Indian billionaires Mukesh Ambani, Azim Premji and Adi Godrej made their fortunes in oil refining, software and toilet soaps. These days the moguls see big money in bullets, bombs and ballistics.
Indiais the world’s largest weapons importer, relying on foreign suppliers, including Boeing and MiG Russian Aircraft, for about 70 per cent of its US$35 billion (S$45 billion) military budget.
Now,Asia’s third-biggest economy is revising its rules to give domestic private-sector companies a better shot at more of the spending.
The new procedures added a “buy and make Indian” provision. For contracts that require certain expertise, only local companies, including joint ventures with overseas firms, can enter bids.Indiaalso tweaked rules governing local purchase requirements.
That has got big Indian companies such as Premji’s Wipro, the country’s third-largest software exporter, setting up weapon-making units, forming new partnerships with foreign defence companies or eyeing acquisitions overseas.
“This is a sexy market with a huge capital acquisition programme,” said Mr Dhiraj Mathur, an Executive Director at PricewaterhouseCoopers’Indiaunit.
“The advantage the big players have is that they are large, have deep pockets and the resources.”
Domestic private-sector companies now account for only 10 per cent of India’s defence spending, mostly as sub-contractors to state-owned entities, which contribute about 20 per cent, according to a March report by Boston Consulting Group.
Mr Godrej, chairman of Mumbai-based Godrej Group, whose consumer unit isIndia’s third-largest maker of personal-care products, said “defence will be a major area of expansion” for Indian companies in the next few years.
His group was “looking at all opportunities” to expand into the segment and discussing partnership possibilities, he added.
The tilt to domestic companies comes asIndiaramps up its defence budget, looking beyond its traditional rivalry withPakistanto counterChina’s rising power.
Indiatripled military outlay over the last decade to become the world’s seventh-largest defence spender last year.Chinais the second largest at US$105 billion.
In the next five years, KPMG International estimates,Indiawill seek bids for US$42 billion of military hardware – from fighter jets to artillery guns.
INDIA‘S DEFENCE POLICY UNVEILED
India’s first ever (and long delayed) Defence Production Policy is to be unveiled and come into use in January 2011, alongside “major changes” to a revamped Defence Procurement Policy (DPP), Indian defence minister AK Antony let out today.Indiacurrently has a vast state-owned defence production base, but continues to depend incongruously on imports for much of its weapons and military hardware needs. A skeptical view would be that a new policy for defence production won’t change what is a highly controlled sector. Another view would be what the hell have we been doing without a defence production policy so far?
“Our aim is to have a strong defence industrial base inIndia, because a country likeIndiacannot indefinitely depend on foreign suppliers for majority of our equipments. At the moment 65-70 percent of equipment is imported; we have to reverse this trend,” the minister said.
The minister indicated that state-owned companies (like HAL, BEL, BEML etc) alone could not meet the requirements of the armed forces — the new policy would facilitate the participation of the private sector in more substantive and less regimented way. “Both public sector shipyards will have to compete with the Indian private shipyards to get projects for the Indian Navy. So all the Indian Navy’s procurements in future will be from Buy Indian, Make Indian,” he said.
Antonypaused in his speech at an awards function for excellence this morning to wag his finger at PSU bosses present, informing them that they needed to pull up their socks and brace for heavy competition from the private sector from next year.
AFTER CAG RAP, IAF ASKED TO COMPLETE PROJECTS ON TIME
NEW DELHI: Following a rap by CAG for over a two-decade-delay in commissioning a forward airfield and not activating another for fighter aircraft use, the Defence Ministry has asked the Indian Air Force to take steps to ensure such strategic projects are completed in time.
The CAG in its report on performance audit of Defence Services (2010-11) had questioned the “inordinate delay” in development of airbases.
It had said that despite sanctioning an additional Rs 25.17 crore for speedy completion of the project on fast track basis, frequent changes in plans led to a delay of over two decades in commissioning a strategic forward base airfield.
The paragraph has been considered by Parliament’s Public Accounts Committee for examination.
In its reply to the PAC, the Defence Ministry has said the airfield at Phalodi (Rajasthan) is now being optimally utilised by fighter aircraft.
The Ministry has advised the IAF headquarters to take “appropriate measures” to ensure that strategically important projects like development of airbases are taken up after “meticulous and comprehensive planning” so that they are completed within the schedule time and cost.
