NEED FOR NETWORK OF DEFENCE ACQUISITIONS, TECHOLOGY CUM R&D UNIVERSITIES IN INDIA

The Hindu article “Research in frontier areas of science and technologyon IITM’s achievements is great, we do need to celebrate what we have. But there is so much scope for more.  China has whole Universities dedicated to many of these specializations, and the US has a Defence Acquisitions University which teaches you the ropes for defence acquisitions.

And just look at the courses on offer!!! I am salivating!  Mind boggling!  This is the kind of expertise that leads to well founded decisions in defence acquisitions. Of course, the US has a different approach to acquisitions, it starts with R & D, and then development and then acquisitions. We OTOH start with acquisitions, we don’t start with indigenous production processes at all!

Reproducing the DAU courses below for those who do not wish to click! They are impressive, na?

ALL ALL Training courses FE Facilities Engineering
ACQ Acquisition Management GRT Grants
AUD Auditing IND Industrial/Contract Property Management
BCF Business, Cost Estimating, and Financial Management IRM Information Resource Management
CMA Contract Management – Air Operations LOG Logistics
CMM Contract Management – Manufacturing PMT Program Management
CMQ Contract Management – Quality PQM Production, Quality, and Manufacturing
CMS Contract Management – Software RQM Requirements Management
CON Contracting SAM Software Acquisition Management
COR Contracting Officer’s Representative STM Science and Technology Management
ENG Engineering SYS Systems Planning, Research, Development and Engineering
EVM Earned Value Management TST Test and Evaluation

