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<ul><li>New deal saved 2.86% for the Indian exchequer, says India's federal auditor.</li><li>Latest report tabled in the Parliament will help Modi in fighting corruption charges from the opposition.</li><li>Opposition had hoped to corner the Modi government over the controversial defence deal.</li></ul> The Narendra Modi government struck a better deal than the Congress, that's the verdict from the <keyword id="6379775" type="UNKNOWN" weightage="20" keywordseo="Comptroller-and-Auditor-General-of-India">Comptroller and Auditor General of India</keyword> (CAG), the country's federal auditor, which tabled its report on the controversial 2015 deal to buy 36 Rafale jets from French company Dassault, according to news reports. "Compared to the 126 aircraft deal, India managed to save 17.08% money for the India-specific enhancements in the 36 Rafale contract," news agency ANI said, adding that,"the delivery schedule of the first 18 Rafale aircraft is better than the one proposed in the 126 aircraft deal, by five months." However, the full price of the jets have been redacted in the report based on the insistence of the Defence Ministry citing the Indo-French agreement of 2008 and the provisions of inter-government agreement, another news agency IANS reported. In April 2015, Prime Minister Narendra Modi had announced that India will buy 36 French-manufactured Rafale fighter jets off-the-shelf. This was a departure from the original plan, under the previous regime, under which India would buy 18 off-the-shelf jets and another 108 would be assembled by the state-run Hindustan Aeronautics Limited or HAL in Bengaluru. Modi , however, intervened and decided to buy 36 "ready-to-fly" fighters instead of trying to acquire technology from Dassault and make it in India. "A Defence Ministry team in March 2015 recommended the scrapping of the 126 Rafale deal saying that Dassault Aviation was not the lowest bidder and EADS (European Aeronautic Defence &amp; Space Company) was not fully compliant with the tender requirements," the CAG report said according to ANI. The opposition parties had cornered the incumbent Modi government alleging that the ₹590 billion deal was more expensive and it included kickbacks. It was also said that the deal was made to help Anil Ambani, whose Reliance Naval and Engineering was reportedly brought in to support Dassault. Both entities have denied this. Modi also faced a direct <a href="https://twitter.com/INCIndia/status/1093733762104524800/photo/1?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1093733762104524800&amp;ref_url=https%3A%2F%2Fwww.hindustantimes.com%2Findia-news%2Fdefence-ministry-note-proves-pm-bypassed-negotiations-with-france-on-rafale-deal-rahul%2Fstory-EUd4UAbFWTQ9lX6XODsLkM.html" data-type="tilCustomLink" target="_blank">charge</a> after news reports revealed that the Prime Minister's Office had intervened in the deal negotiations and in fact, dismissed the apprehensions of its own Defence Ministry. The latest report from CAG will be a big blessing for Prime Minister Narendra Modi who will be seeking re-election in the upcoming summer. However, the opposition was already prepared. Prior to the release of the report, the Congress party had pre-emptively dismissed the findings of the report, explaining that Rajiv Mehrishi, the current Comptroller and Auditor General of India, took part in the deal’s negotiations.

CAG report on Rafale deal is a blessing for Modi government

French investigative journal <keyword id="340448" type="General" weightage="50" keywordseo="mediapart" source="Orion">Mediapart</keyword> has made fresh claims that alleged bogus invoices were used that enabled French aircraft maker <keyword id="230239" type="General" weightage="50" keywordseo="dassault-aviation" source="Orion">Dassault Aviation</keyword> to pay at least 7.5 million euros in secret commissions to a middleman to help it secure the <keyword id="921384" type="General" weightage="20" keywordseo="Rafale-deal" source="Orion">Rafale deal</keyword> with <keyword id="3658" type="General" weightage="50" keywordseo="india" source="Orion">India</keyword>. According to Mediapart's investigation, Dassault Aviation paid the kickbacks to the intermediary in Mauritius between 2007 and 2012. Mediapart had reported in July that a French judge has been appointed to lead a "highly sensitive" judicial investigation into suspected corruption" and favouritism in the Rs 59,000-crore inter-governmental deal with India for the supply of 36 Rafale fighter jets. There was no reaction yet from the defence ministry or Dassault Aviation on the latest report. "Mediapart is today publishing the alleged 'false' invoices that enabled French aircraft manufacturer Dassault Aviation to pay at least 7.5 million euros in secret commissions to a middleman to help secure the sale of 36 Rafale fighter aircraft to India," the journal said in its new report on Sunday. It alleged that despite the existence of "these documents", the Indian probe agencies decided not to pursue the matter. "It involves offshore companies, dubious contracts and false invoices. Mediapart can reveal that detectives from India's federal police force, the Central Bureau of Investigations (CBI), and colleagues from the Enforcement Directorate (ED), which fights money laundering, have had proof since October 2018 that French aviation firm Dassault paid at least 7.5 million euros (equivalent to just under Rs 650 million) in secret commissions to middleman Sushen Gupta," Mediapart claimed in the report. "This was in the context of the French firm's long and ultimately successful attempt to secure a 7.8 billion-euro-deal in 2016 to sell 36 of its Rafale fighters to India," it said. BJP's National Information and Technology Department in-charge Amit Malviya targeted the Congress, alleging that the kickbacks were paid during the UPA rule. "Dassault paid Euro 14.6 Mn to intermediary Sushen Gupta over the period 2004-2013 to sell Rafale. So UPA was collecting kickbacks but couldn't close the deal? NDA later scrapped it and got into a contract with the French Govt, which upset Rahul Gandhi no end," tweeted Malviya. The NDA government had inked the deal on September 23, 2016, to procure 36 Rafale jets from Dassault Aviation after a nearly seven-year exercise to procure 126 Medium Multi-Role Combat Aircraft (MMRCA) for the <keyword id="15141" type="General" weightage="20" keywordseo="indian-air-force" source="Orion">Indian Air Force</keyword> did not fructify during the UPA regime. The Congress accused the government of massive irregularities in the deal, alleging that it was procuring each aircraft at a cost of over Rs 1,670 crore as against Rs 526 crore finalised by the UPA government during the negotiations for the MMRCA. Prior to the 2019 Lok Sabha election, Congress raised several questions about the deal and alleged corruption, but the government rejected all the charges. Rafale manufacturer Dassault Aviation and India's defence ministry have previously trashed allegations of any corruption in the contract. India's Supreme Court too in 2019 dismissed petitions seeking a probe into the deal saying there was no ground for it. In a statement published in April, reacting to Mediapart's report on the investigation, Dassault Aviation stated that the group, "acts in strict compliance with the OECD Anti-Bribery Convention and national laws". SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/news/heres-how-you-can-find-your-pets-lookalike-using-googles-pet-portraits-feature/articleshow/87603285.cms">Google’s new feature lets you find your pet’s lookalike using Arts &amp; Culture app — here’s how to do it</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/enterprise/news/netflix-to-launch-tiktok-like-short-video-feature-for-kids-content/articleshow/87601714.cms">Netflix to launch TikTok-like short video feature for kids content</a>

Dassault reportedly paid at least 7.5 million euros in bribes to a middleman between 2007 and 2012

A French judge has been appointed to lead a "highly sensitive" judicial investigation into alleged "<keyword id="46183" type="PERSON" weightage="20" keywordseo="Corruption">corruption</keyword> and favouritism" in the Rs 59,000 crore <keyword id="6381048" type="UNKNOWN" weightage="20" keywordseo="rafale">Rafale</keyword> fighter jet deal with India, French investigative website Mediapart reported. Following the development, Congress chief spokesperson <keyword id="498878" type="PERSON" weightage="20" keywordseo="Randeep-Surjewala">Randeep Surjewala</keyword> on Saturday urged Prime Minister <keyword id="6354477" type="PERSON" weightage="20" keywordseo="Narendra-Modi">Narendra Modi</keyword> to come forward and order a Joint Parliamentary Committee (JPC) probe into the Rafale deal. "Corruption in the Rafale deal has come out clearly now. The stand of the Congress party and <keyword id="5268" type="PERSON" weightage="20" keywordseo="Rahul-Gandhi">Rahul Gandhi</keyword> has been vindicated today after the French government has ordered a probe," he told reporters at a press conference. However, there was no immediate reaction from the Indian government or the BJP. The Mediapart said the probe into the inter-governmental deal signed in 2016 was formally opened on June 14. "A judicial probe into suspected corruption has been opened in France over the 7.8-billion-euro sale to India in 2016 of 36 Dassault-built Rafale fighter aircraft," the Mediapart reported on the latest development on the controversial deal. It said the investigation has been initiated by the national financial prosecutors' office (PNF). The judicial investigation has been ordered by France's national financial prosecutors' office, following Mediapart's fresh reports in April of alleged wrongdoings in the deal as well as a complaint filed by French NGO Sherpa that specialises in financial crime. "The highly sensitive probe into the inter-governmental deal signed off in 2016 was formally opened on June 14th," the media report said. Mediapart journalist Yann Philippin, who filed a series of reports on the deal, said a first complaint was "buried" in 2019 by a former PNF chief. "The judicial investigation was finally opened following the revelations of the investigation #RafalePapers of @mediapart and a new complaint from @Asso_Sherpa. A 1st complaint was buried in 2019 by the former PNF boss, Eliane Houlette," he tweeted. In April, Mediapart, citing an investigation by the country's anti-corruption agency, reported that Dassault Aviation had paid about one million Euros to an Indian middleman. Dassault Aviation has rejected the allegations of corruption, saying no violations were reported in the frame of the contract. The <keyword id="105903" type="COMPANY" weightage="20" keywordseo="National-Democratic-Alliance">National Democratic Alliance</keyword> (NDA) government had inked a Rs 59,000-crore deal on September 23, 2016, to procure 36 Rafale jets from French aerospace major Dassault Aviation after a nearly seven-year exercise to procure 126 Medium Multi-Role Combat Aircraft (MMRCA) for the <keyword id="15141" type="COMPANY" weightage="20" keywordseo="Indian-Air-Force">Indian Air Force</keyword> did not fructify during the <keyword id="83449" type="COMPANY" weightage="20" keywordseo="United-Progressive-Alliance">United Progressive Alliance</keyword> (UPA) regime. The Congress accused the government of massive irregularities in the deal, alleging that it was procuring each aircraft at a cost of over Rs 1,670 crore as against Rs 526 crore finalised by the UPA government during the negotiations for the MMRCA. Prior to the Lok Sabha elections in 2019, the Congress raised several questions about the deal and alleged corruption but the government rejected all the charges. SEE ALSO- <a href="https://www.businessinsider.in/business/startups/news/bharatpes-banking-licence-digits-funding-mswipes-new-ceo-and-more-mega-deals-and-launches-in-indias-fintech-space-/slidelist/84085401.cms" data-type="tilCustomLink">BharatPe’s banking licence, Digit’s funding, Mswipe’s new CEO and more -- mega deals and launches in India’s fintech space</a> <a href="https://www.businessinsider.in/cryptocurrency/news/google-crypto-tokens-binances-regulatory-troubles-free-nfts-and-more/slidelist/84086617.cms" data-type="tilCustomLink">Google’s crypto tokens, Binance’s regulatory troubles, free NFTs and more — Here’s what happened in the world of crypto this past week</a>

