22 November Friday

Yet another Fighter Tender: Confusion and Worse

RaghuUpdated: Tuesday Mar 27, 2018

HISTORY repeats itself, wrote Karl  Marx, first as tragedy then as farce.  One wonders how he would have  characterised a third repeat, when  all the tears are done and even the  disorganised buffoonery is over!  Whatever term is used, the fresh tender  for fighter aircraft being floated by  India is surely way beyond farcical. The  confusion around an already shambolic  procurement process betrays a pathway  being opened up for arbitrary decisionmaking  by the political leadership, even  at the expense of carefully assessed  military and strategic requirements  including self-reliance in this crucial  sector, with dangerous potential for  backroom dealings, currying favours  with preferred foreign countries, and  promotion of crony capitalists in India  as the thin edge of a wedge to privatise  the domestic defence production  industry. 

INEXPLICABLE DECISION-MAKING 
To see what lies beyond farce, let  us briefly recap the extraordinary  twists and turns in India’s fighter  aircraft acquisitions. Anticipating the  impending phase-out of the Mig-21,  Jaguar, Mig-23 and Mig-27, as well as  delay in the indigenous Light Combat  Aircraft (LCA) project, and given the  dangerously widening gap between  available and required fleet strength,  already down from the sanctioned and  healthy 44 squadrons in the mid-  1980s to a likely 30 by 2015, the initial  tender for 126 multi-role combat  aircraft was issued in 2004 after initial  conceptualisation in 2001. 

Bids were invited from both light  single-engine and heavier twin-engine  aircraft, so as to fill the gap between  the LCA light fighter and the heavy,  air superiority Sukhoi SU-30 MKI. The  grapevine had it that the Air Force had  a clear preference for the mediumweight  Mirage 2000 which had  performed superbly during the Kargil  conflict. But India dithered as usual in  decision-making, and the French firm  Dassault meanwhile closed its Mirage  production line. 

After seven long years, India issued  a revised tender for 126 Medium  (weight) Multi-Role Combat Aircraft  which, in the IAF’s considered opinion,  met its fleet-mix needs the best, with  sufficient numbers of LCA, Rafales  and Sukhoi-30s while also doing away  with the cumbersome mix of numerous  types of aircraft. The renamed MMRCA  tender floated in 2011 had thus shifted  the goalposts and eliminated the light  fighters Lockheed Martin F-16 from the  US, the Saab Gripen NG from Sweden,  and the Russian MiG-35. 

In the twin-engine category,  Dassault offered its Rafale fighter. Other  contenders were Boeing’s F/A-18 Super  Hornet and the Typhoon Eurofighter.  Again, after rigorous assessments and  field tests spread over several years,  the F/A-18 was eliminated, and the  Rafale was finally chosen ahead of  the Eurofighter. However, the Modi  government shockingly scrapped the  MMRCA tender and clinched a hushhush  inter-governmental deal for only  36 Rafale fighters in fly-away condition  at a summit meeting. Reasons given  were that the price negotiations with  Dassault were stalled, the aircraft  were urgently required, and the cost  was working out to be too high. The  decision was taken at the top-most  level, apparently without the knowledge  of the defence minister or the IAF, and  without even going through the cabinet  committee on security which, it now  transpires, retrospectively approved the  deal only in August 2016, more than 16  months later! 

The IAF’s requirement for  126 medium-weight twin-engine  fighters, carefully assessed over a  decade or more, went out the window  overnight opaquely, arbitrarily and  without explanation. Anil Ambani  led Reliance Aerospace was selected  as Dassault’s partner for most of the  50 per cent offsets (Rs 30,000 crore)  obligated under the deal, a windfall  for a company with no aerospace  manufacturing experience. Details  of the pricing, covering additional  weapons, spares, and maintenance,  remain confidential and controversial.  Who knows what else might have  transpired in Paris! 

CONFUSION CONFOUNDED 
But the curtailed size of the order had  clearly left a yawning gap. And were  finances really a problem? Inexplicably  then, a fresh tender was thereafter  issued, this time for single-engine  fighters, a category earlier dropped  from the decade-long MMRCA  acquisition as not the crucial need! Had  the IAF’s view on its fleet mix suddenly  changed? If so why, based on what  strategic calculus, and where was this  reflected? Who else drove this sudden  shift and that too at a time when  the indigenous LCA programme was  making good headway, development of  a Mark-II version was at an advanced  stage, and production rate was being  expanded by HAL? Or were there other  pressures at work, for instance from the  US, which was winding down its F-16  production line back home? 

