First published December 2008
India has a penchant for blacklisting foreign arms producers without considering negative effects it has on India’s military preparedness. This is the reasons why recent reports of irregularities in the procurement of seven Barak anti-missile defense systems and 200 missiles from Israel Aircraft Industries Ltd (IAI) have caused serious concern to the Indian armed forces. They fear that the Government may get forced to blacklist IAI as per the provisions of defence procurement procedure. Should that happen, India’s defence modernisation plan would suffer irretrievable damage. Having seen the adverse effects of banning Bofors, HDW and Denel, they dread a similar fate for a large number of ambitious plans under implementation.
IAI is deeply involved in most of the major modernisation plans of the three services. In addition to the upgradation of fighter aircraft (Jaguar, MIG-21, MIG-29 and Mirage-2000), transport aircraft (AN-32) and all helicopters of MI series, it is supplying three Airborne Early Warning and Control System (AWACS) systems to India. It is also a prime supplier of unmanned aerial vehicles to the three services. Most importantly, IAI is involved in a number of developmental projects. India simply cannot afford to cut off all dealings with it. The saga of banning Bofors, HDW and Denel cannot be repeated.
After carrying out trials of various guns on offer, India opted for Bofors 155 mm FH-77B towed artillery system. A contract for 410 systems was signed with the Swedish firm in 1986 for Rs1437.72 crore. The contract included transfer of technology for subsequent manufacture of guns in India. India had planned to produce 1,840 pieces within the country to equip 92 artillery regiments. However, with the exposure of kickbacks, the Government banned Bofors for all future dealings. It had the following effect:-
• Although India had paid for transfer of technology, it failed to utilise it. India lost an opportunity to create a base for further development of artillery weapon systems. As a result, indigenous competence to manufacture and maintain guns remained stunted.
•As spares could not be procured from Bofors, middlemen thrived making huge profits. In the absence of adequate spares, the Army had to cannibalize parts from some guns to keep other guns functional. Essential maintenance also suffered.
•Without help from Bofors, India is struggling to carry out overhauling of guns in the stipulated time frame. It is feared that delay in overhaul will adversely affect extension of useful life of the gun systems. Indigenous capacity installed with a Base Repair Workshop is far too less and it will take unacceptably long to overhaul the complete inventory.
•The Navy was already using Bofors guns on some ships and they faced difficulties in ensuring regular supply of spares.
•Indian inventory of 84 mm Carl Gustav Rocket Launchers suffered as Carl Gustav subsequently became a subsidiary of Bofors and thus, came under the ban.
Discussions were in final stages with Denel of South Africa for 155 mm howitzers (both towed and self-propelled) when it emerged that Denel had employed unacceptable means to grab contract for the supply of NTW-20 Anti-Material Rifle. It was alleged that Denel had engaged middlemen to offer bribes to obtain sensitive information about the internal proceedings of the Commercial Negotiation Committee. The Government decided to blacklist Denel in 2005 and cancel all orders placed on it.
The development was highly unfortunate. Bhim project was almost concluded with Denel’s T-6 155mm turret from the G-6 being mounted on Arjun hull. An initial order had also been placed on a public sector undertaking. With the blacklisting of Denel, Indian Army’s Field Artillery Rationalization Plan suffered a crippling blow. The total requirement envisaged by 2025 is 3600 artillery guns of 155mm/52 calibre. The current inventory is of 410 Bofors guns only. Therefore, India desperately wants to procure 400 additional gun systems (220 wheeled and 180 tracked) on priority to meet inescapable minimum requirement.
Field trials in respect of wheeled systems were carried out in 2003 to ascertain compliance of Services Qualitative Requirements. Three competitors participated – Denel, Soltam Atmos 2000 and FH77 of SWS Defence. All the three systems failed to meet specified standards. Retrials of duly improved versions were held in 2004. With the blacklisting of Denel, the choice got limited to Soltam and FH77. As per the press reports, FH77 emerged far superior to Soltam and was the choice of the Army. However, due to politically sensitive reasons, the Government incorrectly termed the case as a single vendor situation and decided to float fresh tender enquiries with reformulated Qualitative Requirements. Tender for wheeled guns was floated in March 2007 and the second tender for tracked guns followed soon thereafter. It is learnt that 12 producers of guns have been invited.
Nearly 20 years have passed since the induction of Bofor guns; no new gun system has been procured. Due to ban on Bofors and Denel, India has shut doors on two major producers of guns and thereby limited its choice. Continued shortage of suitable 155mm/52 caliber gun systems implies major gaps in India’s defence preparedness. Additionally, India’s quest for indigenous production of 155 mm ammunition also suffered a major blow. Work on a new ordnance factory in Nalanda to manufacture 155mm ammunition for Bofors guns has got stalled, as Denel was to provide technical know-how. Hundreds of crores of rupees have also gone down the drain.
The case of HDW makes instructive reading. A contract was signed with the German firm in December 1981. India was to get two HDW 209 class fully built submarines and sub-assemblies and components for assembling two other submarines in India. HDW was also to provide required training to Indian personnel.
HDW delivered two submarines in 1987 and two more were assembled in India in due course. As allegations of bribery and kickbacks became public, the Government decided to blacklist the company. It was also decided not to build any more submarines of the same class. Marlog, a company jointly owned by HDW and Ferrostal, took over the responsibility to fulfill all contractual obligations.
There are just a handful of competent submarine manufacturers in the world. By blacklisting HDW, India antagonized one of the leading producers and thereby deprived itself of the benefits of latest technological advancements. HDW is the world leader with the most advanced air-independent propulsion system. Continued collaboration would have given a boost to indigenous submarine building competence. Additionally, India would have acquired wherewithal as regards maintenance, overhaul and repair support.
As India had not received the complete drawings and NATO identification numbers for all spare parts of the submarines, it faced immense problems in procuring them from other sources. Middlemen made huge profits. The Navy wanted to increase the offensive punch of the submarines by mounting Exocet missiles on it. As HDW could not be engaged, others laid unacceptably harsh conditions. Indian plans for the upgradation of the submarine entailed an increase in their length and that could be done only by HDW. To sum up, by blacklisting HDW India deprived itself of maintenance support, upgradation opportunities and development of indigenous skills.