C5’s European Forum on

India Defence Procurement

Tuesday, December 06 to Wednesday, December 07, 2011
The Intercontinental Hotel, Berlin

Day 1 | Tuesday 6 December 2011

9:00 Opening Remarks from the Co-Chairs

9:15 India Defence and Homeland Security Market Roundtable: New Sale, Investment and Joint Venture Opportunities

Lira Goswami
Partner
Associated Law Advisors (India)

Brinley Salzmann
Director - Overseas & Exports
A|D|S (UK)

Ulf Rudebark
Senior Director, Head of Strategic Partnerships
Market Area India, Saab AB

Wg Cdr Neelu Khatri
Director - Defence and Security Advisory Services
KPMG Advisory Services (India)

  • India’s short and long term national defence procurement, R & D and technology plans
    - What key industries, products and technologies expect the most growth?
    - Intended capital versus revenue expenditure
  • Defence procurement opportunities in the Indian versus European market: Consolidation and retraction of European defence spending?
    - What is the impact of Europe’s restricted offset policy on competitiveness in the Indian market?
  • How the current structure of the Indian domestic aerospace and defence industry can aid foreign investors
    - Research and development organisations
    - The role of DPSUs
    - Private domestic industry
    - Key growth areas, import dependencies and competencies
  • What are the key market advantages for European vs. US, Israeli and Russian companies?
  • How to approach the market as a product/component supplier as opposed to an integrator
    - Unique opportunities for subcontractors
    - Negotiating sub-supplier positions through US Integrated suppliers
  • How competitive is the market, and how can European companies compete with US, Indian and other bidders?
    - Pros and cons of collaborative agreements between European companies to enhance chances of success in India
  • Possible investment opportunities under the Foreign Direct Investment (FDI) policy
  • Scope of opportunities for European companies to work with DPSU’s including DRDO and HAL
  • Who does what: Jurisdiction and roles of key government bodies and decision-makers, including India’s Ministry of Defence
  • How foreign companies have succeeded, or not, in satisfying India’s demands
  • Deals completed and in the pipeline for India’s Air Force, Army & Navy
  • Examples of European-India JVs, new trends where JV opportunities are up for grabs
  • How India’s new Defence Production Policy impacts European companies
    - How India is advancing its goal of increased indigenous production
    - Steps being taken to increase private sector participation for design and development opportunities
    - How the new policy will impact sales of competing systems, JVs and technology licenses

We invite you to send your questions to the organisers before the conference. Alternatively, questions may be asked on an anonymous basis by dropping your questions in a sealed box provided at the conference venue. The discussions will not be recorded or reported.

10:45 Morning Refreshments

11:15 Interpretation and Application of the Defence Procurement Procedure (DPP) and Other Prevailing Policies: How to Meet Key Procurement Criteria

Rahul Gangal
Director
Aviotech (India)

Dr. Shweta Hingorani
Partner
Luthra & Luthra (India)

  • Latest amendments to the DPP: What is expected in 2012?
  • Understanding the DPP and the Defence Procurement Manual (DPM)
    - Capital procurement (DPP) versus Revenue procurement (DPM) expectations
    - How to satisfy pre-qualifi cation criteria
  • What is the selection criteria used by the Indian MoD to award contracts?
  • Understanding how the defence procurement process works
    - Bidding and contract performance timeframes
    - India’s defence procurement pre-qualifi cation requirements
  • Competing for Indian contracts under “fair competition” principles
  • Requirements and types of projects to be designated under the “Buy” and “Buy & Make (Indian)” procurement categories
  • Overcoming practical challenges of operationalising the DPP: What are the grey areas of the policy and how can they be met in completing a tender bid?
  • How foreign companies can contest an award — chances of success and prospects for future business
  • Legal protections for winning bidders against award challenges
  • Update on bidder’s obligations under the DPM
  • Reconciling India’s Defence Production Policy with the DPP
  • Dealing with instances of “bid-rigging”

12:30 Networking Lunch

1:45 Understanding India’s Offset Policy: Qualification Criteria and Discharge Obligations for Offsets

S N Misra
Principal Controller of Defence Accounts,
Indian Navy Former Joint Secretary (Aerospace),
Department of Defence Production
Ministry of Defence (India)

Col. Rajiv Chib
Associate Director, PricewaterhouseCoopers
Former Secretariat, DOFA,
Ministry of Defence (India)

Professor Christopher R. Yukins
Professor of Government Contract Law and
Co-Director, Government Procurement Law Program
George Washington University Law School (USA)

S. Ravinarayanan
Chairman & CEO, Axis Aerospace &
Technologies Chairman, Offset Task Force
Federation of Indian Chambers of Commerce
and Industry (FICCI) (Bangalore, India)

Sandeep Verma
Director (Planning & Coordination), Department of Defence Production
Ministry of Defence, Government of India

