Two-year achieve­ments – Tackle brass tacks

SP's MAI - - FRONT PAGE - LT GEN­ERAL P.C. KA­TOCH (RETD)

The ex­trav­a­ganza post com­ple­tion of the present govern­ment on May 26 high­light­ing achieve­ments in the past two years was ex­pected, as a lot has cer­tainly hap­pened in this pe­riod. The econ­omy is look­ing up, the for­eign pol­icy pro­gress­ing tak­ing into ac­count the fluid dy­nam­ics of geopol­i­tics, in­clud­ing fur­ther ce­ment­ing of the China-Pak­istan anti-In­dia axis. In the de­fence sec­tor, the ma­jor change has been the ‘Make in In­dia’ ini­tia­tive al­beit its ef­fect to be felt would pan over some years.

Some achieve­ments at­trib­uted to De­fence Min­is­ter Manohar Par­rikar on so­cial me­dia in­clude: 100 per cent con­ver­sion of off­set obli­ga­tion in 2014-15, as against 63.7 per cent con­ver­sion be­tween 2008-13; Growth in value of pro­duc­tion of ord­nance fac­tory (OF) and de­fence pub­lic sec­tor un­der­tak­ings (DPSUs) over the last two years; Growth in de­fence ex­ports over the last two years; In­dige­nously de­signed and de­vel­oped light com­bat air­craft (LCA) Te­jas is un­der pro­duc­tion; Test­ing of Dhanush – the 155mm X 45-cal­i­bre ar­tillery gun sys­tem is un­der ad­vanced stages; List of mil­i­tary stores re­quir­ing NOC, and SOP for the same have been made pub­lic, which re­moves am­bi­gu­ity and pro­motes con­sis­tency; Govern­ment to sup­port do­mes­tic de­fence in­dus­try with 90 per

cent of de­sign and de­vel­op­ment project fund­ing; MSMEs to be given spe­cial pref­er­ence; Ex­change rate vari­a­tion pro­tec­tion made ap­pli­ca­ble for In­dian pri­vate sec­tor, at par with DPSUs for all cat­e­gories of de­fence ac­qui­si­tions; De­pen­dence of the forces on for­eign firms for pro­cure­ment has re­duced by more than 20 per cent year-on-year in last two years; In the last three years, the In­dian Army placed over 75 per cent of its cap­i­tal ac­qui­si­tion or­ders with In­dian firms, and, All naval ships and sub­marines on or­der are be­ing con­structed in In­dian ship­yards, in line with the spirit of ‘Make in In­dia’. There is no deny­ing that the De­fence Min­is­ter has demon­strated his re­solve to ad­vance In­dia’s de­fence but the above needs to be more closely ex­am­ined what the ground po­si­tion is, which is sum­marised as: con­ver­sion of off­set obli­ga­tion – full de­tails of con­tracts signed are not avail­able be­yond broad fi­nan­cial de­tails like date of con­tract sign­ing, value of the main con­tract and off­set amount. The name of the In­dian off­set part­ners (IOPs), amount and kind of off­sets re­ceived by each, and the de­tailed time­frame for ex­e­cu­tion of each off­set con­tract are miss­ing, in ab­sence of which ac­cu­rate eco­nomic anal­y­sis is not pos­si­ble. There is also the point about ser­vices in off­sets, in­tro­duced in 2012 and re­moved in 2013 due ` 392 crore paid through In­dian com­pa­nies in the name of soft­ware ser­vices as kick­backs in the Agusta-West­land he­li­copter scam.

Past Comptroller and Au­di­tor Gen­eral of In­dia (CAG) re­ports too are more fault-find­ing, not cer­ti­fy­ing that any in­di­vid­ual off­set con­tract has worked as per con­trac­tual terms. There­fore, the claim that 100 per cent con­ver­sion of off­set obli­ga­tion has been af­fected dur­ing 2014-15 may not be the true pic­ture and need to be seen in this back­drop. The new pol­icy has re­vised the off­set limit from ` 300 crore to ` 2,000 crore but more trans­parency is re­quired to eval­u­ate the ac­tual per­cent­age of the con­ver­sion; growth in pro­duc­tion

value of OF and DPSUs – growth in pro­duc­tion value is a sim­plis­tic state­ment. What is im­por­tant is whether it is holis­tic, what per­cent­age, and more im­por­tantly how is this growth con­tribut­ing to bridge the ‘crit­i­cal voids’ of the mil­i­tary, of which there is lit­tle ev­i­dence;