India's deal to buy Rafale fighter jets will face a judicial probe for alleged corruption in France

India’s federal auditor, the Comptroller and Auditor General of India (CAG), gave the Modi government a comfortable headline — the final cost of Rafale jets as negotiated by the incumbent government was cheaper than the deal struck by the previous Congress government. While the report deftly evaded the questions of alleged corruption, it has certainly exposed a set of serious problems in the way India buys its arms and ammunition, no matter which political party is in power. The issues highlighted by Rajiv Mehrishi, the CAG, not only indicate the room for and possibilities of corruption and kickbacks, it may also compel people to question if the country’s unsuspecting forces are wielding substandard equipment. Here are some of the shocking truths: 1. Requirements are changed to include or exclude specific vendors The rules mandate that the Indian Air Force must clearly state its needs in verifiable and measurable terms before inviting bids from suppliers. People do that even before buying phones-- have a clear picture of what features they need and a price range-- before going to a shop or a website to buy a phone. Here, we are speaking about defence equipment. But, the CAG report noted, the requirements of the Air Force are changed several times. The Air Force diluted its needs in the purchase of Attack Helicopter and the <keyword id="134615" type="ORGANIZATION" weightage="20" keywordseo="Doppler-Weather-Radar">Doppler Weather Radar</keyword> as no vendor could meet its requirement. What is worse? The audit noted that in case of acquisition of Apache Attack Helicopters and Chinook Heavy Lift Helicopters, “the Air Staff Qualitiative Requirements (ASQR) were aligned to products of a particular vendor.” 
 
 
 
 
 
 <div type="image" title="Chinook Heavy Lift" msid="67982017" hostid="261"></div>













 India approved the purchase of Chinook Heavy Lift Helicopters and Apache Attack Helicopters from Boeing in 2015 for $2.5 billion under the Modi government. Boeing’s Chinook was up against Russian MI-26, which offered nearly double the capacity to transport weapons, supplies and soldiers. Suppose, forces have to be transported to a conflict zone, Chinook would take twice as many trips as the MI-26 would have. But the Air Force reduced its requirement which allowed for Boeing's bid to be accepted. Essentially, the needs of the Air Force were tweaked to match Boeing’s offering. 2. The decision to pick a certain aircraft, weapon or a vendor over another is often ad hoc In an ideal situation, the government would have a benchmark price set for a particular purchase, and the bids can be evaluated in relation to the benchmark. However, in many cases, the government changed the benchmark prices after opening the bids and ended up favouring one vendor over the others. In some cases like the procurement of Doppler Weather Radars and Apache Attack Helicopters, technical bids were rejected when the vendors failed to meet the parameters. But in other cases that included MMRCA, Heavy Lift Helicopters and C130 J30 aircraft, bids were technically qualified even when they did not meet critical ASQRs based on the assurance given by the respective vendors. 
 
 
 
 
 
 <div type="image" title="Apache Attack Helicopter" msid="67982126" hostid="261"></div>













 3. A vendor is allowed to make changes even after placing a bid In the case of the Basic Trainer Aircraft supplied by Pilatus, the Swiss company was allowed to change its offer after the bids were received from all potential vendors. The two other vendors had offered a better price by including certain hardware within their bid that Pilatus hadn’t. 
 
 
 
 
 
 <div type="image" title="Basic Trainer Pilatus" msid="67982127" hostid="261"></div>













 However, instead of accepting one of the other bids, the government decided to seek a clarification from Pilatus and allowed it to make its bid competitive again. The contract was approved by the Cabinet Committee on Security, under the United Progressive Alliance (UPA) government led by the Congress, in May 2012. 4. Vendors can get away giving assurances What’s more unfair than allowing vendors to change bids after submission? At times when the vendor does not meet the requirements still, the government has taken the supplier’s word for future improvements, while either undermining the needs of the forces, or putting lives at risk. Both MI-26 and Chinook were cleared based on the presentation/assurance of the vendor to rectify the ASQR non-compliance before delivery. 
 
 
 
 
 
 <div type="image" title="MI26" msid="67982128" hostid="261"></div>













 The government does not even maintain proper records of the field trials of the equipments that were considered, making future reviews of such decisions difficult. 5. India could have bought weapons for cheaper prices but... Indians buying cars, or even two wheelers, are notorious for being penny wise. They not only consider the mileage but also the cost of maintenance before making their choice. Similarly, for defence equipment, mid-life upgrades for sustainment of the capabilities, if not for enhancement, should ideally be considered. However, the Indian government is a lot more lax, or selective in enforcing prudence. Out of eight cases, the government did not consider the costs that may be incurred during the life of the product purchased. For example, in 2017, the government decided that it <a href="https://www.defensenews.com/training-sim/2017/07/20/swiss-firm-not-extending-maintenance-deal-for-indias-pc-7-trainers/">cannot</a> continue using Pilatus’ trainer aircraft because the maintenance cost was raised too high. If this had been considered at the time of purchase, some other vendor may beat the Swiss manufacturer. 6. Endless delays The delay in decisions, signing of the contracts,and eventual procurement by the Indian government can be termed ‘proverbial’. “Against three years envisaged in Defence Procurement Process, four cases took more than three years and seven cases took more than five years to reach the contract conclusion stage. Delays in acquisition was essentially due to a complex and multi-level approval process, where objections could be raised at any stage,” the CAG report said. And delays cost money. 
 
 
 
 
 
 <div type="image" title="Doppler Weather Radar" msid="67982119" hostid="261" caption="&amp;lt;p&amp;gt;The contract for Doppler Weather Radar was signed in 2012 and the actual delivery was in 2016.&amp;lt;/p&amp;gt;"></div>













 7. Unforced errors leading to higher cost India’s bureaucracy has also acted lazy at times. For instance, for all procurements from Russia or CIS countries, India allows for a 5% annual increase in cost, and for European suppliers the cost is allowed to increase by 3.5% every year of delay. The actual increase, going by market rates, would have been less than half. SEE ALSO: <a href="https://www.businessinsider.in/cag-rajiv-mehrishi-who-tabled-rafale-deal-audit-report-in-parliament/articleshow/67975553.cms">The man who audited the Rafale deal is now the subject of the controversy</a> <a href="https://www.businessinsider.in/cag-report-on-rafale-deal-tabled-in-parliament-says-jets-cheaper-under-modi-government-than-upa/articleshow/67970948.cms">CAG report on Rafale deal is a blessing for Modi government</a>

