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Defence Investor Cell Needs Fleshing Out

Investment in the defence sector is sluggish on account of there being no compelling business case for making heavy investments.



The Department of Defence Production (DDP) has set up a Defence Investor Cell under the chairmanship of a Joint Secretary. The office order issued by DDP in February 2018 has assigned an amazing range of roles and responsibilities to the Cell, most of which are inadequately defined.

Among other responsibilities, the Cell has been tasked to facilitate several functions: investment in the defence sector, the process of acquisition of industrial and export/import licenses, the formation of joint ventures (JVs), transfer of technology (ToT), and the search for strategic partners for the potential investors. The office order does not say how the Cell would facilitate these tasks.

Investment in the defence sector is sluggish not because of the absence of a facilitating agency but on account of there being no compelling business case for making heavy investments.

Arguably, the investment so far has been commensurate with the quantum of business being given to the private sector entities. To be sure, there are several other reasons, including the de facto cap of 49% on foreign direct investment (FDI), which account for the disinterest shown by investors.

As in the case of investment, the grant of industrial and export/import licenses also does not pose any serious problem that requires the intervention of a government facilitating agency.

It, therefore, needs to be made clear as to what it is that the applicants can expect from the Cell, especially because licences are granted by the Department of Industrial Policy and Promotion and the Ministry of Home Affairs on which the Cell may not have much influence.

The responsibilities of facilitating the formation of JVs, ensuring ToT and searching for strategic partners for the potential investors assigned to the Cell appear to be a case of bureaucratic overreach. As of now, the MoD does not have domain expertise to handle these task.

And, at any rate, there is no reason for the ministry to get itself entangled in such business-to-business dealings. It is best left to the private sector entities to work out arrangements and tie-ups among themselves. To meddle in this would be contrary to the government’s policy of ‘minimum government, maximum governance’.

It is possible that the Cell’s role with regard to the formation of JVs and ToT is to be limited to facilitating a dialogue between the Ordnance Factory Board (OFB) and the Defence Public Sector Undertakings (DPSUs), on the one hand, and the private sector entities, including foreign companies, on the other. Even if that were to be the case, it may amount to interference in the affairs of these organisations, which need greater autonomy to take commercial decisions.

The ministry’s track record on managing ToT has also not been very encouraging. DPSUs and OFB, both of which are under the administrative control of the DDP, have had problems in the past in obtaining and absorbing technologies from foreign companies. Perhaps, the best that the Cell could do in the immediate term is to revise the 2012 guidelines on the formation of JVs between DPSUs and private sector entities which have not had a very successful run.

All this leaves the Cell with some run-of-the-mill responsibilities, such as providing ‘advisories regarding the ‘Defence Procurement Process various Make procedures’ (sic) and ‘Offset Policy and Offset Discharge’ (sic). That advisories – whatever they might mean – should be required to be issued on the defence procurement process and the ‘Make’ procedure reflects poorly on textual clarity in the Defence Procurement Procedure (DPP) 2016 which covers both.

If the intention is that the Cell will issue clarifications on the procurement procedure in general, it ought to function directly under the Defence Acquisition Council (DAC) or the Defence Procurement Board (DPB) and not under a Joint Secretary in the DDP since defence procurement does not fall in the DDP’s charter of duties.

The Cell being assigned the task of issuing advisories in respect of offsets is baffling, not least because a Facilitation Cell of the Defence Offsets Management Wing (DOMW) is already functioning under the DDP since February 2014, ostensibly for answering the queries on offsets of existing and potential Indian Offset Partners (IOPs) as well as foreign vendors.

There is a similar overlap between the Cell and other organisations in respect of the task of facilitating the availability of public sector testing infrastructure for testing requirements of the industry particularly the Micro, Small and Medium Enterprises (MSMEs). These facilities are presently available with the OFB, DPSUs, the Services, and the Defence Research and Development Organisation (DRDO).

