WHAT'S HOT? –– ANALYSIS OF RECENT HAPPENINGS

SECOND India–UK Defence Industry Seminar

An IDC Report on DEFEXPO 2004

New Delhi, 04 February 2004

Defexpo 04 is slated to be the India’s biggest Defence (land and naval systems) show and all the big ticket companies are there in Delhi with a fairly high level of delegations for the opening by Defence Minister George Fernandes on 4 Feb. The RM returned recently from S Africa where he had talks with the Defence Ministers of Brazil and host country.

The main big business prospects are sited. The Air Defence Ship (ADS) of the Navy has many prospects and Fincanteri, Izar and DCN in that order, have been looking at it as the prime consultants since India CSL which will build the big 37,500 platform have little experience in this class of ships. UK has the 66 AJT contract, but the UK Government is unsure of the sale of INVINCIBLE or the Harriers, which could interest the Indian Navy, so UK looks for other prospects. The GRSE and Navy will also be looking out for equipment for the planned ASW Corvette and the 6 Survey ships and MCMVs are on the cards.

The Russians with good business already in hand have stakes in the Type 17 and supply of missiles and the Gorshkov/MiG 29Ks and helicopters. Media keeps reporting the Akulas and the TU 22 M. On the Army front the additional 155mm Gun looks like going to South Africa and Bofors way and the Army is all set to upgrade the Battalions with $700 million. In all this the UK has lagged.

The pre Defexpo 04 activities in New Delhi therefore kicked off on 3^rd February with a well attended day long India–UK Defence Industry seminar, where over 32 delegates from British Industry and DESO, who interacted with over 60 Indian defence industry representatives and some Government officials. This was the second such seminar organised by the Confederation of Indian Industries (CII) and the Defence Manufacturers Association of UK (DMA), who have signed an MOU to facilitate trade.

Mr Atul Kirloskar Chairman of CII’s National Committee on Defence welcomed the foreign guests, which included Lord Bach, UK’s Minster of procurement and Gen Shankar Roy Chowdhury, Member of Parliament. UK’s High Commissioner in India Sir Michael Arthur in his opening remarks spoke glowingly of India’s buoyant economy and asked delegates from Britain to look at the opportunities in India in a mutually beneficial manner. He lauded the 66 Hawk AJT agreement and assured that UK looked to greater opportunities as India’s second largest International business partner.

The address by Lord Bach, UK’s Minister for Defence Procurement began with a personal note by him. He revealed that he had spent his childhood in Chennai and hence confessed that his affection for India was abiding. He dwelt on the UK–India relationship and how strong they were, and also referred to the 66 Hawk AJT deal which was cleared by the Government of India immediately after UK itself took a decision to select the Hawk, as the UK’s trainer of choice, and looked forward to the signing of the contract soon.

Lord Bach spoke of the many changes that had taken place in India’s Industrial policy to open the defence sector to private participation, and the progress made. Later in the day Maj. Gen. Mrinal Suman (Retd) who was earlier in the Ministry of Defence elaborated on the procurement procedure in India titled “Understanding Indian Procurement Procedures” which are now available on the net.

Lord Bach surveyed Britain’s defence complex which employs 300,000 workers in hitech industries and services and contributes to 3% of the industrial production in UK. He spoke of UK’s recent white paper on Defence and the Strategic Defence Review (SDR) and the achievements in the Iraq war. He stated that net centric enabled warfare was now the way ahead for all modern Armed Forces, and the mosaic of defence industries in the world had undergone many changes. Large National companies like BAE and Rolls Royce were now International with footprints all over the world in joint collaborations. UK looked to India in that vein, and he urged delegates to meet and discuss prospects for both countries.

Nationality and control of defence industries are less relevant and he congratulated the GOI for allowing 26% FDI in the defence sector as that would allow inflow of technology and jobs to the recipient nation. He also explained the pillars of UK’s Defence Industrial policy. These include best value for acquisition and to meet the competition, larger R&D with access to it, close working with industry in UK and abroad, and to open market access. He stated UK had the most open defence industry in the world. On India he stated that India has large Armed Forces and DESO has an office in India to help UK Defence industries’ to get a market in India and vice versa, as UK wishes India should have best of equipment and the best of relations with UK.

Gen Shankar Roy Chowdhury Member of Parliament and Member Standing Committee of Defence admitted that India had vast equipment needs for its manifold security concerns. He referred to the recent détente with Pakistan as a good sign but that did not detract from India’s security concerns. He dwelt on Indian Armed Forces traditional procurement polices from Ordnance factories and Defence PSUs, and explained how post 1965 India had no option but to look to the Soviet Union for procurement, both for availability and prices. Hence, Indian Armed Forces predominantly had Eastern oriented equipment and he touched on the technology denial regimes which precluded induction from the West in the past.

In the present scenario he recommended that foreign defence companies should look at this scenario, and see where they can upgrade present equipment and offer new technologies. For reasons of security, production of small arms and ammunition was still in government hands as their safe transportation was crucial. However, in other spheres the opportunities were many and he wished the delegates well in their efforts.

Air Vice Marshel Gavin Mackay Senior Military Adviser DESO spoke on the Indo–UK Defence relationship and Mr. Tim Jones Managing Director of Rolls-Royce India gave a presentation of the Rolls-Royce Company worldwide and its operations in India. His theme was “India–UK Defence Business Potential –– A Case Study”.

The seminar also included separate workshops on Land Systems, Aerospace and Naval Systems.

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