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DefINsights - Sugosha Newsletter Dec 2018

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Published by sohilpat, 2019-01-23 08:46:12

DefINsights - Sugosha Newsletter Dec 2018

DefINsights - Sugosha Newsletter Dec 2018





Security of North East Saluting the Martyrs
Region of India
P 10
DPP Primer: Part 8
Indian Navy : 47th Navy Day
P 18
P 12
Business Opportunities
P 22
2 | DefInsights | December 2018
Industry Buzz

P 15

From the MD’s Desk - The year that

As the year closes, we at Sugosha are upbeat on the developments that have
taken place over the last one year. Plenty of work, progress, contracts and hope.

The greatest among them has been the announcement of the Government in the
nomination of the two Defence Industrial corridors. The choice of regions is indeed
Mrs. Shanti Kuber laudable. The geography has been addressed for the North and the South;
Northern corridor being a relatively “Gren Corridor” and the Southern one being
more of a “Brown Corridor”, what with the growth of automotive industry in the South.

Acquisition of the S-400 Triumf,
while enhancing the military
relations with the US to next
higher levels has been the
hallmark of Military Diplomacy. it
was not just a balancing act, it
was a statement of
statesmanship, bringing about an
unique place for India in the
world. Frigates for the
Grigorovich class, additional MI-
17 helicopters, 2 x IL 76 based
AWACS, IL 76 upgrades, the
procurement of Kalashnikov rifles
are some key highlights from

The government issued the “letter of request” to the US government for the Rs 13,500 crore acquisition
of 24 naval multi-role MH-60 ‘Romeo’ helicopters, armed with torpedoes and missiles for potent anti-
submarine warfare capabilities, The government-to-government deal for the MH-60 choppers,
manufactured by Sikorsky-Lockheed Martin, under the US foreign military sales programme is likely to
be inked within a year. The US has already notched military sales worth $17 billion to India since 2007,
even overtaking Russia for three to four years during the last decade. India and the US are also in
advanced talks for 22 armed Predator-B or weaponised Sea Guardian drones. Then, after the first 24
multi-role helicopters, the Navy also has long-term “Make in India” projects for another 123 such
choppers as well as 111 armed light utility choppers. Increasing the Anti-submarine warfare capabilities
through the FMS sale of Sea Hawks, was the need of the hour; in fact we are looking forward to the
actual requirement of 123 being addressed as we move forwards. After the first ever US sale to India by
Raytheon in late 90s, for the ANTPQ 37 radars, we now have Raytheon bouncing back with a huge FMS
sale for the NASAMs-II, New Delhi/NCR would enjoy the same protection as is Washington DC. This is a
huge step. Clearance by Pentagon to supply Six Apaches for the Indian Army with Hellfire Longbow air
to surface and air to air missiles, simulators and associated systems , with a hope for 12 x follow-on
orders for the P8-I , setting up of a maritime reconnaissance training suite in India at a cost of USD 304
million, were key highlights from the US side. There is plenty of talk around the Predators and Avengers,

December 2018 | DefInsights | 3

while General Atomics has announced its permanent establishment in New Delhi.
Cancellation of the Spike missile was a set-back for the Indian Army, a missile that they needed so
desperately, well we now have to wait for the MP ATGM of the DRDO. Well, I also saw on display ASIBAL
indigenously designed and developed ATGM by VEM technologies in the DEFEXPO earlier this year, some
hope that the Indian Army will get what it wants soon. Contract for 131 x Barak-1 missiles, for IN with spares
at an estimated value of INR 461 crores from Rafael, a USD 777 million contract to IAI for sale of Barak 8
missiles for IN9follow-on to the USD 630 million in 2017 as a supply to BEL) and progress in procurement of
Herons are key highlights from Israel.
BAE has started delivering the guns and the Indian Navy has placed an additional order for 13 Guns at an
estimate of INR 3000 Crores for the newly constructed warships.
Some not so usually heard of companies like SMPP winning the order for Bullet Proof Jackets, HFCL winning
contracts for OFC and poised well for perimeter security, while participating in other contracts involving
UAVS etc are some highlights. Indigenous BRAHMOS missiles for ships, ARVs (Armour Recovery Vehicles),
midlife upgrade to the Dorniers(HAL), upgrade of 130/52 M-46 field guns by OFB, maiden trials of the Deep
Submergence vessels, MP ATGM of DRDO, under water breathing Apparatus by DRDO(DEBEL), follow on RFP
to HAL for Ka-226 helicopters that includes import of 60 x helicopters in fly-away condition, successful test
fire of HELINA are few of the highlights from domestic side.
Adani Defence has made tremendous foray by integrating the small and medium industries into their growth
strategy, acquired stakes in few of them, bonded with many of them and working with all of them. They
have exhibited a well defined strategy by addressing the MSMEs at the grass roots levels, by creating Tier 1
capabilities in terms of tie-ups with Rave Gears and others for gears and transmission, with leading OEMs
like SAAB of Sweden, Ilyushin of Russia and Elbit of Israel for various strategic programs, this is the need of
the hour.


4 | DefInsights | December 2018

L&T has begun delivery of the K-9 Vajra, an achievement of sorts, this is a strong statement in the larger
modernisation of the Artillery. We soon will have the ATAGS coming out of Indian soil.

