Removal Of Offset Out Of Defence Acquisition Procedure 2020 Is Beneficial: SAAB's MD Ola Rignell
Swedish PM Stefan during the recent Summit with PM Modi imparted a new thrust in Indo - Swedish relations. Defence and Security remain the key docket where Swedish defence OEM SAAB renewed its commitment to India of laying production ecosystem of its flag horse Gripen E for the lucrative MRFA 114 fighter jets program. Besides, SAAB is focusing on critical navel systems like G1X family of latest radars, AUV 62 autonomous underwater vehicle and ship design with stealth signature management. BW Businessworld’s Defence Editor Manish Kumar Jha speaks with Ola Rignell, Managing Director, SAAB INDIA on such projects and collaboration.
OLA RIGNELL, Managing Director, SAAB
Let’s begin the discussion on the Swedish Prime Minister’s interaction with PM Modi. There obviously seems to be a renewed interest in the Sweden’s offer in terms of defence cooperation. What did they discuss?
Ola: It was a virtual meeting between Prime Minister Modi and the Swedish Prime Minister Stefan Löfven. One of the things that was discussed was defense cooperation between the two countries. Since 2014, India and Sweden have a joint agreement to develop on different areas of interest, one of which is defense. In line with that both sides have reiterated that they should look into defense cooperation and also to look into development of the two Indian defense corridors.
During the virtual summit, Prime Minister of Sweden pitched Gripen with new commitment regards to Make in India configuration and about setting up the entire ecosystem. If we talk about MMRCA 2.0, there has been new line of jets in the competition. What is the new commitment for Gripen as far as India is concerned in terms of technology and investment?
Ola: Our offer consists of producing of 114 aircraft for the multi-role fighter aircraft requirement for IAF or which is popularly called as the MRFA. As our RFI depicts the first 18 would be development in the country of the OEM. The remaining 96 will be produced by India. Saab will of course honour the arrangement to a 100%. We will not only support a design, development, and a production facility but also offer in-country support. We will not only transfer all capability for building the Gripen fighter for the MRFA programme but also for developing different aspects of an aircraft that will support other indigenous programmes. Saab will hand over full capabilities to India which is not licensed production but is actually handing over of capabilities which was also stressed by our Prime Minister, should India and Sweden join hands in defence.
It is at least a 40 year long commitment, not only between the two governments but between Indian Government and the Swedish industry, primarily Saab.
When it comes to the financial commitment, we see media reports about SAAB with respect to disruption in the supply chain of Gripen E due to COVID19. Some of your sub-contractors have defaulted. With regards to Gripen for India how do you see such a billion-dollar investment taking shape and how robust will your financial commitment be?
Ola: Saab’s Q3 results was announced in October 2020 when the CEO announced that Saab had some reservations, of about one and a half billion SEK or roughly $200 million which was due to some Saab contractors having issues supplying us with spares or material. It was also an effect of the downturn in civil aviation. But on February 12, 2021 Saab presented its full year result which was very good. We have increased our order intake, our sales, so overall cash flow was good. Saab has very good financial standing. With a deal like Gripen we do not see any financial issue. Saab along with the Swedish government can offer some over favourable financial setups which we have done with other countries as well.
India is scouting for the aero engine, once the offset with Rafale failed to materialize which they promised to deliver and which has not happened so far. Now, yours is again 414- GE engine and India also procures for the Tejas program from GE. As far as India is concerned what would be SAAB contribution and commitment in this direction because this is such a key advanced technology India is looking for and how would you build up the case for that?
Ola: For our offer to the Indian air force for the Gripen E/F, that aircraft is equipped with a General Electric 414. It's the same engine that India is planning to have on the LCA Mk 2. Now General Electric is one of our Tier 1 sub-suppliers. So they are fully committed to support our program in India. We have a full commitment from General Electric to support us for the Gripen fighter.
When Saab commits engine collaboration with India what is the terms of commitment? Like Saab has a commitment from General Electric for its Gripen E/F.
Ola: There is a contract between Saab and General Electric for providing the engine GE-414 for Gripen E and F. Saab being an overall manufacturer of the aircraft makes a commitment to keep the platform running for at least 40 years. In fact, the RFI stipulates 50 years of operation for the MRFA. General Electric has back to back agreement with Saab to supply engine for the programme for 50 years as well.
But you don’t commit the TOT [aeroEngine] with General Electric for this particular program-MRFA?
Ola:When it comes to the ToT from General Electric that should be raised with them. But as the manufacturer of the aircraft, we will offer full transfer of capabilities for the entire aircraft to India.
