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ARMS OPEN AT DESI WAR MART - India - The Times of India
With a defence budget of around $32 billion, India is one of the biggest arms importers among emerging economies. But this vast sum is mostly spent without any real planning. As foreign armament manufacturers eye our impressive shopping list, the question is: Will we get enough bang for our buck?
There is simply no business like the arms business. No trade is as deadly and as lucrative. Just about every nation is amassing the latest arms and defence technology to fight off or vanquish its real or imagined enemies.
Global annual military expenditure tops $1,500 billion now. With a defence budget of close to $32 billion, India, too, has emerged as a major buyer in the global arms bazaar in the last decade. India, in fact, is the largest arms importer in the emerging economies with the exception of China. Indias giant and, of late, increasingly assertive neighbour pegs its annual defence budget at around $78 billion. And this is a conservative estimate.
As per official figures, India signed arms deals worth $50 billion in the decade following the 1999 Kargil war to acquire fighter planes, warships, tanks, missiles, radars and the like. In the last three years alone, the defence ministry signed 465 contracts worth Rs 135,000 crore.
India is not a war-mongering nation. But we cannot be complacent. Our aim is to give the most modern equipment to our armed forces so they can meet any challenge from any quarter at any time, says defence minister A K Antony, normally not given to making strident noises.
India has reason to worry. It has two large unresolved borders with nuclear-armed Pakistan and China, both of whom are not the friendliest of neighbours. It was actually Kargil that caused India to step on the gas pedal to acquire arms. But while the focus was on the 14,880 km of land borders, the 26/11 terror attacks jolted the government out of its relative neglect of the countrys vast 5,422 km coastline , 1,197 islands and 2.01 million square km of Exclusive Economic Zone.
The Mumbai attack exposed like nothing else the vulnerability of Indias shoreline. Estimates show India will spend over $150 billion on its military and homeland security needs during this decade.
GUNNING FOR DESI
For a regional superpower, which aspires to be a global one, it remains a major source of embarrassment that India still imports 70 per cent of its military requirements. According to a top defence official , this heavy dependence on imports makes India vulnerable. The government wants the Indian private sector to jump into defence production in a big way. Antony, on his part, wants a situation in the not too distant future when India meets 70 per cent of its own defence needs internally.
That sounds unrealistic just now. The fact is even meeting 50 per cent of our defence requirements will take a lot of doing. Ever since independence, the defence sector has been the exclusive preserve of the public sector, which as it turns out is just not up to the job.
As a result, in 2001-2002 , when it was acknowledged that the Defence Research and Development Organisation and its 51 labs, the Ordnance Factory Board and its 39 factories, and the eight defence PSUs had failed to deliver, the government opened the sector to 100 per cent private investment, with up to 26 per cent foreign direct investment (FDI).
But the piecemeal measures announced since then have evoked a rather lukewarm response in the capital-intensive defence production sector, which has long gestation periods for the technology to mature, and a limited market.
The government does not help its case by backtracking on some proposals, or by being obstinate in some other crucial matters. Take the example of 13 private companies, which were short-listed for nomination as Raksha Udyog Ratnas (RURs) to ensure they were treated at par with defence PSUs in a level-playing field.
The RURs were to actively undertake the licensed production of weapon systems and platforms with transfer of technology (ToT) from foreign companies. But the RUR proposal has been given a quiet burial.
The government has also remained adamant about not allowing 49 per cent FDI in the defence sector despite persistent howls from the industry in view of the sensitivities involved. This has hindered Indian companies from setting up joint ventures or co-production arrangements.
Moreover, if India can trust foreign vendors, it is not clear what is the harm in allowing higher FDI for indigenous production at least in some areas not considered strategic?
The government now says its formulating a comprehensive Defence Production Policy (DPrP), on the lines of its Defence Procurement Policy (DPP), which is revised every year, to strengthen the countrys defence-industrial base (DIB). The coming DPrP and DPP will give a new impetus to indigenisation since our ultimate goal is self-reliance
. We will give more opportunities to Indian companies, who can form JVs with foreign companies , promises Antony.