I believe the Strategic Partnership model is progressing well with the Indian Navy taking the lead in the
Naval Utility Helicopters program, closely followed up by the IAF for the Fighter aircrafts. We believe in an
inclusive industry and the spirit of the policy must take precedence over the letter for the nation to progress.

Foreign Affairs

The United States will exempt China, India and Japan from oil sanctions on Iran, Secretary of State Mike
Pompeo, while vowing to be "relentless" in pressuring Tehran. Hours after sweeping sanctions were re-
imposed following the US withdrawal from a denuclearization deal, Pompeo said eight countries would be at
least temporarily exempt from the ban on buying Iranian oil due to special circumstances or so as not to
disrupt energy markets. The countries with the waivers will be China, India, Italy, Greece, Japan, South
Korea, Taiwan and Turkey, Pompeo said.

Russia said no one should play “geopolitical games” in Afghanistan as Moscow hosted a major conference to
create “favourable conditions” for the start of direct peace talks with the Taliban whose representatives
were present at the meeting which was attended by India for the first time.
Opening the second Moscow meeting on Afghanistan, Foreign Minister Sergey Lavrov said Russia and the
countries of the region will continue to do everything possible to launch dialogue between Afghanistan’s
government and the Taliban, which is banned in Russia.

Military Diplomacy

President Ram Nath Kovind on a state visit to Vietnam was expected to provide a boost to the Defence
cooperation between the two countries and boost Exports from India. A USD 500 MN was proposed by PM
Narendra Modi two years ago. Vietnam seems to be torn apart from appeasing India vis-à-vis its relations
with China, while its stated policy is to have a deeper cooperation with India. Vietnam was also in the
process of exercising caution and scrutiny of its foreign loans/debts and it does not want foreign debt to
exceed 50% of its GDP and its public debt exceed 65% of its GDP. There is precedence in the form of USD
100 MN extended by India for Vietnam to procure Off Shore Vessels from India.

Well, we have had a wonderful 2018, with plenty of action, the heat on the Defence Industry Corridors is on,
a grand event is scheduled in Tamil Nadu in the third week of Jan 2019.

Wishing all our dear readers a Merry Christmas and wonderful 2019 ahead; continue to enjoy reading
Sugosha’s DefInsights.

December 2018 | DefInsights | 5


Ashwini Sharma And Dr Navin Varma. Dept of Defence Studies, Meerut College, Meerut
The security issues in North East India have both internal and external consequences. the internal
consequences are political, economic, social-ethnic dimensions. The external consequences include
intentions and potential role of countries surrounding northeast India and their impact on foreign relations.
this article discusses the factors causing insurgency and measures to counter these factors, and a
comprehensive way ahead.

Security problems in the north east has come a long way ever since India gained its independence in general
and in particular after 1953 which continue to persist even today in one form or another with very little
scope for solution that would hold the key to the restoration of peace and stability in the region. The region
presents itself as one of the most troubled and vulnerable area of our country wherein the security of life is
under severe threat. Insurgency has spread its tentacles wide, enveloping practically the whole region and
giving rise to an endless cycle of bloodshed. insurgent outfits of the North East Region (NER) are posing
serious threats to the peace and security of our country in general and in particular to the security and
development of the region.


6 | DefInsights | December 2018

Factors of Insurgency
There are four major factors causing insurgency, namely; geographical, socio-cultural, economic and

Geographical factor -
The north-eastern region of India lies in the northeastern extremity of the country and the region is
surrounded by foreign countries on almost all sides and the only link with the rest of the country through a
narrow corridor running under Bhutan foot hills is in north Bengal. The NE states have links with
neighbouring countries who fuel insurgency, as they do not want to see India as a powerful and prosperous
nation. most of the insurgent groups have their advance bases in these countries across international

Socio-cultural factors -
As an expert, Trith Nath Mishra put it in his
book, 'insurgency or ethic conflict' that the
lack of social and cultural homogenization is
a product of such diversity. in certain border
and are found to feel affinity and kinship
towards them and cannot be restricted to
sentiments of patriotism based on political
boundaries. their major hideouts are found
among these foreign people. in the north-
east region the government of India
reorganized the territories of the provinces
of Assam under constant pressure yielded by
the tribal people. The govt. created new
political units to appear the tribal political
leaders who managed to essence political
power and serve their interest at the cost of
the poor people. in fact, these political
leaders, keeping in view their own political
ambition and economic prosperity, become
blind followers of the Indian political
leaders, moreover; they began to
misappropriate the central funds provided
for rapid economic growth of the newly created political units. The political instability and confusion at the
central level during the recent years due to political parties, and also the growth of regional political parties,
have create the feeling among the insurgent leaders of the north-east India that the Indian federal system
would not survive for long.

Economic Factor -

The economy of the states of the region is one of the most backward and it is one of the most impoverished
regions of India, on most economic indicators, its performance is less than that of all India average. This
gives rise to apprehension among the local people that they may not get any gainful employment unless the
economy exhibits rapid structural change. The per capital income accruing to persons (ordinary) ordinarily
resident in the region, would be somewhat less than income transfers out of the region, since the region is
rich in resources. thus we see that the insurgency in Assam and other states is further compounded by the
lack of economic development.

December 2018 | DefInsights | 7

Not only the lack of agricultural and industrial development is low, the provision of infrastructure is so
inadequate, and people don't foresee any prospect in the coming future.