growth in de­fence ex­ports – good sign but much more catch­ing needs to be done; LCA Te­jas un­der pro­duc­tion – there is news of the Te­jas be­ing in­ducted this July in the first IAF squadron. Com­pare the news just six months the news was that while the IAF was to pro­cure 120 x Te­jas (70 per cent parts and as­sem­blies be­ing im­ported) the air­craft was still to un­dergo 43 im­prove­ments out of the 57 main­tain­abil­ity weak­nesses de­tected, which was es­ti­mated to take an­other three years at least, fur­ther pro­long­ing de­vel­op­ment of the air­craft

that be­gan in 1983. Hope­fully, in the hurry to show progress some of these 43 im­prove­ments re­quired will not be post­poned for ad­dress­ing post in­duc­tion. Dhanush test­ing un­der ad­vanced stage – this is a good in­dige­nous gun though the De­fence Re­search and De­vel­op­ment Or­gan­i­sa­tion (DRDO) has pro­duced this af­ter tweak­ing the ToT of Bo­fors on which it sat for decades. Con­sid­er­ing that no gun has been in­ducted in the ar­tillery for the past 25 years, not only will the Dhanush need to be pro­duced in mass num­bers the in­terim crit­i­cal voids need to be ad­dressed as im­por­tantly; mil­i­tary stores re­quir­ing NOC and SOP for

same made pub­lic – good ini­tia­tive; sup­port do­mes­tic de­fence in­dus­try with 90 per cent of de­sign and de­vel­op­ment project fund­ing – this is a good ini­tia­tive but con­sid­er­ing that there is glut in the in­dige­nous tech­no­log­i­cal base, the voids of DPP 2016 in­clud­ing bench­mark­ing of the ‘strate­gic part­ners’ must be re­solved early keeping in mind that no for­eign part­ner will in­vest in In­dia un­less he can make ad­e­quate profit; MSMEs to be given spe­cial pref­er­ence – good pol­icy but im­ple­men­ta­tion is the key; ex­change rate vari­a­tion pro­tec­tion made ap­pli­ca­ble for In­dian pri­vate sec­tor at par with DPSUs for all cat­e­gories – good pol­icy; de­pen­dence of the forces on for­eign firms for pro­cure­ment, has re­duced by more than 20 per cent – the ap­prov­ing author­ity is the De­fence Ac­qui­si­tion Coun­cil (DAC). While claim­ing this as an achieve­ment, what needs to be ex­am­ined is how this has af­fected the crit­i­cal voids of the forces.

Take for ex­am­ple the crit­i­cal de­fi­ciency of bul­let proof jack­ets in the In­dian Army which has shot up to over 3,50,000 while In­dian firms are ex­port­ing this item to armies and se­cu­rity forces of some 200 coun­tries; In­dian Army placed over 75 per cent of cap­i­tal ac­qui­si­tion or­ders with In­dian firms – same as last com­ment; all naval ships and sub­marines on or­der are be­ing con­structed in In­dian ship­yards,

in line with the spirit of ‘Make in In­dia’ – in line with the new pol­icy. Navy presently has 47 war­ships un­der con­struc­tion in var­i­ous do­mes­tic ship­yards, even­tu­ally aim­ing at a 198 war­ship and 600 air­craft by 2027. Build­ing six Scor­pene sub­marines in­dige­nously through ToT un­der Project 75 is al­ready run­ning four years be­hind sched­ule and suf­fer­ing from ris­ing costs. Project 75(I), in­volv­ing lo­calised pro­duc­tion of six air-in­de­pen­dent propul­sion sub­marines un­der the ‘Buy and Make (In­dian)’ pro­cure­ment cat­e­gory, was can­celed and then re­vamped un­der ‘Make in In­dia’. Fresh es­ti­mates in­di­cate it may take 10-12 years be­fore any sub­ma­rine in this class en­ters ser­vice. Over­all, while it is good to talk of achieve­ments, there is need to ad­dress the brass tacks.

De­fence Min­is­ter Manohar Par­rikar re­leas­ing a booklet ti­tled “De­part­ment of De­fence Pro­duc­tion in Pur­suit of Self-Re­liance” New Delhi, May 26, 2016. De­fence Sec­re­tary, G. Mo­han Ku­mar and Sec­re­tary (De­fence Pro­duc­tion), A.K. Gupta are also seen.

Ris­ing costs: LCA Te­jas and Scor­pene class sub­ma­rine, Kal­vari

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