Report of the Forum on High-Tech Defence Innovation

2014 11 26 Report of 5th Forum meeting on Hi-Tech Defence Innovation

If quoted please attribute the Forum/ Smita Purushottam


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Programme 5th Meeting of Forum on High-Tech Defence Innovation

vista-bharat-final-logo-2 below

5th Meeting of the Forum on High-Tech Defence Innovation

Vision for an Indian S & T Advancement Strategy


Institute for Defence Studies & Analyses

Seminar Room 1, 26th November, 2014, 1000 hrs- 1400 hrs

Welcome remarks

  1. Special Address
  2. Report of 2nd & 4th Forum Meetings

Panel 1:  Indian Industry:

  • R & D vs. Licensed Production : Industry’s contribution to Innovation Ecosystem
  • India First: Measures to Promote Indian Industry- Industry’s expectations
  • Offsets
  • FDI
  • Any other issue of concern

Panelists for Round 1: Weaponry: planes, subs, naval weaponry, etc.

  • R.K. Tyagi, Chairman, HAL
  • Commodore Mukesh Bhargava (Retd), Vice President, International Defence & Aerospace Business Flight Systems BU, L & T
  • Shri Rahul Chaudhry, CEO, Tata Power SED
  • Admiral Verma, CMD GRSE

Panelists for Round 2: ICT technologies

  • Shri Sanjay Nayak, Chief Executive Officer & Managing Director, Tejas Networks
  • Shri Rajiv Mehrotra, Founder and CEO, VNL; Chairman of the Shyam Group of companies
  • Shri Sridhar Nadupally, Chairman and Managing Director, Saankhya InfoTech Ltd.
  • Shri Ashok Atluri, CMD, Zen Technologies
  • Vishwa Kayargadde, Saankhya Labs

Panel 2: Government/Governance

  1. The Science State and role for Indian State
  2. RDA or DPP?
  3. Offsets
  4. FDI
  5. Weapons mix
  6. Any other issue


  • Admiral Shekhar Sinha, former CISC and C-in-C West
  • Shri Ajay Bharti, Swadeshi Jagran Manch
  • Vice Admiral Raman Puri, former CISC
  • Bharat Karnad, Research Professor in National Security Studies at the Centre for Policy Research, New Delhi
  • (Retd) Kamaljit Singh Jassal, IDS HQ

Panel 3: Innovation eco system

  1. R & D
  2. Valley of Death
  3. Incubation of High-Tech SMEs
  4. Role of State
  5. Any other issue


  • Mr Vishnu Dusad, MD Nucleus Software,iSPIRT
  • B.M. Suri, BARC
  • Nilesh Dhande  Founder & VP-Corporate Strategy , Uniken: “Towards integrated co- innovation for faster technology acquisition”.
  • A.S. Rao, former Adviser, DSIR
  • Shri Sanjay Aggarwal, Managing Director  -CBS
  • Shri Sabyasachi Dasmohapatra, CEO, Global Innovation & Technology Alliance (GITA)


Vote of Thanks


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

Concept Card
Course Title Access
Access Public
Course Material
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

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.


  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.


  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’.   


  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.





(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:




















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.


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!

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”


“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.


Uploaded here – AGENDA INDIAN A&D INDUSTRY GROWTH is an excellent report prepared by Commodore (Rtd) Sujeet Samaddar, NM, Director and CEO, ShinMaywa Industries India Private Limited and member of the High Tech Forum on Defence Innovation launched at IDSA.

To encourage indigenous high-tech manufacture, he has outlined several measures that would help provide a level playing field for Indian industry. Till now, the system was skewed towards PROCUREMENT, not PRODUCTION. A beginning has been made with DPP 2013, which according to a highly placed source “now requires justification for not taking recourse to Indigenous products. That needs to be followed strictly. There is already a shift towards Buy Indian on account of this but will need to be nurtured.”

So the test, as always, will lie in implementation. We have many apologists for foreign products deeply embedded in our system. It was noted at the 4th Forum meeting that the heads of 4 governments visited India to promote their jets for the MMRCA acquisition, whereas we shy away from promoting our own products and host huge air shows which promote the aircraft of other countries! This is despite the fact that Indian products are greatly appreciated far and wide.

Commodore Samaddar suggests several measures to equalize the field between Indian and foreign players, and even tilt it a bit towards Indian firms, an endeavour we fully support. No country has become strong without strong indigenous firms. 

Ideas such as a streamlined defence exports policy and “deemed exports” which will “make it attractive for foreign OEMs to contract in India and thus create capacity capability and jobs in India” are great and even overdue. So are the suggestions on amending taxation policy to encourage indigenous production, “prepared in consultation with leading tax and legal experts” and “attached separately as Annexure”. And all the other suggestions to flatten the playing field.

Please read the report, comment and send feedback to him and also yours truly.