HEADLINES:
Possible sale of Boeing C-17 aircraft to India approved – Pentagon। President Trump tweets: Look forward to welcoming to India’s PM Modi to White House on Monday. Important strategic issues to discuss with a true friend! । Prime Minister Narendra Modi leaves for three-nation tour to Portugal, US and the Netherlands June 24 । India, Portugal sign MoUs in areas of Space, and Collaborative Research । Agreements signed during PM Modi’s first leg visit of the three-nation tour । US clears sale of 22 General Atomics Sea Guardian drones for Indian Navy । Deal likely to be announced during PM Modi’s visit to Washington June 26 । These unmanned, or Remotely Piloted, Aircraft will be used for ISR Missions in Indian Ocean । The G-to-G deal, under the US FMS program, should be around $2 Billion । India launches Cartosat-2 along with 30 other satellites June 23 । PSLV-C38, the 40th flight of PSLV, carrying 31 satellites took off from first launch pad of SDSC Sriharikota । President Mukherjee, PM Modi and the Defence Minister congratulated ISRO and its scientists for the successful launch । Lockheed Martin, Tata announce F16 India Partnership । Partnership aims to produce F16 Block 70 in India if selected by IAF । GE Capital Aviation Services (GECAS) orders 100 A320neo aircraft । Paris Air Show 2017 opens at Le Bourget, France June 19 । Chairman COSC and CNS Admiral Sunil Lanba on a visit to Isreal। India, Pakistan become full member of SCO। India’s entry into SCO was backed by Russia, and Pakistan’s membership by China। PM Modi calls on Chinese President Xi Jinping on the sidelines of SCO। He also thanked the Chinese President for supporting India’s entry into SCO। Prime Minister Narendra Modi exchange greetings with Pakistani PM Nawaz Sharif in the Leader’s Lounge before the SCO concert in Astana, capital of Kazakhstan। It was the first time the two had met in nearly a year, during which period bilateral relations have deteriorated। PM Modi greeted his Pakistani counterpart and asked about PM Sharif’s health and about the health of his mother । Prime Minister Narendra Modi departs for 2-day visit to Astana, Kazakhstan to attend SCO Summit । India to be admitted as full member of SCO during the Summit । India signed Paris climate pact for its commitment towards protecting the environment, says EAM Sushma Swaraj । The EAM said this during MEA’s annual conference in New Delhi June 5 । It did not sign the pact of any greed or fear from any country: EAM । Ms Swaraj was rebutting US President Trump’s allegation saying India signed the deal to receive billions of foreign aid । India successfully launches communication satellite GSAT 19 June 5 । The heaviest ever rocket GSLV Mk III carrying GSAT 19 lifted off from SDSC (SHAR) Sriharikota । Bahrain, Egypt, Saudi Arabia and UAE cut diplomatic ties to Qatar । The 4 Gulf nations took the step following Qatar’s relations with Iran and support of Islamist groups। They also cut off its land, sea and air routes to the outside world । Libya, Yemen also joined the four Arab nations in snapping ties with Qatar । India, Russia sign pact for two nuclear power units at Kudankulam in Tamil Nadu । INS Kalvari, the Indian Navy’s first Scorpene class submarine, will be battle ready from Day One, French collaborator DCNS announced June 1 । Kalvari, meaning shark, will be commissioned in July । Kalvari is the first of the six modern submarines ordered by the Indian Navy । Indian Navy is looking at 200 ships and 400 aircraft, all with hitech systems । Vice Adm Karambir Singh also told a seminar on Future Indian Navy that poor quality systems are not acceptable । Indian shipyards are building 40 ships at present । PM Modi reaches St. Petersburg in the 3rd leg of his 4-nation visit । He is to participate in 18th India Russia Annual Summit and SPIEF 2017 । India, Spain sign 7 agreements including one each on Cyber Security and Civil Aviation । Naval Chief Adm Sunil Lanba calls for cutting edge technologies with a Made in India stamp । Addressing a seminar on Building India’s Future Navy, he said ToT from foreign vendors would be say now with Strategic Partnership model । Adm Lanba said selection process for shipboard fighter is moving at desired