Defence production secretary R K Singh, in turn, says the government will be willing to fund even 80 per cent of the development costs of some systems if private companies enter the fray. Gradually, we intend to make or integrate most of the platforms here and reduce our dependence on imports, he adds.
The government is also confident that the huge defence offsets a foreign vendor who bags an arms deal worth over Rs 300 crore must plough back at least 30 per cent of the contract value back into India in the pipeline will go a long way in strengthening the countrys DIB, with the private sector cornering a major chunk of the spoils.
As of today, 10 offset contracts have been signed, collectively worth Rs 8,200 crore, wherein 31 private firms have benefited apart from ordnance factories and PSUs. There are 41 offset contracts worth over Rs 49,000 crore, which are going to materialise in the next couple of years, says minister of state for defence M M Pallam Raju.
Armament majors are indeed fast tying up with Indian companies to discharge their offset obligations. The usual suspects like Larsen & Toubro, Mahindra, Tatas, Punj Lloyd, Ashok Leyland and the like are already in the fray; some alone and some in JVs.
They are raring to go. L&T , for instance, is confident of undertaking the Rs 30,000-crore project to build a second line of submarines with foreign collaboration, deeply associated as it has been in fabricating the hulls for the secretive ATV (advanced technology vessel) project, under which three nuclear submarines are being built. We have got the facilities and workshop to manufacture conventional submarines at Hazira. They will be simpler and smaller than nuclear submarines. We have also started a shipyard, where we are currently building 10 commercial ships, says L&T senior executive vice president M V Kotwal.
NO LONG-TERM PLANNING
A bane of the defence establishment remains its sheer inability to formulate long-term strategic plans to assiduously build military capabilities in tune with Indias geo-strategic aspirations.
Take, for instance, the much-touted Long-Term Integrated Perspective Plan (LTIPP) for the armed forces. The draft LTIPP for 2002-2017 was junked since it could not be finalised in time. And the new upgraded LTIPP for 2007-2022 is still in the works.
With the government reluctant to create a chief of defence staff (CDS) post to clearly lay down inter-service prioritisation, the Army, Navy and IAF continue to squabble with each other for bigger and bigger slices of the limited budgetary pie.
Year after year, as every fiscal draws to a close, or when elections are on the horizon, the government rushes to close defence deals. The result is that despite India spending big money, the country often does not get the biggest bang for its buck. It merely buys weapons without adequate planning, instead of building military capabilities in a cost-effective manner. Consequently , several operational gaps persist:
Nuclear Deterrence |
India has the intermediate-range Agni missiles as well as the fighter jets to deliver nukes, but the absence of nuclear-powered submarines armed with longrange nuclear missiles remains a critical gap. The underwater leg of the nuclear triad is, after all, considered the most difficult to detect and most effective platform to deliver nukes.
It is all the more critical for India since it has a declared no-first use nuclear doctrine. The countrys first and long-delayed nuclear-powered submarine INS Arihant is likely to be commissioned towards 2011-2012 , but it will be armed only with short-range missiles to begin with.
Submarines |
To Chinas 62 submarines 10 of them nuclear ones and at least three armed with long-range missiles India has just 16 ageing, diesel-electric submarines. Only half of the 10 kilo-class , four HDW and two virtually obsolete Foxtrot submarines are operationally available at any given point in time.
As per projections, only nine of the 16 will be left functional by 2012-2013 , and the number may dip to just five by 2015. There is the ongoing Rs 18,798 crore project to construct six French Scorpene submarines at Mazagon Docks, which was supposed to deliver one vessel ever year from 2012 onwards. But that promise has been hit by a two-year delay and huge cost escalations.
Fighters |
IAF continues to grapple with a free-fall in the number of its fighter squadrons (each has around 14-18 jets), down to just 32 from even its sanctioned strength of 39.5. Moreover , MiG variants, which constitute over 60 per cent of the combat fleet, suffer from poor serviceability problems. Though the IAF needs 44 squadrons to meet the possible contingency of a full conflict with Pakistan, while maintaining a dissuasive posture against China, it will reach the 39.5 mark only by 2017 or so. Huge delays in both the development of the indigenous Tejas Light Combat Aircraft and new procurements has led to this sad state of affairs.