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Course Title Access
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CLPs Last Modified
ACQ 101 Fundamentals of Systems Acquisition Management DL YES 25 10-Jul-2014
ACQ 120 Fundamentals of International Acquisition (FIAC) DL YES 19 01-Aug-2014
ACQ 130 Fundamentals of Technology Security/Transfer (FTS/T) DL YES 12 10-Jul-2014
ACQ 201A Intermediate Systems Acquisition, Part A DL YES 25 10-Jul-2014
ACQ 201B Intermediate Systems Acquisition, Part B YES YES 34 09-Jul-2014
ACQ 202 Intermediate Systems Acquisition, Part A DL N/A 0 10-Jul-2014
ACQ 203 Intermediate Systems Acquisition, Part B YES N/A 0 09-Jul-2014
ACQ 230 International Acquisition Integration YES YES 40 30-Jul-2014
ACQ 265 Mission-Focused Services Acquisition YES YES 23 09-Jul-2014
ACQ 315 Understanding Industry (Business Acumen) YES YES 37 09-Jul-2014
ACQ 370 Acquisition Law YES YES 29 09-Jul-2014
ACQ 401 Senior Acquisition Course YES YES 80 09-Jul-2014
ACQ 403 Defense Acquisition Executive Overview Seminar YES YES 0 09-Jul-2014
ACQ 404 Systems Acquisition Management Course YES YES 41 09-Jul-2014
ACQ 405 Executive Refresher Course YES YES 74 09-Jul-2014
ACQ 450 Leading in the Acquisition Environment YES YES 31 09-Jul-2014
ACQ 451 Integrated Acquisition for Decision Makers YES YES 25 09-Jul-2014
ACQ 452 Forging Stakeholder Relationships YES YES 25 09-Jul-2014
ACQ 453 Leader as Coach YES YES 27 09-Jul-2014
AUD All DCAA Auditing Courses DL N/A 06-Aug-2012
AUD 1113 Orientation to DCAA DL N/A 0 10-Apr-2014
AUD 1121 Briefing Contracts DL N/A 0 10-Apr-2014
AUD 1122 Accounting System Survey DL N/A 0 10-Apr-2014
AUD 1126 Adequacy of Proposals DL N/A 0 10-Apr-2014
AUD 1142 Progress Payments DL N/A 0 10-Apr-2014
AUD 1150 Technical Indoctrination YES N/A 0 10-Apr-2014
AUD 1221 Basic Flowcharting DL N/A 0 10-Apr-2014
AUD 1231 Intermediate Contract Auditing YES N/A 0 10-Apr-2014
AUD 1249 Agreed-Upon Procedures DL N/A 0 10-Apr-2014
AUD 1261 Scanning Guidance DL N/A 0 10-Apr-2014
AUD 1265 APPS Performance Support Module DL N/A 0 10-Apr-2014
AUD 1269 Working Paper Documentation DL N/A 0 10-Apr-2014
AUD 1271 Permanent Files DL N/A 0 10-Apr-2014
AUD 1283 Fraud Awareness DL N/A 0 10-Apr-2014
AUD 1440 GAGAS DL N/A 0 10-Apr-2014
AUD 1541 Cost Accounting Standards YES N/A 0 10-Apr-2014
AUD 1570 CAS—Administration and Coverage DL N/A 0 10-Apr-2014
AUD 1571 CAS 401, 402, and 405 DL N/A 0 10-Apr-2014
AUD 1572 CAS 403, 410, 418, and 420 DL N/A 0 10-Apr-2014
AUD 1573 CAS 404 and 409 DL N/A 0 10-Apr-2014
AUD 1574 CAS 414 and 417 DL N/A 0 10-Apr-2014
AUD 1575 CAS 406, Cost Accounting Period DL N/A 0 10-Apr-2014
AUD 1576 CAS 408 and 415 DL N/A 0 10-Apr-2014
AUD 1577 CAS 407, Standard Costs for Direct Material and Labor DL N/A 0 10-Apr-2014
AUD 1578 CAS 416, Accounting for Insurance Costs DL N/A 0 10-Apr-2014
AUD 1579 CAS 411, Acct. for Acquisition of Cost of Material DL N/A 0 10-Apr-2014
AUD 1580 CASB Disclosure Statements DL N/A 0 10-Apr-2014
AUD 1601 FAR 31, Allowable and Unallowable Costs DL N/A 0 10-Apr-2014
AUD 1602 Allowable Costs with Restrictions (Non-Employee) DL N/A 0 10-Apr-2014
AUD 1603 Allowable Costs with Restrictions (Employee) DL N/A 0 10-Apr-2014
AUD 2311 Defective Pricing DL N/A 0 10-Apr-2014
AUD 4035 Quantitative Methods Refresher YES N/A 0 11-Apr-2014
AUD 6115 Effective Report Writing YES N/A 0 10-Apr-2014
AUD 6220 Auditor Interview and Interpersonal Reactions YES N/A 0 10-Apr-2014
AUD 6240 Oral Presentation Workshop YES N/A 0 10-Apr-2014
AUD 8414 DDI Leadership Skills YES N/A 0 11-Apr-2014
AUD 8564 Administration and Management of Audits for Supervisors YES N/A 0 10-Apr-2014
AUD 8565 Supervision YES N/A 0 11-Apr-2014
AUD 8611 EEO for Supervisors DL N/A 0 21-Jun-2011
AUD 8655 Human Resources for Supervisors DL N/A 0 21-Jun-2011
AUD B4121 Statistical Sampling YES N/A 0 22-Jan-2014
AUD S5651 Retrieving and Analyzing Electronic Data Using SAS YES N/A 0 11-Apr-2014
BCF 103 Fundamentals of Business Financial Management DL YES 26 10-Jul-2014
BCF 106 Fundamentals of Cost Analysis DL YES 37 10-Jul-2014
BCF 107 Applied Cost Analysis YES YES 30 09-Jul-2014
BCF 204 Intermediate Cost Analysis YES YES 67 09-Jul-2014
BCF 205 Contractor Business Strategies YES YES 30 09-Jul-2014
BCF 206 Cost Risk Analysis YES YES 22 09-Jul-2014
BCF 207 Economic Analysis YES YES 28 28-Jul-2014
BCF 209 Acquisition Reporting for MDAPs and MAIS YES YES 26 09-Jul-2014
BCF 215 Operating and Support Cost Analysis YES YES 30 09-Jul-2014
BCF 220 Acquisition Business Management Concepts DL YES 27 10-Jul-2014
BCF 225 Acquisition Business Management Application YES YES 28 09-Jul-2014
BCF 301 Business, Cost Estimating, and Financial Management Workshop YES YES 61 09-Jul-2014
BCF 302 Advanced Concepts in Cost Analysis YES YES 66 09-Jul-2014
CMA 211 Government Flight Representative (GFR) YES YES 24 09-Jul-2014
CMA 221 Government Ground Representative (GGR) YES YES 24 09-Jul-2014
CMA 231 DCMA Aviation Safety Officer (ASO) YES YES 12 09-Jul-2014
CMM 100 Surveillance Implications of Manufacturing and Subcontractor Management YES YES 55 09-Jul-2014
CMQ 101 Government Contract Quality Assurance Fundamentals YES YES 67 09-Jul-2014
CMQ 220 Root Cause Analysis (RCA) DL YES 14 14-Aug-2014
CON 090 Federal Acquisition Regulation (FAR) Fundamentals YES YES 133 09-Jul-2014
CON 100 Shaping Smart Business Arrangements DL YES 16 10-Jul-2014
CON 121 Contract Planning DL YES 12 10-Jul-2014
CON 124 Contract Execution DL YES 13 10-Jul-2014
CON 127 Contract Management DL YES 10 10-Jul-2014
CON 170 Fundamentals of Cost and Price Analysis YES YES 76 09-Jul-2014
CON 200 Business Decisions for Contracting DL YES 25 10-Jul-2014