pace and they should be inducted in about 5 years । About 80 killed, several injured in a bomb blast near Indian embassy in Kabul । Indian embassy staff were safe: MEA । PM reached Madrid on the second leg of his tour for a day- long visit to Spain May 31 । India, Germany sign 11 MoUs including one on Cyber Security । MoUs signed during Prime Minister Modi’s 2-day Germany visit on May 29-30 । We are made for each-other, says PM Modi on India-Germany ties । The Prime Minister is on 4-nation tour of Germany, Spain, Russia and France from May 29-June 3 । India’s distinguished police officer, Mr KPS Gill passed away at 82 । Hassan Rouhani re-elected Iranian President । Prime Minister Modi congratulated him on his re-election । India, Palestine sign 5 MoUs including one on visa exemption for diplomatic passport holder । Agreements were signed after Prime Minister Modi’s meeting with President Abbas May 16 । Palestine President Mahmoud Abbas is on 4-day State visit to India beginning May 14 । Abbas is visiting India on the invitation of President Pranab Mukherjee । This is the fifth visit and the third State visit of President Abbas to India । Prime Minister Narendra Modi arrives in Colombo May 11 on his two-day visit to Sri Lanka । He was received by his Sri Lankan counterpart Ranil Wickramsinghe on his arrival at the Colombo airport । PM Modi is the chief guest at the International Vesak Day celebrations of Sri Lanka । India marks 19th National Technology Day । National Technology Day is marked to commemorate the anniversary of Pokhran nuclear tests of 1998 । On this day, Prime Minister Modi hails the then PM Vajpayee’s courage to conduct the nuclear tests । India launches GSAT-9 satetllite from Sriharikota । India to make Israeli rifles and small arms । Punj Lloyd and Israel Weapon Industries (IWI) collaborating in the venture । Trump to visit Israel and Saudi Arabia this month । This will be his first foreign visit as US President । India, Turkey signed three agreements including one between the Foreign Services Institute of India and the Diplomacy Academy of Turkey । Turkey President Recep Tayyip Erdogan calls on President Mukherjee, Vice President Ansari, PM Modi and EAM Sushma Swaraj during his State visit to India । The Turkish President, visiting from April 30-May 1, backs India in fight against terrorism । Turkey conveyed its support for India’s bid for membership of the Nuclear Suppliers Group (NSG) । PM Modi expressed his gratitude on Turkey’s support । Indian Army celebrates 79th Armour Day । On 1 May 1938, Scinde Horse cavalry regiment was equipped with Vickers tanks and Chevrolet armoire cars । The Indian Army’s Armourerd Corps has played decisive role against Pakistani intruders in 1947, 1965 and 1971। India, Cyprus sign 4 agreements including one on Air Service Agreement । Agreements signed during Cyprus President Nicos Anastasiades’s visit to India April 28 । Cyprus President called on President Mukherjee, Prime Minister Modi and External Affairs Minister Sushma Swaraj in New Delhi । The visiting President and PM Modi agreed on urgent need for all countries to decisively act against the states supporting factories of terrorism । PM Modi also thanked the Cyprus President for his support to India’s claim of Permanent Membership in UNSC । North Korea test fires a ballistic missile which landed in the Sea of Japan । India, Sri Lanka ink pacts on economic cooperation and road infrastructure development । The agreements signed during Sri Lankan PM Ranil Wickremesinghe’s visit to India । Prime Minister Modi, Home Minister Rajnath Singh and External Affairs Minister Sushma Swaraj called on him । Foreign Secretary S Jaishankar accompanied Sushma Swaraj when the latter called on the visiting Sri Lankan PM । India-Russia defence engagement will continue to grow, says Defence Minister Arun Jaitley । He was speaking at the 6th Moscow Conference on International Security in Moscow । India, Russia are celebrating 70 years of Diplomatic Relationship । China launches its first indigenous aircraft carrier । The new carrier will accommodate 36 aircraft and will be commissioned in 2020 after sea trials । It’s a 50000 ton platform with a ski jump deck modeled on Soviet