Citing increasing number of airfields inPakistan, an approval was granted for the construction of a Fighter Base Support Unit (FBSU) in March, 1985 at Phalodi at a cost of Rs 29.33 crore.
Though the land was acquired in October, 1986, actual construction could not commence as the budgetary support for the FBSU was utilised for other “urgent and operationally important requirements”.
After a gap of more than a decade in January, 2002, the proposal was once again moved for the construction of a full- fledged airfield instead of a mere FBSU which resulted in increased cost of Rs 227.38 crore.
Despite approval, the funds were released in August, 2004 defeating the purpose of sanctioning the project on a fast track basis, the document said.
“The ministry is in agreement with audit’s conclusion that there has been changes in plans and delay of over two decades in the Phalodi project…,” the document said.
Fighter aircraft operations have commenced from the airfield from April, 2010.
The second case pertains to an approval for an Air Force Station at Cholvaram near Chennai by inducting a squadron of fighters from the authorised force level in June, 1984.
The base was conceived to provide air defence cover to certain sensitive installations. But since the state government was reluctant to approve an airfield at Cholvaram, in October, 1987 it was decided to relocate the airfield to Thanjavur where runways of 1942 vintage existed.
While the government approved setting up of an air wing at Thanjavur in December, 1989, the IAF changed its stance about the “nature and priority” of the base and without obtaining the approval of the competent financial authority downgraded it into a “care and maintenance” unit.
NAVY ON ITS WAY TO STRENGTHEN INFRASTRUCTURE
CHENNAI: The Indian Navy is in the process of strengthening its infrastructure in the naval aviation sector through more acquisitions to increase its multi-dimensional capacity, a senior naval officer said today.
“We are building a modern and potent air element to add to our punch at sea with new acquisitions that are underway,” Vice Admiral Sunil Lanba, Chief of Staff, Eastern Naval Command, said.
“Besides the long range aircraft like the TU and forthcoming P 8-I that extends our reach, the helicopters are integral to the ship and are force multipliers to surface platforms, adding to the Fleet’s lethal punch,” he said.
Lamba was addressing newly commissioned helicopter pilots at naval air station INS Rajali in nearby Arakkonam, about 80 km from here.
Four pilots of the Navy and five of the Coast Guard, including two women, have completed training as part of the 78th Helicopter Conversion Course at theHelicopterTraining School.
ARMY ASSURES ORDERS FOR DRDO HOWITZERS
NEW DELHI: In a major boost to indigenous defence capabilities, the Indian Army has assured the DRDO an order for over 140 howitzers once the premier research agency proves its artillery guns which are under development.
DRDO’s Pune-based Armament Research and Development Establishment (ARDE) is working on to develop a 155 mm 52 calibre indigenous howitzer for the Army.
The DRDO was recently told by the Army that it will place an order for over 140 artillery howitzers if the guns being developed by the research agency are proven in field trials and are ready for induction, sources told a news agency here.
This proposal made by the Army to the DRDO was also a part of the presentation made to Defence Minister AK Antony while he was reviewing the preparedness of army’s Corps of Artillery, which has not been able to induct even a single piece of howitzer for over 25 years after the Bofors gun deal scam broke out in the 80s.
During the presentation, the Defence Minister was also informed about the progress made in the development of Bofors guns being produced indigenous by the Ordnance Factory Board (OFB).
The trial of the OFB guns was done recently in the Pokhran firing ranges in presence of senior officials from the Army, which has already placed an order for 100 of these guns.
The Defence Ministry has recently approved the procurement of 145 Ultra Light Howitzers (ULHs) from theUSunder a Foreign Military Sales (FMS) route for being deployed in high altitude areas.
A deal for these guns is expected to be signed by the end of this fiscal and one they start getting inducted, they will be the first ones to join the army in over two decades.
DRDO had earlier developed the 105 mm field artillery guns for the Army and is still in operational service.
DRDO had started working on the development of the Bhim self-propelled howitzer about a decade back but the project was virtually scrapped after South African firm Denel was blacklisted by the ministry.
DRONING ON ABOUT PAK-BASED TERRORISM
NEW DELHI: Visiting US Defence Secretary Leon Panetta, here on Wednesday, strongly backedAmerica’s drone campaign, which flies unmanned aerial vehicles (UAVs), or drones, fromAfghanistanintoPakistan’s tribal areas to launch missile attacks on terrorists who feature on a detailed hit list.
