Indecisiveness impedes military modernisation

July 20, 2021 1:09 PM

Instances of the vendors’ bids being kept in prolonged suspended animation or the Requests for Proposal (RfP) being retracted several years after these are issued, only to be re-issued and, in some cases, to be re-retracted, abound.

indian armyMore than fifteen years after the ‘Make’ procedure was evolved by the MoD to encourage indigenous design and development of prototypes of futuristic equipment by the Indian industry, not a single development contract has been awarded.

By Amit Cowshish

The inability of the Ministry of Defence (MoD) to find a quick way out of logjams in procurement programmes has caused more damage to the military’s modernisation drive and the country’s prestige than the combined effect of Byzantine procedures, bureaucratic lethargy, financial constraints, and occasional allegations of corruption.

Instances of the vendors’ bids being kept in prolonged suspended animation or the Requests for Proposal (RfP) being retracted several years after these are issued, only to be re-issued and, in some cases, to be re-retracted, abound.

The red flag recently raised by the Indian Army (IA) and Indian Navy (IN) over delay in replacing Cheetah-Chetak helicopters of the 1960s’ vintage is a grim reminder that boastful claims of reforms in the policy and procedures governing acquisition of defence materiel have failed to deliver as the internal processes of the MoD and the Services Headquarters (SHQs), both of which work in tandem to build up the military capabilities, continue to be marred by indecisiveness.

More than fifteen years after the ‘Make’ procedure was evolved by the MoD to encourage indigenous design and development of prototypes of futuristic equipment by the Indian industry, not a single development contract has been awarded. No deal has also been finalised under the ‘Strategic Partnership Model’ introduced in 2016 for indigenous production of aircraft, helicopters, submarines, and armoured fighting vehicles by the Indian industry with technology transfer from the foreign manufactures.

It has been a decade since MoD took the bold step of allowing the foreign companies to select the Indian Production Partner on their own from the private sector for manufacturing a transport aircraft in India to replace the Avro-fleet. However, the Airbus-Tata combine’s Rs 15,000 crore bid for manufacturing C-295 military transport aircraft in India remains in limbo even after it was reported by the media in February this year that the offer was about to be approved by the Cabinet Committee on Security.

The ongoing Cheetah-Chetak replacement project is of a piece with these random examples of indecisiveness, as the MoD has nothing concrete to show for more than two decades of labour to acquire 498 Light Utility Helicopters (LUHs) to replace the ageing fleet whose extended technical life would expire 2023 onward, and to create parallel capacity for aircraft manufacturing in the private sector.

Meanwhile, after two failed attempts to meet the scaled-down requirement of 197 helicopters, an inter-governmental agreement (IGA) was signed with Russia in 2015 and a joint venture (JV) between the state-owned Hindustan Aeronautics Limited (HAL), and Rostec Corp/Russian Helicopters was also set up, to acquire 40 twin-engine Kamov-226T helicopters in a fly-away condition and to build another 160 in India, of which 135 were to be for the IA and the remaining 65 for the Indian Air Force (IAF).

According to some sources, the project is stuck six years after it was conceived because India wants a higher indigenous content in the helicopters that are to be made in India, than what Russia is prepared to offer. This is not the first time that a badly needed project is stuck because of the disagreement over the extent of indigenisation or workshare between the foreign original equipment manufacturer (OEM) and the Indian production agency.

Acquisition of 126 medium multi-role combat aircraft -of which 18 were to be imported in a fly-away condition from Dassault Aviation of France and the remaining 108 made in India by HAL- too remained stuck largely because of the wrangling over the workshare between them before it was unceremoniously abandoned in 2015.

While the MoD wants the equipment manufactured in India to have a high percentage of indigenous content -normally in the range of 50% to 60%- some OEMs assert that the Indian industry is often unable to absorb the technology offered by them. The Indian vendors, of course, deny it, but many admit privately that achieving higher levels of indigenisation in the locally manufactured equipment is a tall order. No wonder then that there are unconfirmed reports of the contractually stipulated percentage of indigenous content being reached in some cases through clever accounting.

The argument that local production of equipment saves foreign exchange, despite all the problems mentioned above, is valid. However, in some cases this advantage is nullified by the higher cost of local production of a foreign-origin equipment. This is exemplified by Ka-226T helicopters which are estimated to cost around $11 million apiece, if made in India, against the per unit import cost of $6 million.

The present approach of realising the nebulous goal of Atmanirbharta, or self-reliance, in defence production by insisting on increasing levels of indigenous content in the locally manufactured equipment is flawed for it compels the vendors to focus largely on indigenisation of parts, components, assemblies, and sub-assemblies, and not the critical technologies that go into its production. Denial of these technologies by the foreign manufacturers in crisis situations can jeopardise self-reliance.

Four things are required for achieving better results. First, a composite policy for indigenous design and development of major equipment and platforms which focusses on development of critical technologies and special military-grade metals and alloys. Second, an overarching organisation to coordinate the efforts currently being made disjointedly by several agencies like the Services’ Indigenisation Directorates and the Defence Research and Development Organisation. Third, an appropriate funding mechanism for research, design, and development. Fourth, and most importantly, the capability to take quick decisions to wrap up the procurement cases. All this is missing at present.

(The author is former Financial Advisor (Acquisition), Ministry of Defence. Views expressed are personal and do not reflect the official position or policy of Financial Express Online.)

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