carriers but has many design innovations । India, South Korea Sign Inter-Governmental MoU for Defence Industry Co-Operation in Shipbuilding । The MoU signed by Secretary (Defence Production), India, Ashok Kumar Gupta and Minister of Defence Acquisition and Programme Administration (DAPA), South Korea, Chang Myoung-Jin । The Inter-Governmental MoU was conceived under the overall umbrella of the ‘Special Strategic Partnership’ between both countries । The Cabinet Committee on Security (CCS) accorded its approval for signing the MoU । The CCS also gave a go ahead for nominating Hindustan Shipyard Ltd, Visakhapatnam for collaboration । Indian Navy successfully test-fires land attack version of Brahmos supersonic cruise missile । Nepal President Bidya Devi Bhandari calls on President, Vice President, Prime Minister, Home Minister and Defence Minister in New Delhi Apr 18 । Nepalese President is on a State visit to India April 17-21 । This is her first ever visit to India since taking over in 2015 । She was given a ceremonial Guard of Honour on her arrival at Rashtrapati Bhawan । Canada’s Minister of National Defence, Harjit Singh Sajjan, called on Defence Minister Arun Jaitley Tuesday । He was presented a Tri-Services Guard of Honour on his arrival at South Block । 12 killed in Saudi military helicopter in Yemen । Unconfined reports say the Blackhawk was accidentally shot down by a Saudi Patriot missile। US NSA Gen HR McMaster meets Prime Minister Modi in New Delhi । Gen McMaster also exchanged views on Indo-US relations with Indian counterpart Ajit Doval and Foreign Secretary S Jaishankar । Happy Easter । US drops its biggest 21,000 pound bomb on ISIS in Afghanistan April 13 । Designated GBU 43, the Mother of All Bombs is designed to hit deep caves and tunnels in hardy mountains । GBU 43 is the biggest non-nuclear bomb, carried by the US Air Force (USAF) and the British Royal Air Force (RAF) । White House Press Secretyary Sean Spricer confirmed the night bombing but there was no immediate word from Taliban । Spicer said the ISIS terroists were targeted as they used the caves and tunnels to hit the US forces । GBU 43 is a concussion bomb carrying an explosive charge of 8,500 kg, equal to 11 tons of TNT । India, Australia sign 6 MoUs including on Combating Terrorism and Civil Aviation Security । Agreements signed during Australian PM Malcolm Turnbull’s Visit to India April 10 । He calls on President Pranab Mukherjee, Vice President Hamid Ansari and Prime Minister Narendra Modi । This is the first ever visit of Turnbull after taking over as Australian PM in 2015 । The Australian PM along with his Indian counterpart took a Delhi metro ride to visit city-based Akshardham Temple । India, Bangladesh signed 22 agreements April 8 including key pacts on defence cooperation and civil nuclear cooperation । India announced an additional $4.5-billion concessional line of credit for infrastructure projects in Bangladesh, and another $500 million for Dhaka to procure defence equipment from New Delhi । A joint India-Bangladesh event saw both PMs honour the 1,661 Indian soldiers who sacrificed their lives during the 1971 war for Bangladesh’s independence । Bangladesh Prime Minister Sheikh Hasina arrives in New Delhi for 4-day State visit to India । Prime Minister Modi himself goes to the airport to greet the Bangladesh PM on her arrival । External Affairs Minister Sushma Swaraj calls on Sheikh Hasina at Rashtrapati Bhawan । She is the special guest of President Pranab Mukherjee during her State visit to India । The Bangladesh PM has a full day of bilateral discussions with her Indian counterpart on Saturday (April 8) । 20 agreements are expected to be signed between India and Bangladesh । India, Malaysia sign 7 agreements । The agreements signed during Malaysian PM Najib Razak’s visit to India from March 30 to April 4 । Malaysian PM calls on President Pranab Mukherjee, Vice President Hamid Ansari and Prime Minister Narendra Modi । India and Malaysia joint statement, issued after Modi, Razak meeting, calls for a deeper ties between the two nations ।
June 28, 2017
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Strategic Partnership Model – Fine Print Will Hold the Key to Success

