India to buy 22 attack, 15 heavy-lift copters

As part of Prime Minister Narendra Modi’s plan to bolster the nation’s military posture, India is to acquire 22 Boeing AH-64E Apache attack helicopters and 15 CH-47F Chinook heavy lift helicopters for the Indian Air Force (IAF), valued at $2.5 billion.

Approval stage

Officials in the know said the attack helicopter (Apache) and the heavy lift helicopter (Chinook) are currently in the Government approval stage.

“The Ministry of Finance and Cabinet Committee on Security needs to approve…before contracts are signed. All other steps are done,” officials said.

Sources pointed out that India’s defence acquisition process mandates that all contracts that are in excess of $50 million require 30% offsets. Way back in 2013, Boeing had signed a memorandum of understanding with Dynamatic Technologies of Bangalore, to manufacture the aft pylon and cargo ramp assemblies for the Chinook. Sources indicated that Boeing had done this in anticipation of the IAF order. When contacted, Boeing said it was deferring all questions on the Apache procurement to India’s Ministry of Defence for comment.

Offsets galore

“Defence spending eligible for offsets through 2017 are huge. Based on the current order pipeline, big procurement programmes ensure that offset obligations could become an opportunity worth $10-$20 billion for the domestic industry,” said sources.

Another official pointed out that offsets are expected to spur growth, as well as aid the basic intent of the offset policy, which is to build a domestic defence manufacturing base.

Force projection

“Multinational original equipment manufacturers with Indian defence contracts can discharge their offset obligations by sourcing military grade components from India,” the official added.

Boeing’s Apache is the most capable multi-role combat helicopter, “combining performance and lethality with more affordable and efficient maintenance.

“It will provide the Indian Air Force with enhanced dominant force projection capabilities, and will address the full spectrum of conflict to peace keeping and nation building.”

Newest member

India has been offered the AH-64E, the newest member of the combat proven Apache family, and is to get the latest upgraded version of the helicopter, which has been delivered only to the US Army. In the case of Boeing’s Chinook helicopter, “the tandem rotor H-47 Chinook is the most capable, advanced heavy lift helicopter, providing maximum value at the lowest risk.

The H-47 Chinook offers India heavy lift and high altitude transportation for a multitude of military, humanitarian, rescue, disaster relief, fire fighting and nation building missions in all climates and conditions and altitudes.”

Flight trials

The Chinook and an advanced version of the Mi-26 helicopter were put to flight trials in 2011, in desert and high altitude terrain. Boeing’s Chinook had beaten out Russia’s Mi-26, when the Indian Defence Ministry had opened bids in November 2012, said sources, adding that the Russian bid was set aside after officials failed to provide details on how they would execute their offset liabilities.

Boeing is deferring questions on the contract to India’s Ministry of Defence.

HAL plans to get listed; to restructure board by April 1

As part of the government’s disinvestment programme, state-run Hindustan Aeronautics Ltd (HAL) plans to get listed as one of the Maharatna companies, for which it will restructure its board by April 1.

Besides, the company is looking to enhance its focus on aeronautical technology segment, rather than being only a manufacturing firm, HAL’s outgoing Chairman R K Tyagi said today.

“In last almost three years, we have tried to convert HALfrom a manufacturing company into a technology company… we have made efforts… For the preparedness for tomorrow,” Tyagi told reporters here as he prepares to demit office on January 31.

“HAL board in the last two years has given us approval for more than Rs 7,000 crore of investment where an aggressive modernisation is taking place,” said Tyagi who joined HAL as its Chairman in March 2012.

“We have prepared the company externally and internally … The company is planning for the future, reinvesting for the future, and I’m sure the valuation of the company is going to be very relevant,” he added.

Tyagi said “our dream is to see the company as a Maharatna company which have more than 5,000 patents, a company which will be fully responsive to any of the leads of the defence sector and also in the exports.”

