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	<title>Comments on: Towards Building A Domestic Defence Industry</title>
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	<link>http://indianeconomy.org/2007/09/01/towards-building-a-domestic-defence-industry/</link>
	<description>Issues &#38; insights</description>
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		<title>By: The Indian Economy Blog &#187; Russia&#8217;s Rouble Advantage</title>
		<link>http://indianeconomy.org/2007/09/01/towards-building-a-domestic-defence-industry/comment-page-1/#comment-220905</link>
		<dc:creator>The Indian Economy Blog &#187; Russia&#8217;s Rouble Advantage</dc:creator>
		<pubDate>Mon, 24 Sep 2007 17:13:13 +0000</pubDate>
		<guid isPermaLink="false">http://indianeconomy.org/2007/09/01/towards-building-a-domestic-defence-industry/#comment-220905</guid>
		<description>[...] Unconfirmed reports have it that the Russians are planning to invest the unexpended portion of the rupee debt repayment back in India with a five year lock in period. This is most likely to include setting up of service centres for defence products already sold to India. More significantly, accumulated rupee debt repayment projects could also be planned as a part of the mandatory DPP-2006 requirement of 30% offset investment in indigenous production for future acquisitions.The readily available capital of debt repayment account will provide the Russians with a distinct advantage over other competitors in the ensuing defence deals. As such, the Russians have a head start over others because of India&#8217;s long history of military hardware acquisition from Russia; continuity in operation logistics and generational consistency can only be achieved by adhering to this legacy. [...]</description>
		<content:encoded><![CDATA[<p>[...] Unconfirmed reports have it that the Russians are planning to invest the unexpended portion of the rupee debt repayment back in India with a five year lock in period. This is most likely to include setting up of service centres for defence products already sold to India. More significantly, accumulated rupee debt repayment projects could also be planned as a part of the mandatory DPP-2006 requirement of 30% offset investment in indigenous production for future acquisitions.The readily available capital of debt repayment account will provide the Russians with a distinct advantage over other competitors in the ensuing defence deals. As such, the Russians have a head start over others because of India&#8217;s long history of military hardware acquisition from Russia; continuity in operation logistics and generational consistency can only be achieved by adhering to this legacy. [...]</p>
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		<title>By: Shantanu Chatterjee</title>
		<link>http://indianeconomy.org/2007/09/01/towards-building-a-domestic-defence-industry/comment-page-1/#comment-215702</link>
		<dc:creator>Shantanu Chatterjee</dc:creator>
		<pubDate>Sun, 16 Sep 2007 11:32:23 +0000</pubDate>
		<guid isPermaLink="false">http://indianeconomy.org/2007/09/01/towards-building-a-domestic-defence-industry/#comment-215702</guid>
		<description>We need the private sector who can handle mega projects to get into armaments in a big way(think Reliance L&amp;T,Tata etc).We are not Russia that even today can pack off train loads of brilliant freshly minted physicists to obscure towns in siberia we have to compete with the private sector for pay packets.A scientist who works for the DRDO gets a pittance in a city like bangalore compared to his counterpart in Infosys who is probably less qualified but still gets a 15-10% hike EVERY YEAR and gets to go onsite to earn $$ and live in the first world(a huge aspiration).
It is only the private sector that can get the best and brightest &#039;pathfinders&#039; from anywhere in the world and pay them the moon to deliver the results.I mean we do not have to re invent the wheel most of the technology is pretty standardized (no one is asking for a F-22 Raptor)its just the inflexibility of the system and the appauling lack of value based compensation that has made the indian defense industry dig its own grave. 