Seven shocking truths about how India buys arms

India’s Comptroller and Auditor General (<keyword id="6356851" type="ORGANIZATION" weightage="20" keywordseo="cag">CAG</keyword>), <keyword id="1928895" type="PERSON" weightage="20" keywordseo="Rajiv-Mehrishi">Rajiv Mehrishi</keyword>, today gave Prime Minister <keyword id="6354477" type="PERSON" weightage="20" keywordseo="Narendra-Modi">Narendra Modi</keyword> his biggest win in the ongoing controversy over the government’s deal to by 36 <keyword id="6381048" type="UNKNOWN" weightage="20" keywordseo="rafale">Rafale</keyword> jets from the French company Dassault. Modi government’s deal was 2.86% cheaper than that planned by the earlier Congress regime, the report said. However, Modi’s rivals have questioned the credibility of Mehrishi while escalating their attack on the government alleging corruption in a crucial defence deal. The Congress has alleged that Mehrishi was privy to the internal negotiations in the Rafale deal and therefore he cannot be an independent auditor. Over the course of his career, Mehrishi has essayed a number of prominent roles both at the state and national level, cementing his credentials as an insider in the Modi administration. Mehrishi entered civil services in 1978 from the Rajasthan cadre. November 2009 - April 2012: Mehrishi was an additional secretary in the Ministry of Agriculture. He was specifically tasked with spearheading research and education initiatives. October 2012- November 2013: He was a secretary in the Ministry of External Affairs under the previous Congress government. December 2013: He was moved to Rajasthan as the chief secretary in the BJP government led by Vasundhara <keyword id="51253" type="ORGANIZATION" weightage="20" keywordseo="RAJE">Raje</keyword>. This was the last role he held as an IAS Officer prior to his retirement after a 30-year career. As chief secretary, he played a big role in Raje’s labour and land reforms. This involved an easing of hiring norms, especially for apprenticeships, and the expansion of an industrial belt from Gurgaon to Jaipur. The same reforms were championed by Finance Minister <a href="https://economictimes.indiatimes.com/news/economy/policy/rajasthan-pioneer-state-in-implementing-labour-reforms-arun-jaitley/articleshow/49848504.cms">Arun Jaitley</a>, who made them a big part of the BJP government’s Ease of Doing Business Agenda a few years ago. However, it has been speculated that some of these policies eventually <a href="https://thewire.in/politics/vasundhara-raje-rajasthan-elections"></a><a href="https://thewire.in/politics/vasundhara-raje-rajasthan-elections" data-type="tilCustomLink">cost Raje the state elections</a>t Raje the state elections in December last year. However, within three months after Narendra Modi came to power in May 2014, Mehrishi was called on to serve in the central bureaucracy. October 2014- August 2015: Mehrishi was the secretary of the finance ministry, charged with economic affairs. His work as a government auditor now has also drawn criticism because of his tenure at the finance ministry. The question raised by the opposition is that whether someone who has been an integral part of spending decisions in the past should be allowed to audit the same decisions. However, the Modi government has dismissed the allegations saying that his responsibilities had<a href="http://pib.nic.in/newsite/PrintRelease.aspx?relid=188381"> nothing to do with government expenditure decisions</a>. September 2015: Mehrishi was accused of <a href="https://www.indiatoday.in/mail-today/story/probe-against-the-union-home-secretary-did-he-wrongly-avoided-tax-as-finance-secretary-263226-2015-09-16">evading taxes </a>on a land deal. Mehrishi reportedly saved ₹10 million of capital gains tax by claiming that a piece of land sold in a commercial transaction was actually an agricultural plot, which qualifies for different tax treatment. The plot had been as agricultural land in 2006 but sold as commercial land (without <a href="https://www.newslaundry.com/2019/01/24/did-cag-rajiv-mehrishi-evade-tax-or-not">the requisite payment of fees</a> for the change in title) to benefit from a higher selling price. The allegations, which analysed by <a href="https://www.newslaundry.com/2019/01/24/did-cag-rajiv-mehrishi-evade-tax-or-not">Newslaundry </a>earlier this year, did not lead to any action against Mehrishi. August 2015- August 2017: Mehrishi served as the secretary of the Home Ministry for the current government. As home secretary, he notably called out Pakistan as a safe haven for terrorists and criminals on the run like <a href="https://www.financialexpress.com/india-news/dawood-ibrahim-being-sheltered-by-pakistan-says-home-secretary-rajiv-mehrishi/833316/">Dawood Ibrahim.</a> This was also the time when the <a href="https://www.livemint.com/Politics/3GJ0xAYec7sn0hjjRFNrPO/A-year-after-Burhan-Wanis-death-big-change-in-antiterror.html">political crisis </a>in Kashmir escalated. The central government was blamed for using excessive force against rebel groups, and often civilians too found themselves in the firing line. Despite the Home Minister Rajnath Singh’s attempt to salvage BJP’s position in Jammu and Kashmir, its local ally the People’s Democratic Party (PDP) snapped ties <a href="https://economictimes.indiatimes.com/news/politics-and-nation/bjp-ends-alliance-with-pdp-in-jammu-and-kashmir-presidents-rule-likely-in-the-state/articleshow/64646710.cms">in June 2018</a> as the crisis unraveled. The first allegation against the current government in the controversial deal to buy Rafale jets emerged in November 2016. Mehrishi was appointed as the CAG in September 2017, while the audit of the deal began a few months later in 2018.

The man who audited the Rafale deal is now the subject of the controversy

The face of the Indian defence sector is changing rapidly with a strong focus on indigenisation. The man leading that change is Manohar Parrikar, India’s defence minister. Parrikar has worked hard over the last one-and-a-half years to bring a complete turnaround in the defence establishment. 
 
In a latest interview, Parrikar spoke about his future plans and the key security issues facing the country. 
 
Q. The new Defence Procurement Policy (DPP) is being referred to as a game changing policy for the sector. How do you see it altering the Indian defence growth story? 
 
A. In the new DPP, we have tried to shift the focus on Make-in-India, small and medium scale industries. We are also stressing on time-bound procedures. 
 
The defence sector has a strange set of procurement procedures, which do not normally exist for other procurements. One obvious reason is that products need to be tested as unless successful testing is conducted, the costly equipment can’t be procured. So testing is a major criteria and this was, so far, not allowed to Indian private companies and was resulting into major delays. So the new DPP opens up testing facilities. Various defence PSUs are also offering facilities to the private sector. The new DPP will address these concerns of the industry in detail. 
 
Q. The <keyword id="6354869" type="UNKNOWN" weightage="20" keywordseo="make-in-India">Make in India</keyword> initiative is gaining steam. The new category of ‘Indigenously Designed, Developed and Manufactured’ (IDDM) equipment reverses the local mix from 70:30 to 30:70. Do you have any timelines for its implementation? 
 
A. It won’t happen overnight. In the new DPP for IDDM, it will be only now that things will be processed. Orders may be placed after one year and actual production will start after a year. So, it is in 2017 that we will start seeing the real impact. Of course, some push that we had given earlier would result in some shifting of the balance during the current year. 
 
Q. We see a sudden rush from big corporates who want to invest big time in the defence sector. Already some 50 MoUs have been signed and over 350 licenses given. Is there any kind of a mechanism that you are going to put in place to monitor that everything that is being talked about actually takes-off? 
 
A. Unlike other sectors, the buyer is only one except for exports, which we have opened up. In fact, the recorded NoCs for export granted by us in spite of the fact that we have reduced the number of items under restricted export in defence, has almost tripled as compared to last year and grown by five times the earlier years. We are now touching around Rs 2000 crore this year. I expect growth of another 50%-100% because of offsets. 
 
In the next year, we should cross Rs 1 billion in exports, which itself will be an achievement. Except the export part of it, the rest is produced and purchased by the Indian defence forces. These are part of preparations. These are not actual fructification. The fructification will happen in the current year for some in the private sector whom we are already placing orders with. In fact, Tata’s have developed 6x6 (truck for Indian army), Larsen &amp; Toubro is in the final stage of getting the order for self-propelled guns. 
 
Q. Will the entry of private companies affect the role of defence PSUs and DRDO? 
A. PSUs are also part of Make-in-India. We are asking them to broaden their vendor base and get products outsourced so that the private industry also develops in course. 
 
Q. Indian defence companies say their products are comparatively much cheaper to, say those supplied by US companies, like for example the ultra-light weight howitzers developed by the Kalyani Group is around 50% cheaper than that manufactured in the US. Aren’t we spending a lot for importing equipments like these? 
 
A. I am not aware of the costs but I will definitely find out. We are serious on indigenously developed products and I will talk to them. 
 
Q. Are you happy with the budget allocation? How would you in the present constraints of fund allocation priorities your plans on modernization? 
A. I don’t see a big fund constraint. Let me put it this way, in a month if a family eats say 20 kg of rice they may consume around 500 grams a day --- so budgets have to be seen in that angle. What do I require today? One is my committed liabilities. I am talking about capital acquisition so if I have placed orders with the vendors then as they supply I have to go and pay. For example, Apache Helicopter for which I placed the order in October. It will be supplied in 2018. Initially, I paid some 15%. The total including the weapon package was about Rs 21,000-22,000 crore. I paid only Rs 3000 crore. How much do I require as per the calibrated payment terms --- maybe I will require another Rs 1500 crore this year and Rs 1500 crore next year and maybe some Rs 5000 crore or Rs 8000 crore the year after. So what I do today has its impact in next 5-10 years and what was done in 2012-13 is going to reflect now. 
 
Q. What about China and Pakistan’s participation in the Defexpo? 
A. I don’t see a big issue in inviting or not inviting. Traditionally, they have not been invited but I think from China we had some people to visit if I am not mistaken. There is no calibrated decision specifically taken in this regard. 
 
Q. The double finance scrutiny first by MoD and then by finance ministry is making defence procurement cumbersome. Why should there be a double scrutiny at all? 
A. Ask that question to the finance ministry. If you ask me it is a triple level --- MoD, then our own finance department and then the MoF. I think it’s a case for a higher delegated power. It will be taken up but I don’t see it as a big problem. I have no problem in finance expenditure going through it. 
 
Q. Your comments on the government’s plans to cut foreign vendor contracts by 30% in the next two years? 
A. We don’t intend to cut. We intend to purchase locally so automatically the procurement from outside will reduce. 
 
Q. In Rafale jet deal pricing is a big issue? Even the law ministry has recently raised some objections? 
A. Price is equally important. While I want the aircraft, I will definitely be interested in the right price. The objections are being attended to. 
 