Successful Predator drone strikes have whittled Al Qaeda dramatically, through high-tech operations like last week’s aerial execution of its deputy leader, Abu Yahya Al-Libi, inNorth Waziristan.
“The worst job you can get these days is to be a deputy leader in Al Qaeda or, for that matter, a leader,” Panetta wise-cracked to NATO soldiers inKabul, where he went from here.
But opposition is growing to this new form of war. In May, Cameron Munter, America’s respected ambassador in Islamabad, quit, and apparently because of his opposition to the Central Intelligence Agency’s (CIA’s) unrelenting drone campaign in the Federally Administered Tribal Areas (FATA), as the predominantly Pashtun belt along the Pak-Afghan border is called. According to The New York Times, he bitterly told a colleague that CIA drone strikes are central toUSpolicy inPakistan, and that “he didn’t realise his main job was to kill people”.
Back inWashington, President Barack Obama is under attack from the left fringe of his own party. Democratic congressman Dennis Kucinich has launched a letter campaign that questions the legal basis for striking targets in a country that theUSis not at war with.
In another stinging reproof earlier this month, the UN human rights chief, Navi Pillay, saidPakistan’s prime minister should refer the legality of missile strikes to the UN’s special rapporteur on extrajudicial, summary or arbitrary executions. The London-based Bureau of Investigative Journalism estimates some 850 civilians, including many women and children, have died in drone attacks in the FATA, with several hundred more injured.
Criticism of the drone campaign is of three different types. Realists argue drone strikes create mass resentment in FATA, creating 10 terrorists for each one killed. Then there are moralists, who oppose drones because of the many innocents, including women and children, who become “collateral damage”. The third lot are the idealists, who believe drone strikes are a cowardly way of fighting a war from a distance, dispensing with the responsibility and judgment that comes from proximity and immediacy.
Washington, to nobody’s surprise, remains unmoved by these objections. With theUSfirm on withdrawing the bulk of its military fromAfghanistanby 2014, drones provide an irresistible option for retaining strike power in the region, with minimum exposure to human life. Given the satellite multi-media links theUSenjoys, even the UAV ground controllers that watch real-time video feed from the drones operate from theUSmainland.
Washingtonclaims foolproof safeguards against collateral damage. President Obama personally approves the execution of each drone target. This, says the administration, has brought down to “single digits” the number of innocents killed in drone strikes over the past year. But the devil is in the details. According to The New York Times, the formula for identifying collateral damage is skewed to produce favourable results. When a drone strike takes place, all men of military age who happen to be in the target area are assumed to be militants.
Given the success of drones in decimating Al Qaeda, the fleet is expanding even as theUSmilitary downsizes due to budgetary constraints. While theUSarmy is being cut from the current level of 570,000 soldiers to 490,000 soldiers over the coming decade, the drone fleet will go up by a third, said the Pentagon in January.
ForPakistan’s military, US drone attacks present an unresolved dilemma. On the one hand,Rawalpindisecretly welcomes the killing of jehadi leaders in drone attacks. On the other hand, unilateral drone attacks, for which theUSseeks no permission fromPakistan, are humiliating violations of sovereignty. The Pak army has suggested a compromise: placingPakistanin charge of the drone attacks. ButWashingtonflatly rejects that. Given the lack of trust between the two countries, any form of Pak control overAmerica’s cutting-edge drone fleet is unthinkable.
Besides, withIslamabadblockingUSaccess toAfghanistan; clamping on CIA operations inPakistan; refusing the use of Pak military bases; downgrading intelligence cooperation and re-evaluating the entire relationship withWashington, drone strikes remainAmerica’s only serious lever inPakistantoday.
Therefore, as Panetta made clear, drone attacks will continue in FATA, irrespective of Pak objections. That quashes any hope that an American and NATO drawdown fromAfghanistanin 2014 might ease the security environment by ending the provocation of “foreign occupation”. With Pashtun resentment continuing to boil in FATA; and with radical Pakistani groups like Difa-e-Pakistan continuing to rabble rouse through accusations of “violation of sovereignty”, the AfPak region seems likely to witness continued turmoil.
UNSEEN THAW IN PAKISTAN ARMY THINKING
ISLAMABAD: India may have already ruled out a breakthrough in the Siachen dispute with Pakistan when the two defence secretaries meet here tomorrow, but the fact remains that both sides will take serious judgement calls on the progress of the bilateral relationship that could have a serious bearing on a possible visit of Prime Minister Manmohan Singh to Pakistan later this year.
