India's heaviest satellite GSAT-10 launched successfully

 India's advanced communicationsatellite GSAT-10 that would augment telecommunication, direct-to-home broadcasting and radio navigation services was successfully launched early today on board Ariane-5 rocket from Europe's spaceport in French Guiana in South America.

At the end of a smooth countdown lasting 11 hours and 30 minutes, Ariane-5 ECA rocket injected GSAT-10 into an elliptical Geosynchronous Transfer Orbit (GTO), very close to the intended one, after a flight of 30 minutes and 45 seconds, Indian Space Research Organisation said. 

At 3,400 kg at lift-off, GSAT-10 is the heaviest built by Bangalore-headquartered ISRO.GSAT-10 project is a Rs 750 crore mission that includes the cost of satellite, launch services by the European space consortium Arianespace and insurance. 

Soon after GSAT-10 was hurtled into space, ISRO's Master Control Facility (MCF) at Hassan in Karnataka took over the command and control of the satellite and declared the launch of Indian space agency's 101st space mission a success.

An Ariane 5 rocket carrying two satellites, ASTRA 2F and GSAT-10, blasts off on September 28, 2012 from the European space centre of Kourou, French Guiana. The ASTRA 2F, built by Astrium, which had a lift-off mass of six tonnes, will provide satellite television links to Africa, Europe and the Middle East. The GSAT-10, which has a lift-off mass of 3.4 tonnes and is operated by the Indian Space Research Organisation (ISRO), carried equipment for GPS and GEO navigation systems.

"The satellite is in good health", ISRO said after checks on various subsystems of the spacecraft, adding all its parameters were satisfactory. 

Blasting off from the launch pad at 2.48 am (IST), Arianespace's rocket first injected European co-passenger ASTRA 2F into orbit followed by GSAT-10.

An Ariane 5 rocket carrying two satellites, ASTRA 2F and GSAT-10, blasts off on September 28, 2012 from the European space centre of Kourou, French Guiana.

With a 15-year design life, GSAT-10 is expected to be operational by November and will augment telecommunication, DTH and radio navigation services by adding 30 more to the much-in-demand transponder capacity, now hit by a crunch.

ISRO Chairman K Radhakrishnan, who was at MCF at Hassan at the launch, said, "By November 2012, we expect to operationalise GSAT-10 and make it available to the user community.

GSAT-10 is fitted with 30 transponders (12 Ku-band, 12 C-band and six Extended C-Band), which will provide vital augmentation to INSAT/GSAT transponder capacity. 

With a scramble for transponders, India is now managing a significant part of its requirement by leasing foreign transponders to meet the domestic demand. 

GSAT-10 also has a navigation payload - GAGAN (GPS aided Geo Augmented Navigation) -- that would provide improved accuracy of GPS signals (of better than seven metres) to be used by Airports Authority of India for civil aviation requirements. 

This is the second satellite in INSAT/GSAT constellation with GAGAN payload after GSAT-8, launched in May 2011. 

GSAT-10 was originally scheduled for a Sept 22 launch, but was deferred after scientists detected a small glitch -- one gram of dust -- in the upper part of the rocket. 

GSAT-10 Project Director T K Anuradha, Additional Secretary of Department of Space, S Srinivasan and Director of ISRO Satellite Centre S K Shivakumar were among key ISRO officials who were in French Guiana for the launch. 

Shivakumar said GSAT-10 would give an impetus to the 'communication revolution' in India. 


An Ariane 5 rocket carrying two satellites, ASTRA 2F and GSAT-10, blasts off on September 28, 2012 from the European space centre of Kourou, French Guiana.

Arianespace Chairman & CEO Jean-Yves Le Gall said at the launch base that ISRO is a highly loyal customer, as the collaboration with it began more than 30 years ago with its Apple satellite's orbiting by the third flight of an Ariane vehicle - an Ariane 1 version launched in June 1981. 

In the coming five days, orbit raising manoeuvres will be performed to place the satellite in the Geostationary Orbit with required inclination with reference to the equator, ISRO said. 

The satellite will be moved to the Geostationary Orbit (36,000 km above the equator) by using the satellite propulsion system in a three step approach. 

After the completion of orbit raising operations, the two solar panels and both the dual gridded antenna reflectors of GSAT-10 will be deployed for further tests and operations. 
It is planned to experimentally turn on the communication payloads in the second week of October, ISRO said.

After the successful completion of all in-orbit tests, GSAT-10 will be ready for operational use by November. GSAT-10 will be positioned at 83 deg East orbital location along with INSAT-4A and GSAT-12.

How the retailing world stacks up globally and the challenges it faces in India

With foreign direct investment ( FDI) in retail, India's $450-billion retailing industry is about to undergo a big change. What you buy and how you buy will change too.

Pushing for this change will be an entire brigade of big retailers. The big daddy of retail — Walmart — has already announced that it will be here in 12-18 months. Others like Metro and Tesco too are figuring out their India strategy. They all will do their best to stir up the Indian shopping experience.

In the next five-ten years expect many more global retailers to get into the fray in India. Who will they be? What are they like? And how will they fit into Indians' shopping basket? These are questions with no easy answers. But global pecking order should hold a few clues.