Responding to a question on disinvestment Ashok Tandon, Company Secretary & Executive Director of HAL, said: “Disinvestment process is in progress, there were couple of issues… One was the restructuring of the board for which we have got approval from the competent authority in the government, it will be in place by April 1, 2015, and the other was sharing of confidential information with the book running lead manager which we have to sort out….”

In reply to a question on restructuring of the board, he said, “Now we have nine whole time directors, six independent and two government directors; the revised structure provides for five whole time directors including CMD, two government nominee directors and seven independent directors.”

To a question on exports, Tyagi said “if you look at the export market 60 per cent of the formal exports of the Defence PSUs is accounted by HAL; if you have to export products in the international market you must have certification….”

“Last two years we have started this exercise, those certifications are now in advanced stage and hopefully by the end of this year we will have both these certifications and then we will be able to establish good export market to our products.”

In addition to this, he said a presentation had been made to Minister for External Affairs and “we have put forward that our neighbouring countries will be a very good markets to start with, as far as our products are concerned.” He noted the handing over of Dhruv Helicopter to Nepal last November and contract from Mauritius for Dornier Aircraft.

US to help India design jet engines

Washington has agreed to assist Delhi in sharing, designing and developing jet engines for aircraft—a critical technology that is exclusively owned by a handful of countries—in what is being considered a big step forward in Indo-US defence collaboration.

The assistance comes within months of the Defence Research and Development Organisation (DRDO) winding up a Russia-backed project to develop Kaveri jet engines after losing more than Rs 2,000 crore and almost three decades.

New Delhi and Washington negotiated the text of the bilateral Defence Framework Agreement for the next 10 years as the existing framework signed in 2005 by then defence minister Pranab Mukherjee and his US counterpart Donald Rumsfeld expired in 2014. The new pact, however, is yet to be signed.

“We have decided to take our growing defence cooperation to a new level. We have agreed, in principle, to pursue co-development and co-production of specific advanced defence projects. These will help upgrade our domestic defence industry, and expand the manufacturing sector in India,” said Prime Minister Narendra Modi at the joint press conference with US President Barack Obama here on Sunday.

The big takeaway is the collaboration on jet engines, to be used in home-grown aircraft. “India and the US have agreed to explore development of jet engine in the country. It would be broader than the Kaveri programme,” said S Jaishankar, Indian Ambassador to the US.

Originally meant for use in indigenous light combat aircraft, the Kaveri jet engine was being developed with support from Russia. But the engine developed by the Gas Turbine Research Establishment in Bengaluru could fly only for 73 hours on the IL-76 Flying Test Bed (FTB) in Russia.

Because of the delay, DRDO picked up the US-made GE 404 engine for the Tejas Mk-1 and GE 414 for the Tejas Mk-II aircraft.

Kalyani Group to set up defence manufacturing unit in Gujarat

The Kalyani Group will invest Rs  600 crore in a defence manufacturing facility at Dholera in Gujarat. Likely to employ about 2,500 people, it will include the capacity to upgrade and overhaul  armoured vehicles, with a plan to also make defence electronics and radar.

According to a memorandum of understanding signed with the state government on Sunday at the Vibrant Gujarat Summit, the operations are likely to commence by 2016. Amit B Kalyani, executive director, Kalyani Group, said the setting up of the plant would be in line with Prime Minister Narendra Modi’s ‘Make in India’ vision.

“We are confident that given an opportunity, we can become the manufacturing hub for the world,” he said. Kalyani Group has already formed a ‘Make In India’ project team, with senior executives to work on an import substitution strategy. It is targeting $30-40 billion worth of iron and steel products that are currently imported for the defence, energy, automotive, construction and mining equipment industries.  The group is undertaking its defence business through a subsidiary, Kalyani Strategic Systems.

The land at Dholera has been offered by the state government for putting up the plant. Kalyani Group’s annual turnover is Rs  12,000 crore and the plan is to increase thes business three to four times over the next 10 years, by embracing Make in India.

Beside the forging and engineering business of its flagship company, Bharat Forge, it is focusing on the non-automotive segments of the power, railway, aerospace, oil and gas, and defence industries. A large part of this will be on defence and aerospace.