Could you talk about specifically in terms of the naval platforms? What are you offering to the Indian Navy from SAAB?
Ola: First of all, with the Indian Navy, we have already delivered to the Indian Navy is superstructure for some of the Indian Navy's corvettes. So there is a carbon fiber superstructure and when I say superstructure, it's everything that, you know where you're having all the control rooms and so forth. So that has been delivered already. What we are now talking with Indian Navy about is for future needs, we’re willing to offer to them different versions of our surface ships. Be it more corvettes, be it Combat Boat 90 which is a very high speed surface vessels that you can use for, you know, assault missions by your Indian Navy Marines. You can use it for border control or Marine police for the coast guard.
It could be both coast guard, it could be Marine police, it could be Indian Navy. It’s up to the customer, how they want to use it. This design is operational in a lot of countries worldwide and it's very intellectual or intelligent design using water jets. So there are different naval designs that we have in use in India or elsewhere that we would like to develop with Indian Navy and Indian Navy being one of the biggest navies and also an expanding Navy and you have a big coast to actually cover.
I am aware of some of the breakthrough research in the underwater vehicle-- autonomous vehicle& remotely operated vehicle which have lot of application on defence side, but also seabed mining? How does Saab’s underwater autonomous vehicles work?
Ola: One part of Saab is the Kockum shipyard which belongs to SAAB since some years back. They are expert on submarines but we also have a different part of SAAB called SAAB underwater. They are responsible for designing and producing either remotely controlled underwater vehicles or fully autonomous underwater vehicles. Now the fully autonomous underwater vehicle is in operation today in a lot of countries worldwide and that vehicle is capable of either appearing as a submarine.
So you can actually train your Navy against submarine threat. They will appear and can make it appear as a nuclear submarine or a smallest conventional submarine because you can electronically decide how much echoes that the vehicle should give. You can also equip the same vehicle with mine reconnaissance packs, so they can actually autonomously scan a certain volume of the sea floor or sea water as it is to look for mines, either floating mines or mines laying on the bottom of the sea floor. And when you have identified them you can then take action against them. Then to take action against them you would utilize a remotely controlled vehicle and we have remotely controlled vehicles, both for military use as well as for civil use. But for military use our remote control vehicle is capable of you know be launched, go down to the identified position of the mine and actually put a very, dedicated charge on that mine, then back off and we'll be blow up the hostile mine remotely and from a safe distance.
So those are already in use with Swedish Navy?
Ola: We have them in use in several navies in worldwide. Both in Europe and in Asia and elsewhere in the world. We are operating both the autonomous vehicles, as well as the remotely controlled vehicles. Now, the Indian Navy has a tender right now for remotely controlled vehicles. I think there are 10 of those and we have of course submitted our bid for that. I think we have a very competitive bid.
On policy part, DAP 2020 has come up new mechanism and ways of procurement. One of the option is leasing out? Recently, India has leased from General Atomics. These are the new ways and modern mechanism to optimize costs. Would you be keen on such model as far as these technologies and platforms are concerned?
Ola: We are open to discuss leasing options for our different products. Today, for example, the Swedish Government is leasing our fighter aircraft to NATO countries. We have a long experience of leasing out commercial aircraft. We had a huge leasing fleet of commercial aircrafts a few years ago.
So we are definitely open to discuss leasing with the Indian Armed Forces and I agree with you that the new DAP 2020 opens up for different kind of leasing setups. So yes, we are definitely willing to discuss that.
You also proposed, somewhere, you'd want to help India in ship design by transferring technology in terms of stealth and signature management system. How advanced is Saab proposition in transferring technology for naval design?
Ola: Well in the same manner as we have done on the fighter program, we have always prided ourselves with sharing the technology with the customer. So if we managed to sign a deal with the Indian Navy for a certain Naval design and we will then partner up with any Indian partner be it Mazagon Shipyard or Goa Shipyard Limited, etc.
We are willing to transfer our technology into India because we are aware about the DAP 2020 with the amount of indigenous content. So yes, we will transfer technology to India depending on what contract we are in. But we are fully committed to do that and that's one thing that we have been priding ourselves with for decades. So I see no issues with it.
One of the things which came up, during the prime minister’s visit which got highlighted is advanced light helicopter? SAAB’s collaboration with HAL on integrated defense suite has been successful. How is that partnership going?
Ola: When it comes for the IDAS system that you rightly said, is fully integrated on the ALH, the Advance Light helicopter that started quite some time ago and we have been supplying HAL with the IDAS suite which is fully integrated into ALH. That's a program where we have been working very closely with HAL. We have transferred knowledge to HAL and we are still transferring knowledge to HAL. In India, you have a huge need of helicopters. The next product from HAL is the light combat helicopter, the LCH and of course we are hoping to be part of that program as well.
