based defence contractors
Lockheed Martin wins two
key contracts from the US
DoD worth ~US$10 billion
• ► The US DoD has awarded a contract worth US$3.8 billion to Lockheed Martin for Black Hawk
helicopters for sale to Saudi Arabia.
• ► The contract for a multi-year production effort includes associated services for program system
management, engineering, technical data and publications.
• ► The US DoD has also awarded a US$5.6 billion contract to work on the 11th lot of F-35 aircraft. It
will include 91 units of the F-35 aircraft.
Boeing bags contracts worth
US$74.8 billion at the Paris
Air Show
• ► Boeing has bagged incremental orders and commitments for 571 airplanes worth US$74.8 billion
at list prices. Airbus’s new orders and commitments totaled US$39.7 billion, marking the first
time since 2012 that Boeing announced more business than Airbus at a major international air
show.
• ► The 737 Max 10 drew 147 incremental orders and commitments out of the 361, including
conversions from smaller Max models.
GE announces orders for
1,700 new aircraft engines
at the Paris Air Show
• ► GE Aviation and its JVs announced orders totaling more than US$31 billion (1,700 engines) at
the Paris Air Show.
• ► Of the US$31 billion, US$27.3 billion came from orders involving CFM International, a 50/50
JV between GE Aviation and Safran. China Eastern Airlines, Spring Airlines and China Southern
Airline were some of key customers for GE Aviation.

44 | Eye on Defence
Analysis of M&A trends
A&D highlights: 2017
1
Deal value
• Q2 2017 deal value was down 61% compared to Q2
2016 deal value, US$1 billion versus US$2.6 billion.
• The largest transaction was the US$215 million paid by
Thales SA to acquire Guavus, followed by the US$213
million paid by Investcorp for ABAX Holding AS.
1
Thomson One (01 January 2011—31 July 2017)
30,696
11,497
2011 2012 2013 2014 2015 2016 2017
9,708
15,625
56,655
17,619
11,681
235 240
215
250
234
187
108
0
50
100
150
200
250
300
0
10,000
20,000
30,000
40,000
50,000
60,000A&D value (US$ million) A&D deals
Source: Thomson One, accessed 31 July 2017
A&D deals yearly view (2011—YTD2017*)

45Eye on Defence |
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
Q111
Q211
Q311
Q411
Q112
Q212
Q312
Q412
Q113
Q213
Q313
Q413
Q114
Q214
Q314
Q414
Q115
Q215
Q315
Q415
Q116
Q216
Q316
Q416
Q117
Q217
Q317
#ofdeals
DealvalueUS$million
A&D value (US$ million) A&D deals
A&D deals quarterly view (1Q11—2Q17*)

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K. Ganesh Raj
Partner and Leader
Aerospace and Defence Practice
Ernst & Young Pvt. Ltd.
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Amit Dugar
Senior Consultant
Business Tax Advisory
Aerospace & Defence
Ernst & Young Pvt. Ltd
Mob: +91 9705813268
Email: amit.dugar@in.ey.com

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Eye on Defence October 2017

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