CON 216 Legal Considerations in Contracting DL YES 23 19-Aug-2014
CON 232 Overhead Management of Defense Contracts YES YES 86 09-Jul-2014
CON 234 Joint Contingency Contracting Course YES YES 64 09-Jul-2014
CON 237 Simplified Acquisition Procedures DL YES 6 10-Jul-2014
CON 243 Architect-Engineer Contracting YES YES 35 09-Jul-2014
CON 244 Construction Contracting YES YES 32 19-Aug-2014
CON 251 Fundamentals of Cost Accounting Standards—Part II YES YES 30 09-Jul-2014
CON 252 Fundamentals of Cost Accounting Standards YES YES 52 09-Jul-2014
CON 260A The Small Business Program, Part A DL YES 10 10-Jul-2014
CON 260B The Small Business Program, Part B YES YES 17 09-Jul-2014
CON 270 Intermediate Cost and Price Analysis YES YES 68 09-Jul-2014
CON 280 Source Selection and Administration of Service Contracts YES YES 97 09-Jul-2014
CON 290 Contract Administration and Negotiation Techniques in a Supply Environment YES YES 96 09-Jul-2014
CON 334 Advanced Contingency Contracting Officer’s Course YES YES 39 09-Jul-2014
CON 360 Contracting for Decision Makers YES YES 81 09-Jul-2014
CON 370 Advanced Contract Pricing YES YES 74 09-Jul-2014
COR 206 Contracting Officer’s Representatives in a Contingency Environment YES YES 3 09-Jul-2014
COR 222 Contracting Officer’s Representative Course YES YES 32 09-Jul-2014
ENG 102 Fundamentals of Systems Engineering DL N/A 0 10-Jul-2014
ENG 204 Applied Systems Engineering in Defense Acquisition, Part I DL N/A 0 11-Aug-2014
ENG 205 Applied Systems Engineering in Defense Acquisition, Part II YES N/A 0 11-Aug-2014
ENG 301 Leadership in Engineering Defense Systems YES N/A 0 11-Aug-2014
EVM 101 Fundamentals of Earned Value Management DL YES 18 10-Jul-2014
EVM 201 Intermediate Earned Value Management YES YES 60 09-Jul-2014
EVM 262 EVMS Validation and Surveillance YES YES 58 09-Jul-2014
EVM 263 Principles of Schedule Management YES YES 22 09-Jul-2014
FE 201 Intermediate Facilities Engineering DL YES 18 10-Jul-2014
FE 301 Advanced Facilities Engineering YES YES 40 27-Sep-2013
GRT 201 Grants and Agreements Management YES YES 23 09-Jul-2014
IND 105 Contract Property Fundamentals YES YES 64 09-Jul-2014
IND 205 Contract Government Property Management Systems and Auditing Concepts YES YES 52 09-Jul-2014
IRM 101 Basic Information Systems Acquisition DL YES 34 15-Aug-2014
IRM 202 Intermediate Information Systems Acquisition YES YES 79 14-Aug-2014
IRM 304 Advanced Information Systems Acquisition YES YES 36 09-Jul-2014
LOG 101 Acquisition Logistics Fundamentals DL YES 27 10-Jul-2014
LOG 102 Fundamentals of System Sustainment Management’ DL YES 25 10-Jul-2014
LOG 103 Reliability, Availability, and Maintainability (RAM) DL YES 22 10-Jul-2014
LOG 200 Intermediate Acquisition Logistics, Part A DL YES 32 10-Jul-2014
LOG 201 Intermediate Acquisition Logistics, Part B YES YES 32 09-Jul-2014
LOG 204 Configuration Management DL YES 18 10-Jul-2014
LOG 206 Intermediate Systems Sustainment Management DL YES 27 09-Jul-2014
LOG 211 Supportability Analysis YES YES 28 09-Jul-2014
LOG 215 Technical Data Management DL N/A 0 10-Jul-2014
LOG 235 Performance-Based Logistics DL YES 19 10-Jul-2014
LOG 340 Life Cycle Product Support YES YES 40 09-Jul-2014
LOG 350 Enterprise Life Cycle Logistics Management YES YES 90 09-Jul-2014
LOG 365 Executive Product Support Manager’s Course YES N/A 80 09-Jul-2014
PMT 251 Program Management Tools Course, Part I DL YES 20 10-Jul-2014
PMT 257 Program Management Tools Course, Part II DL YES 43 10-Jul-2014
PMT 304 Advanced International Management Workshop YES YES 39 09-Jul-2014
PMT 313 Advanced Technology Security/Control Workshop YES YES 33 09-Jul-2014
PMT 352A Program Management Office Course, Part A DL YES 22 10-Jul-2014
PMT 352B Program Management Office Course, Part B YES YES 119 09-Jul-2014
PMT 400 Program Manager’s Skills Course YES N/A 77 09-Jul-2014
PMT 401 Program Manager’s Course YES YES 470 09-Jul-2014
PMT 402 Executive Program Manager’s Course YES YES 146 09-Jul-2014
PQM 101 Production, Quality, and Manufacturing Fundamentals DL YES 16 10-Jul-2014
PQM 201A Intermediate Production, Quality, and Manufacturing, Part A DL YES 12 10-Jul-2014
PQM 201B Intermediate Production, Quality, and Manufacturing, Part B YES YES 35 09-Jul-2014
PQM 203 Preparation of Commercial Item Description for Engineering and Technical Personnel DL YES 6 10-Jul-2014
PQM 301 Advanced Production, Quality, and Manufacturing YES YES 76 09-Jul-2014
RQM 110 Core Concepts for Requirements Management DL YES 19 10-Jul-2014
RQM 310 Advanced Concepts and Skills for Requirements Management YES YES 38 09-Jul-2014
RQM 403 Requirements Executive Overview Workshop YES YES 8 09-Jul-2014
RQM 413 Senior Leader Requirements Course YES N/A 2 09-Jul-2014
SAM 301 Advanced Software Acquisition Management YES YES 32 09-Jul-2014
STM 202 Intermediate S&T Management YES YES 20 09-Jul-2014
STM 303 Advanced S&T Management YES YES 25 09-Jul-2014
SYS 101 Fundamentals of Systems Planning, Research, Development, and Engineering DL YES 35 10-Jul-2014
SYS 120 Defense Standardization Workshop YES YES 14 09-Jul-2014
SYS 130 Specification Selection and Application YES YES 10 09-Jul-2014
SYS 202 Intermediate Systems Planning, Research, Development, and Engineering, Part I DL YES 9 10-Jul-2014
SYS 203 Intermediate Systems Planning, Research, Development, and Engineering, Part II YES YES 37 09-Jul-2014
SYS 302 Technical Leadership in Systems Engineering YES YES 68 09-Jul-2014
TST 102 Fundamentals of Test and Evaluation DL YES 18 10-Jul-2014
TST 204 Intermediate Test and Evaluation YES YES 64 09-Jul-2014
TST 303 Advanced Test and Evaluation YES YES 32 09-Jul-2014