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More importantly, how is the world of global retailing (born in the 20th century) getting redefined in the 21st century? What are the opportunities and challenges that the big retailers see and how is that reshaping the landscape in the industry?

Answers for these questions will help us get a perspective on global retailing. But it will also offer clues into how Indian retailing will shape going forward.

As India and Indians take tentative steps to embrace modern retail, ET Magazine brings to its readers a global perspective on how the retailing world is stacked up and a few trends that are reshaping it:

Changing Pecking Order 

First the pecking order. Of course Walmart is the biggest of them all. Based on 2010 retail sales figures, aDeloitte 2012 global report puts the top 10 retailers as follows: Walmart, Carrefour, Tesco, Metro, Kroger, Schwarz, Costco, The Home Depot, Walgreen and Aldi — in the descending order.

The nationality of these retailers is revealing. There are five US-based retailers (the biggest consumer market till recently), three German and one each from the UK and France. But that order is seeing some flux. "Many of the new, fast-growing players are coming from China, Japan and Australia," says Shyamak Tata, partner, Deloitte Plc, a consultancy firm.

A ranking done by Planet Retail, a global retail consultancy firm, based on total sales of 2011 sees entry of two Asian (Japanese) retailers Aeon, Seven & I and one French retailer Casino. The entry of Asian retailers in the top 10, mirrors the shift that the world economy is undergoing from the West to the East. Interestingly, US-focussed Home Depot and Walgreen make an exit from the Planet Retail's top 10 ranking.

Their pace of growth too tells a story. Look at Carrefour, the second-largest retailer after Walmart. Its total sales are expected to grow from $123 billion in 2006 to $161 billion by 2016, a growth of 31% over a decade, according to the Planet Retail data. As compared to this, Asian retailer Seven & I is expected to grow from $62.5 billion in 2006 to $131 billion by 2016, a rise of almost 110%.

But the world's biggest retailer, Walmart, seems to be maintaining its competitive edge. From around $368 billion in 2006 to an estimated $607 billion in 2016, it is expected to log a topline growth of almost 65% over a decade. "The business is undergoing a structural shift.

Action is shifting from slow mature markets to emerging ones. And their successful big-box strategy is under threat with e-tailing. Retailers will have to rejig their strategy to maintain edge," says Natalie Berg, global research director, Planet Retail.

India angle: As India enters the world of organised retail, its billion-plus population and growing consumption power will receive a lot of attention from global giants seeking growth. Expect to hear many more to announce their India plans in future.

Retail is a Local Business

Of course global giants will look at India. But it is important to keep in mind that organised retailing has so far been a very local business — often dominated by local not global players, says Arvind Singhal, chairman, Technopak Advisors.

Most of the top retailers in China — from the Brilliance Group, to Suning Home Appliances, Gome Home Appliances to Dashang Group — are Chinese. This is when there are 25 global retailers vying for customers in the $2-trillion plus Chinese market.

China isn't an exception. It is the same in most other countries like Japan, Germany, France and the US. Most top global retailers — from Carrefour to Walgreen to Aldi to Home Depot get the bulk of their global sales from their home territory. There are some like The Kroger Co (fifth largest) and Target (11th largest) who only operate out of one country, the US.

Many global retailers have ventured out, but finding success hasn't been easy. Carrefour recently withdrew from Malaysia and Thailand and will shut down operations in Singapore. Walmart has had to close down its operations in Germany and South Korea.

In 2006, the US-focussed Home Depot ventured into China by acquiring a local company. But it has been struggling with its operations there. "The complex logistics and understanding of local customers make it very difficult for foreigners to crack the market. Local firms have a significant edge," says Singhal.

India angle: India, considered one of the most difficult markets in the world where food habits change every 200 km, may not be any different. The operating cost of an organised retail store is about 15% higher than a kirana store. India has among the highest rents per sq ft of space while the sales per sq ft are among the lowest. Global retailers, as much as Indian, are struggling to make profits. Some like Bharti Group may let its partner Walmart lead the way.

The Future Group too might get a global partner on board to continue the journey. But experts expect local players like the Tatas (it has a tie-up with Tesco), Birla and Reliance to show the way provided they get their act right and play their cards well.

Globalising to Chase Growth

With slowing growth in their home bases, the retailers are exploring newer markets in the developing world. Take for example Carrefour, which has a vast network of stores across the world but bulk of it sales still come from western Europe. It is now looking at Latin America and Asia seriously.

The same is true for the German Schwarz Group which operates Kaufland and deep discounter Lidl stores. The Europe-only player was focussed on central and west European market. However, growth in these places has tapered and it is now looking beyond to eastern Europe, Asia, the Americas and South Africa for growth.

This journey will not be easy as many like Carrefour, Walmart and Home Depot have realised it first hand. Most of them have had to exit a few countries or rework their strategies in these markets. The big retailers will need to go glocal — use their global experience and tap into local knowledge and management to operate in emerging markets, says Berg.

India angle: After lots of trial and tribulations, difficult markets like China have taught global retailers such as Walmart to be flexible and appreciate the importance of local knowledge. Humbled, today it marries well its global learning and best practices with local understanding to handle emerging markets. India, late to the global retailing party, should benefit from this.

Death of Big Box?

