Antony asks armed forces to shed overdependence on foreign vendors

[Daredevil]

Confronted with scams in defence deals, Antony asks armed forces to shed overdependence on foreign vendors for buying military hardware

The taint of corruption in the AgustaWestland helicopter deal has brought focus on the need to shed overdependence on foreign vendors for military hardware, but the status of indigenous defence programmes tells a story of cost overruns and delays.

Confronted with allegations of largescale corruption in defence deals, Defence Minister A.K. Antony has asked armed forces to change the mindset of rushing to foreign vendors for military equipment and hinted at indigenisation as a solution to check graft.

Mail Today assessed the research and development costs of some of the major programmes and their status.

Hindustan Aeronautics Limited (HAL) is making light combat helicopter, which took part in Indian Air Force's latest exercise 'Iron Fist' in Pokhran. The state-owned aeronautical company has spent about Rs.900 crore to develop the helicopter whose induction has already been delayed by four years.

Armed forces have severe shortage of light utility helicopters. But the effort to develop them at home will cost about Rs.400 crore and the project is already behind schedule by 30 months.

HAL is looking to supply Cheetal light helicopters meant for operations in high altitude areas. The 10 helicopters to be supplied to the air force will cost Rs.100 crore.

The development of intermediate jet trainers has hit a roadblock despite the programme costing Rs.600 crore. The jet trainers, needed badly by the IAF, have been under development for a decade. The IAF is hoping that the issues regarding the aircraft's design would be sorted out but its induction seems unlikely anytime soon.

The advanced light helicopter Mk-IV, a version which comes with guns, rockets and missiles, has been delayed by four years.

The R&D cost analysis of light combat aircraft Tejas shows that the project's cost is now Rs.13,000 crore with completion deadline of December, 2018. The project was started about 35 years ago with a budget of Rs.560 crore.

India, the biggest arms importer in the world, buys 70 per cent of its military equipment from foreign vendors. The lack of private defence industry and failure of public sector undertakings to deliver have contributed to the situation. Officials say it would take at least three decades for the indigenization to make any impact.

Blame game

The defence scientific establishment blames armed forces for preferring foreign military hardware and not supporting the local efforts. It was reflected in tussle between the army and DRDO over Arjun tanks. The army accepted the locally made tanks and ordered 124 (Mk-I) of them only after extensive comparative trials with Russian T-90s and removal of defects.

In the renewed effort to develop the domestic industry, emphasis is on private participation which has been nonexistent. But situation is gradually changing with big industrial houses like Tatas, Reliance, Mahindra and L&T making inroads in defence manufacturing. The IAF is looking to get its first aircraft from private sector as replacement for the existing fleet of 56 Avros. The `12000 crore project is aimed at encouraging private aircraft manufacturing.

Confronted with scams in defence deals, Antony asks armed forces to shed overdependence on foreign vendors for buying military hardware : North, News - India Today

 

[Yusuf]

Last para was interesting. IAF looking at private players to replace the Avros. Never heard about this. Any info on this?

 

[W.G.Ewald]

Confronted with scams in defence deals, Antony asks armed forces to shed overdependence on foreign vendors for buying military hardware.

I am confident that Indians are fully capable of scams within their own indigenous defense industry.

 

[nrj]

I am confident that Indians are fully capable of scams within their own indigenous defense industry.

And you are very right good Sir !

 

[cobra commando]

India: Major Policy Shift Favor Local Suppliers in Defense Programs

The Indian Ministry of Defense is about to introduce a major change in its defense procurement policy, giving a priority to local companies through rating 'Buy and Make' (Indian production of goods) as the top category for procurement. This 'India First' policy will provide first opportunity in all contracts to Indian companies, from the public and private sector, while placing procurement from foreign suppliers as the last option.

The Indian Ministry of Defense has also excluded software and consultancy services from the approved offset list, meaning that international companies selling defense systems to India will not be able to acquire offset credit buying services from Indian software services or consultancies. The exclusion of software and consulting services from the list of recognized defense offsets is the resulted from VVIP helicopter scandal, after Italian investigators found that middlemen involved in the VVIP helicopter scandal routed kickbacks into India through a phony software contract. (The Economic Times)

The move would be a historic shift from existing priority given to acquisitions from foreign companies, which today accounts for 70 percent of purchases. Most of the remaining is procured from Indian public sector units and ordnance factories while Indian private sector only gets a very limited number of defence contracts. These private sector companies will now get a significant boost opening new opportunities for supplying equipment as well as establishing joint ventures with foreign producers of military systems.The proposals have already been discussed in a few rounds of discussions and is set to be approved by the Defence Acquisition Council headed by AK Antony in the next few weeks, the Times of India said.

