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THE conflict between probity and speed in defence acquisitions sums up the present process of defence equipment purchase in India. Defence Minister AK Antony is known for being overcautious in ensuring all defence deals are above board, but the effort also ends up slowing down already long-awaited acquisitions when probes are ordered into purchases even on anonymous complaints.
While the diminutive Kerala politician enjoys the sobriquet of ‘Saint Antony’, his critics say the ‘clean-up’ drive in the Ministry of Defence during his eight-year tenure has done no good for the problem of delays in acquisition.
Proposals to buy new fighter jets to replace the ageing MiG-21s and the next-generation of submarines, helicopters and artillery guns are pending for years. The upgrade of decades-old air defence radars and guns started only after then Army chief General VK Singh brought out the shortages. On March 28, 2012, speaking in Parliament, Antony confessed: “If a written complaint, even if anonymous, was received, I used to forward it for inquiry”.
Amidst all this, the Indian government has spent over Rs 2,35,000 crore ($38.4 billion) in three years — April 1, 2010, to March 31, 2013 — for procuring weapon systems for the three armed forces, Parliament was informed in August 2013.
The money trail in two recent CBI cases — the AgustaWestland and Rolls Royce — was first uncovered in Europe. India had only reacted, exposing the rot from within. AgustaWestland was the only helicopter maker in the world which had three-engine
machines — considered the safest — yet it allegedly paid Rs 352 crore as bribe to secure the tender to supply 12 copters for VVIP use in India. Similarly, Rolls Royce, one of the top engine makers, faces a CBI probe for having paid ‘intermediaries’ for securing a contract.
Depending upon which side of the debate one is on, it is a toss-up between Antony’s promise of weeding out the unscrupulous corrupt elements and the challenge of cutting down the delays in equipping the forces with the best equipment, weapons and aircraft. The question remains how to deal with foreign companies who, despite being the best in their class, offer bribes or are forced to offer bribe to bag contracts in India.
Blacklisting clearly has not deterred bribe-seekers in India, but may have contributed in slowing down acquisition.
Gunning for them
One example is the blacklisting of three major artillery guns makers. Denel of South Africa, Singapore Technologies, and Rhienmettal Germany have been banned over the past few years. Bofors, the original ‘bad word’ of Indian artillery purchase, no more exists as a brand name. The last proposal to buy 145 ultra-light howitzers (ULH) from BAE systems has not been cleared despite a two-year wait and the acquisition being through the foreign military sales route between the US and India. Not a single new gun has been inducted since the purchase of the 155 MM Bofors in 1987.
Notably, a CBI case was lodged against Denel in 2005 for allegedly paying kickback in the sale of an anti-material bunker buster gun in India. Eight years later, in October 2013, the case was closed. Nobody was convicted as allegations of kickback could not be substantiated. In the meantime the company tied up with Indian vehicle maker TATA and now its 155 MM artillery gun is mounted on a TATA chassis. It is soon to be tested.
Hard-nosed strategists are worried over the slow pace. Lt Gen Mohinder Puri, a former deputy chief, pointed at Admiral DK Joshi’s resignation to say: “It was the lack of modernisation that felled the Admiral. It was not his fault if the spares were not available or the re-fit was improper. The MoD should streamline processes.”
Collateral benefits
Antony’s overcautious perseverance has paid-off in two ways, one direct and the other indirect; the latter stems from his simultaneous thrust on indigenisation. The Light Combat Aircraft (Tejas), Arjun tank, nuclear powered submarine Arihant, and inter-continental ballistic missile Agni-V are the marquee localised projects that fructified. A replica of the Bofors gun, based on the original design and drawings, has been built by Ordnance Factory Board (OFB) and is being tested. As many as 114 of these are set to be inducted by the year-end.
The direct benefit is the fear Antony has created. The CBI is looking at scams in major deals and senior government functionaries, including Air Chief Marshal SP Tyagi (retd) and VRS Natrajan, former CMD of Bharat Earth Movers Limited (BEML), are facing the heat in separate cases. Checks like having an integrity pact with suppliers have been introduced and the Central Vigilance Commission vets each major deal before the purchase.