The story of big retail has largely been built around big-box strategy, which took birth in the middle of the 20th century. The retailers set up large hypermarkets, often outside the main city, where real estate was cheap and used the economies of scale and operational efficiency to make money. Historically, big retailers have entered a new country through the hypermarket route before a full-fledged rollout.

But now this model is under threat. A Canadian retailer Rona is pushing for proximity stores while closing down its big-box outlets. Walmart is testing a smaller-format Walmart Express aimed at urban locations. Another retailer Target has opened City Target in downtown Chicago. Targeted at the local population, it will be the first Target store with no parking facility.

"Proximity retailing looks to address the convenience of shoppers through easily accessible stores offering an edited assortment to fulfil the top-up/impulse/distress needs of shoppers," says Himanshu Pal of Kantar Retail in a recent report.

But why are retailers looking at newer formats? A combination of factors is pushing big-box driven retailers to think small. In mature markets like the US, retailers built big-box stores on the outskirts of the cities, where space was cheap and plenty. That market is saturated. "One last opportunity for them are the cities which are still under penetrated," says Berg.

Greying population in mature markets, where people prefer neighbourhood shopping, is catalysing this shift. Not to forget that technology too is shaking up the business — but more on this a bit later.

All this means that big retailers, used to making money on big-box stores, have to learn how to make money from small stores. Located in the middle of the city where real estate is scarce and expensive and replenishing merchandise in these stores is difficult. Making money is even more so in this proximity model which leans on high footfalls and capture rate to make money.

India angle: This learning will come handy for many of the retailers with aspirations in India. Densely populated India, with costly real estate, will not afford retailers the comfort to go for a full-blown big-box strategy. Indians are also used to shopping for routine stuff at their neighbourhood stores rather than driving long distances.

Tech-edged Challenge

Technology has redefined many industries. Retailing isn't an exception. Guess who is keeping Walmart awake at night? Amazon. Three factors — low prices, wide assortment and everything under one roof — helped the big-box retail model become so successful in the past. Now, e-tailers like Amazon offer all that with more convenience, better price and more variety. Not to forget that over time, retailers like Amazon have also built customer trust that they can exploit.

The growing popularity of "showrooming" is another challenge big retailers face. Showrooming is the act of examining a product in a brick-and-mortar store and then purchasing it online at cheaper rate. It does not help that today's consumers are armed with smartphones and can instantly compare the prices while walking down the aisles of stores and make an informed decision.

Further, e-tailing is growing rapidly even as brick-and-mortar-focussed retailers such as Best Buy and Border book stores struggle to survive. Almost all retailers are laying thrust on tapping the internet. Using social media to connect with customers is high on the agenda. Tesco, for example, recently offered double Clubcard points to its customers who used Facebook to like, share and buy its products on its website. Dell is rewarding its customers who promote Dell products online.

But they have a long way to go as Walmart discovered recently. To promote one of its products, it announced a contest where it would send American rapper Pitbull to a Walmart store that received the most new Facebook Likes. A cheeky online campaign #ExilePitbull was launched to send Pitbull to the remotest Walmart outlet near Alaska — and it won.

Big retailers are also trying hard to reinvent their big-box strategy. Proximity stores that know the neighbourhood well and stock appropriately and cannot easily be replaced by internet shopping is their first weapon. Most retailers are pushing deeper into private labels which help them avoid direct price comparison with other big brands, takes the conversation away from just prices and offers them better margins.

Some retailers are also trying newer formats. For example, Auchan in France has innovated on a hybrid model — where you place order online but drive and collect the order from a physical store. The format has seen good success and is being followed by many other retailers.

India angle: India is late to the organised retail world. It can leapfrog. Expect global retailers, with no legacy issues here, to experiment with some of these new formats when they come.

Pedal power will light up Mysore Palace this Dasara

On the first day of Dasara, Mysore Palace will be illuminated not with regular electricity but with pedal power. "The Mysore Palace Board and district administration, in association with a private telecom company, plans to fit dynamos to bicycles and generate power," said assistant executive engineer, Mysore Palace Board Parashiva Murthy.



Ten cycles will be placed on the palace premises and visitors can pedal for as long as they wish. Power is generated using a dynamo and the generated power will be stored in batteries and used to light up the palace on Oct 16.

Asked if there'll be sufficient power to illuminate the entire palace, he said the palace has 98,260 bulbs of 15 watts each and every hour, 1 megawatt power is needed to light up the palace. Cycle-generated power will not be sufficient to illuminate the entire palace but just a certain portion of it.

"The effort is to spread the message about the benefits of cycling and we hope the response is positive," Mysore Palace Board deputy director TS Subramanya told STOI. The palace gets over 5,000 footfalls every day.

Deputy commissioner PS Vastrad said, "We've discussed this project with a private firm which will install the necessary equipment required for power generation." In earlier efforts to popularize cycling, the district administration introduced the cycle-to-work culture in which bureaucrats came to office by bicycles.

Times View

The use of dynamos to generate electricity is ages old, but the idea of using such power to illuminate the centre of Karnataka's Nada Habba is innovative. Though the bicycles will light up only a part of the Mysore Palace, it's an eye-catching demo of the advantages of using bicycles. Visitors to the palace during Dasara can do their bit for eco-friendly illumination. The district administration's efforts to promote cycling are worth emulating.