Artillery |
The Bofors ghost and other bogeys have ensured that Army has not inducted a single 155mm gun since the 410 Bofors 55mm/39-calibre howitzers were bought in 1986. Projects under the Rs 20,000-crore artillery modernisation plans are stuck at different stages.
Night-Fighting |
The army is suffering from an acute case of night blindness, both in the infantry and the mechanised forces. The need to bolster the night-fighting capabilities of the Army, Navy and IAF is so critical that India may have to spend at least $1 billion in the area in the next few years, focussing on thirdgeneration thermal imaging (TI) sights and night-vision devices.
Aircraft Carriers |
The navy has long wanted three carriers to project potent force in the entire Indian Ocean, but is having to make do with the 50-year-old , 28,000-tonne carrier INS Viraat after it recently underwent another lifeextension refit.
To compound matters, INS Viraat is left with only 11 Sea Harrier jump-jets to operate from its deck. India is now being forced to pay $2.33 billion to Russia to get the 44,570-tonne Admiral Gorshkov by 2013. The lack of planning can be gauged from the fact that while Gorshkov will come after three years, its 16 MiG-29 Ks are already being inducted here. Moreover, the longdelayed 40,000-tonne indigenous aircraft carrier being built at Cochin Shipyard will be ready only by 2014-2015 .
Surveillance |
There is a huge shortfall in all kinds of radars, from coastal and aerostat ones to AWACS (airborne warning and control systems) and LLTRs (low-level transportable radars). Similarly, the Navy has just eight ageing TU-142 Ms, five inadequately upgraded IL-38 SDs and a Dornier fleet for maritime surveillance as of now.
The first of the eight Boeing P-8 I long-range maritime patrol aircraft, under the $2.1 billion contract signed in January 2009, will only come by 2013-2014 . IAFs ADGES, an integrated network of surveillance radars, air defence control centres, anti-aircraft guns, air and missile bases tasked with protecting Indias vast airspace, is full of gaping holes.
HAVE MONEY, WILL BUY
The mother of all defence deals is the Rs 42,000-crore project to acquire 126 medium multirole combat aircraft. With the final field trials under way, six fighters are battling it out in the hotly contested race: American F/A-18 Super Hornet' (Boeing) and F-16 Falcon' (Lockheed Martin), French Rafale (Dassault), Russian MiG-35 (United Aircraft Corporation), Swedish Gripen (Saab) and Eurofighter Typhoon (consortium of British, German, Spanish and Italian companies). While 18 jets will be bought off-the-shelf , the rest will be manufactured here under transfer of technology. The IAF is keen to begin inducting the fighters by 2012-2013 The Navy is desperate to kickstart the Rs 30,000-crore project for six new-generation submarines to supplement the ongoing but delayed Rs 18,798-crore French Scorpene project to build six submarines at Mazagon Docks. Under it, a private or public domestic shipyard will tie-up with a foreign vendor like Rosoboronexport (Russian), DCNS/Armaris (French), HDW (German) or Navantia (Spain) to build the second lot of six submarines with AIP (air-independent propulsion) systems, stealth, land-attack capability and ability to incorporate futuristic technologies Army wants its long-delayed over Rs 20,000-crore artillery modernisation programme to finally kick-off to augment long-range high-volume firepower. Different projects under it include acquisition of 1,580 towed guns, 814 mounted gun systems, 180 self-propelled wheeled guns, 100 self-propelled tracked guns and 145 air-mobile ultra-light howitzers Armed forces are looking to induct around 800 helicopters, almost half of them from abroad, at an estimated cost of over Rs 25,000 crore. This included the $1.2-billion deal already signed with Russia for 80 advanced Mi-17 medium-lift helicopters as well as the ones for 12 three-engined Italian AW-101 VVIP helicopters for Rs 3,726 crore and five Russian Kamov-31 early-warning helicopters for Rs 950 crore.