Significantly, for the first time since 1992, whenIndiaandPakistannearly agreed to disengage, authenticate their respective ground positions and withdraw troops from their eyeball-to-eyeball locations on the Siachen glacier, the Pakistani army and Prime Minister Manmohan Singh seem nearly on the same page.
As far back as 2005 while on a visit to Siachen base camp, Manmohan Singh had announced the best thing the two countries could do was to stop the ecological destruction of the glacier on which troops from both countries had been stationed since 1984, and convert it into a “mountain of peace”.
His UPA government has never formally disowned that statement, although Defence Mminister A K Antony, briefing journalists last week after the Cabinet Committee on Security cleared the line for Defence Secretary Shashikant Sharma’s talks in Islamabad, insisted it was impossible to expect a “dramatic announcement or decision on an issue which is very important for us, especially in the context of (our) national security”.
In fact, it is the Indian army, speaking through officials on the condition of anonymity, that has considerably hardened its position, certainly since the near-breakthrough in 1992 and more so since the Kargil conflict in 1999.
According to defence ministry sources, Sharma will tell his Pakistani counterpart during the 13th round of the Siachen talks over the next two days that Pakistan must not only ‘authenticate’ troop positions of both armies on the Saltoro ridge of the Siachen glacier, but follow with a proper ‘delineation’ of the Actual Ground Position Line (AGPL) on the map as well as on the ground, which in turn should lead to a ‘demarcation’ of the border. Only then, the sources said, wouldIndiaconsider disengaging and redeploying its troops from the heights of the Saltoro ridge of the glacier on which Indian troops have been stationed since 1984.
This position by the Indian army is much more hardline than the positions it took in 1989, when Rajiv Gandhi and Benazir Bhutto were prime ministers and a deal on Siachen was almost said to have been done, or in 1992, when then defence secretary and current Jammu & Kashmir governor N N Vohra nearly broke through the Siachen deadlock.
Of course, the Indian army argues the Kargil invasion in 1999 had changed the entire discourse and vindicated its position that the Pak army is not to be trusted.
In 1989 and in 1992, the Indian army’s insistence that the Pak army authenticate its ground positions, both current and those it would relocate to, included one significant compromise. Which was that the authentication of positions would not be put into the main document but in the annexures to the main document. The latter would only contain a reference to the annexure, delineating the positions on a two-grid reference. The Pak army conceded this was a major face-saving device, especially since it had always held that the Indian army, by racing to the Saltoro ridge in 1984, had violated the Shimla agreement. If it agreed to authenticate the Indian army’s positions, Pak army officials said, it would be accepting those transgressions.
Clearly, no Pak army nor government leadership would be able to survive if it were seen to be acknowledging that it was sanctioning the heights on which Indian troops were stationed.
On the other hand, after the Indian army evicted soldiers of the 6 Northern Light Infantry at Kargil, it began to get much more powerful, with the result that the earlier compromise offer of authentication in the annexures was not repeated.
That is why the Indian army’s newest three-step negotiating position with the Pak side tomorrow — to authenticate, delineate and demarcate — is doomed to fail from the start. The Pak army believes itself responsible forPakistan’s security, especially vis-a-visIndia, and will never negotiate from a starting position of weakness.
But conversations with several Pak military analysts here over the past few days, on the margins of a conference organised by the Islamabad-based think-tank, Jinnah Institute, and the Delhi-based Centre for Dialogue and Reconciliation, indicate there could be some space between the extreme positions adopted by the two countries. The conversations were held on the condition of anonymity, considering the sensitive nature of the subject.
According to the first analyst, Paki chief of army staff Gen Ashfaq Kayani’s invitation to the Islamabad-based correspondent of The Hindu newspaper in early May, to travel with him to Gyari in the Siachen glacier, the site of a major snowslide in April in which 139 soldiers and civilians lost their lives, is more significant than has been acknowledged in Delhi so far. Considering the correspondent, who cannot even travel to Rawalpindi (a mere 25 km from her house in Islamabad) without permission, but shared breathing space with Kayani — and even a briefing, admittedly with three other Pak journalists, by the cream of the army officer corps — certainly means the army is sending some sort of a message that it wants to seriously talk to New Delhi.