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Science and Technology for the Society

India is rich not only in cultural values, heritage and knowledge power, but also in having tremendous sources of natural energy. Furthermore, in the last decade India has embarked on the development of Science & Technology on a Global Front. Nowadays, we are heavily dependent on technology for our daily routines, for example telephones, television, transportation…etc. Having one of the biggest knowledge pools in the world – which is acknowledged by the international community, what important is to utilize this rich source of the knowledge in a correct manner to empower the nation in the real sense.

Majority of the Indian population is stationed in rural areas and this rural community plays a vital role in the sustainability of the urban areas. Rural areas need basics like electricity, employment, food…etc. If the science and technology is adopted by our modern society, why not it can also be utilized to empower the rural sectors of the country?

Today, the daily consumption of power of mega and metro cities enjoy power is sufficient for under privileged rural and/or coastal areas for at least one week. The needless usage of technology by modern society is actually usurping the rights of our brothers and sisters in the rural areas. If we share the technology with our brothers and sisters in the rural community, we will help them to not only sustain but to live a quality life and enjoy the same comfort level which we have.

We have large coastal areas. Just like European countries, if the water turbines are placed across the coastal line, we can have continuous power supply generated through these water turbines and sufficient for coastal communities. The wind turbines should also be stationed at various places which can produce power that can be utilized to provide basic electricity to the villages. Also, many villages are now having solar panels and bio-gas plants for the purpose of providing electricity for street lighting.  New ways should be innovated by which the society – as a whole, can be benefitted. For example, I am a space scientist, so I will comment that utilizing space technology and remote sensing applications can be beneficial in monitoring the agriculture, urban planning, observing rich heritage of the country, health monitoring, preparing mitigation guidelines for the disaster risk reduction, telemedicine…etc. There are many more applications of the present technologies, in each sector, which can benefit the society, contributing in the development of the country.

The focus on utilization of Science & Technology for development will not only help to empower the rural sector of the country, but also create a greater impact as the growth engine for the development of the country. Also, this will trigger healthy competition amongst the states within the country to be the model state through development in education, growth of commercial activities and industrial development, strengthening the rural communities, showcasing the hidden treasure of rich heritage and culture…etc. Above all of these, the real actions in this direction will bring the communities together for the harmonious growth and the ancient adage – “Vasudhaiva Kautumbakam” will be seen in the country in real sense.

 – R. Ghadawala

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The Case for Indian Industry

There is a campaign to prove that Indian Industry cannot deliver and only foreign OEMs can.

There are only two growth areas for defence expenditure in the world – America and India/China. Of these, the Chinese market is closed because of the arms embargo. The Indian market is the only bailout for OEMs. A Jane’s study came to similar conclusions.

How will OEMs ensure that they get a share of the Indian pie – the bigger the better? They can only get it if the abilities of Indian Industry are run down.

They don’t need to get their hands dirty for this. So many Indians are ready to oblige!  67 years after Independence and we can’t get over our you know what.

Also, OEMs don’t fear PSUs, which have acted as pliable conduits for imports, giving away market access for free. Honourable exceptions are PSUs in the Naval sector, BHEL and HAL under Dr. R.K. Tyagi’s leadership. They fear the Indian private sector.

Foreign companies quickly recovered from the shock administered by the adoption of the Preferential Market Access Policy (PMA), which could have helped Indian industry gain just a little domestic market share in their own country in telecom and electronics, forcing backtracking on the PMA.

Now something even more nefarious is going on. Indians are trying to frame the conditions for the bids in such a way that all Indian companies will be eliminated from even bidding. A member of Indian Industry has cried out – how can this happen in our own country?

People, you need to ask the same.

At a think tank meeting, two leading experts actually reportedly concluded that India does not need a defence industrial base!

Every statement made by these manufacturers should be read in this light. Myths being promulgated against Indian industry need to be decisively refuted as they are deeply ingrained in the minds of officials and are reflected in their statements and actions. This is doing incalculable harm to India’s desire to create a high-tech, indigenous defence production base. The eco-system that this will spawn will provide high grade, quality employment to millions of young Indians, who today are wasting their graduate degrees in pitiful employment avenues.

Myths of Sisyphus being spread in the market about Indian Industry:

  • Myth 1: Indian industry does not have the capability to undertake hi-tech manufacturing.
  • Myth 2: India’s Offsets policy is very strict – 30% direct Offsets is wayyyy….too much.
  • Myth 3: Indian Industry lacks the sponge factor-i.e.- it does not have the capacity to absorb Offsets.
  • Myth 4: Higher the percentage of FDI, greater the technology transfer! (Jeez, they don’t know the basics, do they now?)
  • Myth 5: Multipliers and Indirect Offsets in other sectors must be given.

Let us examine these “Myths of Sisyphus”, which have held back Indian Industry, one by One:

Myth 1

  • Indian industry does not have the capability to undertake hi-tech manufacturing!

Fact: India has very strong industrial capacities, and its private and public sector wields great financial power and capabilities. Many Indian firms have won high-tech project contracts abroad and have been praised for their quality, cost effectiveness and on-time performance.

In the nuclear sector, self-reliance was promoted from Day 1. Emphasis was on indigenous design and in-house technology. Public-Private Partnerships were encouraged, with BHEL and L & T allotted core tasks on an equal playing turf. The reactors and core nuclear know-how were under DAE but equipment and systems were built by Indian Industry.  After the 1998 tests, India faced unprecedented sanctions. And yet Indian companies delivered the highest level of complex and high-tech systems. The Arihant Submarine Program, launched in 1997, under the peak of the sanctions regime, was successfully delivered under a PPP (Public-Private Partnership) model.