The list of testing facilities available with the DRDO and OFB are available on their respective websites. Similar lists with respect to the Services and the DPSUs must already be available or can be made available, on their respective websites. Besides providing the link to all these lists on its webpage, it must be specified what more can the Cell be expected to do to facilitate the availability of these testing facilities to Indian industry and what in particular it can do to help the MSMEs.

The Cell has also been tasked to assist investors in identifying the location of the proposed investments and help the MSMEs/start-ups explore various outsourcing opportunities offered by the OFB and DPSUs. The Cell could set the ball rolling by posting on its website the information and contact details of various state governments which are actively engaged in wooing the investors.

This should be followed up by the provision of access to information regarding outsourcing opportunities in a format which helps the MSMEs. It will help if the format were to be decided in consultation with the MSME associations.

Assisting the MSMEs and start-ups in identifying various outsourcing opportunities offered by the OFB and the DPSUs is one of the few responsibilities that the Cell could play some meaningful role in since both are under the administrative control of the DDP. But what is not clear is what exactly that role would be.

The Cell’s webpage says that comprehensive guidelines have been issued by these organisations, which include vendor development for indigenisation and import-substitution. It will be of immense help if the Cell were to provide the link to these guidelines on its webpage, followed by a clear indication as to how it intends to make DPSUs and the OFB handhold the MSMEs and the start-ups.

The DDP’s office order requires the Cell to work in coordination with ‘Invest India’ in respect of issues being addressed by the latter. Invest India is a not-for-profit National Promotion and Facilitation Agency under the DIPP that acts as the first point of reference for investors in India. It would have been better to let Invest India handle the responsibilities now entrusted to the Cell because, besides offering one-stop services to investors, the task could have been managed more professionally.

But now that the Cell has been set up, it must be empowered to discharge the responsibilities cast upon it. Care must be taken to ensure that its functioning does not get hamstrung because of the ad hoc nature of its set up and bureaucratic inflexibility.

In the initial stage, the Cell is to have four officers, drawn from DPSUs and the OFB, with expertise in aerospace, electronics, naval and land systems. With the Director (P&C) as its nodal officer, the Cell would be attached to the Directorate of Planning and Coordination and function under the overall charge of a joint secretary in the DDP. The Cell will remain hamstrung if its powers are not clearly defined, especially in regard to securing budgetary support which is to be provided by the Director General of Quality Assurance.

Considering that the Cell is mandated to interact with investors, it is inexplicable that it has been located in the D-I Wing of Sena Bhawan, which falls in the highly protected security zone. To begin with, the Cell must be relocated to a place that is freely accessible to potential investors.

Disclaimer: The facts and opinions expressed in this article are strictly the personal opinions of the author. League of India does not assume any responsibility or liability for the accuracy, completeness, suitability, or validity of any information in this article.

Originally published by Institute for Defence Studies and Analyses (www.idsa.inhere.

Amit Cowshish

Amit Cowshish is a former Financial Advisor (Acquisition), Ministry of Defence and a former Distinguished Fellow, Institute for Defence Studies and Analyses (IDSA), New Delhi.

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India Aiming at Equipping Defence Forces with Artificial Intelligence

The project to equip defence forces with Artificial Intelligence includes the representation from all defence forces and other stakeholders.



The Union Minister for Defence, Smt. Nirmala Sitharaman at the inaugural ceremony of the ‘Stakeholders’ Workshop on Artificial Intelligence in National Security and Defence on May 21, 2018. (PIB Photo)

NEW DELHI: The Raksha Mantri Smt Nirmala Sitharaman inaugurated the ‘Stakeholders’ Workshop on Artificial Intelligence in National Security and Defence, Listing of Use Cases’, here today.

After Russia, China and US, India has decided to include Artificial Intelligence in its defence forces with an aim to enhance the operational preparedness of the armed forces.

The project to equip defence forces with Artificial Intelligence, includes the representation from all defence forces or Defence Research and Development (DRDO) labs, government, BEL, experts, professionals and startups.

Artificial Intelligence (AI), a branch of computer science dealing with the simulation of intelligent behaviour in computers, has shown significant technical advancement in some of the developed countries.