In a further astonishing twist,  yet another tender, changing the  earlier one, has now been issued, for  both single- and medium-weight  twin-engine fighters, with the same  contenders as in the MMRCA tender  which was unceremoniously scrapped  by the Modi government! This is  a mockery of the entire MMRCA  procurement and raises serious  questions about the rigour in its  framing and implementation. Unrefuted  reports in the press have claimed that  the government has expressly pushed  for inclusion of the Boeing F/A-18 in  this latest tender, despite its rejection  by the IAF during the earlier MMRCA  field trials. Some sources have ascribed  this to the Navy expressing interest in  this aircraft, expressly designed and  used for carrier-borne operations, for  deployment on Indian aircraft carriers.  But again, even though the MiG-29 K  currently in service with the Navy has  faced many problems without adequate  redressal by Russia, why even consider  an ageing aircraft in service only in  Australia besides the US, and rejected  by India earlier, when the more modern  Rafale also has a proven carrier version,  as does the Gripen? 
It is highly unlikely that all this  chopping and changing is due to  indecision or confusion in the IAF.  No doubt the IAF has not exactly  distinguished itself in drawing up and  clearly enunciating a medium- or longterm  strategic vision and a projected  fleet mix based on it. Equally, though,  ad hocism is in-built in the entirely  civilian and bureaucratic defence  ministry. As seen above, there are many  indications that political interference,  without expertise or long-term vision  to back it up, is at work.  Nobody would argue that the  political leadership has no role to  play in decision-making regarding  acquisition of military hardware.  Other things being equal, political  considerations may indeed weigh as  regards strategic vision, total budgetary  outlay for defence and distribution  between the three services, or even  choosing between manufacturers  from different countries keeping  geo-political considerations in mind. 

Development of indigenous capability  as a strategic industrial and security  objective is also a quintessentially  political task, in which the current  dispensation has singularly failed,  especially by deliberately pushing for  private Indian manufacturers despite  glaring absence of technological  capacity. Yet, an institutionalised  integration of military, strategic and  political perspectives and personnel  for strategic planning and correlated  acquisitions has been historically sorely  lacking in India, and its absence is  being badly felt today with burgeoning  military hardware imports, always  susceptible to subjectivity, influencepeddling,  manipulation or worse. 

DEEPLY FLAWED PROCUREMENT  PROCESS
 
The current fighter aircraft imbroglio  has totally undermined the Defence  Procurement Procedure (DPP) crafted  over a decade ago with the goal of  reducing subjectivity, arbitrariness and  opacity in decision-making processes,  and introducing rules and procedures  for procurement of defence hardware.  In typical Indian bureaucratese,  however, while they could become  a cause for interminable delays  and constraints on bold decisionmaking,  ways could always be found  to circumvent the rules or completely  distort the original intention, and the  DPP has been amended several times  to suit the evolving perspective of the  government of the day. 

In the Rafale deal, the Modi  government argued that the DPP  simply did not apply to governmentgovernment  deals, where no tendering  was involved! But surely, even intergovernmental  deals require some  rationale, some transparency and  sound evidence that alternatives have  been considered. The offsets clause,
  for instance, has been taken as a given  even in the Rafale deal. But its very  raison d’etre has been undercut in  both spirit and the letter of the DPP.  Offsets mandating some proportion  of manufacture within the country  have been made part of acquisition  procedures in several countries,  primarily as a means to acquire  advanced technological capability. In  India, especially under the BJP, offsets  have been viewed almost solely as a  financial condition. Whereas offsets  should be utilised to enable acquisition  of technology, especially through  identification of strategic technology  gap areas across different hardware and  deals. The DPP was however actually  amended to allow Boeing, for example,  to use offsets to make components  for civilian aircraft in deals involving  military equipment, ostensibly because  the numbers being bought did not  based on which properly envisaged  rather than ad hoc acquisitions or  indigenous R&D could be planned and  undertaken. Second, this process and  institutional structures for the same  should involve and bring together user  wings and/or integrated commands  of the armed forces, the political  leadership and strategic experts so that  the user services in particular are not  saddled with ill-planned equipment  or those acquired due to extraneous  considerations. Thirdly, acquisition  procedures should facilitate effective,  reasoned, timely and transparent  decision-making. Finally, all this should  be done within an overall framework  of advancing indigenous technological  know-how, manufacturing capability  and industrial base as critical needs for  development as well as security.  permit any sizeable manufacturing in  India.

In the Rafale deal, which involves  only 36 aircraft in a fly-away condition  in which no India-based manufacturing  is envisaged, the Anil Ambani-Dassault  JV has been allowed to deploy offsets to  make components or sub-assemblies  for Dassault’s Falcon executive jets,  deceitfully terming it part of the DPP’s  “Make in India” category! So a huge  amount of Rs 30,000 crores of offsets  will result in little or no technology  absorption by India. 

The DPP also contains a particularly  egregious stipulation that singlevendor  situations, where only one party  is available or left after consideration  of all applicants, should be avoided.  But if bureaucratically interpreted,  this can severely hamper acquisition  of specialised equipment, and several  important tenders have been cancelled  for that reason. In the MMRCA  acquisition, whereas the Eurofighter  and the Rafale were short-listed, the  Rafale was ultimately declared to be  the winner or L1 (strictly, the lowest  bidder). According to the DPP, price  negotiations with L1 start only after this  stage. This dragged on interminably,  with Dassault apparently also balking  at technology transfer and performance  guarantees.

The labyrinthine and  dysfunctional procurement process tied  Indian hands while favouring which  could bargain indefinitely. Surely,  negotiations covering all aspects such  as base price, life-cycle costs, spares  and after-sale services, technology  transfer etc should be held with  both finalists if they satisfy requisite  technical conditions, and the contender  offering the best terms selected within  a specified time frame. 
Clearly, defence procurement  processes in India needs to be  completely overhauled. First, a  documented strategic vision is required,
    

 

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