Defence Deals With Indian Firms Are Tricky: Here’s Why We Import

Every finance minister in the world would wish that money grew on trees. Alas, it is not so, and the situation becomes critical in countries where the social obligations of the government are as weighty, if not more, than its national security considerations; India is a prime example of this guns versus butter quandary. We, thus, have the 2020-21 defence budget at 1.44% of the national GDP, and the downward slope doesn’t seem to be changing its trajectory.
This, despite the ground reality of the three services having glaring capability gaps that should have been addressed years back; the Indian Air Force is a case in point with its dwindling Squadron strength as the venerable MiG-21 phases out from operational flying, to be followed by others in due course.

Can Big Ticket Defence Deals Really Wait?

The Tejas was to replace the MiG-21, an event that should have taken place almost two decades back. The reasons for this not happening are well known and are representative ofall that ails the indigenous armament industry. So, as governments came and went, one got the impression that each successive ruling dispensation was just papering over the deficiencies with the fervent hope that no kinetic war would take place in its term.
That the implications of the cliché, “capability takes time to build but intentions can change overnight” are fatal if not addressed in a pro-active manner, have seemed to be invisible to the powers that be. It is under this context that two recent media reports need greater deliberation.

• First, the news that the IAF and HAL have reached an agreement to close the contract for 83 Tejas Mk1A;
• Second, the statement of the CDS, Gen Bipin Rawat, that purchase of big ticket items can be staggered.

It is no state secret that the IAF wanted all its Tejas to be in the configuration that the Mk1A variant would hopefully port. However, the induction of the first 40 Tejas Mk1, twenty each in IOC (Initial Operational Clearance) and FOC (Final Operational Clearance) configuration, was a decision to get a move-on with the project so as to get the vitally needed numbers in the inventory.

Air Force Can Trust Indigenous Players Only When Timelines Are Respected

It has been a laborious journey, with the contract for the first twenty IOC aircraft signed on 31 March 2006 with a delivery date of December 2011 and FOC contract signed on 23 December 2010 with a completion date of 2016. That the IOC could itself be obtained only byDecember 2013, with the contract cost doubling, conveys the quality of the programme management. As on date, only the first 16 Tejas in IOC configuration have been delivered! The FOC status was finally granted in February 2019 and the first delivery should happen as per an agreed contractual timeline;but, if the past is any pointer, it may be strongly influenced by HAL’s work ethos.

The contractual timeline must be adhered-to if the IAF’s faith in going the indigenous way is to be proven true. The Squadron numbers are to be partially made up by the 83 TejasMk1A whose contract has now been placed. While the four mandatory requirements of an AESA radar, air to air refueling, a modern EW suite and Beyond Visual Range missile incorporation are being evaluated as standalone features, the complete package—as a fully ready Mk1A—would only fly by 2022!

Hope, thy name is HAL! And one wishes that the production does get ramped up to twelve aircraft per year – 12 aircraft accepted by the IAF, and not mere production, for there is a big difference between the two terms.

The costing methodology for these 83 Mk1As also raises a few eyebrows. Why did it require “hard bargaining to bring down the cost from Rs 56,500/- crores to Rs 39,000/ crores,” as a press report put it? A 30% reduction (!!) in costs gives an impression that this was more in the manner of a commercial transaction with a foreign firm, with one side out to make money, rather than a contract between two entities working under the same Ministry that wants to give indigenisation an urgent fillip; incidentally, one year was lost in these negotiations.

What Needs to be Avoided in Defence Acquisitions

Indigenisation and modernization are oxymoronic in concept; indigenization would take decades to kick-in while the modernization that the Services want is literally ‘as on yesterday,’ since one cannot afford to be on the wrong end of technological asymmetry. It is with this fundamental premise that one needs to look at Gen Rawat’s statement that, “We should not go in for larger numbers at one time. So, if the requirement is to buy 10 submarines, 100 aircraft and 1000 tanks, the purchase should be staggered…..phasing the procurement would be a better idea keeping future upgrades.” He added, “If a bulk order is made only one force will benefit.”

Which leads one to ask whether the task of the CDS is to ensure that each Service benefits; or, is it to ensure that the right capability comes to each service as per an assessment of future threats and how a conflict situation would unfold.

‘Staggering’ an optimal quantity of arms would do two things. First, it would result in an increase in project cost due reduction in delivery numbers; secondly, and more importantly, it may result in acquiring an emasculated capability that would be neither here nor there. This is most unwise and a call must be taken on a purely professional assessment.

And the argument that a staggered purchase would help upgrades does not stand professional scrutiny; no large scale delivery happens all at once but is ‘phased out’ over many years with clauses built-in that new upgrades would be incorporated on later deliveries while the earlier ones would be built up to the new standard when they fall due for servicing. The monies have to be earmarked phase wise for a full potent capability and not ‘balanced’ by staggering purchases. A false sense of capability acquisition could result from such planning—something that needs to be avoided like the plague.

CDS Needs to Expedite Re-Organisation of the Forces

Which brings one to the tight timeline that the CDS has drawn for himself in setting up of theatre commands and joint entities. What is being attempted is radical surgery without any exploratory procedures. Exercising caution may be in order. While models of other nations may not form fit us, there is no harm learning from their experiences - in terms of timelines and scope of changes attempted in one go.

A dispassionate analysis would be an eye opener for people who are trying to expedite this re-organisation which affects the very basics of war fighting—an effective Command and Control structure that is, but the spine of a uniformed force.

(Air Vice Marshal Manmohan Bahadur is Additional Director General, Centre for Air Power Studies, New Delhi. He tweets @bahadurmanmohan. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)