  • Most of this progress is due to advances in the AI sub-field of Machine Learning (ML).
  • Most experts believe this rapid progress will continue and even accelerate.
  • Most AI research advances are occurring in the private sector and academia.

AI has a potential to have a transformative impact on national security. It is also seen that AI is essentially a dual-use technology. While it can fuel technology-driven economic growth, it also has potential to provide military superiority. India has strong IT industry and huge talent pool of engineers which are advantages which need to be leveraged.

To study the whole gamut of issues surrounding strategic implications of AI in the national security perspective, in global context, a multi-stakeholder Task Force represented by members from the Government, Services, Academia, Industry Professionals and Start-ups has been constituted with the approval of the Raksha Mantri for developing future roadmap on AI with following goals –

  • To establish tactical deterrent in the region.
  • To support its peaceful and commercial use.
  • To mitigate catastrophic risk.
  • To visualize potential transformative weaponry of future.
  • To facilitate in keeping a check on non-state actors.
  • To develop intelligent, autonomous robotic systems.
  • To enhance capabilities for collection and analysis of data and also the creation of data.
  • To bolster cyber defence.

The Terms of Reference for the AI Task Force, of Ministry of Defence are as under-

  • Study use of AI by other leading countries including US, China, Japan, Germany, Russia etc.
  • Study of the level of AI/ML development in India in general and specific in the context of defence needs.
  • Make recommendations of making India a significant power of AI in defence specifically in the area of aviation, naval, land systems, cyber, nuclear, and biological warfare; Recommendations to include both defensive and offensive needs including counter AI needs.  Make specific recommendations with respect to arrangements for AI safety required within defence ecosystem.
  • Make recommendations for policy and institutional interventions that are required to regulate and encourage robust AI-based technology for defence sector in the country.  Specific suggestions for increased focus on AI within DRDO, BEL, service units, selected academic institutions of the country.
  • Considering that most AI work is happening in private sector, make recommendations to work with start-ups/commercial industry in the field of use of AI for defence purposes.
  • Recommendations for RFIs that need to be floated in next 2 years on dual-use AI capabilities.
  • Make recommendations regarding appropriate strategies for working with startups in the US working in this area.
  • Recommendations for funding required to achieve aforementioned goals.

The AI Task Force of Ministry of Defence under the Chairmanship Shri C Chandrasekharan, Chairman of Tata Sons, has met twice on 10 February and 28 April 2018.

In the last meeting, it was discussed that one of the key approaches for the use of AI is to work on building a profile that mimics normal behaviour by learning from the data generated from a given use case. Then using machine learning/ deep learning techniques, one can draw correlations among various parameters in an automated way (from the huge dataset) and can flag pattern and anomalous behaviour for further analysis and insights.

This essentially forms the basis for AI-based applications. Thus, it was decided that a Stakeholders’ Workshop on AI in National Security and Defence shall be organized for ‘Listing of Use Cases.


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Ramzan Gift from Pakistan? Killing of 8-Month-Old Baby Nitin Kumar

The incident comes a day after BSF said that the Pakistani Rangers had PLEADED with them to observe a ceasefire.



JAMMU (Jammu & Kashmir): Pakistani troops targeted border outposts and villages with mortar shells and small arms in Jammu district on Monday, 21 May, killing an eight-month-old boy and injuring six, including a special police officer, officials said.

Eight-month-old Nitin Kumar, sleeping with his family outside their home in Pallanwala sector along the LoC, was killed in Pakistani firing, while six people – including the special police officer – were injured in Pakistani shelling in Arnia sector along the IB.

The unprovoked mortar shelling started on Monday morning, with Pakistani Rangers firing on civilian areas leading to panic.

Pointing out that the child died in R S Pura sector, sources identified the injured women as Sudesh Devi and Madhu Devi, who live in the same neighbourhood. The women were injured when the mortar shell fell on Madhu Devi’s house.