Q. Your government is completing two years in office? How do you think it has performed? 
A. I am happy because this government is doing more than reasonably well. The foundation is already there and lot of things have been done by this government which had been in limbo for last 10-12 years so I feel that in another one year we would be very clearly reaping the benefits of the seeds that have been sown by this government and things that have been done by this government.

Parrikar: Real impact of Make in India in defence sector will be seen in 2017

Since the last decade, India has been on a spree of buying modern weapon systems through its ever increasing defence budget. In particular the <keyword id="15141" type="ORGANIZATION" weightage="80" keywordseo="Indian-Air-Force">Indian Air Force</keyword> is going through a total revamp. India is the only country which has categorised its fighters as heavy, medium and light combat aircrafts. It has assigned specific roles to its fighters however most are multi-role in nature. 
 
The Dassault Mirage 2000 is a French multirole, single-engine jet fighter manufactured by Dassault Aviation. India has acquired a total of 51 Mirages, which include 41 single-seater Mirage 2000Hs and 10 two-seater Mirage 2000TH trainers. 
 
The SEPECAT <keyword id="42034" type="COMPANY" weightage="80" keywordseo="Jaguar">Jaguar</keyword> is an Anglo-French jet attack aircraft originally used by the <keyword id="2875013" type="ORGANIZATION" weightage="80" keywordseo="British-Air-Force">British Air Force</keyword> and is playing the nuclear strike role with the Indian Air Force. Similarly MIG 21 and MIG 27 are the interceptors and Ground attack aircrafts. HAL Tejas is a single seater, single engine multirole fighter. Sukhoi SU-30MKI is the pride of the Indian fleet and is one of the best 4++ generation air superiority fighters in the world. 
 
The MMRCA deal, the comparison and what went wrong 
India is planning to decommission its entire fleet of MiG 21s and MiG 27s by the year 2020~2023. Now, the MiG 21 is an Interceptor while the MiG 27 is a Ground attack aircraft. 
 
The MMRCA program was initiated to replace both these specialized aircraft with a Medium Multi Role Combat Aircraft. This is the reason IAF floated a global tender for a suitable aircraft. 
 Out of the 6 aircrafts which reached the last stage of negotiations, Dassault <keyword id="6381048" type="ORGANIZATION" weightage="80" keywordseo="Rafale">Rafale</keyword> emerged as the winner. Initially the plan was to buy 126 aircrafts, 18 in flyaway condition and the remaining 108 was to be manufactured domestically under the Transfer of Technology agreement. However after Narendra Modi's <keyword id="6354785" type="COUNTRY" weightage="80" keywordseo="France">France</keyword> visit in April, air was made clear and India inked the deal for 36 aircrafts in flyaway condition for an undisclosed amount of money which could seriously go over US$ 6 billion. 
 
Much has been said about the escalating cost of the deal and its worthiness to acquire the Rafale jets which was out rightly rejected by many former bidders and a section of experts believe that a SU 35 would be a much better option specially for India. 
 
 Dassault Rafale vs Sukhoi SU-35 
 Overall rating table 
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				CATEGORY</td>
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				DASSAULT RAFALE</td>
			<td>
				SUKHOI SU-35</td>
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				BVR Rating</td>
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				90%</td>
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				80%</td>
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				Armament</td>
			<td>
				7.8/10</td>
			<td>
				8.1/10</td>
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				Technology</td>
			<td>
				7.7/10</td>
			<td>
				8.1/10</td>
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				Avionics</td>
			<td>
				8.0/10</td>
			<td>
				8.2/10</td>
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				Manoeuvrability</td>
			<td>
				9.5/10</td>
			<td>
				8.4/10</td>
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			<td>
				Rate of Climb</td>
			<td>
				max. 300 m/s – 60k ft/min</td>
			<td>
				max. 280 m/s – 55k ft/min</td>
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			<td>
				Thrust/Weight</td>
			<td>
				1.13</td>
			<td>
				1.10</td>
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			<td>
				Service Ceiling</td>
			<td>
				17 km – 55k ft</td>
			<td>
				18 km – 59k ft</td>
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			<td>
				Speed</td>
			<td>
				2.00 Mach</td>
			<td>
				2.25 Mach</td>
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			<td>
				Fuel Economy</td>
			<td>
				0.27 km/l – 0.63 NM/gallon</td>
			<td>
				0.19 km/l – 0.44 NM/gallon</td>
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			<td>
				Unit Cost</td>
			<td>
				90.000.000 USD</td>
			<td>
				65.000.000 USD</td>
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			<td>
				Overall Rating</td>
			<td>
				very good</td>
			<td>
				very good</td>
		</tr>
	</tbody>
</table>

	 
	FACTS- Dassault Rafale vs Sukhoi SU-35
 
Sukhoi SU-35 is cheaper. 
Dassault Rafale is more economical. 
Sukhoi SU-35 is faster. 
Sukhoi SU-35 is better armed. 
Dassault Rafale is better dogfighter. 
Dassault Rafale is smaller than Sukhoi SU-35. 
 

	France is a reliable defence partner for India and it is already supplying and upgrading the Mirage 2000 fighters however its credibility in the international defence market was questioned after the Mistral row. Rafale is a good fighter in its class and a better dogfighter but the days of dog fighting are over and this is the era of Net-Centric Warfare. Rafale is smaller in size when you compare it to the SU-30MKI or the SU-35 and possess good ground attack capabilities. India is becoming a regional resource centre for the SU series fighters and should have gone for the SU-35 or the Euro fighter both of which have a lower price tag than the Rafale fighters. However buying 36 Rafale jets was vital for Indo-French geo-political relations. Now is the time to have a complete stop on this and which was also confirmed by the Indian <keyword id="6366153" type="POSITION" weightage="80" keywordseo="Defence-Minister">Defence Minister</keyword>. 
	 
	(Image Courtsey: gripen4canada.blogspot.com) 
	<o:p></o:p>

India's Fighter Aircraft ambitions: Desire and Dilemma

I’m An Outsider To Delhi And To Politics As Well, Narendra Modi Says (Full Text Of Modi Interview)

<keyword id="6361649" type="CITY" weightage="40" keywordseo="Goldman-Sachs">Goldman Sachs</keyword> has Modi-fied its view of the <keyword id="6356076" type="UNKNOWN" weightage="40" keywordseo="indian-economy">Indian economy</keyword>. <keyword id="46431" type="CITY" weightage="40" keywordseo="India-Inc">India Inc</keyword> is rubbing its hands in unabashed glee. Two weeks ago, the benchmark stock indices hit their alltime high levels. Brokerage houses are goading clients to invest lest they miss the bus. 
 All this is based on hopes that the BJP-led NDA will emerge victorious in the 2014 polls and that <keyword id="6354477" type="PERSON" weightage="40" keywordseo="Narendra-Modi">Narendra Modi</keyword>, superlatively described by <keyword id="140092" type="POSITION" weightage="40" keywordseo="investment-banker">investment banker</keyword> CLSA as the ‘greatest hope’ for the Indian <keyword id="35199" type="UNKNOWN" weightage="40" keywordseo="stock-markets">stock markets</keyword>, will become the <keyword id="71" type="POSITION" weightage="40" keywordseo="Prime-Minister">prime minister</keyword>. The groundswell of support for the BJP in the recent state elections has reinforced these expectations. 
 The <keyword id="6484188" type="CITY" weightage="40" keywordseo="Sensex">Sensex</keyword> surged 330 points after the state election results, unmasking the political stance of the investor community. The <keyword id="6355302" type="ORGANIZATION" weightage="40" keywordseo="Rupee">rupee</keyword> appreciated sharply against the dollar and bond yields climbed down. In its report, Goldman Sachs asserts, “The BJP and Mr Modi, in particular, have been focused on infrastructure and capital spending in the past, and a BJP-led government may be beneficial for the investment demand pick-up.” Many others concur with the assessment. This is what’s driving the markets now. 
 
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 Are these expectations running ahead of the ground reality? Can the election results really make a difference to the fundamentals that drive stock prices? How should investors play the stock markets, both in the run-up to the elections and afterwards? Our cover story this week attempts to answer these questions and tell you how to handle your equity <keyword id="6362476" type="ORGANIZATION" weightage="40" keywordseo="investments">investments</keyword> in this election year. 
 
Great expectations 
 Barely five months from now, India will elect the 16th <keyword id="6355187" type="ORGANIZATION" weightage="40" keywordseo="Lok-Sabha">Lok Sabha</keyword>. Given the backdrop of the slowdown, these elections assume greater significance. It is not surprising to hear the growing demand for a change in government. Says Chandresh Nigam, managing director and CEO, Axis Mutual Fund: “The stock markets seem to have a singular expectation for now—the formation of a stable government after the elections.” Not everyone is convinced that India’s economic problems will be cured in a new political environment. There are also voices arguing that investors are reading too much into the political developments. They say that elections do not impact the markets much, and that the outcome should not matter to a long-term equity investor. Neelkanth Mishra, India equity strategist, <keyword id="48085" type="CITY" weightage="40" keywordseo="Credit-Suisse">Credit Suisse</keyword>, argues that elections are overhyped and while the outcome is likely to drive volatility due to the expectations, it may have a limited near-term impact on the <keyword id="34412" type="ORGANIZATION" weightage="40" keywordseo="economy">economy</keyword> and corporate earnings. 
 