Why every major country needs a Kudankulam

Watching hundreds of protesters brave the sea at Kudankulam and a tough-minded Tamil Nadu administration, it might seem that India is ploughing a lonely furrow, pushing for nuclear energy when the world is seemingly turning away from it.

After Japan's Fukushima disaster in March 2011, a tsunami of public opinion blew away a burgeoning nuclear renaissance. Germany, anyway ambivalent about nuclear power, moved swiftly to cut out nuclear power from its energy mix.

Environment minister Norbert Rottgen announced Germany would shut down all its nuclear plants by 2022. Eight reactors were immediately put out of work. Germany decided to go for off-shore wind farms, coal power plants but with carbon sequestration technology, and solar energy.

An irate Japan, reeling from the radiation disaster, trained its ire on nuclear power. Last week, the Japanese government announced it would phase out nuclear power by 2040. In the months after Fukushima, Japan shut down all its nuclear reactors for safety checks.

France, that strong proponent of nuclear power, too buckled. Last week, President Francois Hollande declared that France would down its 78% dependency on nuclear power to 50%.

The last word apparently belonged to Jeff Immelt, the chief of GE. In an interview to FT, one of the world's largest makers of nuclear equipment said, "It's just hard to justify nuclear, really hard. Gas is so cheap and at some point, really, economics rule."

Energy Wars

India was looking at a nuclear renaissance of its own after a US-India nuclear deal in 2008 opened the door to internal cooperation in building nuclear plants in India. India's nuclear power plants, mostly set up during the sanction years, provide only 3% of the energy mix. But the first two plants at Kudankulam, being established with Russian assistance, ran into popular protests, with the local population raising questions of safety. Should India go down the Japanese route?

Hold your horses. Let's look at the world more carefully. Can Japan really turn off its nuclear power? Japan got around 30% of its electricity from nuclear power before Fukushima, and was planning to raise that to 50%. Now Japan, a resource-poor nation will be importing 96% of its energy from overseas, mainly fossil fuels.

This is expensive, not to speak of ruining all environmental standards. With its economy in chronic shortage, will Japan survive raising the costs of manufacturing and recovery to such an extent? Secondly, almost all of Japan's oil and gas is sourced from West Asia, and all of those super tankers traverse the difficult waters of Straits of Hormuz, South and East China Seas.

Japan-China tensions are running high. Why would Japan want to hand over its energy security keys to China which could block access? Less appreciated too is the fact that Japan's nuclear deterrent would take a heavy beating if it turns away from nuclear power.

Japan is not an overt nuclear weapons state, but it's famously known as being a screwdriver's turn away from being one. It could become a costly security mistake. Small wonder then that Japan's cabinet on Wednesday stopped short of a commitment to phase out nuclear power.

Germany's alternatives are a little better. Moving tofossil fuels will hit at the heart of the green movement which wants Germany to slash its carbon emissions by 2020 to 40% below 1990 levels. Germany already leads the pack in solar panels and wind turbines.

But wind turbines are no favourite of wildlife conservationists, they want turbines offshore, which makes them expensive. Back-of-the-envelope calculations say you need 2,000 giant turbines, covering over 350 square miles to generate equivalent power as an 1,154 MW nuclear reactor.

Nod to Nuclear

When you get past the romance of solar and wind, two obvious things strike you — a nuclear power plant can give you steady, uninterrupted, predictable power. Guess what — the sun isn't shining all the time and neither is the wind blowing at optimum generating speeds. Besides both solar and wind power are great for domestic use, but not industrial use.

On the cost front, the cost of a nuclear power plant incorporates the cost of waste and decommissioning. Not fossil fuels, where the cost in terms of human and environmental damage is incalculable. In India, where coal mining is dirty business, land acquisition is a problem and imported energy is hopelessly expensive and uncertain, we should not turn our back on nuclear power. Yes, there are costs and risks, but so is fracking for shale gas, tar sands, heck, even oil and natural gas.

So are the Kudankulam protesters wrong? No, but we must be clear that the concerns are about safety not nuclear power. It is correct for citizens to grill the atomic energy establishment on safety. India's DAE and AERB need to be up to speed on safety measures and develop more transparent methods of informing the population. Last week, the DAE said it would ask IAEA to review its nuclear regulatory process which has come under severe criticism.

And thankfully, in many parts of the world, there are more sensible countries around. The UAE plans to build four nuclear power plants of a total 5,600 MW at $20 billion, the first of which will roll out in 2017. South Korea won that contract from under the noses of the market leaders, France.
 
Turkey is building its first nuclear power plant in Akkuyu with Russian help in another $20-billion deal. The UK is getting the French to build its next nuclear power plant, albeit under popular protest. It's time to think beyond a disaster.

The Gujarat miracle: No denying the economic advances the state has made under Narendra Modi

I recently wrote about why the accomplishments of chief minister Nitish Kumar - that at last bring hope toBihar - could not be underestimated. Today, I turn to Gujarat, which has been generally more prosperous in the post-Independence era and has performed impressively under chief minister Narendra Modi. Critics who insist on viewing everything related to Modi through the 2002 lens and, thus, fail to separate their economics from politics have fallen short of 20/20 vision.

Begin with growth. The relevant comparison here is with larger, richer states. Based on per-capita Net State Domestic Product (NSDP) in 2009-10, Gujarat ranks third, behind Maharashtra and Haryana but ahead of Tamil Nadu, Kerala, Punjab and Karnataka in that order.

