Tuesday, 27 January 2015

How Modi & Obama’s back-room boys broke impasse on n-deal in London



By Ajai Shukla
Business Standard, 27th Jan 15

Washington and New Delhi have announced that they have bridged the gulf that has deterred US nuclear power generation companies from entering the Indian market since 2008, when the US-India civil nuclear agreement was signed.

On Sunday, President Barack Obama hailed the “breakthrough” agreement after talks with Prime Minister Narendra Modi. Modi stating that India was “moving towards commercial cooperation (with the US in nuclear power generation), consistent with our law, our international legal obligations, and technical and commercial viability.”

Yet, the joint statement issued by the two countries contained no details of how both sides’ concerns have been met.

American interest in setting up nuclear plants in India had been stopped dead in 2010, when New Delhi passed a law called “The Civil Liability for Nuclear Damage Act, 2010” (hereafter Nuclear Liability Act). Departing from global practice, which makes only the nuclear plant operator liable to pay compensation in the event of a nuclear accident, India’s Nuclear Liability Act allowed for claims to also be made on the supplier of the nuclear plant and fuel.

US companies like General Electric and Westinghouse, which hope to supply reactors to India, argued that liability should rest with the operator alone. In India, the operator is the Nuclear Power Corporation of India (NPCIL).

India’s position hardened after the Fukushima Daiichi nuclear disaster unfolded from March 11, 2011, when a tsunami knocked out emergency power supply in the Japanese power plant, eventually displacing 150,000 people and triggering a cleanup operation that will cost some $200 billion.

Three major differences had emerged between the US and Indian sides over years of negotiations. The first was a US demand, first made in 2012, for “tracking” nuclear material supplied to India, on a “cradle-to-grave” basis. New Delhi flatly rejected this, on the grounds that the 2008 agreement with the US only permitted inspections by the International Atomic Energy Agency (IAEA), that too only within 14 plants placed under safeguards. The US has now dropped this demand.

The second sticking point was over Section 17(B) of India’s Nuclear Liability Law, which allows the Indian operator to recover costs from the supplier, if an accident were caused by defective materials or equipment. It was believed that this responsibility would encourage suppliers to adopt higher safety standards.

This impasse has been resolved by insuring suppliers against Section 17(B) risk, with General Insurance Corporation (GIC) --- India’s national re-insurer --- which will establish an insurance pool, from which damage payments could be drawn.

Bloomberg News quotes Amandeep Singh Gill, joint secretary of disarmament in India’s foreign ministry, as stating that GIC and four other public sector companies would set up an insurance pool valued at Rs 750 crore ($122 million), with New Delhi contributing more later.

“It appears as if the risk premium is low enough to not place a serious burden on the suppliers”, says Siddhartha Varadarajan of Shiv Nadar University.

The third point of dispute flowed from Section 46 of the liability law, which permitted nuclear accident victims to file tort claims for compensation under general principles of law. The US companies believe this would expose them to practically unlimited liability in the event of a nuclear disaster.

The government of India has now provided a written undertaking, apparently from the Attorney General, that this liability would not extend to the foreign supplier.

On Sunday, US ambassador to India, Richard Verma, said both sides had agreed that liability would operate “through a memorandum of law within the Indian system” and would not “require at this stage a legislative undertaking.”

Even so, it remains unclear how New Delhi’s undertaking would withstand the legal challenges that seems inevitable. “This would have to be embodied in some form in the liability law at a future stage”, says Varadarajan.

Verma admits that US companies would have to do their own risk assessment before entering the Indian market.

Danny Rodericks, chief executive officer of Westinghouse, told NDTV on Monday that “We need to look at the new things that have come out… we need to look at the fine print of that and go through (it) in detail.”

Rodericks also said that his Indian partners, like L&T, were anxious to get started on actual projects.

The agreement was reached in intensive negotiations between Contact Groups that Obama and Modi had set up in September specifically to break the deadlock. The groups met thrice over the last two months, including a three-day meeting in London last week where the deal was sealed.

India, which currently produces less than 5,000 megawatts of electricity (MWe) in nuclear power plants, hopes to increase this to 20,000 MWe by 2020, and to 63,000 MWe by 2032, meeting 25 per cent of its total needs by 2050.

Friday, 23 January 2015

Induct the Tejas in numbers. Half-strength squadrons


By Ajai Shukla
Editorial in Business Standard, 23rd Jan 15

On Saturday, Hindustan Aeronautics Ltd (HAL) handed over to the Indian Air Force (IAF) the first Tejas Mark I fighter built on its new production line in Bengaluru. Fifteen prototypes earlier produced were each hand built to different specifications as the Tejas evolved. Now, however, HAL’s production line will build to a controlled standard using modern manufacturing methods. The first production Tejas had already flown in September, but the IAF had refused to accept it until HAL could hand over eight fighters together, half the complement of the first Tejas squadron. Eventually the defence ministry ordered the IAF to accept each fighter as it was built, like every air force does.

