1. D1: Exercise Komodo
  2. D2: Defense FDI reformed
  3. D3: Navy War-room leak & Transfer of Technology contracts

D1: Exercise Komodo

  • @Indonesia (28th March to 3rd April) 2014
  • Navies of many countries: India, Indonesia, USA, China, Russia etc.
  • India has sent INS Sukanya with Chetak helicopter.

This exercise will benefit in future operations for:

  1. Humanitarian Assistance
  2. Disaster Relief, civilian rescue
  3. Oil Leakage Control
  4. Sports and Social Interaction among defence personnel.

D2: Defense FDI reformed (Sep 2014)

Reforms In the Defense Sector FDI in India
Old policy New policy
FDI 26%
  • 49% govt. approval
  • Above 49% also allowed, if access to ‘ modern and state of art technology’
FII banned
  • 24% automatic approval
  • Allowed FPI, FII, QFI, NRI, foreign venture capital investment.
  • Only 24% because hot money and sometimes hard to trace real owners.
JV Single Indian resident to have 51% share NO such requirement
Duration Three years lock-in period on foreign investor. No such requirement.


Who approves what?
Investment limit Approving agency
Upto 1200 crore FIPB
>1200 crore CCEA
>49% FDI CCS (cabinet committee on security)

Challenges in Defence FDI

  1. 49% FDI means the foreigner still can’t get management control of the Joint ventures with Indian companies.
  2. Hence they’ll be hesitant in transferring the proprietary technology to India.
  3. This was the same reason why old policy did not attract large investmnt.
  4. Secondly, Government has yet to notify what constitutes “modern and state of art technology”, (because there more than 49% FDI permitted, and foreign companies may get attract to invest and transfer secret technology.)

D2: Defense Procurement:

Defense Acquisition Council (DAC) is chaired by Defense Minister.
This DAC cleared following proposals (in August 2014):

  1. Stopped the tender process to import helicopters for army. (perhaps don’t want to burn hands again like UPA did with AgustaWestland)
  2. Instead, Government will now buy 400 desi helicopters from Hindustan Aeronautics Ltd. for moving men and material in border region.
  3. Will induct 118 new (Desi) Arjun tanks.
  4. Will produce Self Propelled (SP) guns to mount on  Arjun tank- this will give us advantage in swift desert battles in Rajasthan and Western Border.
  5. Will upgrade six submarines.

D3: Navy War-room leak & Transfer of Technology contracts


  1. What do you know about the Navy War room leak case? What is the present status?
  2. What are your views on transfer of technology (ToT) contract?

What is Navy war room leak?

  • This is about spy scandal in purchase of Scorpene submarines from France.
  • Directorate of Naval operations in New Delhi is known as Navy war room.
  • Ravi Shankaran, a retired Naval officer cum London-based arms dealer cum relative of then Navy chief Arun Prakash.
  • Ravi acquired certain sensitive documents from Navy war room, and leaked them to Thales (French company that makes Scorpene submarines).
  • Another middleman Abhishek Verma helped transferring money.

Year 2005:

  • Then Defence minister Pranab Mukharjee approved the deal.
  • Navy conducts a secret inquiry, dismisses three officers but nothing reported to courts or CBI.
  • Media exposes the scam. CBI starts inquiry but at turtle speed.

Year 2007

  • Prashan Bhushan filed PIL.
  • Delhi HC orders CBI to make haste.
  • CBI interrogates Ravi’s partners, and finds out Ravi escaped India without any valid travel documents. He may be hiding in UK, Sweden or some other European country.
  • CBI locates him in UK, gets an arrest warrant.
  • Ravi surrenders to London court.
  • British Secretary of State signs Ravi’s extradition treaty.
  • Ravi challenges it in London court.
March 2014
  • London high court rules in favour of Ravi, that he cannot be extradited to India.

Transfer of technology (ToT) contract?

  • These Scorpene Submarines were to be acquired under transfer of technology (ToT) contract.
  • Meaning, the seller company (Thales, France) will not only sell the “product” (submarine), but also handover the technology of its critical components.

But, until now the problem was= Seller Company [Original equipment manufacturer/OEM] would demand

  • That we must pay them additional license fees/royalty for such tech.transfer. and OR
  • That our local companies (Defence factor/DRDO etc) CANNOT export or sell items produced with such technology.

But, Defense Procurement Procedure (DPP) 2013 has fixed this issue (atleast in theory!)

DPP-2013 says that:

  1. The TOT should be provided without licence fee
  2. There should be no restriction on domestic production, sale or export- of any items manufactured with help of such ToT technologies.

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