Modi came to office in October 2001. In the following eight years spanning 2002-03 to 2009-10 (2002-10), NSDP grew at 10.5% annual rate in Gujarat and at 10.1% in the nearest competitor, Maharashtra. The rate during the preceding eight years, 1994-02, was 5.9%, behind only Haryana's 6.3%. Modi inherited a vibranteconomy and has taken it to new heights. Gujarat had ranked sixth in terms of per-capita NSDP in 2002-03. Outperforming Tamil Nadu, Kerala and Punjab, it moved up to the third spot in 2005-06 and has remained there.

While the performance in agriculture has received the greatest attention, perhaps the most exceptional feature of Gujarat's success has been the performance of manufacturing. Compared with the national average of 15%, manufacturing in Gujarat accounted for 27.4% of the Gross State Domestic Product (GSDP) in 2009-10.

Critics might say that this proportion has risen only one percentage point since 2002-03. But given the uphill battle manufacturing faces in India, even maintaining the share at this high level is a challenge. In all comparator states, this share has been below 20%. Moreover, with the exception of Punjab, none has been able to raise it by more than a percentage point during 2002-10.

With a high and rapidly rising per-capita income, it should come as no surprise that Gujarat has a significantly lower poverty ratio than India as a whole and it is fast declining. Based on the Tendulkar poverty lines and methodology, overall poverty in Gujarat fell by only six percentage points during 11 years between 1993-94 and 2004-05. But during just five years between 2004-05 and 2009-10, it fell an impressive nine percentage points. In 2009-10, the poverty ratio in Gujarat at 23% was almost seven percentage points below the national average.

The decline in poverty has been observed across all major social groups. My ongoing rese-arch with Megha Mukim finds the poverty ratio for the scheduled castes tumbling from 40.1% in 2004-05 to 21.8% in 2009-10. The decline has been less sharp for the more numerous scheduled tribes (ST) - from 54.7% in 2004-05 to 47.6% in 2009-10. Given the continued high absolute level of ST poverty, the state must think of imaginative ways to bring the fruits of growth to the tribal belts.

Critics frequently deride the exceptional growth in Gujarat by pointing to its lack of achievement in the social sectors. But they often do so by focussing on selective indicators. A consideration of a broad set of indicators hardly offers an indictment of the state even in social sectors.

The critics' case is particularly weak in education. Gujarat added 10 percentage points to the literacy rate during 2001-11, more than any other comparator state. At 79.3%, the literacy rate now stands one percentage point behind Tamil Nadu and three percentage points behind Maharashtra. Indeed, once we take into account the low literacy level of Gujarat at Independence, its progress looks more impressive than that of even Kerala.

To eliminate the bias that may result from differences in initial levels of literacy in evaluating the improvements in literacy, compare the three-decade progress in Gujarat during 1981-2011 to that in Maharashtra during 1971-2001 and Kerala during 1951-81. The initial literacy rates in these states during these periods were almost equal: 45% in Gujarat in 1981, 46% in Maharashtra in 1971 and 47% in Kerala in 1951. But three decades later, larger improvements by Gujarat had taken it ahead of both Maharashtra and Kerala.

On a longer-term basis, Gujarat's gains in the vital health statistics are nothing to scoff at either. If the levels of these statistics compare unfavourably, it is because it began the race with a disadvantage. In life expectancy, it began a year below the national ave-rage during 1970-75 and remained exactly there in 2006-09. Infant mortality rate per thousand live births in Gujarat exceeded the national average by 15 in 1971 but fell below it by two in 2009. Under-five mortality and maternal mortality rates in 2006-09 were, likewise, well below the national average.

Data do show Gujarat performing worse than the national average in child nutrition between 1998-99 and 2005-06, the latest period for which consistent data are available. The government can do much social good by targeted action in this area. The good news is that with high growth, the state has the necessary revenues to successfully address the problem.

While one can selectively poke holes in nearly every success story, taken as a whole, it is difficult to remain unimpressed by what Gujarat has achieved. I would be only too happy if its economic success spread next door to my home state, Rajasthan.

The writer is professor of economics at Columbia University.

$10 billion business: How did Israel become India’s most important partner in the global arms bazaar

Israelis never tire of telling the story of David Ben-Gurion's great respect for Mahatma Gandhi. The founder of Israel, Ben-Gurion's few possessions when he quit active politics and retreated into a shack in a kibbutz in his late years included a portrait of India's father of the nation which enjoyed pride of place in his small study. So deep is the connection between India and Israel, they assure you.

It's an irony then that India and Israel established diplomatic ties only as late as 1992 though the Jewish nation was founded in 1948, a year after India became independent. "But the two countries were always natural allies," says Yossi Melman, award-winning Israeli journalist. And nowhere is this "natural alliance" more evident than in defence where Israel has become India's second-largest supplier; in 2009, the West Asian nation briefly overtook Russia, India's largest and the oldest defence supplier. For all to see, the business relationship is thriving: in the past decade alone, Israeli defence sales to India surpassed $10 billion and the exports are expected to grow faster in the coming years. However, there is a flipside to it: Indian officials and industry insiders say there is more to this "flourishing partnership" than meets the eye. There is widespread bribing of Indian officials by Israeli companies, they say.