Foreign dependence
India is heavily import-dependent for its military needs and foreign companies are an integral part of the supply chain. Imports are largely from Russia, Israel, the US, the UK, Poland, Slovakia and Finland. A report of the reputed Stockholm International Peace Research Institute in March 2013 explains New Delhi was the biggest arms importer of the world. “India accounted for 12 per cent of all global arms transfers between 2008 and 2012,” it said.
The CBI files
Several key projects are under the CBI scanner. One set is of those being probed by the CBI and the other is of acquisitions held up due to lack of decision making at the government or MoD level.
The latest case referred to the CBI is the alleged payoff made by British engine-maker Rolls Royce to Hindustan Aeronautics Limited’s (HAL’s) Industrial Marine and Gas Turbine Division allegedly for securing the contract for supply of engines and expertise used to power gas through pipelines in India.
Antony sent this to the CBI on February 28 and going a step further he ‘put on hold’ all contracts Rolls Royce had with HAL for repair and overhaul of engines, used in at least seven types of aircraft in the IAF and Navy. These contracts are being screened by the CBI and will be resumed only if found clear.
The CBI is also probing the purchase of 12 AgustaWestland helicopters for VVIP travel at a cost Rs 3,650 crore. Prosecutors in Italy, where a case is going on, have established that Rs 350 crore was paid as bribe to European and Indian middlemen. The deal has been cancelled and among the 13 booked by the CBI is former IAF chief SP Tyagi. The bribe was routed in such a fashion that it never reflected in the documents in India. The helicopter was top of the line and is used by dignitaries in Europe, including the British Prime Minister. So Antony has refrained from blacklisting Finmeccanica, AgustaWestland’s parent company. It does a lot of specialised engineering work in the defence sector.
In March 2012 Antony ordered a CBI probe into the import of specialised trucks from Tatra, a European company. The trucks, used to carry very heavy loads like the missile systems, were being sold in India by BEML, an MoD-owned company. The Indian firm was marking up price and marketing the truck; the losses to MoD were in hundreds of crores of rupees. This case proved to be a boon. Tatra’s purchase stopped and Indian truck makers were tested and found to be good enough to carry similar heavy loads.
The OFB’s Nalanda unit probe by the CBI led to the blacklisting of six companies and the arrest of top officials like OFB Director-General Sudipta Ghosh. The following six firms were debarred in April 2012 from further business dealing for 10 years: Singapore Technologies Kinetics Ltd. (STK); Israel Military Industries Ltd. (IMI); T.S. Kisan & Co, New Delhi; R.K. Machine Tools, Ludhiana; Rheinmetall Air Defence (RAD), Zurich; and Corporation Defence, Russia.
Slow in approach
The purchase of 126 fighter jets from French aviation major Dassault is a prime example of an altogether slow process. On April 28, 2011, Dassault’s Rafale and a European consortium’s Eurofighter were shortlisted among six global contenders. The planes of the six manufacturers had been tested on 643 parameters between 2009 and 2010. In January 31, 2012, it was announced that Rafale was the winner of the contract and Eurofighter had lost out. Till now there is no finality on the deal. In February this year, while inaugurating the ‘Defexpo’, Antony said: “There are complaints about the procedure of calculating the lifecycle cost and that issue is not yet settled. Before bringing the deal to the Cabinet Committee on Security for final approval, we would like to get clear on that aspect.”
Tenders for artillery guns have been cancelled at least six times in the past 10 years. The decision on getting six next-generation submarines that will have air-independent propulsion (AIP) — allowing for the vessel to remain underwater for longer periods — is shuttling between desks. The tender for replacement of helicopters for the four-decade old design of Cheetah, which is based on French origin Lama Alouette Ill, has been recalled once and is mired in delays since 2007.
DEALS HELD UP
- British aircraft engine-maker Rolls Royce and HAL
- AgustaWestland helicopters for VVIP travel
- Fighter jets from French aviation major Dassault
- Purchase of next generation artillery guns, submarines, helicopters to replace Cheetah