  • Criteria for setting offset requirements at 30% – 50%: Examples of higher offset minimums
  • Update on recent changes to India’s offset policy
  • What are the current trends in India MOD offsets requests?
  • Comparisons of offset policies between Europe, USA, Russia and India
  • How does/can the Indian defence industry absorb all offset obligations under international contracts?
  • Approved methods for discharge of offset obligations: Requirements for Direct Purchases, FDIs and offset credits
  • What qualifies for offset credits under the DPP 2011 categories of products eligible for discharge of offset obligations, including new categories: products for“internal security” and “civil aerospace products”
    - What can be used for offsets, i.e. services and training?
    - What does not qualify?
    - When technology transfers can be used to satisfy offset obligations under the DPP
    - Eligibility of “raw materials” and “semi-fi nished goods”
  • Updating your compliance strategies amid expanded “eligible” offsets, including the use of dual use products
  • Determining whether an offset contract can be fulfilled
  • Resolving offset performance issues, and what to do in the event of a possible default
    - Overcoming challenges to discharging an offset policy
    - What are the consequences of failing to discharge an offset policy?
  • Comparisons in the requirements for different types of offsets: Technology Transfers or Work Generation
    - Direct and indirect offsets

2:45 Agreeing on and Meeting Expectations for the Transfer of Technology and Protecting Intellectual Property Rights

Malavika Jayaram
Partner
Jayaram & Jayaram (India)


  • Responding to Indian government expectations in regards to European and US technology transfers, and the scope of their flexibility in accepting transfer restrictions
  • How can you negotiate the transfer of technology with protection of IPR?
    - Incorporating effective IP contractual controls governing the procurement relationship and post-termination
  • What the Indian Government expects and requires in receiving associated IP rights
    - Does India expect rights to further develop products or technology?
    - What impact will imposed restrictions on technology transfers have on a company’s chances of winning a contract?
  • What does the Indian government expect in terms of receiving foreground versus background IP?
    - implications for pricing under the contract
  • Weighing the commercial disadvantage of transferring technology and IP rights versus the commercial benefit of winning the contract
  • Reconciling Indian technology transfer and IP requirements with European legal and regulatory restrictions
  • Who owns IP when the Indian government partly funds the development?
    - What level and type of IP licence would India typically require?
  • Determining ownership of new IP resulting from joint ventures: Who owns the newly created IP? Is there de facto ownership by the Indian government or others?
  • Circumstances in which a technology transfer or technical assistance can be cancelled or reversed when business relations fail
  • When and how to use available recourse for breach of IPR and assessing your chances of success

3:45 Afternoon Refreshments

4:00 Reconciling India Defence Procurement Requirements and Import Regulations with European Export Control Obligations, ITAR and Indian Import Regulations

Sunny Mann
Partner
Baker & McKenzie (UK)

Bart M. McMillan
Partner
Baker & McKenzie (USA)


  • How will European export controls impact aerospace and defence companies operating in India?
    - Common Military List 2010/C 69/03
    - Military Technology and Equipment Exports Common Position 2008/944/CFSP
    - Arms Brokering Common Position 2003/468/CFSP
  • Where are the potential confl icts between Indian and European import/export regulations and trade controls?
    - Which provisions/regulations would prevail?
  • Licences and approvals required in Europe to export products and technology to India
    - What are the deemed export restrictions?
  • Approvals, documents and licences required by Indian officials to import products and technology into India
    - Industrial licences and approvals from the FIPB
  • Identifying the product and technology transfers that require license approvals under the International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR), and incorporating these requirements into your tender bid
  • What licences are required for taking products and technology for exhibition or demonstration purposes in India?
    - How can the products be recovered?
  • Working within India’s import requirements
  • How the US State and Commerce Departments are assessing license applications for technology transfers to India
  • How does the Indian government incorporate various international licensing restrictions into the defence contract negotiations?
    - Making reasonable timeframe allowances to satisfy all international import/export requirements

5:00 Conference Adjourns

Day 2 | Wednesday 7 December

9:00 Opening Remarks from the Chairperson

9:15 How to Successfully Structure, Operate and Maintain Control over a Joint Venture or Investment under Foreign Direct Investment Policy (FDI) Restrictions

Dr. Daniel H. Sharma
Partner
DLA Piper (Belgium/Germany)

Priti Suri
Founder Partner
PSA (India)

  • Current status of the FDI policy: 26%, 74% or 100%?
  • Do’s and don’ts for joint venture agreements: Addressing key items including competition issues, dispute resolution, representations, warranties and indemnities
  • Identifying common red fl ags and pitfalls in establishing and operating a joint venture with local partners
  • Determining the appropriate joint venture structure: Pros and cons of various JV structures
    - Finding sources of capital and fi nancing in compliance with FDI rules
  • Maintaining control of a JV or entity when foreign investment is capped at 26%
    - Factoring entity control issues into a defence contract
  • Assessing FDI limits and minimizing the associated risks
  • What are the exceptions to FDI rules: When are they applicable, who decides and on what basis?
  • Incorporating adequate management mechanisms: who has control of what aspects of the joint venture operation?
  • Contractual methods of risk allocation and mitigation
  • Monitoring local partners to ensure ongoing compliance with FDI, DPP and offset requirements as well as export controls and corruption compliance
  • When and how to unwind the venture
  • Key warning signs affecting the fate of the transaction: When to walk away from the deal