Famed Jewish Smartness

Corruption charges fly, but India continues to gain a lot from Israel's cutting-edge warfare technologies. "Nobody can beat Israelis in peddling weaponry. They are very, very good at it. It is tempting too because most often, they offer cutting-edge technology," said a former army officer who added that within weeks of Indian agencies detecting secret tunnels across the border from hostile neighbour Pakistan, Israelis have begun to suggest that India buy their "hot systems" to detect tunnels—which were of great use for Israel in cracking down on "secret" tunnel supplies from Egypt to Palestinians in Gaza. Israel's enemies transported everything from food to missiles through those underground tunnels.

"India will need them now because it has been found that there are tunnels dug by Pakistan to infiltrate to India," an Israeli official said asking not to be named.

The Israeli 'Invasion'
Israel is India's second-largest defence supplier, after Russia. With costs of Russian spare parts for replacement escalating by 300-500%, it won't be a surprise if Israel soon emerges as India's No. 1 supplier
Key Areas of Cooperation
Submarine-launched cruise missiles	Micro-satellite systems for surveillance	Laser-guided systems and precision-guided munitions	Anti-ballistic missile systems	Upgradation of all Soviet-origin aircraft, artillery, tanks, etc.	Various radars

Israel, currently, is under pressure to step up defence sales to rev up its flagging economy. A Delhi-based defence expert says the fall-out with Turkey, one of the country's major buyers in the Middle East due to political differences, has begun to hurt. The single-biggest buyer of Israel's defence products now is India, the world's largest defence spender. Conversely, India currently faces the prospect of buying $200 million worth of ammunition immediately (and another $1.5 billion worth of arms later) to make up for losses in the recent fires at Indian Army ammunition depots. Certainly, there are elements of desperation as well as opportunity there, says the government official referring to Israel's aggressive defence pitches. "Of course, India needs them too," he adds.
Ties That Bind

Thanks to Israel's highly advanced sensors (radars of various types), infiltration levels from across the border, from hostile neighbour Pakistan, have rapidly fallen over the past decade. Defence purchases from Israel are proof that the country has vastly improved its low-intensity warfare prowess. "No other country could make such a big entry in such a short time as Israel did in India's defence business," says a government official who didn't wish to be identified. Sure, it was a fait accompli, he hastens to add. The official agrees completely with Melman: "Both needed each other."


Major India-Israel Deals

In the short run, India has gained a lot from defence cooperation with Israel, especially in low-intensity warfare

1996	India bought an air combat manoeuvring system from Israel which was installed at the Jamnagar air base
1996	The same year, a $10-million deal was made to provide two Dvora MK-2 patrol boats for the Indian Navy
1996	Israeli firm Elta won a multi-million-dollar contract to upgrade the avionics on India's MiG-21 fighters
1999	Israel supplied arms, including ordnance, laser-guided bombs, and unmanned aerial vehicles, during the 1999 Kargil War between India and Pakistan
2008	Rafael was awarded a $325-million contract to supply IAF with Spyder missile systems armed with Python and Derby missiles
2009-2010	Israel delivered Phalcon Airborne Warning and Control Systems, equipped on Russian-built Ilyushin II-76s, to India
2010	The two countries signed a $1.4-billion contract for the development and procurement of Barak 8 medium-range surface-to-air missiles

Lure of 'Liberal' Deals

In military parlance, it is called "convenience and comfort" of inking deals. Israeli defence companies "uncomplicated" what is otherwise a rigamarole, says another government official about the process of acquiring defence equipment. Arielle Kandel, an expert on India at the Jewish People Policy Institute, a Jerusalem-based think-tank, terms it flexibility. "Israel reacts faster and more flexibly to India's needs than most other countries," she adds.

Defence experts agree: unlike western arms companies, Israeli ones don't subject India to lengthy interviews about the intentions of a buy. Nor do they insist on stringent conditions, political or otherwise. Efraim Inbar, political science professor at Bar-Ilan University and the director of its Begin-Sadat Center for Strategic Studies, says, "Israel, unlike others, is very liberal when it comes to technology transfer." The "easy-peasy process" has helped India and Israel bind very quickly, he adds. Kandel talks about the key takeaway: Israeli products are cheaper. They just made things so simple, the second official adds, emphasising that besides existing projects, India is keen on acquiring low-intensity warfare systems such as Iron Dome and David's Sling from Israel. He asked not to be named.

Iron Dome, an anti-rocket warfare system made by Rafael Advanced Defense Systems, has successfully intercepted and destroyed short-range rockets and artillery shells fired from distances of 4 to 70 km. Deployed two years ago in Israel, this 90kg mobile system has so far intercepted 93 rockets. Iron Dome, officials close to the matter confirm, has been highly effective in fighting terrorist group Hamas on Israel's Gaza border. Similarly, David's Sling has been highly potent in intercepting medium- to long-range rockets and cruise missiles. Israelis refer to it as the magic wand—it was built jointly by Rafael and American defence giant Raytheon.

"As far as I know Israelis have been hard-selling it (Iron Dome) and considering its use against attacks from close neighbourhoods," said a person close to the matter, requesting anonymity.