External Factors

External involvement takes place in the form of safe haven and transit; financial resources; direct military
support; additional base for recruitment; training; dissemination of propaganda and arms and material,
including ammunition, food and fuel. Transborder linkages of the north-eastern insurgent groups had, in
fact, started developing right in the first decade of India's independence. The key actors which are involved
in the prolonged issue of insurgency problem in the region are China, Bangladesh, Pakistan and Myanmar.
other than this, Bhutan and Nepal is also the preferred destination for other insurgent groups like the
National Democratic Front of Bodoland (NDFB) and the Kamtapur Liberation Organization (KLO). The
insurgents take advantage of the difficult terrain along the borders, plus lack of adequate controls along the
borders help them to carry out attacks with a well planned strategy designed from beyond the borders.
countering insurgency holistically the roots of insurgency are found in political, cultural, and economic
domain warrant dealing holistically. The suggested measures are discussed below.

Political Measures

At the political level, there is an urgent need for a much stronger political commitment to tackle the issue in
the proper manner which has survived for the last many decades. The people of the region feel dejected
over the step motherly treatment meted to them. they feel that they are being systematically exploited and
suppressed. As a result of which, they do not consider themselves as equal partners of the Indian union.
They even blamed the constitution for being discriminatory in the sense that they have no equal
representation in the council of states.

Socio Economic Measures

Measure must be undertaken at the socioeconomic level to address the security concerns in the north east.
Most of the northeast states affected by insurgency issues are among the poorest and underdeveloped and
are inhabited by the tribal population comprising of Assam, Nagaland, Manipur, Mizoram, Meghalaya and
Tripura. Economic and social compulsions have rendered the region prone to insurgency and other security
related crisis. Efforts must be made at the state level which must be supported by the central government to
create a climate suitable for development and economic growth in the areas which are insurgency prone
areas. as has been pointed above that large scale of economic underdevelopment, socioeconomic alienation
and the dissatisfaction with the widening economic inequality are the root causes of insurgency in our

Military Measures

Other than politico-economic and social measures, the state and central government will need to take up
military measure to tackle the insurgency problem in north east. The government will need to show military
commitment to tackle the problem. the decision of the government to engage in peace talks with any
militant outfit which is involved in killing of innocent civilians is a welcome development. This resolve of the
government was witnessed with the launch of full-scale military operations against the NDFB’s, leading to
the death of one of its senior commanders and arrest of more than 30 hardcore cadres of the outfits,
including some of its top commanders.


8 | DefInsights | December 2018

North East Security: Way ahead

With the present political situation in the north east, peace still seems to be a far cry. Uneven
development, regional deprivation, internal colonialism, cultural oppression and lack of integration are
some of the major root causes behind most of the conflicts and insurgencies in the region. The Indian
governmental measures to combat insurgency have largely been reactionary rather than conciliatory.
Following measures should be undertaken to holistically improve north eastern security:-

 Ensure proper maintenance of law and order situation in the region. this will not only bring safety of
people of northeast but also ensure long-term development in the region.

 Ensure that law enforcement is efficient enough to create disincentives for armed groups to continue
arming themselves;

 Ensure good governance free from the virus of corruption.

 Increase involvement of local people in economic development and long-term planning and change of
economy towards industrialization.

 Give enough emphasis on look east policy and promote crossborder trade. This has vast economic
potential of promoting growth and employment in the region.

 Provide better infrastructure facility in the region.

 Manpower development and employment generation.

 Strengthening the local self-government and institutions.

 Engage in a political dialogue between the government and the insurgents' group.

 State and central government will need to give special attention to remove the ill feeling of alienation
and neglect that has been festering for long.


Peace and development are the need of the hour for the people of the north east which is good for the
national interests of our country. Enhancing the rate of growth and employment and incomes in our North
– East would have a positive political impact. The initiation of the look east policy has brought very little
success for the security of the region which is still reeling under the pressure of insurgents. Under
development in the region has been fuelling insurgency. Security and development of the north east must
also be given utmost significance under the scope of Act East Policy (AEP). By bringing lasting security,
stability and development in the region, one can erase a sense of neglect and frustration that persists
among the people of the region. To deal with the rising concerns of insurgency problem, India must
strengthen its efforts at the individual and at bilateral level (in cooperation with the neighbouring
countries such as Myanmar and Bangladesh). Since, various insurgent groups are active along the roads
connecting northeast India to southeast Asia, unless security network is not good along these routes, the
future of connectivity through these routes will face a question mark. Thus it is imperative to address the
security concerns of NER holistically for enduring effectiveness of AEP.

December 2018 | DefInsights | 9



3 DEC 2018

Lt General AK Bhatt, Chinar Corps
Commander visited to the native
village, Cheki Ashmuji, Kulgam, of
the gallant soldier of Indian Army
L/Nk (late) Nazir Ahmed Wani,
SM* on 03 December, 2018. The
Corps Commander met the
family members of two martyrs
of 162 Infantry Battalion (TA) JAK
LI L/Nk (late) Nazir Ahmed Wani,
SM* and L/Nk (Late) Mukhtar
Ahmed Malik of Shurat village,
also in Kulgam district, shared
their grief and consoled them. L/
Nk (late) Nazir Ahmed Wani, SM*
laid down his life fighting
terrorist in operation Batagund
at Shopian District and L/Nk
(Late) Mukhtar Ahmed Malik was
brutally killed by terrorists in a
dastardly act while he was on
leave. The Corps Commander
assured the family members of
all possible support including
education of the children of
martyrs in prestigious Sainik
Schools or other schools in the