This illustrates the continuing problems with the Tejas, and why it has taken so long to enter service. With diverse organisations contributing to its development since 1983 --- including HAL and the National Aeronautical Laboratory --- the programme has been overseen by the Aeronautical Development Agency (ADA), established by the Defence R&D Organisation (DRDO). From the start the IAF has convinced itself that building a modern fighter was an extravagant aim. Unlike the navy, which took ownership and control of warship-building programmes, an uninterested IAF highlighted flaws and demanded the purchase of expensive fighters from the international market --- currently the unaffordable Rafale.

Every country that builds contemporary fighters has been through a tortuous learning process --- a century for the United States, Germany, Italy, Britain, France and Russia. India has leapfrogged in building what even the IAF accepts is a fighter far better than the light MiGs it was intended to replace. The IAF’s strength is down to 35 squadrons (each with 16 operational fighters), and 10 more MiG-21 and MiG-27 squadrons will retire by 2018. But, even so, the IAF has made its preference for foreign fighters like the Rafale clear.

The Tejas has not achieved final operational clearance. Some capabilities remain to be validated before it can be fielded in combat. On the other hand, the flight test programme has completed 2,800 flights, with only a few hundred more required. The problem is the delays. HAL must build the Tejas faster, so that 10 squadrons can fill the gap created by the retiring MiGs. Just two Tejas will be built this year; another six in 2015-16; eight more the year after that and, only in 2017-18 would HAL hit a production rate of sixteen Tejas per year. Clearly this is too slow. If the Tejas is to help set up a domestic high-tech sector, then the defence ministry needs to be swifter and HAL needs to indigenise further, developing Indian small-scale vendors to build systems and components currently being imported. 

Obama visit: Climate change talks a priority: US officials



By Ajai Shukla
Business Standard, 23rd Jan 15

US government officials on Thursday confirmed that President Barack Obama’s visit to India for Republic Day was the first time he would be travelling to attend another country’s national day.

Also exceptional would be the US president’s exposure abroad to an outdoor security risk. While Obama had appeared in public for hours during his two inaugural parades, the officials said, “There’s not been a similar event that he’s attended overseas in which he’s done so, so it’s unique in that case”.

Deputy National Security Advisor for Strategic Communications Ben Rhodes briefed the US media in Washington on Obama’s visit to India.

Press reports have indicated that Washington has warned Islamabad of the consequences of a terrorist strike on President Obama in India.

Rhodes also confirmed that Obama’s State of the Union address, an important annual political rite in America, had been brought forward to Wednesday evening to enable the president to be free for his India trip.

Unusually, India’s “support” to US interests in Iran and Afghanistan was highlighted, even though Washington and New Delhi have not always seen eye-to-eye on these issues.

Stating that India has been “an important element of our international effort with respect to Iran”, Rhodes said Obama and Modi would “discuss the status of the Iran nuclear negotiations.”

“India’s reduction in its purchases of Iranian oil have been essential to the pressure that we’ve placed on Iran that has them at the table in this negotiation.  India has a relationship -- a longstanding relationship with Iran, and so we need to make sure that we’re closely coordinated with India as we continue to enforce those sanctions and pursue a comprehensive resolution”, Rhodes said.

On Afghanistan, he noted, “India is a major contributor to development assistance in support of the Afghan government.  We need to maintain that cooperation going forward now that the U.S. has drawn down our military presence.”

While reluctant to point out specific objectives of the visit --- “deliverables” in official jargon --- Washington made it clear that forging a common position on climate change would be on the “front burner”.

“(C)ooperation on clean energy and climate change is critically important, both because the United States and India are working together to develop additional clean energy sources and because we’re both working independently in our own countries to reduce the public health impacts of our energy sectors, but also because of the international climate negotiations that are leading into Paris this year,” Rhodes said. 

During Obama’s visit to China in November, the American and Chinese presidents had agreed on emission targets for both countries. China’s carbon dioxide emissions will peak by 2030, with Beijing trying to achieve this earlier. Meanwhile the US would strive to reduce emissions by 26-28 per cent from its 2005 levels.

With Washington aiming at emission targets more ambitious than those laid out in the Kyoto Protocol, it clearly believes New Delhi can announce ambitious emission targets that would take forward the battle against global warming.