Samyukta Electronic Warfare (EW) System for the Army – was another successful example of a completely indigenously developed system under the PPP model. Dr. Abdul Kalam was the driving force behind putting this technology into Indian hands. He publicly acknowledged Tata’s and CMC’s contribution – which met the challenge of developing real-time command and control software, not for profit.

In the Aerospace industry, many capabilities were built by Indian Industry. User, R & D and Industry moved in unison, thus achieving national capability. Most importantly, faith was kept. ISRO asked L & T to continue making some important components (motor casings) even where there was no demand because it didn’t want India to lose the technology. And sourcing was restricted to Indian players, not to external sources.

Ashok Parathasarthy details in his excellent book “Technology at the Core” numerous example as how the old Indian State supported high-tech Indian companies and helped them win market share.

We succeeded because we believed in ourselves, we believed in our Industry and most of all we even believed in our Private Industry.

This can be replicated in defence.

But what has happened since?

  • Complete change!
  • I love you OEMs policy has been adopted
  • The exclusion of Indian Industry from domestic contracts is a recent phenomenon.
  • In the name of ‘Security’ the Indian private sector is being denied participation in the same Electronic Warfare programmes which it created in the first place.  L&T which gave the hull for Arihant is denied the same for a conventional Submarine.
  • An order from Indian Industry cannot be processed under the current acquisition system. Indian Industry cannot even get an RFP.
  • How is giving orders to foreign industry compatible with National Security while Indian Industry is denied the opportunity to contribute on the same security grounds?
  • As a result India has become an Import-Oriented Economy which favours only foreign imports!  This has benefited foreign companies, deprived India of the multiplier effects of domestic production, opened up the country to an endless outflow of foreign exchange and undermined its capacity for strategic autonomy.
  • Myth 2: Offsets policy of India is very strict – 30% direct Offsets is too much.

Fact: Most countries have 100% Offsets. But India, 10th industrial power in the world, is considered incapable of absorbing offsets and is extremely apologetic even over seeking 30%.

Indicative list of countries with 100% Offsets: Argentina, Austria, Brazil, Bulgaria, Canada, Chile, Colombia, Croatia, Denmark, Estonia, Greece, Italy, Malaysia, Netherlands, Norway, Peru, Portugal, Slovenia, Switzerland,

  • Myth 3: Indian Industry does not have the capacity to absorb offsets.

Fact: Offsets are the key to achieving technological independence and relocating manufacturing activities to developing countries and every country studied is successfully operating Offsets, not FDI, to kickstart indigneous defence production sectors. The US$100 billion Indian defence market should yield US$ 30 billion at least in Offsets under India’s current lax Offset policy over a period of 10-15 years. It is laughable to suggest that Indian industry cannot absorb a paltry US$ 2-3 bn a year.

A medium-sized Indian company achieved turnover of $107 million in 2002 and $1200 million in 2011 in high-tech manufacturing. Exports stood at $25 million in 2002, but reached $800 million in 2011 (70% of production)! This is just one relatively small medium sized Indian company. Why do we talk in such awe of absorbing only $10 bn in 10 years?

A valid question is why is Indian industry never consulted on Offsets, while only baboos, foreign advisors or those in their pay, and armchair experts decide on policy? India has been apologetic over 30 % offsets instead of seeking 100% as other countries do. An EU code of conduct on defence offsets signed by all the EU nations except Romania and Denmark states that its primary purpose is to promote the “European Defence Technological and Industrial Base”. It pleads humbly with member countries to exercise self-restraint and limit the offsets quantity to 100% of the contract value! It includes Multipliers, TOT etc. And we are apologetic on 30% as a nation. Kaan pakro!

  • Myth 4: FDI is the only route for India to get technology.

Fact:

  1. Access to technology is not an issue at all. Today some of India’s companies are the largest manufacturing employers in advanced countries and have access to all kinds of high technologies. The main issue is that control should not be ceded.  Today, we have several tie-ups in which because the Indian firm has control – the global partner has agreed to transfer every aspect of knowhow and know why.
  2. Experience shows that when market access has been routed through indigenous firms – global partners have agreed to transfer every aspect of knowhow.In the 1990s when we had C-DOT, India got much better prices on exchanges than did China. Without CDOT we would have been ripped off. A lot of companies came in for manufacturing partnerships in India, but they all moved out since we have not encouraged or leveraged the market to create a telecom manufacturing sector or a single Huawei.The minute market access is denied, the foreigners’ behaviour changes completely. Till the offset dilution on Lockheed Martin was approved, the foreign party was going through the Indian partners for ToT and creation of capabilities.
  3. ToT does not flow from FDI necessarily.  For example, the GE centre in India has 100% FDI, but they cannot part with even one drawing to any Indian party without seeking US permission.  India has 100s of R & D centres of MNCs but none of them share technology with Indian firms or Indians. China realised this years ago and that is why they started to focus on Indigenous Innovation. 
  4. No country allows high FDI in defence. The most restricted place for defence manufacturing is the US, yet they want 100% in India!
  5. Indian Defence Industry has proved its ability to deliver state-of-the-art technology against the odds of global sanctions when allowed to (above).
  6. If FDI is considered necessary, for local manufacturing of state of the art weapons, we must have control by Indian companies, strong local sourcing, skill development and employment obligations.
  • Myth 5: Multipliers and Indirect Offsets in other sectors must be given.