10 | DefInsights | December 2018

December 2018 | DefInsights | 11


The Navy Week celebrations culminated with a scintillating Beating Retreat and Tattoo Ceremony at the
Gateway of India on 04 December 2018, the Navy Day. The Hon'ble Governor of Maharashtra Shri CH
Vidyasagar Rao was the Chief Guest at the occasion hosted by Vice Admiral Girish Luthra, the Flag Officer
Commanding-in-Chief Western Naval Command. An eclectic audience comprising Service officers and
dignitaries from various fields witnessed stellar performances by the Indian Naval Band, Sea Cadet Corps
cadets, Continuity drill by Naval personnel, Search and Rescue demonstration and flypast by Naval
helicopters based at Naval Air Station, INS Shikra.
The ceremony of ‘Beating Retreat’ has its origins in early warfare. The Retreat was sounded every day as a
signal to the troops to disengage from combat as daylight faded, ordering them to withdraw to the
confines of their encampment for the night. Since then, the ceremony of ‘Beating Retreat’ has become an
integral part of military traditions. The custom of ‘Tattoo Ceremony’ encompasses beating the drums
within the billeting, ordering the troops to proceed to their quarters.
Prime Minister Narendra Modi on 04 December, took to Twitter to wish Indian Navy on the occasion. "Navy
Day greetings to all valorous personnel of the Indian Navy and their families. India is grateful to our Navy
for protecting the nation and the commendable role the Navy plays during disaster relief," he tweeted.
The Indian Navy has played a pivotal role over the years in ensuring the country's vast coastline is safe and
secure. India's maritime force has time and again thwarted nefarious attempts and it is this valour that is
saluted each year on December 4 as Navy Day. The Navy Day is celebrated every year to recall the
contribution of the force during the 1971 Bangladesh liberation war. It is to invoke the memory of the
launch of Operation Trident during the Indo-Pak war in 1971, and as a mark of reverence to those who
were martyred in the war. Three missile boats of the Indian Navy, INS Nipat, INS Nirghat, and INS Veer
played a pivotal role in the attack.


12 | DefInsights | December 2018

Present Day
The Indian Navy of the 21st century is emerging as a formidable force likely to influence the Indian Ocean
Region. This is in tune with a CIA report, which pointed out India’s desire to maintain its dominance in the
In line with India’s huge global ambitions, the Navy is expanding and modernizing, even though
bureaucratic hiccups remain.
Speaking on the eve of Navy Day, Admiral Sunil Lanba said, "Navy is looking at inducting 56 warships and
submarines to enhance its strength. This is apart from 32 warships under construction.”
In geopolitical dynamics, aircraft carriers are considered a sign of blue-water ambitions. India’s lone aircraft
carrier is INS Vikramaditya. Accommodating 30 MIG-29Ks and six Kamov helicopters, the aircraft carrier is
expected to be battle-ready by May 2019.
Among Indian Navy’s latest vessels are the Kalvari-class diesel-electric attack submarines. According to one
report, INS Khanderi will be delivered to the Navy by the end of 2018. INS Kalvari, the lead submarine of
the Kalvari-class, is already in service. Another submarine from the same class is expected to be
commissioned sometime next year.
However, with just 14 conventional — some considered obsolete — submarines, India lags behind in the
geopolitical race. On the other hand, China, its main rival in the region, already controls about 60
conventional submarines.

December 2018 | DefInsights | 13

India, nevertheless, operates two nuclear submarines: INS Chakra and INS Arihant. On 6 November this
year, INS Arihant competed its first deterrence patrol, helping India enter the exclusive nuclear triad club.
This means India can now launch nukes from air, land and water. Currently equipped with K15 nuclear-
tipped missiles having a range of 750 kilometres, INS Arihant is the lead submarine of Arihant-class
ballistic missile submarines.

Another recent addition to Indian Navy’s firepower is the destroyer INS Chennai. Capable of being fitted
with Brahmos as well as Barak 8 missiles, INS Chennai is the last of the three modern Kolkata-class vessels
to be commissioned.

The Indian Navy ships including the INS Arihant, INS Kalvari, INS Chennai and the soon-to-be-
commissioned INS Vikrant, India’s second aircraft carrier are all indigenous platforms.
The Indian Navy inducted its first 'Deep Submergence Rescue Vehicle' into service and is in the process of
acquiring one more soon to deploy the vessels permanently at Mumbai and Visakhapatnam.

With the DSRV's induction, the Indian Navy has joined the select league of world navies that have an
integral submarine rescue capability, Chief of the Naval Staff Admiral Sunil Lanba said after the induction
at the Western Naval Command. "The DSRV (induction) is a landmark event and it marks the culmination
of years of focused efforts of the Navy in acquiring niche submarine rescue capability. With these
capabilities, the Indian Navy has joined the select league of navies that operate such assets," Admiral
Lanba said. The Navy has also given a Rs 9,000 crore contract to Hindustan Shipyard Limited for building
two mother ships for DSRVs and deliver them by 2020.

In a bid to turn into a “Builder’s Navy”, the Indian Navy has focused on promoting indigenisation across
various verticals. The navy's ambitious indigenisation plan ranges from producing the smallest spare part
of a machine to building warships. Conveniently, indigenisation is now integrated with the Make in India

14 | DefInsights | December 2018

Industry Buzz

The upcoming 12th edition of the biennial Aero India 2019, scheduled to be held between 20th and
24th February 2019 at the usual venue in Yelahanka Air Force station, Bangalore, will for the first time
subsume the Civil Aviation exhibition. The civil aviation exhibition is usually a dedicated event and is
held in Hyderabad.