With a defence budget of around $32 billion, India is one of the biggest arms importers among emerging economies. But this vast sum is mostly spent without any real planning. As foreign armament manufacturers eye our impressive shopping list, the question is: Will we get enough bang for our buck?
There is simply no business like the arms business. No trade is as deadly and as lucrative. Just about every nation is amassing the latest arms and defence technology to fight off or vanquish its real or imagined enemies.
Global annual military expenditure tops $1,500 billion now. With a defence budget of close to $32 billion, India, too, has emerged as a major buyer in the global arms bazaar in the last decade. India, in fact, is the largest arms importer in the emerging economies with the exception of China. Indias giant and, of late, increasingly assertive neighbour pegs its annual defence budget at around $78 billion. And this is a conservative estimate.
As per official figures, India signed arms deals worth $50 billion in the decade following the 1999 Kargil war to acquire fighter planes, warships, tanks, missiles, radars and the like. In the last three years alone, the defence ministry signed 465 contracts worth Rs 135,000 crore.
India is not a war-mongering nation. But we cannot be complacent. Our aim is to give the most modern equipment to our armed forces so they can meet any challenge from any quarter at any time, says defence minister A K Antony, normally not given to making strident noises.
India has reason to worry. It has two large unresolved borders with nuclear-armed Pakistan and China, both of whom are not the friendliest of neighbours. It was actually Kargil that caused India to step on the gas pedal to acquire arms. But while the focus was on the 14,880 km of land borders, the 26/11 terror attacks jolted the government out of its relative neglect of the countrys vast 5,422 km coastline , 1,197 islands and 2.01 million square km of Exclusive Economic Zone.
The Mumbai attack exposed like nothing else the vulnerability of Indias shoreline. Estimates show India will spend over $150 billion on its military and homeland security needs during this decade.
GUNNING FOR DESI
For a regional superpower, which aspires to be a global one, it remains a major source of embarrassment that India still imports 70 per cent of its military requirements. According to a top defence official , this heavy dependence on imports makes India vulnerable. The government wants the Indian private sector to jump into defence production in a big way. Antony, on his part, wants a situation in the not too distant future when India meets 70 per cent of its own defence needs internally.
That sounds unrealistic just now. The fact is even meeting 50 per cent of our defence requirements will take a lot of doing. Ever since independence, the defence sector has been the exclusive preserve of the public sector, which as it turns out is just not up to the job.
As a result, in 2001-2002 , when it was acknowledged that the Defence Research and Development Organisation and its 51 labs, the Ordnance Factory Board and its 39 factories, and the eight defence PSUs had failed to deliver, the government opened the sector to 100 per cent private investment, with up to 26 per cent foreign direct investment (FDI).
But the piecemeal measures announced since then have evoked a rather lukewarm response in the capital-intensive defence production sector, which has long gestation periods for the technology to mature, and a limited market.
The government does not help its case by backtracking on some proposals, or by being obstinate in some other crucial matters. Take the example of 13 private companies, which were short-listed for nomination as Raksha Udyog Ratnas (RURs) to ensure they were treated at par with defence PSUs in a level-playing field.
The RURs were to actively undertake the licensed production of weapon systems and platforms with transfer of technology (ToT) from foreign companies. But the RUR proposal has been given a quiet burial.
The government has also remained adamant about not allowing 49 per cent FDI in the defence sector despite persistent howls from the industry in view of the sensitivities involved. This has hindered Indian companies from setting up joint ventures or co-production arrangements.
Moreover, if India can trust foreign vendors, it is not clear what is the harm in allowing higher FDI for indigenous production at least in some areas not considered strategic?
The government now says its formulating a comprehensive Defence Production Policy (DPrP), on the lines of its Defence Procurement Policy (DPP), which is revised every year, to strengthen the countrys defence-industrial base (DIB). The coming DPrP and DPP will give a new impetus to indigenisation since our ultimate goal is self-reliance
. We will give more opportunities to Indian companies, who can form JVs with foreign companies , promises Antony.