You can keep giving motherhood statements like one should work for a pittance for 1/10 the salary for the sake of patriotism but 60 years after independence we all know that&#039;s not how the world works.</description>
		<content:encoded><![CDATA[<p>We need the private sector who can handle mega projects to get into armaments in a big way(think Reliance L&amp;T,Tata etc).We are not Russia that even today can pack off train loads of brilliant freshly minted physicists to obscure towns in siberia we have to compete with the private sector for pay packets.A scientist who works for the DRDO gets a pittance in a city like bangalore compared to his counterpart in Infosys who is probably less qualified but still gets a 15-10% hike EVERY YEAR and gets to go onsite to earn $$ and live in the first world(a huge aspiration).<br />
It is only the private sector that can get the best and brightest &#8216;pathfinders&#8217; from anywhere in the world and pay them the moon to deliver the results.I mean we do not have to re invent the wheel most of the technology is pretty standardized (no one is asking for a F-22 Raptor)its just the inflexibility of the system and the appauling lack of value based compensation that has made the indian defense industry dig its own grave. </p>
<p>You can keep giving motherhood statements like one should work for a pittance for 1/10 the salary for the sake of patriotism but 60 years after independence we all know that&#8217;s not how the world works.</p>
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		<title>By: Nikhil Nayak</title>
		<link>http://indianeconomy.org/2007/09/01/towards-building-a-domestic-defence-industry/comment-page-1/#comment-211018</link>
		<dc:creator>Nikhil Nayak</dc:creator>
		<pubDate>Wed, 05 Sep 2007 14:04:57 +0000</pubDate>
		<guid isPermaLink="false">http://indianeconomy.org/2007/09/01/towards-building-a-domestic-defence-industry/#comment-211018</guid>
		<description>King of Hill, nothing you&#039;ve said is entirely wrong.  I am pointing to the fact that times are changing.  

As a matter of fact times have changed - new policies are in place where credible private companies called &quot;Raksha Udyog Ratnas&quot; are being given equal access big research, development and production projects as the public sector.  The likes of L&amp;T and Godrej are in the mix and to answer your question they are doing a pretty good job.

Link: &lt;a href=&quot;http://ridingtheelephant.blogs.fortune.com/tag/raksha-udyog-ratna/&quot; rel=&quot;nofollow&quot;&gt;Riding the Elephant - Defence Industry Jewels&lt;/a&gt;

Link: &lt;a href=&quot;http://www.hindu.com/2007/06/18/stories/2007061801911300.htm&quot; rel=&quot;nofollow&quot;&gt; The Hindu -  12 firms to get Raksha Udyog Ratna status&lt;/a&gt;

Organizations like DRDO failed in part because of a lack of quality culture on their shop floors.  These are also large organizations that are too huge to take up projects with focus.   In these new environments, DRDO and other defence organizations like BDL are moving into a different roles with private industries playing the roles of actual manufacturing vendors.</description>
		<content:encoded><![CDATA[<p>King of Hill, nothing you&#8217;ve said is entirely wrong.  I am pointing to the fact that times are changing.  </p>
<p>As a matter of fact times have changed &#8211; new policies are in place where credible private companies called &#8220;Raksha Udyog Ratnas&#8221; are being given equal access big research, development and production projects as the public sector.  The likes of L&amp;T and Godrej are in the mix and to answer your question they are doing a pretty good job.</p>
<p>Link: <a href="http://ridingtheelephant.blogs.fortune.com/tag/raksha-udyog-ratna/" rel="nofollow">Riding the Elephant &#8211; Defence Industry Jewels</a></p>
<p>Link: <a href="http://www.hindu.com/2007/06/18/stories/2007061801911300.htm" rel="nofollow"> The Hindu &#8211;  12 firms to get Raksha Udyog Ratna status</a></p>
<p>Organizations like DRDO failed in part because of a lack of quality culture on their shop floors.  These are also large organizations that are too huge to take up projects with focus.   In these new environments, DRDO and other defence organizations like BDL are moving into a different roles with private industries playing the roles of actual manufacturing vendors.</p>
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		<title>By: King of Hill</title>
		<link>http://indianeconomy.org/2007/09/01/towards-building-a-domestic-defence-industry/comment-page-1/#comment-210955</link>
		<dc:creator>King of Hill</dc:creator>
		<pubDate>Wed, 05 Sep 2007 09:38:46 +0000</pubDate>
		<guid isPermaLink="false">http://indianeconomy.org/2007/09/01/towards-building-a-domestic-defence-industry/#comment-210955</guid>
		<description>Nikhil, You do understand that defence is not about manufacturing, but continous improvements via R&amp;D.Am amazed at the confidence that you have in in private sector in defence, where profit is everything when DRDO failed where leave aside profit no accountability is asked in return for massive funds provided at their disposal.

 Do yo really think they will invest moolah to do research, than churning the same copies. We have seen the private industries same ambassador, bajaj auto, rajdoot, yazdi, the list is endless. 

Again it is not about ability or funds, it is the people at the helm who should be made accountable. A person leading the Tank project for 30 years and failed is put in charge of the whole organisation as reward. That said person block the extension of service of a guy who brough finished product. This is the kind of reward and accountability present, how can an organisation succeds? 