The other highlights of the 2019 edition of the Aero India event, which have been planned to introduce
new agendas are:

• After the inauguration by the Prime Minister Modi, the inaugural day will include a CEOs round
table with participation of over 15 CEOs from major global aerospace companies

• Day 2 will have a drone competition for Start-Ups
• There will also be a dedicated session for students, academic seminars and photography contest
• Day four will be women’s day, with Indian origin astronaut Sunita Williams is scheduled to attend

the show. Other women achievers will also be present

Thanks to India’s large armed forces major modernisation plans and huge imports, the event has
emerged as the largest aerospace event in Asia, and the tag line of the Aero India 2019 is “Runway for a
billion opportunities” with the logo being inspired by the indigenous light combat aircraft Tejas.

So far 158 Indian and 106 foreign companies have registered.


The 200 Ka-226T Helicopter deal between HAL and the Russian Helicopters, through their joint venture
company “Indo-Russian Helicopters Pvt Ltd” seems all set to take off.

“The joint venture has received the
request for proposal (RFP) in May
this year. By end of August we
submitted the technical and
commercial proposal, and for past
three months we were having
technical consultations, with
another one happening just
tomorrow. We hope that we would
start financial negotiations in
December,” said Andrey Boginsky,
CEO, Russian Helicopters. He added
that “The first 60 helicopters are to
be built in Russia, so we will have sufficient time to carry out localization activities for all the main
components”, claiming to have a “clear cut” plan for sourcing components from local Indian partners.

December 2018 | DefInsights | 15

Industry Buzz

Interestingly, Russian Helicopters has explored the South East countries and have found good traction
lightweight twin-engine multi-purpose helicopter Ansat, and a mid-class multi-purpose helicopter Mi-171A2.

The Bangalore based Alpha Design Technologies Pvt Ltd (ADTL), is keen to be part of the Mid-Life Upgrade
(MLU) of the Indian Navy’s anti-submarine warfare helicopters. The Indian Navy is upgrading its fleet of
Kamov KA-28 anti-submarine helicopters, at an estimated cost of ₹2100 Crore, and this could also attract
offsets as well as orders for the larger fleet of Kamov choppers in service with the Navy. The MLU involves
modernising the sensors and avionics, which will enhance the capability to detect and neutralise the enemy
submarines and will extend the service life of the helicopters.
Citing its “strong partnership” with Adani Defence and Aerospace Systems (ADAS), and its experience in
similar sensor and avionics upgrade and integration, as key influencing factors, ADTL believes it eligible for
participation in the program.

The Defence Acquisition Council (DAC) of the MoD, chaired by the RM Ms Nirmala Sitharaman has approved
the acquisition of defence equipment worth ₹3000 Crore. The acquisition includes the indigenously
designed and developed Brahmos cruise missile for the two stealth frigates which India is procuring for $1
Billion USD.
Along with the Brahmos missile, the DAC also approved the purchase of the Armoured Recovery Vehicles
(ARVs) for the Indian Army’s main battle tank, Arjun. The ARVs are indigenously designed and developed by
the Defence Research and Development Organisation (DRDO), and will be manufactured by the DPSU Bharat
Earth Movers Limited BEML.


16 | DefInsights | December 2018

Industry Buzz

In a recent CII conclave at Hyderabad, many champions of the MSME companies discussed on further
measures which can be taken to promote the MSMEs in the defence and aerospace sector.

Some of the observations and points discussed were:
• The favourable platforms and eco-system created by the governments like the T-Works incubators,

which provide exclusive prototyping facilities, for the MSME companies to make use of and deliver
cutting edge technologies in the Aerospace and Defence sector.
• The presence of larger companies such as Boeing, Lockheed Martin, GE, Tata Advanced Systems are
potential market for MSME companies to bag contracts from, and be part of the domestic and global
supply chain. This was demonstrated in the meeting held by Boeing.
• Use of contemporary manufacturing techniques and technology such as AI, 3D Printing Automation and
Industry 4.0 and be competitive globally.
• Make provision for MSME companies to play a much bigger role in the defence and aerospace sector, by
creating the right industry ambience for the companies which have the potential to enter into direct
contract with the global organisations.

Col K. V. Kuber, Director, Aerospace and Defence in E&Y said “Defence Procurement Policy 2016 (DPP-2016)
has been a game changer for private companies, particularly MSME’s”.


Four of India’s Defence Public Sector Units namely BDL, BEL, HAL and OFB have featured in Stockholm
International Peace Research Institute’s (SIPRI) top list of 100 arms manufacturing and military services
companies for the year 2017

While this is the first time for
Bharat Dynamics Limited (BDL) at
94th position from 106th rank in
2016 - with arms sales of $880
Million USD to be in the list of top
hundred arms producing
companies in the world - the
electronic major Bharat Electronics
Limited (BEL) has moved up 10
notches from 74th position in the
previous year (2016) to 64th
position in 2017, with its revenue
increasing by 12%, from $1.2 Billion
USD, to $1.38 Billion USD. The
combined arms sales of the four DPSUs increased by 6.1% in 2017 from the previous year’s tally, clocking a
total figure of $7.5 Billion USD, and earning the twin distinguishing of becoming the largest arms producer in
the ‘emerging producers’ and also the largest arms importer in the world.