Defence production secretary R K Singh, in turn, says the government will be willing to fund even 80 per cent of the development costs of some systems if private companies enter the fray. Gradually, we intend to make or integrate most of the platforms here and reduce our dependence on imports, he adds.
The government is also confident that the huge defence offsets a foreign vendor who bags an arms deal worth over Rs 300 crore must plough back at least 30 per cent of the contract value back into India in the pipeline will go a long way in strengthening the countrys DIB, with the private sector cornering a major chunk of the spoils.
As of today, 10 offset contracts have been signed, collectively worth Rs 8,200 crore, wherein 31 private firms have benefited apart from ordnance factories and PSUs. There are 41 offset contracts worth over Rs 49,000 crore, which are going to materialise in the next couple of years, says minister of state for defence M M Pallam Raju.
Armament majors are indeed fast tying up with Indian companies to discharge their offset obligations. The usual suspects like Larsen & Toubro, Mahindra, Tatas, Punj Lloyd, Ashok Leyland and the like are already in the fray; some alone and some in JVs.
They are raring to go. L&T , for instance, is confident of undertaking the Rs 30,000-crore project to build a second line of submarines with foreign collaboration, deeply associated as it has been in fabricating the hulls for the secretive ATV (advanced technology vessel) project, under which three nuclear submarines are being built. We have got the facilities and workshop to manufacture conventional submarines at Hazira. They will be simpler and smaller than nuclear submarines. We have also started a shipyard, where we are currently building 10 commercial ships, says L&T senior executive vice president M V Kotwal.
NO LONG-TERM PLANNING
A bane of the defence establishment remains its sheer inability to formulate long-term strategic plans to assiduously build military capabilities in tune with Indias geo-strategic aspirations.
Take, for instance, the much-touted Long-Term Integrated Perspective Plan (LTIPP) for the armed forces. The draft LTIPP for 2002-2017 was junked since it could not be finalised in time. And the new upgraded LTIPP for 2007-2022 is still in the works.
With the government reluctant to create a chief of defence staff (CDS) post to clearly lay down inter-service prioritisation, the Army, Navy and IAF continue to squabble with each other for bigger and bigger slices of the limited budgetary pie.
Year after year, as every fiscal draws to a close, or when elections are on the horizon, the government rushes to close defence deals. The result is that despite India spending big money, the country often does not get the biggest bang for its buck. It merely buys weapons without adequate planning, instead of building military capabilities in a cost-effective manner. Consequently , several operational gaps persist:
Nuclear Deterrence |
India has the intermediate-range Agni missiles as well as the fighter jets to deliver nukes, but the absence of nuclear-powered submarines armed with longrange nuclear missiles remains a critical gap. The underwater leg of the nuclear triad is, after all, considered the most difficult to detect and most effective platform to deliver nukes.
It is all the more critical for India since it has a declared no-first use nuclear doctrine. The countrys first and long-delayed nuclear-powered submarine INS Arihant is likely to be commissioned towards 2011-2012 , but it will be armed only with short-range missiles to begin with.
Submarines |
To Chinas 62 submarines 10 of them nuclear ones and at least three armed with long-range missiles India has just 16 ageing, diesel-electric submarines. Only half of the 10 kilo-class , four HDW and two virtually obsolete Foxtrot submarines are operationally available at any given point in time.
As per projections, only nine of the 16 will be left functional by 2012-2013 , and the number may dip to just five by 2015. There is the ongoing Rs 18,798 crore project to construct six French Scorpene submarines at Mazagon Docks, which was supposed to deliver one vessel ever year from 2012 onwards. But that promise has been hit by a two-year delay and huge cost escalations.
Fighters |
IAF continues to grapple with a free-fall in the number of its fighter squadrons (each has around 14-18 jets), down to just 32 from even its sanctioned strength of 39.5. Moreover , MiG variants, which constitute over 60 per cent of the combat fleet, suffer from poor serviceability problems. Though the IAF needs 44 squadrons to meet the possible contingency of a full conflict with Pakistan, while maintaining a dissuasive posture against China, it will reach the 39.5 mark only by 2017 or so. Huge delays in both the development of the indigenous Tejas Light Combat Aircraft and new procurements has led to this sad state of affairs.