Fact: Since we have advocated 100% Offsets, we are in favour of applying Offsets in areas related to Defence Production. However, there is huge potential for more scams through these provisions. Only if India puts in place robust and credible monitoring mechanisms can these be agreed to, as other countries have benefited from indirect offsets. Till then, these can be kept in abeyance.

To India

India has come a long way since 1991. Indian Industry is seeking global leadership and has the capability to deliver. It just has to be given a chance.  It has performed well whenever it has had a level-playing field.

What it can’t do is provide post-retirement scholarships and sinecures remunerated in US dollars on the Boards of MNCs to every selfish little soul who puts his interest above that of the country. All such appointments should be examined for conflict of interest regarding decisions taken and articles written against Indian Industry.

If Indian Industry can produce world class products in some sectors, why not in defence?

Indian Industry has to engage with the political class and the bureaucracy. Foreign officials got high level access whereas senior Indian Industrialists in the manufacturing sector were unable to secure meetings with decision makers. The classified LTIPP was known to foreign vendors but not to Indian industry.

The leadership has to promote Indian industry. The heads of government of 4 countries visited India to lobby for the MMRCA. India has to get into a pro Indian industry mode and promote the expansion, indeed the explosion of domestic capabilities. Every country id pursuing a defence industrialisation strategy to promote employment and national welfare. We can too!

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US report on the Impact of Defence Offsets on Its Defence Industrial Base

The  16th  Annual  Report  to  Congress  on  the  Impact  of  Offsets  in  Defence  Trade  has  the  following  to  say:

  1. Between  1993-2010,  US  firms  agreed  to  $78.08  billion  worth  of  Offsets  out  of  defence  exports  worth  $111.59  billion,  or  nearly  70%.    Technology  transfer  was  among  the  top  3  offset  categories.

NEGATIVES  FOR  US:

  1. The  report  however  warned  that  Offsets  would  “limit  future  business  opportunities  for  U.S.  subcontractors  and  suppliers,  with  negative  consequences  for  the  domestic  industrial  base.  Other  kinds  of  offsets,  such  as  technology  transfers,  may  increase  research  and  development  spending  and  capital  investment  in  foreign  countries  for  defence  or  non-defence  industries,  thereby  helping  to  create  or  enhance  current  and  future  competitors  to  U.S.  industry….”

Which  is  exactly  the  point  of  Offsets,  that  they  should  help  in  boosting  the  defence  industrial  base  and  wean  developing  countries  off  the  need  to  keep  importing  in  perpetuity.

POSITIVES  FOR  US:

  1. However  the  report  also  notes  –  ‘anecdotal  information  obtained  from  industry  suggests  that  “cutting  edge”  or  nascent  technologies  under  development  in  the  United  States  are  less  likely  to  be  transferred  to  foreign  companies  in  fulfillment  of  offset  obligations  than  are  mature  technologies’.   
  2. Also,  Offsets  involving  technology  transfers  were  only  $985.0  million,  equivalent  to  only  0.24%  of  total  US  R&D  spend.
  3. The  report  further  notes  “Despite  the  capabilities  that  may  accrue  to  foreign  firms  resulting  from  offset  agreements  signed  with  U.S.  industry,  purchases  from  foreign  firms  do  not  represent  a  significant  share  of  DOD’s  total  purchases.    Purchases  of  defence  manufactures  from  US  sources  by  DOD  totaled  $102.46  billion  out  of  total  purchases  of  $106.80  billion  in  2010,  with  purchases  from  foreign  entities  only  $4.34  billion,  or  4%  of  the  total.   
  4. Moreover,  the  US  recorded  ‘an  overall  net  gain  …  a  positive  $7.2  billion  in  added  “input”  opportunities  for  the  U.S.  industrial  base,  and  a  net  gain  of  22,553  in  employment  opportunities  created  or  sustained  during  the  2009-2010  period’.   

POINTS  OF  INTEREST  FOR  POLICYMAKERS

  1. Interestingly,  one  discovered  that  the  analytical  report  is  written  in  pursuance  of  a  US  Defence  Production  Act,  whose  existence  one  was  unaware  of.    The  Defence  Production  Act  has  helped  the  US  develop  a  number  of  new  technologies  and  composite  materials  and  has  also  hand-held  startups  to  commercially  produce  technologies  they  could  not  have  done  on  their  own.   
  2. The  Defence  Production  Act  also  enjoins  on  the  government  to  very  closely  scrutinise  foreign  investment  proposals  in  the  United  States.    It  is  under  the  provisions  of  this  Act  that  some  Chinese  Investments  have  been  denied  in  the  US.
  3. The  point  is,  even  as  many  countries  have  benefited  from  leveraging  Defence  Offsets,  India  is  probably  not  among  them.  This  has  to  change.   
  4. The  above  also  imply  that  negotiating  defence  offsets  is  a  tough  business,  but  other  countries  have  succeeded  and  India  too  needs  to  stick  it  out.
  5. The  other  point  is,  the  US,  the  quintessential  free  marketer,  has  a  wide  variety  of  industrial  promotion  policies  to  help  maintain  its  technological  and  industrial  edge  and  fend  off  foreign  competition.  All  countries  follow  policies  that  are  conducive  to  promoting  their  own  domestic  industrial  base.    As  this  Livemint  article  (“An  economic  roadmap  for  India”points  out  –  it  is  not  healthy  that  India  has  failed  to  nurture  its  manufacturing  base:  “The  fact  that  India  has  moved  from  an  agricultural  economy  to  a  service-driven  economy  with  almost  no  growth  in  industry  is  not  a  virtue;  it  is  an  outcome  of  policies  that  have  hampered  manufacturing  and  mining.    With  production  costs  rising  in  China,  international  buyers  are  looking  for  alternative  sourcing  destinations  for  manufactured  products.  If  India,  with  its  large  labour  force,  is  to  seize  this  opportunity,  it  must  nurture  its  industrial  sector”.