10:30 Morning Refreshments

11:00 Selecting and Collaborating with Third Parties: Co-Production, Licensing and Joint Venture Partners, Sub-Contractors, Brokers and Agents

Paolo Izzo *
Business Development India & East Asia
Resident Manager, India at Elettronica S.p.A (India)

Senior Representative
EADS

Stefan Billep
Head of Eurofi ghter Typhoon
Cassidian India

  • Entry route for foreign companies
  • What are the limitations and requirements under the DPP 2011 on third party relationships, including the use of consultants, agents, brokers, sales representatives and others?
    - What are the exceptions to the prohibition?
  • Tips for finding appropriate business partners on the ground and establishing relationships with approved local vendors
  • Conducting effective pre-transactional due diligence: What documents/information can you look at and what are the red flags?
    - When to commence vetting prospective partners
    - Managing resistance to the due diligence process
  • Overcoming legal and commercial issues, including:
    - Availability of sufficient due diligence records or information
    - Use of local or international external counsel to complete due diligence on your behalf
    - Ensuring proper review of records, credentials and pedigree of prospective India partner
    - Assessing liquidity and assets of would-be partners
    - Measuring your ability to enforce reciprocal covenants
  • What is the level of enforcement of DPP prohibitions on third party relationships?
  • Complying with pre-contract integrity pact agreements: Consequences of improper usage of third parties, possible penalties and “blacklisting” for use of agents
  • Practical examples of unique and heightened challenges of conducting due diligence in India

12:15 Networking Lunch

1:30 Minimising Bribery and Corruption Risks: Compliance with Global and Local Anti-Corruption Requirements through the Procurement Process

Dr Hans-Joachim Priess
Partner
Freshfi elds Bruckhaus Deringer LLP (Germany)

Dr. Shweta Hingorani
Partner
Luthra & Luthra (India)

  • Current status of reforms to Indian anti-corruption and bribery rules: Application and enforcement
  • Identifying key UK Bribery Act and FCPA risk areas affecting the defence bidding process
  • Contrasting Indian anti-corruption, FCPA and UK Bribery Act positions on facilitating payments
  • Preventing gift and hospitality risks: Defi ning “reasonable expenses” and implementing an effective code of conduct for entertaining Indian government officials
    - Can gifts be given to a company as a whole or to a charitable organisation or school?
    - How would this work with the offset policy?
    - Can offsets be used as an alternative mechanism for bribery, corruption or fraud?
  • How to deal with requests for bribes whilst retaining business relationships
  • What are the consequences if bribery or corruption is found after a contract has been awarded?
  • Reporting mechanisms to raise anti-corruption compliance concerns during defence contracting
  • Working with state-owned entities: Managing unique corruption risks
  • Anti-corruption clauses to include in a JV agreement
  • Conducting an investigation of a business partner when a problem arises
  • Reputational versus the legal risks
  • What are the debarment and exclusion implications across the European and Indian market on a finding of corruption or bribery?
  • What is the involvement of multi-lateral development banks and what are their debarment systems?
  • Lessons learned from recent anti-corruption scandals in India

2:45 Afternoon Refreshments

3:15 Successfully Negotiating Defence Contract Terms and Conditions: Liabilities, Indemnities and Governing Law

Shivpriya Nanda
Partner
J Sagar Associates (India)

Priti Suri
Founder Partner
PSA (India)

  • Understanding the general culture of negotiation in India
    - Conducting successful contractual and performance negotiations and settlements in India
  • How does the contracting process work once a contract has been awarded?
  • How many changes is the supplier allowed to make to a government contract? What is the scope of your negotiating power?
  • Practice of the India MOD with respect to key contractual clauses, including:
    - Limitation of liability
    - Indemnity
    - IP ownership/rights
    - Warranty obligations
    - Governing jurisdiction
    - Arbitration
  • Minimizing your liability risks when your bid is being submitted by a local or other foreign partner
  • When to retain Indian legal counsel
  • Drafting contract terms as required by the DPP: What is included, and what is missing
  • Identifying required terms and conditions in the Defence Procurement Manual
  • “Government to government contracts” versus “company to government contracts”
  • How much interface can people have with buying agencies?
    - How much interaction is possible?
    - Can negotiating agents or advisors be used?

4:15 Chairs’ Closing Remarks

4:30 Conference Ends

* Denotes speaker invited