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	&#xa0;</div> “Even though it may seem intuitive that election outcomes drive <keyword id="35050" type="CITY" weightage="40" keywordseo="gdp">GDP</keyword> growth and market performance, our research suggests almost no correlation between the extent of government fragmentation at the Centre and economic growth during its tenure” (see table). Besides, it may be too optimistic to expect that the policy actions taken by the new government will have an immediate impact. “Our analysis of past reforms suggests that it takes 6-8 years, on an average, for any intention of the <keyword id="6357307" type="ORGANIZATION" weightage="40" keywordseo="Central-Government">Central government</keyword> to translate into jobs or meaningful economic growth,” asserts Mishra. 
 
However, markets don’t wait for events to happen and discount them early on. 
 
However, sentiments can carry the markets only so far. So, while the current positive mood will play a pivotal role and drive the markets in the near term, the rally will not be sustainable without the fundamentals matching the expectations. Only an improvement in the investment cycle can revive the economy. Sonal Varma and Aman Mohunta of Nomura point out, “The state elections are likely to boost sentiment, but they should not have any immediate impact on the fundamental outlook. India’s economic growth is bottoming out, but weak domestic demand amid tighter fiscal and monetary policies is likely to prevent any meaningful take-off.” 
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 As far as the macro indicators go, the economy is still going through the motions. Even though the September quarter saw a marginal improvement in the GDP growth over the previous quarter, it is still near its 10-year low. The government has managed to control the current account deficit primarily by restricting <keyword id="18712" type="ENTERTAINMENT" weightage="40" keywordseo="Gold">gold</keyword> imports. It is expected to remain around 4% of the GDP in 2014, down from a high of 4.9% in October. 
 The other data paints a worrying picture. Industrial production declined by 1.8% in October, as against the 2% growth registered in September. <keyword id="22195" type="COMPANY" weightage="40" keywordseo="Inflation">Inflation</keyword> continues to rage, with November data showing a disturbing 7.52% spike in the WPI along with a surge in the CPI to 11.24%. The RBI has not hiked rates this time, but if <keyword id="101998" type="UNKNOWN" weightage="40" keywordseo="high-inflation">high inflation</keyword> persists, it will be left with no option. 
 
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 Another argument against fixation on a particular leadership is the historical continuity in reforms. In the past, reforms have come through irrespective of the party in power. For instance, some major economic reforms happened when the much-hated Third Front was in power (see page 16). For all its perceived shortcomings, even the incumbent <keyword id="26374" type="ORGANIZATION" weightage="40" keywordseo="UPA-government">UPA government</keyword> has pressed through some desirable reforms, such as the hike in diesel prices, as well as some key reforms in the <keyword id="6354432" type="UNKNOWN" weightage="40" keywordseo="pension">pension</keyword> and <keyword id="35450" type="COMPANY" weightage="40" keywordseo="insurance">insurance</keyword> space. 
 Experts agree that a stable government is more important than the party that comes to power. Nandkumar Surti, managing director and CEO, <keyword id="63460" type="CITY" weightage="40" keywordseo="JP-Morgan">JP Morgan</keyword> Asset Management, says, “The importance of the election outcome, in the long run, depends solely on the type of government that comes to power. As long as we have a stable and strong government that implements reforms for economic growth, we will witness an upsurge in the economic climate of the country.” 
 
How can expectations be derailed? 
 Even so, several factors could thwart the expectations of a sweeping change. Despite the anti-incumbency wave, which was visible in the state elections, it may not actually turn out to be a clear victory for the BJP. As Nomura points out, “State election outcomes are not always a reliable indicator of the general election prospects. Even if antiincumbency proves to be a core theme in the 2014 general election, it does not follow, of course, that the BJP would necessarily be the main beneficiary.” For instance, the newly formed <keyword id="6354944" type="ORGANIZATION" weightage="40" keywordseo="Aam-Aadmi-Party">Aam Aadmi Party</keyword> has already demonstrated its ability to take away a chunk of the anti-incumbency votes that would have otherwise gone to the BJP. 
 
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	&#xa0;</div> Also, even if the BJP secures the highest number of seats in the Lok Sabha elections, it may still have to depend on its coalition partners to form a government. A rainbow government may not be able to implement some of the controversial, but desirable, reform measures; this was the trouble that plagued the incumbent UPA no end. Dipen Shah, senior vice-president, private client group research, <keyword id="66607" type="CITY" weightage="40" keywordseo="Kotak-securities">Kotak Securities</keyword>, says, “Only a clear mandate and a stable coalition will be able to take definite steps to provide the required impetus to the economy.” 
 
If there is a stable government after elections, it will take away a lot of uncertainty associated with the economy and support any recovery in the future. Of course, this is assuming that the ruling party will earnestly take up the cause at all. It remains to be seen whether the incoming party will have the resolve to take tough decisions, including those on diesel price decontrol, removal of subsidies, etc. 
 
External risks could also play spoilsport. First is the threat of a downgrade of the Indian economy by global ratings agencies. S&amp;P already has a ‘negative’ long-term outlook on India, the only one of the three rating agencies with this view. It has now warned of the possibility of a further downgrade in case of a hung Parliament or failure of the incoming government to push through key reforms. This would give government bonds ‘junk’ status, which can have very serious, negative implications for the economy. 
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 A rating downgrade would not only cause a flight of <keyword id="136566" type="UNKNOWN" weightage="40" keywordseo="foreign-capital">foreign capital</keyword> but also push up the overseas borrowing costs of Indian companies. If the present government decides to do away with its fiscal consolidation efforts in favour of more populist, welfare-oriented measures to win over voters, India may move closer to a ratings downgrade. A Uturn on the diesel price hikes, for instance, may appeal to <keyword id="1009187" type="UNKNOWN" weightage="40" keywordseo="the-middle">the middle</keyword> class, but will be frowned upon by rating agencies. 
 The second threat is from the winding down of the <keyword id="117388" type="ORGANIZATION" weightage="40" keywordseo="US-Fed">US Fed</keyword>’s asset purchase programme. We saw how initial news of the tapering impacted the rupee between May and August this year. Now that it is official, the rupee may go through another bout of volatility. Along with these known external risks, the unknown uncertainties surrounding the domestic political developments could derail the expectations. In short, the market’s enthusiasm over the BJP coming to power may well be misplaced. 
 
What you should do 
 Whatever the outcome, it is a given that the stock markets will be heavily influenced by political developments till the elections and afterwards as well (see graphic). We would caution investors to temper their expectations and not be carried away with the upbeat mood. As Nomura cautions, “We think that chasing the rally is not prudent, as it remains to be seen how the incumbent party will react to its poor showing in the state elections.” Investors may remain hopeful, but should avoid giving in to the euphoria. If those hopes are not realised, the market reaction may be adverse, opines Pankaj Pandey, head of research, <keyword id="46909" type="CITY" weightage="40" keywordseo="ICICI-securities">ICICI Securities</keyword>. What then should be your stock strategy? 
 
Do not wait for election outcome 
 Some investors may be planning to stay out of the market till the elections are done with and clarity emerges. This may not be the best approach. As mentioned earlier, the markets don’t wait for events to happen. They would have already taken a course by the time the results are out. Surti insists, “The risk-reward equation is quite favourable right now and this is an opportune time for investors to start allocating to <keyword id="45369" type="CITY" weightage="40" keywordseo="equities">equities</keyword> in their portfolios.” This is not to suggest that investors should jump headlong into the markets now; they should merely take a measured exposure, instead of avoiding <keyword id="6354298" type="ORGANIZATION" weightage="40" keywordseo="stocks">stocks</keyword> altogether. 
 As Pandey suggests, “Investors can remain light on stocks for the time being and invest in a staggered manner in the coming months.” However, be prepared for higher volatility as the markets are likely to be on tenterhooks till the results are out. Investing in equity <keyword id="6357979" type="ORGANIZATION" weightage="40" keywordseo="mutual-funds">mutual funds</keyword> through the <keyword id="35471" type="ORGANIZATION" weightage="40" keywordseo="SIP">SIP</keyword> route is the ideal way to deal with this volatility. 
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Gain exposure to cyclicals 
 A few stocks shot up after the state poll results (see table). It would be too early to view this as a clear trend. Most economic indicators show that there is a long way to go for a turnaround in the investment cycle. However, you should catch hold of certain investment themes that are likely to play out in the event of an economic recovery and possible pick-up in investments. Besides, it is time that investors gradually lowered their exposure to overvalued defensive stocks and started adding cyclicals to their portfolio over the coming months. Many stocks in the capital goods, banking and auto sectors are available at cheap valuations. It is now a good entry point for those looking to invest for the next 3-5 years or more. Nomura asserts, “We expect market gains to be led by high-beta domestic cyclicals (banks and industrials, mainly) and expect defensives (<keyword id="34523" type="CITY" weightage="40" keywordseo="fmcg">FMCG</keyword>, pharma, telecom and IT services) to underperform.” It believes the banking sector will benefit the most from a new regime. Shah believes, “The new government is likely to focus on boosting investments, which could help in reviving the economy. In that event, select companies in the capital goods and infrastructure segments would do well.” 
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Do not let go of defensives 
 
While defensive sectors are expected to underperform, don’t exit these sectors completely. Any turnaround in the economy will take some time to fructify. “We do not expect a pick-up in the investment cycle in the next two to three years,” insists Mishra. This means shifting completely in favour of economy-sensitives may not be a good strategy at this point. However, Mishra expects income growth at the bottom of the income pyramid to stay robust, which bodes well for the consumption sector. Defensives (consumer staples and pharma) and export themes (IT services) remain a good play given the struggling economy and weak currency. Shah says, “Investors should have a mix of defensives and economy-sensitives in their portfolios.” However, investors should avoid defensive stocks quoting at high valuations. 
 