Artillery |
The Bofors ghost and other bogeys have ensured that Army has not inducted a single 155mm gun since the 410 Bofors 55mm/39-calibre howitzers were bought in 1986. Projects under the Rs 20,000-crore artillery modernisation plans are stuck at different stages.
Night-Fighting |
The army is suffering from an acute case of night blindness, both in the infantry and the mechanised forces. The need to bolster the night-fighting capabilities of the Army, Navy and IAF is so critical that India may have to spend at least $1 billion in the area in the next few years, focussing on thirdgeneration thermal imaging (TI) sights and night-vision devices.
Aircraft Carriers |
The navy has long wanted three carriers to project potent force in the entire Indian Ocean, but is having to make do with the 50-year-old , 28,000-tonne carrier INS Viraat after it recently underwent another lifeextension refit.
To compound matters, INS Viraat is left with only 11 Sea Harrier jump-jets to operate from its deck. India is now being forced to pay $2.33 billion to Russia to get the 44,570-tonne Admiral Gorshkov by 2013. The lack of planning can be gauged from the fact that while Gorshkov will come after three years, its 16 MiG-29 Ks are already being inducted here. Moreover, the longdelayed 40,000-tonne indigenous aircraft carrier being built at Cochin Shipyard will be ready only by 2014-2015 .
Surveillance |
There is a huge shortfall in all kinds of radars, from coastal and aerostat ones to AWACS (airborne warning and control systems) and LLTRs (low-level transportable radars). Similarly, the Navy has just eight ageing TU-142 Ms, five inadequately upgraded IL-38 SDs and a Dornier fleet for maritime surveillance as of now.
The first of the eight Boeing P-8 I long-range maritime patrol aircraft, under the $2.1 billion contract signed in January 2009, will only come by 2013-2014 . IAFs ADGES, an integrated network of surveillance radars, air defence control centres, anti-aircraft guns, air and missile bases tasked with protecting Indias vast airspace, is full of gaping holes.
HAVE MONEY, WILL BUY
The mother of all defence deals is the Rs 42,000-crore project to acquire 126 medium multirole combat aircraft. With the final field trials under way, six fighters are battling it out in the hotly contested race: American F/A-18 Super Hornet' (Boeing) and F-16 Falcon' (Lockheed Martin), French Rafale (Dassault), Russian MiG-35 (United Aircraft Corporation), Swedish Gripen (Saab) and Eurofighter Typhoon (consortium of British, German, Spanish and Italian companies). While 18 jets will be bought off-the-shelf , the rest will be manufactured here under transfer of technology. The IAF is keen to begin inducting the fighters by 2012-2013 The Navy is desperate to kickstart the Rs 30,000-crore project for six new-generation submarines to supplement the ongoing but delayed Rs 18,798-crore French Scorpene project to build six submarines at Mazagon Docks. Under it, a private or public domestic shipyard will tie-up with a foreign vendor like Rosoboronexport (Russian), DCNS/Armaris (French), HDW (German) or Navantia (Spain) to build the second lot of six submarines with AIP (air-independent propulsion) systems, stealth, land-attack capability and ability to incorporate futuristic technologies Army wants its long-delayed over Rs 20,000-crore artillery modernisation programme to finally kick-off to augment long-range high-volume firepower. Different projects under it include acquisition of 1,580 towed guns, 814 mounted gun systems, 180 self-propelled wheeled guns, 100 self-propelled tracked guns and 145 air-mobile ultra-light howitzers Armed forces are looking to induct around 800 helicopters, almost half of them from abroad, at an estimated cost of over Rs 25,000 crore. This included the $1.2-billion deal already signed with Russia for 80 advanced Mi-17 medium-lift helicopters as well as the ones for 12 three-engined Italian AW-101 VVIP helicopters for Rs 3,726 crore and five Russian Kamov-31 early-warning helicopters for Rs 950 crore.