Other  factoids  that  it  would  be  useful  for  our  policymakers  to  be  aware  of:

  1. “DOD  is  willing  to  use  reliable  foreign  suppliers  when  such  use  offers  comparative  advantages  in  performance,  cost,  schedule,  or  coalition  operations.    DOD  has  negotiated  bilateral  Reciprocal  Defence  Procurement  Memoranda  of  Understanding  (RDP  MOUs)  with  21  countries”  –  based  on  these  MOUs,  the  US  has  made  blanket  public  interest  exceptions  to  the  Buy  American  Act  for  20  of  these  countries,  as  a  result  of  which,  their  “products  are  evaluated  on  the  same  basis  as  domestic  products  in  competitive  DOD  procurements.”
  2. The  US  also  conducts  a  Dialogue  with  other  countries  on  Limiting  the  Adverse  Effects  of  Offsets  in  Defence  Procurement.  It  has  set  up  an  interagency  team  to  study  the  issue  and  report  to  Congress.  The  team  concluded  that  other  industrialized  nations  are  also  very  concerned  about  offsets  in  defence  procurement.
  3. The  European  Union  (EU)  Defence  Procurement  Directive  in  August  2011  was  a  very  significant  event  in  defence  offsets.    But  even  in  Europe  the  Code  states  that  offsets  will  not  exceed  the  value  of  the  procurement  contract  (100  percent  offset  limit).    
  4. 100%  is  way  above  the  highly  diluted  30%  offsets  provided  in  India,  and  even  this  we  have  been  unable  to  implement.

TIME  TO  LAUNCH  AND  IMPLEMENT  OFFSETS  IN  DEFENCE  PRODUCTION  AND  THE  AEROSPACE  INDUSTRY!

 

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CANADA FIRST!

SO PAPA DON’T PREACH

(On Defence Offsets)

We have the “once-in-a-century” opportunity to get it right when it comes to changing how we buy defence equipment.”  Honourable Diane Finley, PC, MP, Minister of Public Works and Government Services, Announcing the Defence Procurement Strategy,  Ottawa, Ontario, February 5, 2014

The High Tech Forum on Defence Innovation, which comprises experts in various fields related to enhancing indigenous high-tech capabilities, had concluded that Defence Offsets provide a huge opportunity to kick start India’s defence industrial base.

Successfully leveraging defence purchases to build indigenous capabilities is a worldwide trend. On the VISTAS-भारत Facebook page we had mentioned many countries implementing 100% Offsets – not just the 30% provided in our own laws.  Some countries even apply 400%!

So first of all, “Papa Dont Preach!” 30% is not too Onerous considering how many countries practice 100% and above. 100 percenters:

Argentina

Austria

Brazil

Bulgaria

Canada

Chile

Colombia

Croatia

Denmark

Estonia

Greece

Italy

Malaysia

Netherlands

Norway

Peru

Portugal

Slovenia

Switzerland

Canada is insisting on 100% REAL Offsets. Check out our earlier post on the subject – because of their “consistent” insistence, both Boeing and Dassault are either “promising offsets for Canadian industry worth 100 percent of the purchase contract value, or providing full transfer of aircraft technologies to the Canadian government, with no restrictions”.

Contrast this with the tough stance reportedly being taken with India on the MMRCA offset clause. India should straightaway jack up Defence Offsets to 100% at least and derive the maximum out of this once in a century opportunity. India is also right to insist that lifecycle costs and not just the initial purchase price, should be taken into account while calculating Offsets, as lifecycle costs can be extremely high. 

Now, Canada has just overhauled its defence procurement strategy to strengthen indigenous high-tech defence industry and take advantage of the fact that “Defence-related  industries  are  unique  in  that  governments  are  essentially  the  only  customers,  and  have  flexibility  under  international  trade  agreements  to  favour  domestic  suppliers.”

Since advanced nations are constantly brandishing the WTO against us – we must at least take advantage of the flexibilities provided for the defence sector. Wasn’t the WTO meant to facilitate our industrial development? But we had to withdraw the Preferential Market Access Policy for private sector procurements which would have benefited our manufacturing industry.

Thus, many countries have leveraged Offsets to become part of the sophisticated global high-tech aerospace supply chain. But at every turn we have failed to leverage our civil and military aircraft purchases and our considerable air travel market to build our own aerospace industry which can be part and parcel of an exciting high-tech global supply chain.

India also needs to develop the MRO market. A presentation by HAL is being posted which outlines the full potential of the market that can be exploited by Indian firms.

The next post will be on the subtle propaganda on the reputation and capabilities of Indian industry, and the myths being propagated in this regard. This helps only non-Indian firms. Since defence markets are under pressure worldwide, it is essential for OEMs to corner the growing Indian defence market and ensure Indian companies, which have won massive tenders abroad, are disregarded in their own country.

 SUMMARY OF DEVELOPMENTS IN CANADA

2008:  Canada  establishes  the  Canada  First  Defence  Strategy  (CFDS)  which  provides  stable  long-term  funding  and  a  roadmap  for  the  modernization  of  the  Canadian  Forces  over  a  20-year  period.