Again whishing that private sector will achive what DRDO failed is pure fantasy. Do you think Govt will provide funds for say Tata and reliance for fighter project or Tank? If not what are they for assembling components?</description>
		<content:encoded><![CDATA[<p>Nikhil, You do understand that defence is not about manufacturing, but continous improvements via R&amp;D.Am amazed at the confidence that you have in in private sector in defence, where profit is everything when DRDO failed where leave aside profit no accountability is asked in return for massive funds provided at their disposal.</p>
<p> Do yo really think they will invest moolah to do research, than churning the same copies. We have seen the private industries same ambassador, bajaj auto, rajdoot, yazdi, the list is endless. </p>
<p>Again it is not about ability or funds, it is the people at the helm who should be made accountable. A person leading the Tank project for 30 years and failed is put in charge of the whole organisation as reward. That said person block the extension of service of a guy who brough finished product. This is the kind of reward and accountability present, how can an organisation succeds? </p>
<p>Again whishing that private sector will achive what DRDO failed is pure fantasy. Do you think Govt will provide funds for say Tata and reliance for fighter project or Tank? If not what are they for assembling components?</p>
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		<title>By: Nikhil Nayak</title>
		<link>http://indianeconomy.org/2007/09/01/towards-building-a-domestic-defence-industry/comment-page-1/#comment-210718</link>
		<dc:creator>Nikhil Nayak</dc:creator>
		<pubDate>Tue, 04 Sep 2007 19:38:29 +0000</pubDate>
		<guid isPermaLink="false">http://indianeconomy.org/2007/09/01/towards-building-a-domestic-defence-industry/#comment-210718</guid>
		<description>King of Hill, the begging bowl analogy was just in reference to another post.  At the end of the day it is big business.

One thing that has changed from the past is the involvement of private industry.  Earlier all defence deals were the domain of HAL, DRDO, Ordnance Factories etc.  Private industry had no chance of bidding for these tenders.  Today private industry is already doing a huge amount of work for Indian defence organizations.  

Conversely many Indian defence organizations were obliged to buy sub standard equipment/machines/technology from fellow public sector companies.  This is now no longer the case and where obstacles are in place defence industry has started using private industry vendors to work around them.</description>
		<content:encoded><![CDATA[<p>King of Hill, the begging bowl analogy was just in reference to another post.  At the end of the day it is big business.</p>
<p>One thing that has changed from the past is the involvement of private industry.  Earlier all defence deals were the domain of HAL, DRDO, Ordnance Factories etc.  Private industry had no chance of bidding for these tenders.  Today private industry is already doing a huge amount of work for Indian defence organizations.  </p>
<p>Conversely many Indian defence organizations were obliged to buy sub standard equipment/machines/technology from fellow public sector companies.  This is now no longer the case and where obstacles are in place defence industry has started using private industry vendors to work around them.</p>
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		<title>By: King of Hill</title>
		<link>http://indianeconomy.org/2007/09/01/towards-building-a-domestic-defence-industry/comment-page-1/#comment-210520</link>
		<dc:creator>King of Hill</dc:creator>
		<pubDate>Tue, 04 Sep 2007 10:05:05 +0000</pubDate>
		<guid isPermaLink="false">http://indianeconomy.org/2007/09/01/towards-building-a-domestic-defence-industry/#comment-210520</guid>
		<description>This new mantra of local manufacturing is nothing new, didn&#039;t we built MIG 21 in huge numbers? What happened when sovent disintegrated, we grounded many MIG 21 for lack of spares!! That is after manufacturing MIG -21, what does it tell you? Did we not hear that assembling/manufacturing SU-30 is 30% more costly than purchasing, i.e not including the investment in facility. 

What did we learn from MIG-21, Jaguar assembling/manufacturing that we want to take it further with MRCA? Have we did with MIG21 like J-7 or planned to do with SU-30 like J-11B the way chinese did? NO!! All we hear is  SU-30 is very complex system to assemble so we will ordering fresh 40 more, to cover of the slow pace of assembly. Now just imagine what will be the result with RAFALE OR TYPHOONE, considering we find soveit built complx( should see to bElive the quality of construction that RUSSIA did in SU-30).