'Buy' and 'Make' privileges mean Indian private sector companies will become much more attractive for joint ventures with foreign producers seeking to secure deals supplying defense systems to the Indian military.

Under this category, the procurement would be made from an Indian vendor, including a private Indian company that forms a JV or even has a production arrangement with a foreign firm. Under Buy and Make (Indian) there must be a minimum of 50 percent indigenous content.

Until now, the primary protection for the local market was the offset requirement. Under Defence Procurement Procedure, in any purchase over $60 million from a foreign company, 30 percent of the contract value has to be ploughed back into India through offset – buyback from Indian suppliers, encouraging foreign suppliers to team up with Indian suppliers acting as subcontractors. While the majority of buybacks were related to the defense programs, some are suspected to have masked illegal kickbacks. The VVIP helicopter scandal threatens to exclude software and consultancy services from the industry fields approved for defense offset, the Times of India reports.

As a result, the Indian Ministry of Defense is considering to exclude software and consulting services from the offset list after Italian investigators found that middlemen involved in the VVIP helicopter scandal routed kickbacks into India through a phony software contract. In its list of about a dozen offset partners, AgustaWestland, which supplied the VVIP helicopters under the controversial 2010 contract, listed IDS Infotech as a partner. It has emerged in Italian court filings that middleman Guido Haschke had got AgustaWestland to source phony software from IDS Infotech to move a few million euros into India in the name of software outsourcing. And more payment was to be routed to IDS Infotech as an offset partner. Sources said IDS Infotech ploy was the key reason for the decision to look at options available under offsets. "Software and consultancies are difficult to value. The value of offsets should verifiable and credible" a source explained to the Times of India. The proposed amendments would result in defence offsets being mostly clustered around engineering services that are universally quantifiable.

India: Major Policy Shift Favor Local Suppliers in Defense Programs | Defense Update - Military Technology & Defense News

 

[Ray]

Good for this idiot and his advice.

Why can he not get the indigenous industry working for defence needs?

And why can't this idiot get the DRDO do its task rather than make chilly powder for women?

Typical idiot of a clueless politician!

Impotent idiot!

 

[Daredevil]

I am confident that Indians are fully capable of scams within their own indigenous defense industry.

You are right. But at least money will stay in India as well saving precious foreign exchange.

 

[arnabmit]

Nope, money will move to Swiss & Mauritius banks.

You are right. But at least money will stay in India as well saving precious foreign exchange.

 

[Bangalorean]

I am confident that Indians are fully capable of scams within their own indigenous defense industry.

Very true. We will hear of Reliance Howitzer scam, Mahindra chopper scam, Tata tank scam, L&T transport aircraft scam, and so on.

But then, we will have scams irrespective of whether the supplier is domestic or foreign. But at least we will have the capability to manufacture these things domestically during wartime.

 

[rock127]

Very true. We will hear of Reliance Howitzer scam, Mahindra chopper scam, Tata tank scam, L&T transport aircraft scam, and so on.

But then, we will have scams irrespective of whether the supplier is domestic or foreign. But at least we will have the capability to manufacture these things domestically during wartime.

I would prefer domestic scams over foreign scams

I remember when a bolt used in a tank was ordered from Poland which cost RS 5,000 whereas its original cost in India would have been <Rs500. :shocked:

 

[Sam2012]

What the hell , your defence PSU & DRDO takes ages in completing the project & u will not give the project to Private players 2 reason
- No Foreign currency as kickbacks
- And Monopoly , if given chance to private players then ur DPSU has to pack backs like ITI etc

Then whom we have to depend Mr. Antony ? to your dhodhi

 

[Daredevil]

Dependence on foreign suppliers for military hardware is harming national security

The latest episode of alleged corruption in a deal to purchase Italian helicopters for the IAF's VIP Squadron constitutes yet another blow to India's national security. The most detrimental consequence of the ongoing probe into wrongdoing - the CBI has registered a case yesterday - is the harm that it will cause to the morale, cohesion and self-esteem of the armed forces.