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Stock Strategy For An Election Year

<ul class="summary-list"><li>Saudi Arabia and the UAE have signed multibillion-dollar deals for Turkish drones in recent months.</li><li>The deals are a sign of the Arab Gulf states' increasing interest in Turkish-made military hardware.</li></ul>It seems Saudi Arabia and the United Arab Emirates cannot get enough of Turkey's homegrown military drones. Both countries have signed landmark multibillion-dollar deals for Turkish Bayraktar drones in recent months.The deals reflect the increasing interest among Arab Gulf states in Turkish-made hardware and are signs of Turkey's growing desire to sell arms to its Middle Eastern neighbors <a href="https://www.businessinsider.com/us-military-worried-inexperienced-pilots-in-russian-jets-in-libya-2020-6">despite differences</a> over <a href="https://www.aljazeera.com/news/2022/3/31/khashoggi-killing-turkey-prosecutor-asks-to-halt-trial-of-saudis" target="_blank" rel="noopener">other issues</a> in <a href="https://apnews.com/article/syria-russia-turkey-ministers-talks-reconciliation-10a415b545c0365275f22a9b78806627" target="_blank" rel="noopener">the region</a> in recent years.In July, Turkish President Recep Tayyip Erdogan secured a record-breaking deal during a visit to Saudi Arabia, when Riyadh signed a contract with Turkey's Baykar Defense for its new Bayraktar Akinci drone.The Akinci is a much larger and more sophisticated combat drone than its predecessor, the Bayraktar TB2, which became well-known for its use in recent conflicts in the Middle East, North Africa, the <a href="https://www.businessinsider.com/drones-in-armenia-azerbaijan-war-raises-doubt-about-tanks-future-2020-11">South Caucasus</a>, and <a href="https://www.businessinsider.com/how-turkish-baykar-tb2-drone-gave-ukraine-edge-against-russia-2022-9">Ukraine</a>.<div type="image" title="Armenia Azerbaijan drone strike" height="1080" width="1920" msid="102481163" hostid="261" sizebytes="71318"></div>Saudi Arabia previously showed interest in procuring Turkish drones and securing rights for local production. While neither side has disclosed the value of this unprecedented deal Baykar's CEO <a href="https://www.janes.com/defence-news/news-detail/saudi-signs-for-akinci-uavs-in-record-deal-with-turkey" target="_blank" rel="noopener">called it</a> "the biggest defense and aviation export contract in the history of the Republic of Turkey."According to Baykar, <a href="https://www.reuters.com/business/aerospace-defense/saudi-drone-deal-entails-technology-transfer-joint-production-baykar-2023-07-18/" target="_blank" rel="noopener">the new deal includes</a> joint production and technology transfer. The Akinci, with its advanced sensors and weapons systems, will be the most advanced drone Riyadh has ever acquired.The deal was signed just over a month after Kuwait became the 28th country to order the TB2, spending $367 million on an unspecified number of the drones, the 500th of which <a href="https://www.hurriyetdailynews.com/500th-bayraktar-tb2-rolls-off-assembly-line-184220" target="_blank" rel="noopener">rolled off the assembly line in June</a>.Kuwait's purchase was nothing compared to the order made by the UAE last year, which included as many as <a href="https://www.atlanticcouncil.org/blogs/menasource/the-uae-just-received-twenty-drones-from-turkey-whats-the-backstory/" target="_blank" rel="noopener">120 TB2s</a> and assorted equipment and training in a $2 billion deal. While the number of Akincis included in the Saudi deal remains undisclosed, it is likely substantial if the contract is worth more than Abu Dhabi's multibillion-dollar order.The deals show that the leading Arab Gulf states have rapidly become the biggest customers for Turkish drones in just a few years.<div type="image" title="Bayraktar TB2 drone Turkey" height="1500" width="2000" msid="102481164" hostid="261" sizebytes="379512"></div>During the decade preceding these enormous deals, the Saudis and Emiratis mainly bought Chinese drones, notably the Wing Loong II, which saw combat in Yemen and Libya. But Chinese-made drones have lost their appeal amid the TB2's dramatic and rapid ascendance.In 2020, the Turkish-backed government in Libya used TB2 drones to <a href="https://www.aljazeera.com/news/2020/5/28/largest-drone-war-in-the-world-how-airpower-saved-tripoli" target="_blank" rel="noopener">destroy Russian-built Pantsir-S1</a> air-defense systems that the UAE had sent to a militia it was supporting in that country's civil war. Those drones did much more to shape the outcome of that conflict than the Wing Loongs also sent by the UAE.Abu Dhabi later planned to acquire 18 advanced US-made MQ-9B Reaper drones as part of a $19 billion deal reached in January 2021, which included the F-35 stealth jet. It appears that deal <a href="https://breakingdefense.com/2023/02/potential-f-35-reaper-deal-with-uae-not-completely-dead-senior-us-official-says/" target="_blank" rel="noopener">has fizzled</a>, however, with the UAE instead turning to Turkey for drones. The deal slowed as the US <a href="https://www.reuters.com/business/aerospace-defense/us-intends-move-forward-f-35-sale-uae-us-official-says-2021-11-16/" target="_blank" rel="noopener">expressed concerns</a> over Abu Dhabi's relations with China. The UAE then suspended talks altogether and ordered 80 Dassault Rafales from France in December 2021.Ali Bakir, an expert on Turkey at Qatar University's Ibn Khaldon Center, noted that purchasing drones "entails more than just acquiring the system."<div type="image" title="Turkey Recep Tayyip Erdogan Saudi Arabia Mohammed bin Salman" height="1153" width="1538" msid="102481166" hostid="261" sizebytes="93772"></div>The Saudi deal will include "accompanying elements such as ammunition, systems, training, maintenance, command and control units, among others," Bakir said. "These additional components will undoubtedly contribute to the initial costs, and if technology transfer is part of the agreement, the contract could very well exceed $2 billion minimum."Bakir told Insider that Turkish drones have gained "global recognition" due to their "affordability, efficiency, and lethal capabilities" and documented successes over modern battlefields."Furthermore, the Turkish TB2 has found its way to numerous countries across different continents and regions, including NATO and European Union members, as they come with fewer export restrictions," Bakir said.Suleyman Ozeren, a professorial lecturer at the American University and senior fellow at the Orion Policy Institute, said the Turkey-Saudi agreement represents more than merely purchasing drones or technology transfer.It's also "a signifying moment that shows Erdogan's eagerness to make amends with Mohammed bin Salman," Ozeren told Insider, referring to the Saudi crown prince. "Erdogan sees Saudi Arabia as a critical actor, a remedy for Turkey's deep economic crisis, and a shortcut for his return to normalcy with the regional actors."<div type="image" title="Turkey Bayraktar TB2 Akinci drone" height="1333" width="2000" msid="102481167" hostid="261" sizebytes="547986"></div>Ozeren noted Turkey's drones have proven "more reliable" than their Chinese counterparts, which, coupled with the fact they are cheaper than Western-made models, likely motivated these mammoth orders."Turkey's 'no-question-asked,' 'no-strings-attached' policy also plays a role in countries like Saudi Arabia, the UAE, and Qatar relying on Turkey-made drone technologies," Ozeren said.Ozeren said technology transfer and joint production will be "added value" for Saudi Arabia's efforts to diversify its defense capabilities, although it will still be incomparable to Riyadh's longstanding dependency on the US for military hardware."Moreover, Saudi Arabia could use such capabilities to balance Iran's drone technology in the long run," Ozeren said.Bakir, who is also a nonresident senior fellow with the Scowcroft Middle East Security Initiative at the Atlantic Council, said that these lucrative drone sales are of "utmost importance" for sustaining the "current upward trajectory" of Turkey's indigenous defense industry.<div type="image" title="Turkey Recep Tayyip Erdogan UAE Sheikh Mohammed bin Zayed al-Nahyan" height="1376" width="2000" msid="102481168" hostid="261" sizebytes="152566"></div>In addition to expanding market reach and providing "crucial support" to Turkey's economy, the contracts strengthen international partnerships, "creating a web of interests in defense, security, economic, and political realms," Bakir said.Ozeren said the Saudi deal could help Baykar "monopolize" drone technology in Turkey but noted that crucial details about the agreement remain unknown."Are there any binding provisions in the deal that might limit Baykar's ability to make certain deals with certain countries?" Ozeren said, adding that there could also be conditions "independent of drone technology," such as requirements that Turkey improve its relations with Syrian President Bashar Assad."No matter what the answers to these questions will be, the deal made the headlines in Turkey and abroad," Ozeren said. "However, we should wait and see how it will unfold."Paul Iddon is a freelance journalist and columnist who writes about Middle East developments, military affairs, politics, and history. His articles have appeared in a variety of publications focused on the region.

