De­feNce psUs, ord­NaNce fac­to­ries are iN dire Need of over­haUl

As is the case with the DRDO, many of the other DPSUs are en­gaged in pro­duc­ing non-de­fence items.

The Sunday Guardian - - Covert -

In­dia’s nine De­fence Pub­lic Sec­tor Units ( DPSUs) and 41 Ord­nance Fac­to­ries (OF) are in need of a se­ri­ous re­view, over­haul and some se­ri­ous and mean­ing­ful ac­count­abil­ity. This is para­mount if In­dia has to achieve a cred­i­ble level of self- re­liance in de­fence equip­ment. The prob­lems are myr­iad. These state-owned DPSUs and OFs hardly in­vest in re­search and devel­op­ment (R&D). They need suf­fi­cient re­sources to un­der­take up­grad­ing, mod­erni­sa­tion and ex­pan­sion, but not with­out putting se­ri­ous ac­count­abil­ity sys­tems into place. They have been suf­fer­ing se­ri­ous ca­pac­ity un­der-util­i­sa­tion, are in need of greater fi­nan­cial au­ton­omy, as well as more au­ton­omy in de­ci­sion mak­ing such as in mat­ters re­lat­ing to joint ven­tures, co- devel­op­ment and co­pro­duc­tion with for­eign coun­tries.

As is the case with the De­fence Re­search and Devel­op­ment Or­gan­i­sa­tion (DRDO), many of the other DPSUs are sim­i­larly en­gaged in pro­duc­ing non­de­fence items, which has re­sulted in di­lu­tion of their sta­tus and char­ac­ter as DPSUs. For ex­am­ple, Bharat Earth Movers Lim­ited (BEML) is heav­ily into mak­ing rolling stock such as wag­ons and coaches for Rail­ways, earth mov­ing equip­ment and en­gag­ing in min­ing con­struc­tion busi­ness, with de­fence ac­count­ing for less than 50%. About 20% of prod­ucts man­u­fac­tured by Bharat Elec­tri­cals Lim­ited (BEL), which is oth­er­wise en­trusted in man­u­fac­tur­ing radars, sonars, elec­tronic war­fare, com­mu­ni­ca­tion and other sen­sor equip­ment, com­prise sev­eral ma­jor non-de­fence items such as, for ex­am­ple, elec­tronic vot­ing ma­chines and stu­dio equip­ment.

The Mishra Dhatu Nigam Lim­ited ( MIDHANI), es­tab­lished in col­lab­o­ra­tion with a French and Ger­man firm to achieve self-re­liance in strate­gic ma­te­ri­als such as spe­cial steels, su­per al­loys and ti­ta­nium al­loys for the de­fence, nu­clear and space sec­tors, has hardly un­der­gone any worth­while mod­erni­sa­tion and re­mains sad­dled with out­dated and ob­so­lete fa­cil­i­ties, and is thus fraught with jeop­ar­dis­ing strate­gic prod­ucts. The im­pact is ev­i­dent as it is un­able to make even the much needed light­weight bul­let-proof jack­ets for the Army and the para­mil­i­tary forces. In­stead, these are mostly be­ing im­ported. Bharat Dy­nam­ics Lim­ited, which makes var­i­ous types of short range mis­siles, has a poor track of com­plet­ing new projects.

The four ship­yards com­pris­ing the nine DPSUs need ma­jor re­struc­tur­ing and in­te­gra­tion in order to syn­er­gise their re­sources, the lack of which is hin­der­ing mod­erni­sa­tion of the ex­ist­ing fa­cil­i­ties and also in op­ti­mis­ing util­i­sa­tion of hu­man re­sources and pro­duc­tion ca­pac­ity. It is no won­der that none of the ship­yards have been able to ob­tain a ma­jor ex­port con­tract. Rather In­dia’s de­fence ship­yards re­mained un­der­utilised dur­ing much of the 1990s and even a part of this cen­tury. And when tasked, they take far too long to con­struct ships for which the Navy too has to share the blame. More­over, the ship­yards hardly en­gage in R&D, forc­ing them to be there­fore de­pen­dent ei­ther on de­signs sup­plied by ven­dors or on de­signs that are vin­tage.

One ex­am­ple per­tain­ing to the GRSE’s (Gar­den Reach Ship­yards and En­gi­neer­ing Lim­ited) poor track record should suf­fice. In March 2003, the gov­ern­ment sanc­tioned con­struc­tion of four anti- sub­ma­rine war­fare Corvettes. Con­struc­tion of the four war­ships were to be­gin in 2004, 2005, 2007 and 2008, re­spec­tively, and to be de­liv­ered within four years each in 2008, 2009, 2011 and 2012. In­stead a se­ries of de­lays led to an al­most three-fold cost es­ca­la­tion from an orig­i­nally pro­jected Rs 3,000 crore to over Rs 8,000 crore. Even­tu­ally, con­struc­tion on the first ship ( INS Ka­murta) be­gan in 2006 and was de­liv­ered eight years and two months later in July 2014; the se­cond (INS Kad­matt) eight years and seven months later in Novem­ber 2015; the third (INS Kil­tan) a stag­ger­ing nine years and seven months later in Oc­to­ber 2017 and the fourth (INS Kavaratti) also af­ter over nine years later in 2018. It did not help that the Navy made 1,200 de­sign changes dur­ing the course of con­struc­tion of these ships.