December 2018 | DefInsights | 17

Defence Procurement Procedure Primer

Part 8 – Procurement Procedure for ‘Buy’ and ‘Buy
and Make’

In part 7 of the primer we continued with chapter 2 of the DPP 2016 and the
procurement procedure for categories under ‘Buy’ and ‘Buy and Make’
schemes. We covered the RFI, SQR AoN, RFP and TEC thus far, we shall
continue from the next phase i.e. Field Evaluation

(f) Field Evaluation Trials (FET)

After the acceptance of TEC Report, all selected vendors would be asked to

By Sohil Patel provide their equipment for trials in India, except when trials are to be

conducted at vendor premises. FET will be conducted by the User Service on

the basis of trial methodology given in the RFP

SHQ will formulate the Trial Directive, which must specify the fundamental points that need to be
addressed for validating the essential parameters and EPP along with the evaluation credit scores thereof,
as stipulated in SQRs.

FET will be conducted by the user, only pertaining to conditions where the equipment is most likely to be
deployed. In other conditions where the probability of deployment is not high, appropriate certifications
confirming the functional effectiveness under such conditions may be obtained; in cases where applicable,
simulations based testing may be resorted to.

The requirement of FET/NCNC Trials will not be applicable for procurement cases in respect of acquisition/
construction of Ships, Submarines, Yard Craft, Tugs, Ferry Craft and Barges, where there is no prototype
available for conduct of NCNC Trials.

FET will normally be conducted on NCNC basis except when specifically indicated in the RFP for low value
items being procured in large quantities

Any vendor failing to produce equipment for trials by due date would normally be given a grace period of
15 days to produce the equipment for trials. An additional grace period of up to 30 days may be obtained
by SHQs.

All evaluations for confirmation/validation of parameters should be completed and accepted prior to
commencement of the CNC

AoN Validity for categories under ‘Buy’ and ‘Buy and Make’ is six months and one year in case of ‘Buy and
Make (Indian)’ category and all Turnkey projects. AoN would lapse for all cases where the RFP for approved
quantity is not issued within the original validity period of AoN.

Preference will be given to indigenous design, development and manufacturing of defence equipment.

(g) Staff Evaluation

The Staff Evaluation will analyse the Field Evaluation results and shortlist the equipment recommended for
introduction into the services. The Staff Evaluation Report will be approved by the SHQs and forwarded to
the TMs.

After due examination, the TMs, will submit the Report to the DG (Acquisition) with recommendations for

1ac8ceptance or otherwise.

18 | DefInsights | December 2018

(h) Technical Oversight Committee (TOC)

TOC must provide expert oversight over the technical evaluation process. The Acquisition Wing will
constitute a TOC for all acquisition proposals in excess of ₹ 300 Crores and for any other case
recommended by the Defence Secretary/DPB/DAC.

The TOC will comprise three members drawn from a standing panel of specialists (serving Service
Officers, DRDO scientists and DPSU officials).

The TOC will be tasked to see whether the trials, trial evaluations, compliance to QRs and selection of
vendors were done according to prescribed procedures.

Mandate of TOC would also include providing oversight on the adopted trial methodology during trials
vis-a-vis trial methodology given in the RFP and the trial directive. The TOC will also review and bring
out the status of a grievance or complaint, if any existing at this stage, pertaining to acquisition scheme
and will have to give its observations and recommendations, based on a majority decision, within 30

(j) Contract Negotiation Committee (CNC)

The CNC will be constituted after the Staff Evaluation report has been accepted. Initial activities of the
CNC shall include benchmarking and all other activities prior to the opening of commercial bid.

The sealed commercial offers of the technically accepted vendors shall be opened by the CNC at a
predetermined date and time under intimation to vendors, permitting such vendors or their authorised
representatives to be present, only after the acceptance of the TOC report, wherever applicable. The
bids of the competing firms shall be read out to all members present and signed by all members of the
CNC. The CNC would carry out all processes after opening of commercial bids, till the finalisation of
CNC report.

The contract negotiation process would start with preparation of a “Compliance Statement”
incorporating the commercial terms offered in the RFP and that sought by the vendor(s), analysis of
the discordance and the impact of the same.

The CNC would prepare a Comparative Statement of Tenders (CST) with a view of evaluating the
technically acceptable offers and determine the lowest acceptable offer (L1 Vendor).

Once the L1 vendor is identified in multi-vendor cases, the contract should be concluded with the
vendor and normally there would be no need for any further price negotiations. The RFP in multi-
vendor cases should clearly lay down that no negotiations would be carried out with the L1 vendor
once the reasonability of the price quoted by the vendor is established.

In case it is found that the lowest tenderer (L1) is not able to supply the entire quantity within the
prescribed time-frame, the CNC will have the authority to divide the quantity amongst other qualified
tenderers (L2, L3……. in that order), on the condition that other tenderers accept the price and terms &
conditions quoted by the lowest tenderer.

Cases in which contracts have earlier been signed and benchmark prices are available, the CNC would
arrive at the reasonable price, taking into consideration the escalation/foreign exchange variation
factor. The endeavor should be to conclude the CNC early so that the operational/urgent requirement
of the indenting Service is met in a time-bound manner.