How Saudi Arabia and UAE learned to stop worrying and love Turkey's Bayraktar drones

<ul><li>A historic win will make Narendra Modi the first non-Congress Prime Minister to get re-elected.</li><li>This was the first time since 1984 a majority government has been re-elected.</li><li>Visit <a href="https://www.businessinsider.in/" data-type="tilCustomLink" target="_blank">Business Insider India's home page</a> for more stories</li></ul>Narendra Modi has created history by becoming the first non-Congress Prime Minister to get re-elected in the 72 years of India's independence. The National Democratic Alliance (NDA) led by the Bharatiya Janata Party (BJP) is leading in 353 seats compared to its rival the United Progressive Alliance (UPA) that is ahead in 90 seats. The BJP made history even five years back when it clocked in a full majority, the first for any government since 1984. A full majority twice in a row is an even bigger feat for Modi and the BJP. 
 
 
 
 
 
 
 
 
 
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 No single rival was fighting Modi to win on his/her own. A motley crew of former foes were waiting for the final tally before they could stitch a suitable coalition that would end Modi's reign. However, as the counting progressed on May 23, it became evident very early that the the room for any political manoeuvre was limited, and eventually, even that disappeared. The Indian National Congress, the only national party other than the BJP, nearly doubled its seat count in the Lok Sabha, the lower house of India's Parliament, but for Rahul Gandhi, Congress' President, could not escape the embarrassment of having lost a seat, Amethi, that was seen as family bastion for decades. A grand alliance of regional parties, led by Bahujan Samaj Party's Mayawati and Samajwadi Party's Akhilesh Yadav, pitched itself as an alternative to Modi's strongman vibe. However, the camaraderie failed to strike a chord with the voters of Uttar Pradesh-- India's most populous state that is home to these two parties. The music stopped for the Mahagathbandhan when hoards of <a href="https://www.businessinsider.in/narendra-modi-varanasi-up-lok-sabha-election-result-2019/articleshow/69455114.cms" data-type="tilCustomLink" target="_blank">people in Varanasi</a> danced to Modi's tunes on April 25. The final result for the grand alliance were 15 Lok Sabha seats. Modi's rivals cried against the <a href="https://www.businessinsider.in/indias-government-wants-you-to-believe-that-demonetisation-didnt-slow-down-the-economy/articleshow/67785050.cms" data-type="tilCustomLink" target="_blank">whimsical demonetisation</a>, the <a href="https://www.businessinsider.in/unemployment-in-india-is-at-its-highest-in-45-years-says-an-indian-daily-citing-an-undisclosed-jobs-survey/articleshow/67769020.cms" data-type="tilCustomLink" target="_blank">peaking unemployment</a>, the <a href="https://www.businessinsider.in/congress-promises-farm-loan-waiver-after-bjp-offers-minimum-income-support-in-budget-2019/articleshow/67827116.cms" data-type="tilCustomLink" target="_blank">mounting farm distress</a>, and the <a href="https://www.businessinsider.in/patriot-act-godse-debate-kamal-haasan-vs-sadhvi-pragya-bjp/articleshow/69372552.cms" data-type="tilCustomLink" target="_blank">uneasy polarisation</a>, but none of that left as much as a scratch on Modi's chances. Even the alleged scandal in the government deal to buy 36 Rafale fighter jets did not cut ice with the country's voters. 
 
 
 
 
 
 
 
 
 
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 The adolescent Indian democracy was looking for <a href="https://www.businessinsider.in/jlf-gandhi-vs-modi-bjp-vs-congress-dont-understand-indian-voters/articleshow/67685811.cms" data-type="tilCustomLink" target="_blank">a Presidential clash</a> but the opposition could not nominate a powerful alternative to Modi. The writing was on the wall but the regional satraps and national figureheads continued playing hardball with each other, and the potential of a desperate <a href="https://www.businessinsider.in/the-avengers-endgame-lesson-for-modi-rahul-gandhis-congress-and-mahagathbandhan/articleshow/69138766.cms" data-type="tilCustomLink" target="_blank">anti-Modi coalition</a> was never fully realised. The momentum was so strong in Modi's favour that even the terror accused Sadhvi Pragya Thakur-- who was also reprimanded for calling <a href="https://www.businessinsider.in/patriot-act-godse-debate-kamal-haasan-vs-sadhvi-pragya-bjp/articleshow/69372552.cms" data-type="tilCustomLink" target="_blank">Mahatma Gandhi's assassin Nathuram Godse a 'patriot'</a>-- <a href="https://www.businessinsider.in/sadhvi-pragya-thakur-vs-dijvijaya-singh-bhopal-lok-sabha-election-results-2019/articleshow/69456794.cms" data-type="tilCustomLink" target="_blank">won Bhopal with a huge margin</a>. The north-south divide The Modi wave was strong and pervasive but it limited largely to the north of India. The wave <a href="https://www.businessinsider.in/exit-polls-2019-no-modi-wave-in-tamil-nadu-karnataka-kerala/articleshow/69402617.cms" data-type="tilCustomLink" target="_blank">once again lost momentum</a> south of the Vindhya range of mountains, despite its best efforts. 
 
 
 
 
 
 
 
 
 
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 The BJP definitely improved its tally in Karnataka but it could not make any further headway into the other four major states-- Tamil Nadu, Kerala, Andhra Pradesh, and Telangana. While the Dravida Munnetra Kazhagam (DMK) swept Tamil Nadu with 31 out of 39 seats, Jaganmohan Reddy's victory in Andhra Pradesh marked <a href="https://www.businessinsider.in/ap-andhra-pradesh-assembly-elections-2019-jagan-reddys-win-marks-the-rise-of-the-prodigal-son/articleshow/69462170.cms" data-type="tilCustomLink" target="_blank">the rise of the prodigal son</a>. Reddy's immediate neighbour to the west, K Chandrshekhar Rao successfully <a href="https://www.businessinsider.in/telangana-lok-sabha-election-result-2019-trs-vs-congress-vs-tdp-vs-bjp/articleshow/69445813.cms" data-type="tilCustomLink" target="_blank">protected his territory</a>, Telangana, for a second time in less than a year. Rao called for a premature assembly election in Telangana in 2018 and came out of it with flying colours. The only other place Modi faced <a href="https://www.businessinsider.in/the-tmc-and-bjp-are-fighting-over-the-nrc-in-west-bengal/articleshow/69194392.cms" data-type="tilCustomLink" target="_blank">any challenge was in West Bengal</a>. Trinamool Congress (TMC) leader Mamata Banerjee did not pretend to play nice as BJP marched on to claim the eastern state. The clash of titans stirred the volatile electorate with a long history of violence. The BJP may have ended up second in the state but it bagged 18 precious seats that established the party as a serious player in the state for the first time ever. None of this was a surprise. BJP smelled the resentment against the local leadership in the east, and invested itself heavily. Modi himself addressed 17 rallies in Bengal, the most after Uttar Pradesh. The party cadre was funded and fuelled in Odisha and the north-eastern states and all of this paid off rich dividends, much on expected lines. Swinging states Six months earlier, <a href="https://www.businessinsider.in/here-are-some-reasons-why-indias-ruling-party-lost-to-its-main-rival-in-three-very-important-state-elections/articleshow/67057122.cms" data-type="tilCustomLink" target="_blank">BJP had to face defeat in state elections</a> in Madhya Pradesh, Rajasthan, and Chhattisgarh. The party had just whisked past the halfway mark in Gujarat, Modi's home state. These results rejuvenated the Congress and, may be, made it a bit complacent too. Within six months, the same states swung back to voting for the BJP. In Modi's home state Gujarat, the BJP is leading in all 26 seats, in 9 out of 11 seats in Chhattisgarh, and in all but one seat in MP-- a stark contrast to the picture of struggle in the assembly elections in December. In Bihar too, the NDA is miles ahead of competition-- leading in 32 out of the state's 40 seats-- including in high-profile constituencies like <a href="https://www.businessinsider.in/kanhaiya-kumar-vs-giriraj-singh-begusarai-lok-sabha-election-result-2019/articleshow/69453161.cms" data-type="tilCustomLink" target="_blank">Begusarai</a> and Patna Sahib. Debutante politician Kanhaiya Kumar, from the Communist Party of India (Marxist), has less than half the number of votes as rival from BJP, the veteran Giriraj Singh, who was also a minister in Modi's government. In Patna Sahib, sitting Parliamentarian Shatrughan Sinha is trailing Union Telecom Minister Ravi Shankar Prasad, who has over 55% of the votes. There 17 other candidates in this constituency. Congress' solace Congress is leading in Punjab and Kerala, while its biggest ally the Dravida Munnetra Kazhagam (DMK) is cornering maximum votes in Tamil Nadu. In Kerala's Wayanad, Rahul Gandhi is ahead with 67% of the votes where there are 20 other candidates. It was a face saver for Gandhi as he lost the family bastion Amethi to the firebrand from BJP, Smriti Irani. India’s markets celebrated the results. The Sensex hit <a href="https://www.businessinsider.in/sensex-rallies-550-points-as-bjp-leads-convincingly-in-vote-counting/articleshow/69458099.cms" data-type="tilCustomLink" target="_blank">the 40,000 mark for the first time ever</a> as investors hoped that the stability of continuing policies may the give the economy the much-needed fillip. His electoral feats and political might notwithstanding, those who care for it will blame Modi for demonetisation forever. Modi may have pitched himself as a pro-business reformer but experts have expressed fear that if he gets a second term, his policies are likely to be more socialist and akin to the proposals of <a href="https://www.nytimes.com/2019/05/19/opinion/india-elections-modi.html">Bernie Sanders in the US</a>, and not like the policies of Ronald Reagan. Nonetheless, the baton remains with Modi. SEE ALSO: <a href="https://www.businessinsider.in/india-election-results-fii-watch-narendra-modis-new-cabinet-and-policy-decisions/articleshow/69479558.cms" data-type="tilCustomLink" target="_blank">Foreign investors are thrilled about Modi's win but don't know what to expect from him</a> <a href="https://www.businessinsider.in/international-leaders-are-already-congratulating-narendra-modi-for-victory-in-indias-general-election/articleshow/69461194.cms" data-type="tilCustomLink" target="_blank">Naveen Patnaik’s BJD leads in Assembly and Lok Sabha seats in early trends</a> <a href="https://www.businessinsider.in/ap-andhra-pradesh-assembly-elections-2019-jagan-reddys-win-marks-the-rise-of-the-prodigal-son/articleshow/69462170.cms" data-type="tilCustomLink" target="_blank">Jagan Reddy’s win marks the rise of the prodigal son</a>

