Atlas Elektronik, which set up a wholly-owned subsidiary in India in 2013, has won the two medium-sized contracts within a year-and-a-half of re-entering the Indian defense market.
Under the first contract signed in July 2013, Atlas Elektronik will upgrade 64 SUT (surface and underwater target) torpedoes for Indian Navy's four German-origin HDW Shishumar-class submarines. Interestingly, upon upgrade, these torpedoes can also be used on the six under-construction French-origin Scorpene submarines, the first of which is scheduled for induction into the Indian Navy in 2016. The entire delivery would be completed in 50 months from contract inking.
Under the second contract, signed in November 2014, Atlas Elektronik will directly supply six Active Towed Array Sonars (ATAS) to the three Delhi-class destroyers and the three Talwar-class warships. Further, the German company will help Indian public sector Bharat Electronics Limited (BEL) to produce 10 of the ATAS in India, "as the Indian Navy wanted to standardize its anti-submarine capability."
These India-produced ATAS will enhance the submarine detection capability of India's three each of Kolkata-class and Shivalik-class, and four Kamorta class anti-submarine corvettes. These warship projects are indigenous programs at Indian shipyards.
India's Defense Minister Manohar Parrikar had on Sep.30, 2015 commissioned INS Kochi, a stealth guided missile destroyer, in Mumbai. INS Kochi is only the second of the three Kolkata-class destroyers India is currently constructing. INS Kolkata was commissioned into the Indian Navy by Prime Minister Narendra Modi in August 2014. The third warship in this class is slated for commissioning a year from now. The integration of the ATAS on the already commissioned warships of these three classes as and when they dock for scheduled refit and maintenance works.
"Toward array sonar can help the warship see underwater over the horizon. It vastly increases the chances of the warship detecting a submarine. In reality, submarine is a very powerful weapon platform and stealth is its basic nature. The closer the submarine is to the ship, the less time the ship has to do anything about it. "There is no point in having lots and lots of ships that cannot detect submarines. These become sitting ducks. So, the Navy has been cognizant of this fact and that's why they have been pushing very hard to try and equip all the modern warships with towed array sonars," said Atlas Elektronik India CEO Khalil Rahman in an interview on Sep.29, 2015. None of these 16 Indian warships have the ATAS or the capability to detect submarines over the horizon.
"Anti-submarine warfare is the main pre-occupation in the Indian Ocean at the moment. India's neighbors are all acquiring submarines and deploying in the Indian Ocean. China have a lot of submarines and these have ventured into the Indian Ocean region. Pakistan has submarines. Vietnam, Indonesia and Thailand are getting submarines. Singapore, South Africa and Australia have submarines. Basically, the Indian Ocean Region is becoming full of submarines, leaving aside any U.S. activity and France maintaining a submarine fleet here, being a littoral State. There is a lot of submarine activity in the Indian Ocean now," Rahman said.
Atlas Elektronik is also competing for the Indian Navy's projects for supplying anti-submarine systems and torpedoes, such as the futuristic six-submarine Project 75I program, the 16 shallow water craft program, the project for integrating the IADS Anti-Submarine Warfare Suite for Project 15B and 17A, the 12 Mine Counter Measure Vessels that are to be built by Goa Shipyard, and towed array sonars for the existing fleet of nine Kilo-class submarines.
Partnering Pipavav For Torpedo Manufacturing Base In India
Atlas Elektronik is also working towards establishing a manufacturing base for its torpedoes in India, ultimately through a joint venture, for which it has signed a Memorandum of Understanding with Pipavav Defence and Offshore Engineering Company (PDOC) that was earlier this year taken over by Anil Ambani's Reliance Group. The MoU with Pipavav Defence and Offshore Engineering Company was signed in February 2014.
"In the long run, we need to partner with the Indian industry. The rules are such that Atlas Elektronik cannot manufacture without a 49 per cent Joint Venture (JV)," Rahman said.
"Up until now, most the projects to which we have sold were to supply equipment directly from Germany. But it is now clear, as some of the projects now are coming out to be 'Buy and Make India' category, particularly the new ones. In which case, we need to partner to form a JV in order to participate. The problem with many of these is what comes first - the JV or the order. There is no point having a hollow shell JV until you have some business. Because many of these big procurement progress at their own pace, it takes some time to get an order to find a purpose for the JV.
"Nevertheless, especially in the torpedo area, we have moved forward quite a lot with our partner, PDOC, which has now been taken over by the Reliance Group. We are continuing to work with PDOC. We spent a lot of time looking at the supply chain in India. So, it is really to have an Indian project.
"It is not a question of finding an integrator, who is able to import kits and assemble them in India. That doesn't really transfer technology. What we need to do is to develop a supply chain, so that the sub-components are built in India and assembled together. This summer, our team from Germany came and visited a number of companies in India - small and big and they were very much impressed by the SMEs, particularly in South India. They found that they were very good quality companies that were really well qualified to fit into the supply chain, such that they could even be considered as good enough to be qualified as part of the global supply chain. So that's very encouraging.
"In the long run, it will have to be a JV, for the torpedoes. It is not just signing an agreement to create a JV, what's more important is to build up the capability on the ground to do it."
Technology Transfer To L&T For Diver Detection Sonars
Atlas has also joined hands with L&T to bid to supply Portable Diver Detection Sonars (PDDS) to the Indian Navy that enables the ships to keep a watch for enemy divers while at anchor or docked at a port. Being a 'Make in India' program, Indian companies have to tie-up with foreign original equipment manufacturers for the PDDS project.
"The technology will be transferred from Atlas UK to L&T. L&T will manufacture everything for the PDDS. Hence it is a very deep technology transfer. 'Buy and Make (Indian)' requires 50 per cent indigenization package. But in this case, the percentage will be much higher. This is an old tender that came out in 2011 and the Field Evaluation Trials took place in August 2015," he said.
Rahman said that there were so many things that need to change in Indian defense procurement process to make it more efficient, faster and effective.
"I think everyone starts with very good intentions, but what happens in India generally, I am not talking specifically about Defense Procurement Procedures, things are very heavily regulated and we end up with complicated procedures to do anything. One is simplifying things and the other is making decision. You should be able to make decisions. Even if the decision is made, the procedures get more complicated. We tie ourselves up in bureaucratic knots sometimes. I also think we sometimes don't take a long-term view of things.
"But things are beginning to change. Some of them are moving very fast. Some years ago, the shipbuilding industry witnessed that change, with PDOC and L&T and others starting shipyards. I think we should not over-regulate. It has to make business sense for the private players, they have to have confidence in the system, there has to be fairness and transparency, as people will not participate if they think there is no fairness."