By Amit Cowshish Published: June 2017
 

New Delhi. Endorsement of the Strategic Partnership (SP) model by the Cabinet Committee on Security (CCS) on 24 May 2017, within days of its being cleared by the Defence Acquisition Council (DAC), has taken a section of the strategic community and the private sector industry champions by storm.

Though the details of the policy are yet to emerge, it is already being hailed as the game-changing reform which will catapult the Indian private sector to the centre-stage of defence production through transfer of technology from the foreign Original Equipment Manufacturers (OEMs).

It bears recalling that defence production was opened to full participation by the private sector in 2001 but it continues to play a peripheral role with very few big contracts going its way. It is, therefore, not a day too soon to do whatever it takes to energise the domestic industry.

Recommended by a Committee of Experts (CoE) in July 2015, the SP model is uncannily similar to the Raksha Udyog Ratna (RUR) concept, thought of more than a decade back but abandoned at the last minute, ostensibly under pressure from the Defence Public Sector Undertakings (DPSUs) who ran the risk of being sidelined.

Considering the speed at which the proposal has been moving of late it seems the government is determined not to succumb to any such pressure this time. While this may be reassuring some other concerns remain.

The SP model recommended by the CoE envisages selection of OEMs for procurement of strategic platforms and simultaneous selection of SPs, who could then be nominated by the Ministry of Defence (MoD) as the Production Agencies (PA) for manufacturing the selected platforms in India with the help of technology acquired from the OEMs.

The strategic partners would remain associated with a given platform throughout its lifetime and even beyond that if it requires life-extension or upgradation. The life time support would entail maintenance, repair and overhaul.

This will obviously give a monopolistic control to the strategic partners, unless MoD comes up with a mechanism to deal with this situation, as also the critical issue of determination of price in all subsequent cost-plus contracts with the SPs after the initial manufacturing contract is fully executed. These subsequent contracts, for life-extension, upgradation or even maintenance, will obviously not be on competitive basis.

Reports suggest that the scheme may be rolled out in four segments: fighter aircraft, helicopters, submarines and armoured vehicles. More segments could be added later but these will probably be commercially less rewarding.

There is no doubt that generally MoD will have to select the platform through a competitive process. If the past experience is any guide, this could take a long time, unless some simplified procedure is introduced as a part of the new policy.
While selection of the platform may not be much of a problem, selection of the strategic partners could present a bigger challenge, not least because of the difficulty in evolving objective and unchallengeable selection criteria.

The media reports suggest that the selection criteria may include turnover of Rs 4,000 crore (approximately USD 620 million) for each of the previous three years, capital assets of Rs 2,000 crore (approximately USD 310 million), a minimum credit rating of CRISIL/ICRA ‘A’, and demonstrated capability to absorb technology and integrate the systems.
Each of these selection criteria could be challenged by those who lose out on grounds of being prejudicial or bereft of objective justification. Just to illustrate, it would be quite a task to evolve a completely objective and unassailable method to assess the technological capability of a company.

The DPSUs were to be kept out of the scheme but the recent reports suggest that they could also be chosen as strategic partners. This adds a new dimension to the process of selection of strategic partners and adds to the uncertainty about whether there is going to be only one strategic partner per segment or there could be more than one.
Some reports suggest that instead of unilaterally deciding to nominate an SP, MoD is mulling the possibility of creating a pool of six Indian companies as strategic partners and eight-odd OEMs and let the former compete for being selected as PAs for various projects.

The modalities of this arrangement will need to be worked out carefully because eventually two of the six SPs will be left twiddling their thumbs after the projects have been awarded in all the four segments.
Creation of this pool would also potentially close the door for new entrants. This may violate the competition laws. Surely, the government would be conscious of this and it will be reasonable to assume that the scheme will keep a window open for new aspirants.

A window will also need to be created for the Micro, Small and Medium Enterprises (MSMEs) who will obviously not figure in the list of the strategic partners because of the high selection benchmark in terms of turnover, assets, et al.
The scheme envisages long-term contractual relationship between MoD and strategic partners on the one hand and between the latter and the OEM on the other. It could also be the other way around, depending on whether MoD follows the ‘Buy and Make (Indian)’ or ‘Buy and Make’ route for acquisition of platforms from the OEMs. It could even be a tripartite agreement.
Drawing up long-term legal covenants that bind the OEM and the SP over the entire life of the equipment and management of such covenants will require MoD to acquire legal acumen which it presently does not possess.

It is difficult to visualise at this stage how the scheme will play out. The devil is always in the detail and unless every aspect of the scheme is carefully worked out it could end up the same way as the ‘Make’ procedure, adopted more than a decade back, for promoting indigenous design and development of prototypes of high-technology complex systems.
That not a single development contract has, however, been awarded till date under the Make category only underscores the consequences of not addressing the inconvenient issues while formulating a policy. The imperatives of ‘Make in India’ in defence do not brook repetition of the same mistake.

One last thought remains. There is no doubt the SP model will entail transfer of technology to the Indian PAs from the chosen foreign OEMs for indigenous manufacture of the equipment. That being the case, one cannot help wondering, why it cannot be left to the OEMs to select the Indian PAs of their choice. This could save MoD the hassles of selecting the strategic partners and yet achieve the same objective as it intends to achieve through the SP model.

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