No matter what the final outcome of enquiries by the investigating agencies - and past precedent shows that they rarely come to any definitive conclusion - serious damage has already been done to this esteemed institution.

However, a deeper malaise and far more toxic threat to national security, of which this incident is yet one more symptom, is India's abject dependence on foreign sources for military hardware. It is no secret that the Indian armed forces are equipped, overwhelmingly , with platforms and systems acquired from Russia, Israel, the UK, France, Italy and the US, amongst others. Even when we claim that a tank, ship, submarine or aircraft is 'indigenously built' , the fact that seldom emerges is that 70%-80 % of the electronics, weaponry and other vital systems that go into it are imported.

India's past experience has clearly demonstrated the multiple penalties that we pay for this external dependence. The Comptroller and Auditor General, in his annual report to Parliament, regularly highlights the proportion of our imported tanks, artillery , submarines, fighters and radars that are out of action, thus degrading the combat-readiness of our forces.

There does not seem to be any appreciation of the stark fact that every piece of hardware that the Indian armed forces acquire from abroad places them at the mercy of the seller nation for 30-40 years thereafter. The nonchalance with which we continue to import huge quantities of arms not only undermines our security but renders all talk of 'strategic autonomy' meaningless.

India is fortunate to have a vast defence technology and industrial base (DTIB) which would be the envy of developed nations. This base comprises thousands of talented scientists working in a network of sophisticated DRDO laboratories backed by the advanced production facilities of the ordinance factories and defence public sector units (DPSUs).

And yet, India's DTIB has rendered our armed forces hollow by failing to deliver, for six decades, capabilities they direly need. A willing and capable private sector has been kept out of defence production while the DPSUs have hoodwinked the nation with spurious claims of 'technology transfer' and 'indigenisation'.

It is deeply disturbing to note that no one in India's national security establishment, comprising the political leadership, scientists and bureaucrats, has seen fit to demand accountability for this gaping void in national capability . Worse still, no roadmap has been drawn up for attaining selfsufficiency in weapon systems. India's massive arms imports constitute a double jeopardy for the nation. Not only do they constitute a serious security compromise , they also extract a heavy moral price as corruption scandals erupt with regularity, smearing the country's good name and eroding its self-respect.

Banning or 'blacklisting' of arms companies alleged to be involved in malpractices may appear to be a dramatic antidote. But in reality, it is counterproductive because it harms our security far more than the impugned firm. The army's artillery wing has not received a new gun for 30 years because the MoD has blacklisted every reputed gun manufacturer on the basis of allegations. By disarming ourselves in this manner, we are thoughtlessly fulfilling the fondest dreams of our adversaries. It is time for Indians to ask why every foreign arms manufacturer feels compelled to offer bribes in India even when marketing a product which could win the competition purely on its superior qualities or price. The answer is devastatingly simple: because they are convinced, and know from past precedent, that no arms deal ever goes through in India - regardless of the product's merit - without kickbacks being paid. The only service that the so-called middlemen provide is to advise their principals whom to bribe how much.

So deep-rooted is this conviction amongst foreign companies that no amount of fiddling with defence procurement procedures or insistence on 'Integrity Pacts' will deter them from offering bribes as insurance that their deal is not scuttled - either by some influence-peddler in Delhi's backalleys or by a frustrated rival.

According to one viewpoint, parties across the political spectrum see the arms import business as a veritable golden goose for election funding, and are obviously loath to kill it by encouraging the indigenous arms industry. Since alleged scams come in handy to settle political scores, we have witnessed, since the 1980s, every single major defence contract getting embroiled in allegations of corruption and kickbacks. Consequently India's defence modernisation has come to a grinding halt at a time when China's defence budget has hit a new high and AfPak poses a deadly potential menace.

In this grave scenario, India's decision-makers and politicians can take two major initiatives which will help salve wounded national pride and serve the cause of national security. One is to launch a 25-year public-private 'national mission' to attain self-sufficiency in arms; if we start today, we may wean ourselves off foreign dependence by 2038. The other is to get all political parties to sign an Integrity Pact in which they will, in the national interest, undertake to treat defence purchases as sacrosanct and seek election funding from other sources.

The writer is former chief of the Indian Navy.

Dependence on foreign suppliers for military hardware is harming national security - The Economic Times