2013, February: Canada issues the excellent report “Canada First: Leveraging Defence Procurement Through Key Industrial Capabilitiesthe document starts with Canada First! This is what we have been advocating all along – INDIA FIRST! In Canada they call Offsets the Industrial and Regional Benefits (IRB) policy: the report mentions ‘A main source of revenue for Canadian industry relates  to  the  government’s  long-standing  Industrial  and  Regional  Benefits  (IRB)  policy  —  often  referred  to  generically  as  an  “offsets”  policy—  that  requires  winners  of  major  defence  contracts  to  spend  the  equivalent  of  the  dollar  value  of  contracts  (which  are  often  awarded  to  foreign  firms)  in  support  of  Canadian  industry’.

2014, February 05: Canada launches new Defence Procurement Strategy (DPS), with the following goals:

  • Companies bidding on defence and security contracts have to provide 100 percent Offsets. They are insisting Canada get full value for any procurement from Dassault and Boeing.
  • Deliver the right equipment to the Canadian military in a timely manner;
  • Leverage Canada’s purchases of defence equipment to create jobs and economic growth in Canada; and
  • Companies bidding on major defence and Coast Guard procurements have to prove that their bids support “Key Industrial Capabilities (KICs) and other productivity drivers, including industrial and technological high-value activities, for example, “technology transfer”.
  • “Implement an enhanced Export Strategy to support international sales opportunities and “participation in global value chains“” (Note: this is our key goal also).

This is our once in a century chance to get things right too. Let us fulfill India’s promise!

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Let’s get Serious! They say China Will…

This – “Why China will fight for a global climate deal next yearis good news for the Planet.  Time for everyone to realise together that we have only one planet! We see no sign of effective international action, so fusion technology, massive afforestation and use of green technologies will have to offset national emissions. Moreover, the transition to a high-tech growth model (below), which we in this Forum also envisage for India, will lead to a reduction in the more polluting industries:

China has started to establish innovation-based development. It is adjusting its economic structure, and no longer pursuing development at the cost of the environment. This new development path means that China has to lower its total energy consumption and change its energy framework to support further adjustments to its economic structure”

Extracts

“China’s leaders know that an effective treaty on climate change in 2015 is essential to the country’s development, says IPCC China expert Wang Chunfeng.

It isn’t hard to see that China’s motivation is genuine. First, China is suffering badly from the adverse effects of climate change. Over the last hundred years, the annual average rise in temperatures in China has been higher than the global average…Since the 1990s, China has suffered annual average economic losses of over 200 billion yuan (US$32 billion) as a direct result of extreme weather events, and an annual average death toll above 2,000. ..The latest reports from the Intergovernmental Panel on Climate Change (IPCC) predict that rising temperatures will grow more pronounced, adverse impacts will intensify and damage from extreme weather events in China will get even more serious.

Second, there is no contradiction between the direction of China’s economic development and tackling climate change…” as

China has started to establish innovation-based development. It is adjusting its economic structure, and no longer pursuing development at the cost of the environment. This new development path means that China has to lower its total energy consumption and change its energy framework to support further adjustments to its economic structure.”

Extract ends.

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BUY INDIAN AND MAKE INDIANS RICH

Reposting a link Cdr Kamaljit Jassal sent us. Cdr Jassal was the first to draw our attention to industrial promotion policies pursued by advanced countries even as globalisation was being advocated to less developed ones. He guessed that India could learn something from America’s Buy America Act. India lags behind in industrial production and technology and needs such as Act even more. America has a renewed commitment to domestic manufacturing, on which more later, as is shown in Democratic Representative Mike Michaud’s speech in which he justifiably takes great pride in American manufacturing, and shows a commendable commitment to promote indigenous products.

Extracts from Rep. Michaud’s speech:

“Right now, we send millions of dollars — and potentially American jobs — overseas when we purchase footwear for the brave men and women serving our country. But Acting Deputy Secretary of Defense Christine H. Fox recently …let me know about a shift in Department of Defense policy as it relates to the procurement of athletic footwear for our service members — and the decision is nothing short of a huge win for American manufacturers.…it just never made sense to me that we would give our service members products that were produced by foreign countries — sending millions of taxpayer dollars overseas at the expense of hardworking Americans here at home.

The policy change relates to the Berry Amendment — which essentially requires DoD to give preference to American-made products when procuring goods for our service members. For a variety of reasons, DoD has not been able to adhere to the Berry Amendment when it comes to athletic footwear — until now.

Manufacturing is a big part of our state — of our heritage and of our economy. I understand the pride that goes into producing high-quality products that can be shipped out, bringing in important revenue in return. That’s why I’ve pressed so hard on this issue.

This also is important to me because one of the companies capable of producing high-quality, American-made footwear for our service members — New Balance — employs about 900 people in my home state. …Creating more manufacturing jobs in this country invigorates our communities and our economies, and it sends a powerful message about the strength of the American worker. …

DoD’s commitment to American manufacturing is a powerful endorsement of that American spirit”.

Waiting for the Day when Indians start thinking like this! And yes, I didn’t know New Balance is American and it is a jolly good brand!

[Cdr Kamaljit Singh Jassal is one of the original members of the High-Tech Forum on Defence Innovation and helped to nurture it. He took premature retirement from his post as Joint Director (PP&FS), Integrated Defence Staff Headquarters, MOD, and is currently working with an NGO to promote grassroots development in the true spirit of our great Armed Forces. Email: jassalnavy@hotmail.com]

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