Hand over Fist

Neither Melman nor Inbar are surprised that Israeli firms get "blacklisted" for attempting to bribe Indian officials. The government of India has banned Israeli Military Industries (IMI) from doing business in India over bribery charges. Rumours taking rounds say IMI may look to bid for projects in India through its subsidiary, Israeli Weapons Industries. ET Magazine couldn't independently confirm such claims. Israeli officials didn't respond to questions related to the country's defence deals in India. Israeli companies, too, refused to comment.

Inbar, for his part, says, "Corruption [in defence deals] is a major hurdle ... I am aware of the charges of Israeli companies bribing Indian officials. That will have to be managed according to the laws of both the countries." Melman feels "it is part of the game" in the defence business.

The first government official agrees. "But there is a huge difference between the Russians and the Israelis. The Russians bribe only the leadership. The Israeli bribe all," he says laughing. Inbar nods in agreement, but argues, "It is not just the Israelis who are corrupt."

At least two defence officials say that Israel isn't just liberal and friendly with India — as Inbar and others point out—it is also keen to use India as a "neutral platform" to "manage its priorities". One of them elaborates: a few years ago Israel almost managed to get access to technology of Klub cruise missiles. These are a variant of the Russian Yakunt missiles that Iran possesses. But the "operation" was aborted just before Israelis could access it. Again, ET Magazine couldn't independently verify this incident.

A Little History

Kandel points out that defence ties between the two countries predate diplomatic relations by decades. According to declassified documents, Tel Aviv provided India military hardware during the 1962 war with China and later when India went to war with Pakistan in 1965 and 1971. Many years later in 1998, during the Kargil war, Israel, by then a staunch ally, promptly supplied India UAVs for high-altitude surveillance, laser-guided systems, etc. within a day of being asked for help.

By the early 1990s, the Soviet Union had disintegrated and India was scouting for defence technology and weapons in other markets in the face of heightened internal and external security threats, unsuccessfully. Around then, Israel's major partner South Africa was on the verge on unseating the apartheid government and the new political leadership would not have any truck with Israel, at least for the first few years of it coming to power in 1994.

"Israel found India almost the same way it found South Africa after the Islamic Revolution of 1979 [when Iran became a pariah state]. Until then Israel used to sell arms to Iran under the Shah regime," Melman says. By the early 1990s India, too, had begun to frantically look around for supplies, especially in the wake of the Mumbai serial blasts, but neither the Americans nor the Europeans were immediately ready to help the country with arms and technology. For them, India was still the Cold War ally of the Russians —smarting under unprecedented political crises, the Russians took many more years to resume defence supplies to India

At India's defence research agency DRDO, the admiration for Israel is nothing short of profound. "They are always willing to share technology, and they are willing to transfer knowledge — this will not happen with many countries... In this [DRDO-Israel] collaboration, they share the know-why with us," says W Selvamurthy, distinguished scientist and chief controller, research & development (life sciences & international cooperation) at DRDO, referring to his more than 10-year "active interaction" with Israeli defence firms and the government.

Selvamurthy speaks with a sense of awe about his visits to Israel to survey that country's "combat capabilities". He was enamoured of Iron Dome and of how unmanned aerial and ground vehicles work and keep a watch on its restive borders. "Besides, Israeli teams come and work in our laboratories. Our team goes and works in their laboratories and industries. There is a learning that is taking place which was not there when we buy things and integrate with existing products," avers Selvamurthy.

He says defence purchases and co-development between India and Israel are on a rapid ascent. Currently,DRDO is engaged in several co-development pacts with Israel companies such as Elisra, IAI, Elbit and others. "What we have done (and are doing) is not outright purchase of technology or equipment alone. We are involved in co-development," he says.

Benefactor's Role

Selvamurthy thinks India could use Israel as a springboard as it looks to produce indigenous defence products that can be sold in the global market. The time seems ripe, too, with most countries narrowing down investment in defence R&D, he says.

"It (Israel) has got a very strong industrial base...That country also has very strong technical cooperation with the US. Their scientists, their service officers - they have to serve two years in the armed forces (a big plus)," says Selvamurthy and hopes that DRDO records exponential growth thanks to Israel being a major partner. DRDO's major collaborations with Israeli companies fall in the areas of missiles, electronic warfare systems and main battle tanks. It is also looking at tying up with Israeli firms in developing unmanned aerial and ground vehicles.

Selvamurthy dwells at length on "active collaboration" in making medium-range surface to air missiles (MR-SAM; essentially integration of Barak NG missiles in the Indian Navy) — this is a joint venture project involvingIsrael Aerospace Industries (IAI), DRDO and Rafael.

The project, worth Rs 10,400 crore, would be India's biggest defence JV with a foreign country. There is a similar cooperation for long-range surface to air missiles. "In MR-SAM, some portion of the missile is developed here and some portion there. The integration is taking place here... Our scientists are positioned in Israel. One ship has already been fitted; the other is being done," Selvamurthy says, adding that DRDO is in a co-development initiative with Elbit on missile approach warning systems. There will be a lot of cooperation in developing directed energy weapons—such as fibre laser, high-powered micro-waves, etc, he said.