Please don&#039;t go with the press report of defence companies waiting with &quot;begging bowl&#039;/“sufficiently subservient” thing, they are still out there doing the SHINNING INDIA&quot;/super power Thingy.</description>
		<content:encoded><![CDATA[<p>This new mantra of local manufacturing is nothing new, didn&#8217;t we built MIG 21 in huge numbers? What happened when sovent disintegrated, we grounded many MIG 21 for lack of spares!! That is after manufacturing MIG -21, what does it tell you? Did we not hear that assembling/manufacturing SU-30 is 30% more costly than purchasing, i.e not including the investment in facility. </p>
<p>What did we learn from MIG-21, Jaguar assembling/manufacturing that we want to take it further with MRCA? Have we did with MIG21 like J-7 or planned to do with SU-30 like J-11B the way chinese did? NO!! All we hear is  SU-30 is very complex system to assemble so we will ordering fresh 40 more, to cover of the slow pace of assembly. Now just imagine what will be the result with RAFALE OR TYPHOONE, considering we find soveit built complx( should see to bElive the quality of construction that RUSSIA did in SU-30).</p>
<p>Please don&#8217;t go with the press report of defence companies waiting with &#8220;begging bowl&#8217;/“sufficiently subservient” thing, they are still out there doing the SHINNING INDIA&#8221;/super power Thingy.</p>
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		<title>By: Sane Voice</title>
		<link>http://indianeconomy.org/2007/09/01/towards-building-a-domestic-defence-industry/comment-page-1/#comment-209780</link>
		<dc:creator>Sane Voice</dc:creator>
		<pubDate>Sun, 02 Sep 2007 08:21:01 +0000</pubDate>
		<guid isPermaLink="false">http://indianeconomy.org/2007/09/01/towards-building-a-domestic-defence-industry/#comment-209780</guid>
		<description>This &quot;offset&quot; should have been done a long time ago. Many civilian technologies in use today, that we take for granted (including the internet), started out as defence projects. The advantage of defence projects is that the budgets are huge, there are no &quot;quarter-to quarter bean counter hounds&quot; on your back (as is the case in many companies today)and the trickle down effects are available to all other sectors for many years. Much of US &amp; other western country manufacturing sector today, got its technologies from older defence projects.
So all in all it will be a great deal for the indian manufacturers and engineering companies if they can get a slice of the pie. And the manufacturing should be really that, not just assembling. For example it is no use just assembling Radars, we must make the magnetrons, waveguides, signal processing software, everything...</description>
		<content:encoded><![CDATA[<p>This &#8220;offset&#8221; should have been done a long time ago. Many civilian technologies in use today, that we take for granted (including the internet), started out as defence projects. The advantage of defence projects is that the budgets are huge, there are no &#8220;quarter-to quarter bean counter hounds&#8221; on your back (as is the case in many companies today)and the trickle down effects are available to all other sectors for many years. Much of US &amp; other western country manufacturing sector today, got its technologies from older defence projects.<br />
So all in all it will be a great deal for the indian manufacturers and engineering companies if they can get a slice of the pie. And the manufacturing should be really that, not just assembling. For example it is no use just assembling Radars, we must make the magnetrons, waveguides, signal processing software, everything&#8230;</p>
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		<title>By: Nikhil Nayak</title>
		<link>http://indianeconomy.org/2007/09/01/towards-building-a-domestic-defence-industry/comment-page-1/#comment-209770</link>
		<dc:creator>Nikhil Nayak</dc:creator>
		<pubDate>Sun, 02 Sep 2007 06:29:13 +0000</pubDate>
		<guid isPermaLink="false">http://indianeconomy.org/2007/09/01/towards-building-a-domestic-defence-industry/#comment-209770</guid>
		<description>Cybertraker / Raj,  India has tried the self reliance route already and HAL has failed in delivering the Tejas LCA project.  The 126 MRCA deal is a hedge to basically make up for the LCA failure.  Please don&#039;t call it sad or anything like that because it is not.  R&amp;D in the aviation business is not easy and specially in fighter aircraft.  There is nothing wrong in buying the technology from a competent source and with the technology transfers demanded by the Offset Policies we are going to get  self reliance in this area.

&lt;a href=&quot;http://www.defenseindustrydaily.com/mirage-2000s-withdrawn-as-indias-mrca-fighter-competition-changes-01989/&quot; rel=&quot;nofollow&quot;&gt;
Read more on the MRCA News here ...&lt;/a&gt;

Jing, at Aero India in Banglaore this year aircraft company officials were &quot;sufficiently subservient&quot; if you don&#039;t like the term begging (as they should be for a $10 billion deal).  Do a Google Image search  for Aero India and you will see pictures as well.   Anyway I think Pragmatic used the term only in reference to CyberTraker.  