The Pak military analysts Business Standard spoke to were unwilling to threadbare analyse the meaning of Kayani’s gesture, but pointed to two distinct changes taking place in their army, the first related to terrorism and the second toIndia.
The first change broadly refers to the fact that thePakistanarmy is privately willing to acknowledge its role in the creation of terrorists, both againstIndiaand theUSinAfghanistan. It is beginning to realise that the monster of terrorism it helped create is seriously biting back and, as one military analyst said, “The Pakistani army continues to be a predator, but it seems to be beginning to realise that it needs India’s help in eliminating this monster.”
According to a second analyst, “India’s successful economic reform and, conversely in Pakistan, the mistaken identification of the Pakistani army as the state, which has given rise to skewed economic processes, means the Pakistani army is looking to at least partially withdraw from some strategies of politics and governance that are the natural domain of the state.”
None of this means the Pak army is ready to give up its primary role inPakistan’s polity, the analysts insisted, but it does mean the army could be willing to at least consider the fact thatIndiais no longer its chief enemy.
Certainly, Defence Secretary Shashikant Sharma is not going armed to Pakistan with a solution to the Siachen conflict, especially as India believes Siachen must be a part of several other confidence-building measures that both countries must put in place before final solutions are achieved. But, if Sharma is willing to look beyond the obvious and probe beneath the surface in his conversations with his counterpart, as well as with Pak army officials, he just might be surprised on what he comes up with.
GUPTA WILL NOT TESTIFY IN HIS OWN DEFENCE
NEW YORK: Former Goldman Sachs director Rajat Gupta will not testify in his own defence at his insider trading trial, a decision taken after ”substantial reflection and consideration”, his lawyer has told a federal court here.
In a one paragraph letter dated June 10 to Judge Jed Rakoff, who is presiding over the case inManhattanfederal court, Gupta’s lawyer Gary Naftalis said his team had spent the weekend “reviewing what we believe we need to present in the defence case”.
“After substantial reflection and consideration, we have determined that Gupta will not be a witness on his own behalf in the defence case,” Naftalis said.
Naftalis had last week told the court it was “highly likely” that Gupta would take the witness stand in his defence on June 12.
The prosecution rested its case last Friday after Goldman Sachs CEO Lloyd Blankfein finished his testimony.
The judge had instructed Naftalis to inform the court and the prosecution about whether Gupta would take the witness stand as soon as he had taken a decision in order to give the prosecution time to prepare.
The defence began its case by showing a recorded video deposition of Gupta’s “close friend” Ajit Jain, the reinsurance head at Berkshire Hathaway.
Jain is seen as a possible successor toBerkshire’s billionaire chief Warren Buffett.
The prosecution has alleged that Gupta, who sat on the boards of Goldman Sachs and Proctor and Gamble, passed on confidential information about Buffett’s plan to invest USD five billion in Goldman Sachs during the height of the financial crisis in 2008 to convicted hedge fund founder Raj Rajaratnam. When the court resumes today, the defence will continue showing the video deposition of Jain.
About six character witnesses would be testifying for the defence, including one of Gupta’s four daughters.
Naftalis is expected to wrap up his case by Tuesday and closing arguments by both sides would be made on Wednesday.
The case will then go to the jury for deliberations.Gupta has pleaded not guilty to security fraud and conspiracy charges that he passed confidential board information to hedge fund founder Rajaratnam.
The Sri Lankan co-founder of the Galleon group was convicted last year on insider trading charges and is currently serving an 11 year prison sentence.
If convicted Gupta faces upto 25 years in prison.His family and friends have been regularly attending the trial, which began on May 21.
His wife and four daughters have sat behind him in the spectators’ bench in the courtroom.
The prosecution presented phone records, emails, stock information to show Gupta’s relationship with Rajaratnam.
According to phone records, calls were made from numbers associated with Gupta to Rajaratnam’s lines just seconds after Gupta got off from Goldman and P&G board meetings.
Rajaratnam then traded on the basis of information the government alleges he received from Gupta making millions of dollars of profit and avoiding losses.
Gupta’s defence has argued that the evidence against him is circumstantial and rajaratnam had other sources in Goldman who could have shared the secret corporate information before it became public.
Naftalis has said Gupta had a falling out with Rajaratnam after the hedge fund founder lost USD 10 million of Gupta’s investment in the voyager fund.
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