Narendra Modi has retained India's iron throne and reduced rivals to dust

<ul><li>India's former telecom regulator Pradip Baijal has explained how India has had trouble managing its spectrum roll out for next-gen communications technology over the last few decades.</li><li>The latest in this telecom - 5G - is also facing similar hurdles in India, with the government yet to finalise guidelines and announce auction of airwaves.</li><li>He also explained how different use-cases of 5G are relevant and important to India - from the point of view of consumers as well as the industry.</li></ul>India always had problems in dealing with spectrum. We wasted valuable wireless spectrum for fixed line services in 1995, unlike any other country, after the erroneous decision that expensive mobile phones were not for the poor Indians. The decision was reversed in 2004, but led to a lot of inspired criticism by mobile incumbents. Earlier, the government approved a Convergence Bill in 2001, for more efficient use of spectrum, but was not approved. The government/regulator, therefore, approved a Unified Access License in 2004, reduction in interconnect charges and tariff forbearance. But, it took inefficiently long to bring in these changes (it had to be done in stages, by many regulatory efforts). Unified License reduced tariffs 50 times, but increased government revenues. Mobile numbers growth immediately increased 10 times, and gradually 200 times, three times ever the leader, China. 3G spectrum auctions were efficient later, though delayed, and showed the huge loss in 2G allocation and crony capitalism involved, the basis of the CAG report. The allocations led to litigation and differing and controversial judgments by the Supreme Court/CBI Court, the issue still remaining open, but this was one of the issues on which the UPA lost heavily to NDA, in the ultimate court of elections in 2014. 4G auctions were conducted efficiently, even though they were delayed, and now we have come to 5G auction issues, with an ET news item commenting, "India is set to miss the '5G bus' following the lack of preparedness, unavailability of sufficient spectrum, absence of encouraging use cases, and uncertainty around radio waves sale for the next generation of telecom services." This is despite India appointing A.J. Paulraj (winner of the Marconi Prize) Committee to give the recommendations to the steps required. They gave the report in mid-2018, and despite giving the schedule, we have not moved fast. In the past, Prime Minister Modi-led government maintained that it "won't afford to miss 5G bus" like in the case of 2G, 3G, and 4G technologies that were deployed in India way later than many countries, thus losing the many early user advantages. 5G and India Before we discuss, let us understand the nature of use of 5G. For a layman, 5G is just next generation wireless infrastructure which will provide them voice and data services. However, it will impact much more due to its bit-level intelligence characteristics. 5G will provide an array of network intelligence which will get translated into precise and demand-led resource allocation. 1G came in 1980s and provided basic voice services, 2G in 1990s and enabled voice and SMS services due to its digital standards, 3G came in 2000s and introduced data services along with voice and SMS that enabled multimedia services. 4G pure IP network, came in 2010s, and enabled the application services and partially merged the telecom and information technology which gave boom to platform services. The architecture of 5G is designed to handle the connection of billions of devices including industrial machines with seamlessness and reliable data transfer with much faster speed. 5G is not only about high speed boost but it is about the intelligence at the bit level and low latency which will make it the foundational tech for multiple new tech., including self-driven cars, AR &amp; VR, telemedicine, robotic surgery, powering future smart cities, IoT, m2m, AI and manufacturing. 5G will change the future war fighting too due to increased situational awareness to increase the command and control of the battlefield. Once these networks come, 2G and 3G networks can be abolished, like in other countries for better overall spectrum utilization. We have not started. Industrial revolutions and change It has been shown that industrial revolutions change the world. Hirschman had said that these revolutions occur every 70 years. This was proved in IR 1.0, 2.0 and 3.0. The US and the West's GDP went up five to six times in IR 1.0 &amp; 2.0, while India and China went down 10 times (colonial loot was also the reason). Growth reversal with IR 3.0 But IR 3.0 changed the world with the technology being on a connected net and with globalization, available to the Third World (right from the beginning). Of course, the US helped China a lot post 1980, in technology dispersal, and helping China with accelerated WTO membership in 2001. This led to China growing eight times and India 2.5 times in a few years. IR 4.0 and 5.0 The world is now moving to the fourth and the fifth industrial revolutions in quick succession. Providentially, these revolutions are also happening on the same wire or wireless lines as in IR 3.0, and we have bright Indian minds working in the digital sector like Nadella, Pichai, Arvind Kuar, Banga, Tata, Kohli, Nilekani, Narayana Murthy, Patni, Soota, Premji, and millions of others located in Silicon Valleys around the world. The most exciting additions to the list are Mukesh Ambani, Sunil Mittal and Kumar Mangalam Birla. They have kept the mobile sector alive despite crony capitalism, and given the appropriate ambience, should do very well now. Through them, and despite Covid, the world has shown confidence in the Indian economy. China should do well because of enormous investment, past technology thefts, uninhibited US support till 2015, and R&amp;D. The fifth IR will happen with IT getting connected to human minds (AI and beyond). IR 5.0 having reached the human mind, perhaps cannot move beyond, and the 6th IR has to be in another area, maybe the planets, as visualized by Jeff Bezos. Again, India is well-placed. Creating an appropriate environment is the key. Role of private sector It may also be recalled that the 2G rollout had created strong private sector companies and from 10 per cent private network, it had gone to 80 per cent (though the public sector had grown too). Later, despite crony capitalism, they had survived, and are today, India's main hope to take us forward. With 5G networks being more powerful, they will surely impact GDP growth much more than the earlier generation networks and move the country towards Namo's $5 trillion economy in 2024. Fiscal pressure on the government - we can ill-afford to ignore: We are today also hit by Covid, huge bank NPAs, financial crisis, fiscal deficits and fall in investments. 5G rollout is an opportunity for huge network (and downstream) investments by existing private sector companies and their networks all over the country, without putting any fiscal deficit pressure on the government. I had, therefore, anticipated in my China book and articles, that the present is 'providence' for India, like it was 'providence' for China in the 80s with an imaginary 'cold war'. Pricing issues A word about pricing here - our entire 2G revolution came after tariff forbearance, and liberal availability, connectivity and regulatory reforms. Obviously, once 5G revolutions get moving, the disruptions would be higher. Indian economy/GDP did well during IR 3.0, its DNA being more IT-centric, demonstrated by high growth in these sectors during some periods of IR 3.0, when regulations were right (2004 to 2010), particularly vis-a-vis China, and also the Indian minds being more IT-centric, demonstrated by the success of IT (software) and mobile revolutions. World digital economy In 2019, the world celebrated the first full year when more than half of the world (51.2 per cent, or 3.9 billion people) had begun to participate in the global digital economy by logging onto the internet, from almost zero a couple of years back. The world is turning fully digital, and networks converging very fast. China has touched 840 million subscriber base and will be 1 billion at the end of 2020, with superior speed, whereas India has only touched 600 million broadband subscribers. The world will thus transform itself to a form that during IR 4.0 and 5.0 the versatile 4 and 5G networks will be more valuable than all other infrastructure, like roads, rail and air transportation systems etc. Looking at the future, China has created companies which are leading in 5G, AI, quantum computing and other digital products and shaping up the digital behaviour of the people because they are deploying networks faster and learning by doing it. China is also leading in the standardization and patents of the digital ecosystem, manufacture of equipment etc. In contrast, the Indian 5G process is yet to commence (allocation of spectrum and installation of 5G equipment), though we have done extremely well despite late start in the past. India can grow in IR 4.0 given its human capital pool, the start in the use of algorithm prowess and an established IT hub, only if we install 4G and 5G systems adequately. But expensive and presently unviable (for India, since IR 4.0 and 5.0 industries and services have not started) 5G systems are likely to come in slow. Also, the spectrum and equipment prices are anticipated to be high. Unless both spectrum and equipment prices are low and heavily backloaded, I do not see India coming out of the jigsaw puzzle, and not falling back severely in the digital war. And if we miss India's turnaround moment, India's vast market and trained manpower will be used by advanced countries to develop 5G / IR4.0 and 5.0 networks fast. The Paulraj Committee recommended that 5G will mature between 2019 and 2024. India should take lead and become an innovator in 5G applications. (Pradip Baijal is former Secretary, Disinvestment and former Chairman, TRAI. This article is in continuation of his book, Containing the China Onslaught, published by Quadrant, and available on amazon.in and walmart, and further to a review of China's growth in Defensive Offence) <div type="Youtube" id="gFmRP3whXmU" title="Pradip Baijal Explains History of China's Economic Rise." thumbUrl="https://i.ytimg.com/vi/gFmRP3whXmU/mqdefault.jpg"></div>

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