If suppliers are thinking they can wiggle out of this deal without committing to technology transfer they are deluding themselves.  This is why I mentioned the MiG 35 as the front runner as the Russians have made huge commitments with India in the past in both spares and avionics.  India is already in talks with Russia to be a part of the Sukhoi G-5 consortium which is a competitor to the F 35.</description>
		<content:encoded><![CDATA[<p>Cybertraker / Raj,  India has tried the self reliance route already and HAL has failed in delivering the Tejas LCA project.  The 126 MRCA deal is a hedge to basically make up for the LCA failure.  Please don&#8217;t call it sad or anything like that because it is not.  R&amp;D in the aviation business is not easy and specially in fighter aircraft.  There is nothing wrong in buying the technology from a competent source and with the technology transfers demanded by the Offset Policies we are going to get  self reliance in this area.</p>
<p><a href="http://www.defenseindustrydaily.com/mirage-2000s-withdrawn-as-indias-mrca-fighter-competition-changes-01989/" rel="nofollow"><br />
Read more on the MRCA News here &#8230;</a></p>
<p>Jing, at Aero India in Banglaore this year aircraft company officials were &#8220;sufficiently subservient&#8221; if you don&#8217;t like the term begging (as they should be for a $10 billion deal).  Do a Google Image search  for Aero India and you will see pictures as well.   Anyway I think Pragmatic used the term only in reference to CyberTraker.  </p>
<p>If suppliers are thinking they can wiggle out of this deal without committing to technology transfer they are deluding themselves.  This is why I mentioned the MiG 35 as the front runner as the Russians have made huge commitments with India in the past in both spares and avionics.  India is already in talks with Russia to be a part of the Sukhoi G-5 consortium which is a competitor to the F 35.</p>
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		<title>By: Pragmatic</title>
		<link>http://indianeconomy.org/2007/09/01/towards-building-a-domestic-defence-industry/comment-page-1/#comment-209768</link>
		<dc:creator>Pragmatic</dc:creator>
		<pubDate>Sun, 02 Sep 2007 06:24:34 +0000</pubDate>
		<guid isPermaLink="false">http://indianeconomy.org/2007/09/01/towards-building-a-domestic-defence-industry/#comment-209768</guid>
		<description>Jing:

Thanks for the inputs. The \&#039;begging bowl\&#039; term was used by a visitor to this blog. Going by the pulls and pressures being applied on India by various governments and industry executives (there are myriad press reports about these)it doesn\&#039;t seem to be a seller\&#039;s market. Unless you are looking for a specific technology or specific equipment, there are options available. As most of the defence equipment that India is looking for is from a different generation, there are no issues of continuity and logistics support. Else, we would be still stuck up with equipment of Soviet origin.

Having and implementing a defence offset policy is better than having none. It is a small but significant change that can have long term benefits. Indian establishment has to just play it smart now from hereon.</description>
		<content:encoded><![CDATA[<p>Jing:</p>
<p>Thanks for the inputs. The \&#8217;begging bowl\&#8217; term was used by a visitor to this blog. Going by the pulls and pressures being applied on India by various governments and industry executives (there are myriad press reports about these)it doesn\&#8217;t seem to be a seller\&#8217;s market. Unless you are looking for a specific technology or specific equipment, there are options available. As most of the defence equipment that India is looking for is from a different generation, there are no issues of continuity and logistics support. Else, we would be still stuck up with equipment of Soviet origin.</p>
<p>Having and implementing a defence offset policy is better than having none. It is a small but significant change that can have long term benefits. Indian establishment has to just play it smart now from hereon.</p>
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		<title>By: Raj</title>
		<link>http://indianeconomy.org/2007/09/01/towards-building-a-domestic-defence-industry/comment-page-1/#comment-209725</link>
		<dc:creator>Raj</dc:creator>
		<pubDate>Sun, 02 Sep 2007 01:09:54 +0000</pubDate>
		<guid isPermaLink="false">http://indianeconomy.org/2007/09/01/towards-building-a-domestic-defence-industry/#comment-209725</guid>
		<description>Can anyone tell me why we have done a good deal of work in satellite technology and space research but still have not gone far with an allied technology like the Light Combat Aircraft? If I am right, the development efforts have been going on for the past 20 years and we still do not have a commercialized Aircraft that we can use/sell to the world.</description>
		<content:encoded><![CDATA[<p>Can anyone tell me why we have done a good deal of work in satellite technology and space research but still have not gone far with an allied technology like the Light Combat Aircraft? If I am right, the development efforts have been going on for the past 20 years and we still do not have a commercialized Aircraft that we can use/sell to the world.</p>
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