According to the officials, the intense Pakistani shelling started a day after it “pleaded” with the BSF to stop firing, after being pounded with heavy artillery that left a Pakistani trooper dead.

In all, 30 Border Security Force (BSF) outposts and two dozen villages were affected, police said.

Cattle have perished and houses have been damaged in the Pakistani ceasefire violation.

On Sunday night, Pakistani troops fired small arms and mortars, targeting Narayanpur area of Ramgarh sector in Samba district.

The BSF on May 20 released a 19-second thermal-imagery footage, showing the destruction of a Pakistani picket across the border, in retaliation to the unprovoked firing and shelling along the IB.

The BSF has lost two of its soldiers in the latest round of unprovoked firing along the IB in Jammu region since May 15.

All schools within five kilometres of the border have been closed as a precautionary measure, he said.

Jammu & Kashmir has witnessed a sharp spike in Pakistani shelling and firing along the IB and the LoC this year.

Over 700 such incidents have been reported this year, which have left 38 people, including 18 security personnel, dead and scores injured.

Chief Minister Mehbooba Mufti, on May 22, visited the house of Tarsem Lal and his wife Manjeet Kaur, who were killed in Pakistani shelling in Mangu Chak belt of R S Pura sector on May 19.

Photos Sources: Twitter handles @AbidiAsfaq and @JunaidGulJuni


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INSV Tarini: The First-Ever Indian Expedition Steered by Women Sailors Returns

The ‘Navika Sagar Parikrama’ expedition was flagged off on September 10, 2017.



PANAJI (Goa): An all-woman crew commanding the INSV Tarini on May 21 returned to Goa after successfully circumnavigating the globe in a 55-foot sailboat in more than eight months, the first-ever Indian expedition steered by women sailors.

Defence Minister Nirmala Sitharaman and Navy chief Admiral Sunil Lanba welcomed the crew at INS Mandovi boat pool in Panaji.

The ‘Navika Sagar Parikrama’ expedition was flagged off on September 10, 2017.

The six women officers were trained for the project under Captain Dilip Donde, the first Indian to solo-circumnavigate the globe between August 19, 2009, and May 19, 2010, onboard the Indian-built vessel INSV Mhadei, a Navy official said.

A Navy spokesperson said the expedition was completed in six legs, with stopovers at Fremantle (Australia), Lyttleton (New Zealand), Port Stanley (Falkland Islands), Cape Town (South Africa) and Mauritius.

“The crew covered 21,600 nautical miles in the Indian-built sailing vessel INSV Tarini that visited five countries and crossed the Equator twice.

It sailed across four continents and three oceans, and passed south of the three Great Capes – Leeuwin, Horn and Good Hope,” the spokesperson said.

Terming the expedition historic, Sitharaman congratulated the crew and said Prime Minister Narendra Modi would meet the six crew members in Delhi on May 23:

Led by Lieutenant Commander Vartika Joshi, the crew comprising Lt Commanders Pratibha Jamwal and Swati P, lieutenants Aishwarya Boddapati, S Vijaya Devi and Payal Gupta covered a total of 21,980 nautical miles in INSV Tarini, inducted into the Indian Navy on February 18 last year.

She said she felt “honoured” by the achievement of the young women. “I just don’t want to say that it is a pleasure (to receive the crew), I feel honoured and I feel humbled by the great achievement of these six women,” the minister said.

She recalled that flagging off the crew on September 10 last year was her first “out-of-Delhi appointment”, three days after she became the defence minister. She praised the women for making history.

“And today, by the grace of God and the grit and courage that the girls have shown, they are back home to join all of us, having made history,” she said.

The minister said “the feat is not about girls’ achievement, it is (about) youngsters from India achieving and it is a whole motivation for the youth. The women of the country have shown to youngsters that if they want to do something they can do it indeed”. She said she followed the circumnavigation every day.

The minister said the girls have made history not only for themselves but also for the Navy.

“In every small way and big way, the Navika Sagar Parikrama is something that we can be proud of for generations to come,” she said.

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