In­dia’s premier naval ship­yard, the Mazagon Docks Lim­ited (MDL), has a sim­i­larly poor record of main­tain­ing dead­lines. For ex­am­ple, there were in­or­di­nate de­lays in the de­liv­ery of the three 7,400-tonne Kolkata class stealth De­stroy­ers. De­liv­ery of these war­ships was orig­i­nally sched­uled for 2008, 2009 and 2010. The de­liv­ery sched­ule was first re­vised to May 2010, May 2011 and May 2012; then fur­ther re­vised to March of 2012, 2013 and 2014, only to be even­tu­ally com­pleted in July 2014 (INS Kolkata), fol­lowed by in Septem­ber 2015 (INS Kochi) and Novem­ber 2016 (INS Chen­nai) at a 225% es­ca­lated cost of Rs 11,662 crore, from the orig­i­nally es­ti­mated Rs 3,800 crore. The de­lays were on ac­count of mul­ti­ple prob­lems which in­cluded a stag­ger­ing 2,363 de­sign mod­i­fi­ca­tions by the Navy to in­cor­po­rate new weapon sys­tems and sen­sors, slow con­struc­tion pro­ce­dures, tech­ni­cal prob­lems, Ukraine’s fail­ure to de­liver the ship’s pro­pel­lers and shafts, re­sult­ing in the con­tract be­ing later awarded to a Rus­sian firm and fi­nally the de­lay in the de­liv­ery of the Is­raeli Barak-8 anti-air mis­siles.

While the Goa Ship­yard Lim­ited (GSL) and the GRSE can only build small and medium size ships, In­dia ef­fec­tively has only one ship­yard, the MDL, with the ca­pac­ity to build large size war­ships such as de­stroy­ers and sub­marines. Both the GRSE and MDL are fraught with lim­i­ta­tions and re­quire ex­pan­sion, if not re­lo­ca­tion. Both the GRSE’s fu­ture and its abil­ity to build big­ger ves­sels are im­peded by the de­cay of the Kolkata port and the low draft of the Hooghly River. Con­sul­ta­tions have been on with west­ern firms to help mod­ernise both the GSL and GRSE, but so far lit­tle has been achieved. MDL too has a lim­ited ca­pac­ity for ex­pan­sion be­cause of lim­i­ta­tions of draught (4.5 me­ters) and its sand­wiched lo­ca­tion be­tween the Port Trust and a ship break­ing yard. Many of In­dia’s 41 OFs, 16 of which were in­her­ited at the time of In­de­pen­dence, are of World War-II vin­tage and struc­turally in­ef­fi­cient. They do not en­gage in their own R&D and are un­able to de­cide their own ven­dors. The OFs are pri­mar­ily man­u­fac­tur­ing de­fence prod­ucts based on trans­fer of tech­nol­ogy from the orig­i­nal equip­ment man­u­fac­tur­ers, mostly over­seas based and from the DRDO. It has made only mod­est progress in R&D de­spite cre­at­ing 11 Ord­nance Devel­op­ment Cen­tres with iden­ti­fied core tech­nolo­gies. Rather, there con­tinue to be com­plaints of de­fec­tive am­mu­ni­tion be­ing pro­duced in the OFs which have had to be re­turned. For ex­am­ple, be­tween 2012 and 2015, 429 dif­fer­ent types of de­fec­tive equip­ment in­clud­ing am­mu­ni­tion pro­duced at the OFs were re­turned by the armed forces due to qual­ity is­sues. There have also been long ges­ta­tion pe­ri­ods to de­velop and in­crease ca­pac­i­ties at these fac­to­ries. It took nine years ( from May 2002 to Au­gust 2011) for the Ord­nance Fac­tory Board to cre­ate a per an­num ca­pac­ity of build­ing just 30 In­dian-made Ar­jun tanks. It took six years to cre­ate the per an­num ca­pac­ity of as­sem­bling 100 Rus­sian­made T-90 tanks and has been un­able to in­crease this ca­pac­ity to 140 de­spite ef­forts since 2011. Af­ter four to five years of ef­fort, it has been un­able to add even 50% suc­cess in in­creas­ing the ca­pac­ity for as­sem­bling Rus­sian-sup­plied T-72 tank vari­ants, man­u­fac­tur­ing ar­moured ve­hi­cle engines from 350 to 750 per an­num and aug­ment­ing the ca­pac­ity to man­u­fac­ture spares needed to over­haul T-72 and T-90 tanks.

The man­u­fac­tur­ing tech­nol­ogy has ei­ther been pro­cured on a trans­fer of tech­nol­ogy ba­sis or what has been handed to them by the DRDO, much of which is low- end. The OFs are known not to have a sys­tem to pre­pare a bal­ance sheet in order to have an ap­praisal of their cost of prod­ucts and ma­te­ri­als. Even a stan­dard ac­count­ing sys­tem and tech­ni­cal au­dit by an in­de­pen­dent agency has not been in­tro­duced in the OFs. The pri­vate sec­tor is es­ti­mated to pro­duce ten times more than what the 41 OFs put to­gether pro­duce de­spite hav­ing two lakh em­ploy­ees. In order for them to be more pro­gres­sive, pro­duc­tive, com­pet­i­tive and fi­nan­cially vi­able, OFs could per­haps be turned into a cor­po­ra­tion on the lines of, for ex­am­ple, the In­dian pub­lic sec­tor tele­phone com­pany, the Bharat San­char Nigam Lim­ited (BSNL) and al­low them to se­lect ven­dors and to take a de­ci­sion in fi­nan­cial and in R&D mat­ters in­de­pen­dently.

Clearly, the prob­lems are known. But so­lu­tions have to be found and en­forced on a war foot­ing. Any dere­lic­tion is in­ex­cus­able if self-re­liance is to be achieved. Di­nesh Ku­mar is a de­fence an­a­lyst.

In March 2003, the gov­ern­ment sanc­tioned con­struc­tion of four anti-sub­ma­rine war­fare Corvettes. INS Kad­matt (pic­tured here) was de­liv­ered eight years and seven months later than the tar­geted year i.e. in Novem­ber 2015.

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