Questions about MR-SAM

Whatever Selvamurthi may say, at least two government officials suggest that the MR-SAM project, signed by India and Israel three days before the general election of 2009, has run into rough weather.
"The entire project is unwinding," a person close to then matter said, adding that several questions are being raised about the feasibility of the project. "The project has failed to meet deadlines and the contribution of individual players [especially that of DRDO] is not up to the mark," he said.
Senior DRDO officials, however, maintain that everything is "normal and going as planned".
Besides such projects, Israeli aggression in bidding for projects, especially those of upgradation, have come under sharp attack. Said a military official on condition of anonymity: "Israelis always bid the lowest and they naturally secure such deals. They also bribe Indian officials and get away with it... but if OEMs [original equipment manufacturers] go to court, the work will get hurt. Otherwise you end up getting sloppy products." As Indian Navy kickstarts the process of upgrading its fleet of Sea King helicopters, AgustaWestland, the OEM, has said that it alone can legitimately upgrade the helicopter. AgustaWestland spokesman Geoff Russell told ET Magazine, "AgustaWestland is the design authority and the owner of the Intellectual Property rights for the Sea King helicopters operated by the Indian Navy. Therefore, if upgrades/changes are made to the aircraft we are the only company that can ensure the continued airworthiness and flight safety of the aircraft. The reason for this is that AgustaWestland is the only company that has all the technical data to be able to check that changes to the airframe and the aircraft's systems will not compromise the flight safety of the aircraft."
Washington-based defence expert Robert Metzger plays the devil's advocate though: "I am aware of many companies - Israeli and others — who make a good business upgrading the equipment or systems originally built or provided by others. That is a form of competition, as to source, price and quality, which should be encouraged, in my opinion. If there are genuine IP [intellectual property] issues, such as claims of infringement, these can be pursued as commercial matters between the companies."

A Case of Over-dependence?

"All this explains why it is not always wise to put all eggs in one basket," argues another Indian official. "After all, we are the buyers. We are the ones spending. Customer is king," says he.

Metzger makes a point: "The Indo-Israeli partnership is sustainable but it should not be exclusive, as India should seek similar partnerships with other countries. Israel has proven a valuable partner to India and there are many indications it has been willing to share technology that is difficult [or impossible] to obtain from others. However, Israel may not have the best technology, for some missions, and may be less than the ideal partner, in terms of execution leading to true ToT [transfer of technology] and resulting indigenous India capabilities."

While many analysts think it is unwise to depend too much on a country "perilously placed" on the globe thanks to constant threat from its Arab neighbours and Iran, Metzger says India shouldn't be deterred from partnering with Israel because of some postulated "existential threat" to that country. "That gives more credit to such threats than they are due, in my opinion," he says.

Metzger acknowledges that one of the hurdles could be India's "traditional ties" with Iran. However, he expects India not to retreat from its "defence dealings" with Israel out of concerns for its own future and security. If India does so, that "would be seen as indulging the Iranian regime in ways that are both unnecessary and inappropriate, and as suggesting support for that regime that would provoke adverse reaction from many other countries who are aligned in resisting Iran's nuclear development", he says.

Competition, Threat

For Israel though there isn't much to worry about "continuity of deals" in India, the second official says. He says that a series of terror strikes, especially the 2008 Mumbai attacks, which saw, among others, an attack on a Jewish institution in Mumbai, have further strengthened India-Israel defence and homeland security ties. Besides, the DRDO has developed a great affinity for the Israelis. "Earlier it used to be the Russians," he says, adding, "Israel is the new Soviet Union".

Melman expects India-Israel ties to weather the storm of skepticism from both sides. According to him, India has a lot to gain from Israel in terms of "cutting-edge technology", especially in low-intensity warfare. The two countries also face similar threats and those threats are much more than they used to be, he notes. Melman says that he doesn't see the so-called existential threat to Israel posing any problem for the relationship. "What do you mean? You think Israel will be destroyed?" asks Melman with a contemptuous laugh.

Of course, those are "cosmic" questions says the second government official. Israel will survive until it has brute power, he says. Notably, the great writer and peacenik Amos Oz himself had admitted that military force is vital to Israel. "Without it we would not be able to survive a single day," Oz had said.
The official goes on: "I am worried more about wide-spread corruption and loosely drafted deals [that help companies get away with unfinished tasks] ... there is certainly Jewish cunning at play here [in India-Israel relations]. After all, they know we are a lazy yet greedy bunch of people. We have to be more businesslike and get what we want," he says.

"After all, defence is sheer business."

Common ground

- Ease in doing defence transactions

- India and Israel face similar threats from across their borders

- Many Israeli engineers had earlier worked in the Soviet military industry; so India could turn to Israeli firms for retrofitting ageing Soviet weapons

Other Recent purchases

* Artillery guns 130mm (being upgraded to 155mm) 430

* Battlefield surveillance radars (artillery) 250

* Battlefield surveillance radars hand-held (infantry) unspecified

* Electronic warfare system for INS VIRAT

* 160mm mortar ammunition 30,000 rounds

* 130mm artillery gun ammunition 50,000 rounds

* 125mm shells (for tanks) 100,000 rounds

* 5.56mm ammunition for rifles unspecified

* Unmanned aerial vehicles (UAVs) 8 in 1999 for surveillance purposes (army) & 20 in 2000

* UAV requirements for Indian Navy (shipborne) 50

* Russian MI 35 helicopter prototype upgradation 25 (with Israeli avionics and night vision devices)