December 2018 | DefInsights | 19

To ensure product support during the assured life cycle of the product, the CNC would finalise the
following with the L1 vendor:-

(a) Assured supply of information on product/technological improvement, modifications and upgrades.

(b) Obsolescence management and life time purchases.

(c) An illustrated spares price catalogue with base price and pricing mechanism for long term.

(k) Approval of Competent Financial Authority (CFA)
The CNC should document the selection of vendor using a formal written recommendation report
addressed to the relevant approval authority.

The report of the CNC should include:-
(a) A brief background to the requirement.
(b) Composition of the CNC.
(c) An explanation of the commercial evaluation process, selection criteria and commercial evaluation
matrices, if used.
(d) Brief description of different phases of the commercial negotiation process.
(e) A summary of the recommendations.

The CNC Report, along with the summary of recommendations, would be processed by the Acquisition
Manager/SHQ, as applicable, for obtaining expenditure clearance and CFA approval.

(l) Award of Contract

The Standard Contract Document indicates the general conditions of contract that would be the
guideline for all acquisitions. The date of signing of the contract would be the effective date of contract
for all acquisitions, unless the contract specifies otherwise. The draft contract would be prepared as per
these guidelines. However, for single vendor procurements, if there is a situation where Government of
India has entered into agreements with that country regarding specific contractual clauses, then the
terms and conditions of such agreements would supersede the corresponding standard clauses of DPP.
Consequent to the approval of the CFA, the contract would be signed by the Acquisition Manager/
Director (Procurement) concerned in the Acquisition Wing or by an officer authorised by the PSO at the

An “Integrity Pact” would be signed between government department and the bidders for all
procurement schemes over ₹ 20 Crores. In “Buy” and “Buy and Make” cases schemes, the Indian or
Foreign vendors submitting multiple bids will be required to submit one Integrity Pact and one IPBG.

(m) Post Contract Management

While responsibility for contract administration and management would be that of the SHQ concerned,
post-contract monitoring would be conducted by the Acquisition Wing. Depending on the degree of
complexity of a project, the reviews will be carried out as elucidated below:-

20 | DefInsights | December 2018

(a) Simple Projects. Projects involving one time off the shelf buys, without any design and development,
shall be reviewed by the Acquisition Manager/equivalent service officer in the SHQ.

(b) Complex Projects. Projects which require design, development and testing in consultation with the
users, with likely ToT and have enlarged scope in terms of basic complexities, depth of design and
development and consideration of a large number of participants, would be reviewed by a steering
committee headed by DG (Acquisition) in the MoD or PSO at SHQ, with members from MoD, MoD (Fin),
DRDO, DDP and SHQ. In such cases, the Acquisition Wing will submit quarterly Contract Implementation
Reports (CIR) to the DPB.

Equipment Induction Cells (EICs) - EICs will be raised for major projects on a case-to-case basis in SHQ at the
discretion of SHQ. The EICs will deal with the induction of major equipment and help in planning the
requirement of facilities essential for the serviceability and maintainability aspect of that acquisition.

So this brings us to the end of the procurement procedure under “Buy” and “Buy and Make” categories. We
looked at the 12 major steps in order to conclude a contract from the RFI stage to the Post-Contract
Management. In order to cut down the delays in procurement of equipment and ensure that the
procurement system is more responsive to the needs of the Armed Forces the following measures have
been put in place
(a) Broad time frame for completion of different procurement activities, given at Appendix H (anywhere
between 74-114 weeks) should be adhered to. Major deviations from this time frame should be brought to
the notice of the DPB, for necessary corrective measures.
(b) Once the SoC is forwarded by SHQ to MoD, consolidated observations/ clarifications sought from up to
and including the level of JS/AM in the MoD and MoD (Fin) should be clarified in an across the table
discussion and minutes of the same recorded on file.

Subsequent Procurement of Already Contracted Equipment (Repeat Order)

For equipment/systems/platforms already inducted into service, it may be necessary to go back to the
OEM/vendors for placing repeat orders. In such cases it may be ensured that the SQRs of the equipment are
as per the previous order. after seeking AoN, a commercial RFP would be issued to the vendor, for quantity
not exceeding 100% of the previous order. Specific approval of DPB (in acquisition
cases up to ₹ 300 Crores) or DAC (in acquisition cases excess of ₹300 Crores) as the case may be, would be
obtained for Repeat Order of quantity exceeding 100% of previous order. Repeat order cases may fall under
any of the following categories:-
(a) Additional Quantities. This may be necessitated to make up for deficiency in the existing scaling or to
cater for the requirements due to new raisings/War Wastage Reserves (WWR)/sector stores.
(b) Replacement Equipment. This may be necessitated due to equipment declared “Beyond Economical
Repairs” (BER) or damages or loss to the earlier equipment by way of accidents/natural calamities or such
like reasons.
(c) Major-assemblies/sub-assemblies/Special Maintenance Tools (SMT)/Special Test Equipment (STE)/
maintenance/integration of Buyer Furnished Equipment (BFE).
(d) Spares for All Levels of Maintenance. It must, however, be ensured that when spares etc. are procured
from OEMs of sub-assemblies, the assurances/warranties extended by the OEM for the main equipment
retain their validity.

This brings us to the end of Chapter II of DPP 2016. In the next part we will start by looking at some of the
important Appendix to Chapter II, including the infamous Appendix D-Defence Offsets Guidelines.

