The U.K. Ministry of Defence today awarded a GBP 30 million contract to build a brand new warship to VT Group. The new Offshore Patrol Vessel (OPV) is being acquired under an innovative Public-Private charter, including a logistic support contract that guarantees over 300 days at sea per year. Meeting that benchmark currently requires two Castle class ships; in contrast, the OPV is estimated to save over GBP 2 million in support costs over a seven year period. Production will begin in June, and the new OPV is scheduled to enter service in 2007.
Reuters reports that China is likely to announce yet another year of double-digit growth in its defense budget in the next week, with expectations hovering in the 10-12% range. Officially, defense spending grew about 11 percent last year over 2003, hitting CNY 211.7 billion ($25.6 billion). Still, many experts believe that China’s real defense expenditures are two to four times higher than official figures, as items like arms procurement and military R&D are often placed in other budgets.
The only thing the experts seem to agree on is the inability to derive a solid spending figure, but growth rates are impressive. Signs of recent modernization include purchases from Russia of SU-30 fighter jets, Kilo-class submarines, and destroyers. China has also produced as many as 700 short-range missiles, most of which are believed to be aimed at Taiwan. In related developments, both Japan and Taiwan are undertaking reviews of their future defense plans. Japan and the United States are also opposing European Union plans to lift a 16-year-old arms embargo on China. Defense News: China To Boost Military spending as it Eyes Taiwan.
The U.S. campaign to dissuade Europe from lifting its arms embargo against China is bearing some fruit in Britain, where many suppliers consider the USA to be an important customer. Nevertheless, European Union is expected to lift its partial arms embargo before June 2005, when Luxembourg turns over the EU Presidency to Britain. Dual-use items and other low-profile military equipment are already cleared for sale by the EU. U.S. government officials, as well as Congress, have made it clear that retaliaton against European companies would follow if the ban is lifted, changing the contracting and procurement environment in America. Aviation Week & Space Technology: End to Chinese Arms Embargo Concerns British
India’s military budget will increase by 7.8% to 830 billion rupees ($19 billion), a figure far below its original figures and one that is causing some analysts to question whether India’s list of military modernization programs can be sustained. Recent high profile acquisitions have included the Phalcon radar system from Israel for $1.1 billion, the Admiral Gorshkov aircraft carrier from Russia for $1.5 billion, and 66 Hawk jet trainer planes from Britain for $1.45 billion. The country is currently looking for 126 new jet fighters to replace an accident-prone fleet of Russian-built MiG-21s, six new submarines from France, an anti-missile system from the United States, and rocket launchers from Russia. Analysts point out that India’s Congress-led government came to power last May on a ticket that emphasized services for the poor, and received support from four communist parties. Many analysts see the coming budget as a sign of a shift in priorities. Defense News: Indian Analysts Disappointed With 7.8 Percent Defense Hike.
ExpressIndia reports that India is poised to become a key outsourcing hub for global aerospace and missile companies, including France-based MBDA missile systems, BAE and Rolls-Royce, Lockheed Martin, Northrop Grumman, and others. Perhaps “offshoring” is a better word, since the functions being sent abroad are components rather than entire processes or design/ manufacture efforts.
An indication of the growing importance of Bangalore’s aerospace potential can be gauged from the fact that during a recently concluded Aero India 2005 air show – billed as the largest in South Asia – deals worth more than $1.2 billion were signed between Indian and foreign aerospace firms.