I would also like you to talk about the AUV 62. How relevant it is for India? If you could give some specifics on this?
Ola: The AUV 62 is an autonomous underwater vehicle. It's used for training anti-submarine warfare. It can also be used for scanning the sea bottom for mines or anything else you can actually use it for just mapping the sea floor or if you want to build a 3D picture of the sea floor.
I think that's a product that would be extremely suitable for the Indian Navy for protecting your harbors. You have a lot of both import and export going in and out of India and to be able to do that you need to protect your harbors. I think the AUV 62 would be ideal to do that.
You have been a keen observer of Indian defense policies and we have seen your views on the Strategic Partnership policy which came from SAAB. You spoke about the policy in terms of the share holding pattern under the Strategic Partnership. How do you look at the Indian defense policy ecosystem, evolving specific to OEMs like you?
Ola: If we look at the DAP 2020, I think it has been a good improvement because now the DAP allows 74% FDI, not in all categories but I would say we're more or less in half of the categories. They also introduced a new category, the by global manufacturing in India, where you are allowed to have 74% FDI, which will give the OEM full control of the production and the delivery and of course also then taking full liability for the product that you deliver to the Armed Forces.
Now the SP process, as you said is not changed. We would of course appreciate if the SP policy also would allow 74% or FDI because that would give the OEM full control. I'm quite sure that this is a view that is shared not only with Western OEMs, I think most of the OEMS would like to have control of the special purpose vehicle.
How do you perceive the doing away of the Offset clause?
Ola: Over the last decades, Saab has gone into deals with different customers where there have been a fair amount of offset. Normally offset equates that at least a hundred percent of the contract value mostly above and so far and we have always managed to meet our offset obligations from SAAB. I cannot comment upon other OEMs in India.
From a SAAB perspective and from my personal perspective, I think that you know the removal of offset out of the DAP 2020 is beneficial for the customer because offset of course will induce additional cost for the customer.
So from that perspective, I think it's good that the offset is removed. For Saab it is not a key issue because as I said earlier our transfer of technology is not based on offset, it is actually based on how we want to partner with Indian companies or our Indian partner companies and also partner with Indian customer for long-term.
So for us offset is not any major issue.
Often SAAB is discussed broadly in terms of Air force and Naval systems platform. What about the land forces what specific new technology you could offer to the Indian land force because they are the ones at the frontier?
Ola: Well if we start with the Indian army, the ground forces, they have been our esteemed customers since the mid – seventies, when SAAB actually sold the first version of the Carl - Gustaf, which is a recoilless shoulder launch weapon. India is the biggest customer of Carl – Gustaf for SAAB. Over the years we have sold new variants or new generations of the Carl – Gustaf to Indian army and we look forward to continue to work with the Indian army on be it Carl - Gustaf or other versions of the shoulder launched weapon. We have a fair amount of different products in that portfolio.
Of course, we also are a big manufacturer of Signature Management. Signature Management is not only Camouflage net or what you would consider traditional camouflage net. It's also, how do you protect or how do you hide away from heat seeking missiles and from radars detecting you and we have all that technology in-house. We are operating together with different Indian customers in that area as well. Then of course, you can have electronic warfare suites on for armored vehicles.
You could have, ground-based radars. We have several different products. One is the G1X which is the latest radars for detection of air targets. It could be fighter aircraft. It could be of course, UAVs, it could be drones.
GIX is a ground-based radar and the G1X is using an AESA radar based on gallium nitride. Gallium nitride is a certain material that increase the detection range and it also makes the radar more or less maintenance free. That is a product that we have promoted into India both for Army and Air force. It could be mounted on a vehicle; it could be mounted on an antenna. But it could also be mounted on a tripod and it only weighs 150 kilos. So two - three people could actually carry this radar and put it on the roof top of a skyscraper or a high rise building in Delhi and you would get a full coverage.
The beauty of this radar is that it can detect micro UAVs and I'm sure you're aware that UAV today is one of the big threats, at least not from a terrorist perspective because they can carry explosives. So our radar managed to actually differentiate between micro UAVs and birds. So we will discriminate the birds but we will keep track of all the micro UAVs and this is something that we are promoting into India.
They are same family of radars?
Ola: Same family of radars, long range, long detection range, very low maintenance and high availability and high reliability. So this is something that we would like to offer both to the Indian army and the Indian Air force as well as the Indian Navy because we have sea versions of these radar as well.