December 2018 | DefInsights | 21

Business Opportunities : December 2018




2 RFI for Procurement of Air De- 20th Dec 2018 Army

fence Guns and Ammunition

3 Procurement of Interface Adapt- 20th Dec 2018 IAF

ers & Testing Tools

4 RFP towards selection of collabo- 04th January HSL BD/FP/FSSRFP/8101135 RFP-Open

rator towards construction of 05 2019

Nos. Fleet Support Ships (FSS)

5 Procurement of AK-47 Rifle Mod 06th Dec 2018 Assam Rifles AK-47 Rifle Mod Kit RFP-Open

Kit for the FY 2018-19 - MHA

6 Procurement and installation of 05th Dec 2018 Assam Rifles XX.11011/09/IT/2018-Sigs RFP-Open
- MHA dt 14 Nov 2018 RFP-Open
data security for the Assam Rifles CVRD-DRDO RFP-Open
7 CVRDE-Supply of Airworthy Fas- 25th Dec 2018 ADE-DRDO OT/19ATT121/2018-19
teners Two Bid
8 Outsourcing of Development of 18th Dec 2018

Graphical Interface module for

Test system CABS-DRDO CABS/19ATT182/18-19 RFP Open
9 Online Invitation of Bids for Sup- 25th Dec 2018

ply, installation and commission-

ing of video display and confer-

encing system for Board Room

and Audio Conference System in

the Board Room (AMC) 20th Dec 2018 TBRL-DRDO P-3201/227 RFP-Open
10 Ammunition

11 CVRDE-Design, Development, 12th Feb 2018 CVRD-DRDO CVRDE/MMG/ RFP-Open
Manufacture, Supply, Installation OT/19ATT112/2018-19
and Commissioning of Heat Ex-
changer Test Facility HETF GTRE-DRDO GTRE/MMG/ RFP-Open
KAMC/2858/18 RFP-Open
12 Casting, Machining and Supply of 10th Dec 2018 DG,CRPF,MH
ELBOW Compressor BLEED A U.II.1244/2018-19-PROC-
13 Long Range Reconnaissance and 19th Dec 2018
Observation System

14 RFP for design, development, 06th Dec 2018 DG,CRPF,MH M.V.43-2017-18-ITW.DA- RFP-Open
implementation and mainte-

nance of SELO 2 Project

15 Chemicals as per list 17th Dec 2018 DRDO DMSRDE/19ATT115/18-19 RFP-Open

15 Supply of Bullet Resistant Glasses 10th Sep 2018 GSL 15/GSL/GES/FRPBOATS/ RFP - Open
for 5t and 12t frp boats Goa Police/Glasses dt

22 | DefInsights | December 2018

Business Opportunities : December 2018


16 Micro UAV ( Unmanned Aerial 10th Dec 2018 NSG , MHA 14/2018 M And E RFP-Open
Vehicle) RFP-Open
DG, National 12/2018
17 Sniper Rifle Bolt Action 17th Dec 2018 Security
(7.62x51mm) with Telescopic Guard, MHA
Day and Night sight (Thermal
Imaging/Image intense rifle and DG, National 27/2018 MandE(Gen) RFP-Open
assy Security
Guard, MHA PR-13013(18)/2/ RFP-Open
18 a. Explosive detector b. Bomb 13th Dec 2018 CISF, MHA BRH/18-19/PROC RFP-Open
Blanket c. Water jet Disruptor A/BA3/1901IND-
HAL 5/2018
19 Procurement of BR Helmet 11th Dec 2018 635/SEC/CCTV

20 Indigenization of Digital Video 28th Dec 2018
Recorder (DVR) for HAWK

Invitation of Online Bids for Pro- IHQ of MoD RFP -Open
curement and Installation of RFP -Open
21 CCTV Camera along the Perime- 20th Dec 2018 IHQ of MoD RFP-Open
ter and Water Front at INS Chilka Indian Coast
Comprehensive Annual Mainte- DYT/CHSFO/18-19/110
nance Contract of IP Based IR 20th Dec 2018 CCTV/090
21 CCTV Surveillance System In-
stalled at Mumbai 19

22 Design, Development, Implemen- 20th Dec 2018

tation and Support for Document

Management System

Invitation of bids for Indigenous 5BRD/6251/3/3/ISC(T)
Development of Clip Locking IAF RFP-Open

23 Turnb (9401729402) of Pilatus 26th Dec 2018 5BRD/6251/3/3/ISC(T)
Indigenous development of Nut IAF RFP-Open

Hex SLF LKG CADM (9380768307) 5BRD/6251/3/3/ISC(T)
23 of Pilatus a/c 26th Dec 2018 IAF RFP-Open

Invitation of bids for Indigenous IDS ANC/41211/1/LS/IT/ RFP-Open
Development of Pin Cotter

23 (9401702277) of Pilatus a/c 26th Dec 2018

24 Procurement of Security Soft- 21st Dec 2018

ware for Rights Management

System (RMS) for HQ ANC

25 Blasting priming and painting for 18th Dec 2018 MDL EOI/OTS/SHP/P75/ EoI
Indian navy Blasting RFP-Open
submarine of P75 project Indian navy DD/2111/HMNS DAT- RFP-Open
ED 30 OCT 18
26 Supply of Helmet Mounted Night 20th Dec 2018
Sights (HMNS) ED 26 OCT 18

26 Procurement of High Altitude 10th Dec 2018
Parachute Penetration System

December 2018 | DefInsights | 23

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