“This trip is a very important opportunity for us to look at what can we do, what areas can we cooperate in, to give additional momentum to the climate negotiations”, said Rhodes.

Suggesting strongly that agreement on civil nuclear cooperation remained elusive, Rhodes explained, “(W)e’re pushing for progress in terms of the implementation of our civil nuclear cooperation, which is in the benefit of both countries.  So that work is ongoing.”

Highlighting the growing ties in counterterrorism cooperation and intelligence sharing, the US official termed it a “focal point” of the relationship. Referring to the new focus on India-centric groups like the Lashkar-e-Toiba, Rhodes stated, “(W)ith India, our counterterrorism cooperation tends to be focused on those groups that are operating in South Asia.”

Ultimately, Obama’s visit seems likely to be characterised by symbolism rather than agreements signed. “(O)ur goal I think is to leave this relationship in a fundamentally different place than it was when President Obama took office and when Prime Minister Modi took office,” said Rhodes. 

Wednesday, 21 January 2015

India-US defence ties grow with assertive Modi government



By Ajai Shukla
Business Standard, 21st January 2015

Defence purchases from the US

Years
Equipment
Cost



2005-2008



USS Trenton
$50 million

20 GE F-404 engines for Tejas
$100 million

6 Super Hercules aircraft
$1 billion

8 Boeing P-8I maritime aircraft
$2.1 billion

Total
$3.25 billion



2009-2013



500 CBU-97 sensor-fuzed bombs
$250 million

40 Harpoon anti-ship missiles
$370 million

6 additional Super Hercules aircraft
$1 billion

10 C-17 Globemaster III aircraft
$4.12 billion

Total
$5.74 billion



In the pipeline



145 M777 guns from BAE Systems
$700 million

22 AH-64E Apache attack helicopters
$1.4 billion

275 F-125 Honeywell engines for Jaguar
$2 billion

50 General Electric F-404 engines for Tejas
$250 million

4 additional Boeing P-8I maritime aircraft
$1 billion

15 Chinook CH-47F heavy lift helicopters
$1 billion

6 more C-17 Globemaster III aircraft
$2 billion

Total
$8.35 billion


Prime Minister Narendra Modi has continued the previous United Progressive Alliance (UPA) government’s strategic policy of multi-alignment, pursuing close ties with each of the world’s major power centres; leveraging each relationship with the combined weight of the others. Even so, New Delhi is nurturing some ties more carefully, especially those with the United States and Japan --- which have strategic and military components as well as powerful economic drivers. Japanese Prime Minister Shinzo Abe was the chief guest at Republic Day last year, and US President Barack Obama will attend the parade at New Delhi this year.

The Washington-New Delhi embrace had already built up steam under the UPA, with US officials visiting India practically every week. However, Dr Manmohan Singh’s administration carefully underplayed the engagement --- largely due to opposition from within his party, especially from his defence minister, AK Antony. Influential US thinkers like Ashley Tellis complained, “The bilateral partnership is not going forward, only sideways.”

That is in the past. Now the National Democratic Alliance (NDA) government, with a confident prime minister in the driving seat, has rebranded the US-India relationship with the vibrant symbolism of Narendra Modi’s jamboree at Madison Square Garden in New York. This would only be enhanced next week by President Obama’s two-hour appearance amidst Indian throngs on January 26.

While the two governments engage across a plethora of issues, both see defence and security as holding the greatest promise for mutual benefit. So far, only intelligence cooperation has seen a real convergence, driven partly by the domain expertise of National Security Advisor, Ajit Doval. Top Indian intelligence officials say there are unprecedented levels of intelligence sharing, including on topics that both sides earlier regarded as off-limits. New Delhi is especially pleased with information about India-focused groups like the Lashkar-e-Toiba.

In contrast, defence cooperation has not achieved its potential. Both sides agree privately that China constitutes a common challenge. Yet, with New Delhi unwilling to align overtly with Washington, cooperation is couched in the rubric of humanitarian aid and disaster relief (HADR) and “protection of the global commons”, through counter-piracy missions and upholding the right to navigation through international waters.

Even so, US-India bilateral army, navy and air force exercises have grown in frequency, scope and sophistication. The US now does more exercises with India than with any other country, such as the annual Exercise Malabar that involves both navies. In 2007, the scope of Malabar had been vastly expanded with the additional participation of the Australian, Japanese and Singapore navies. After China expressed concern, New Delhi hastily reverted to a bilateral Malabar. But India again invited Japan in 2014 and appears likely to expand Malabar further.

The US-India equipment relationship has so far remained a buyer-seller one. Last February, Jane’s Defence Group named the US as India’s biggest arms supplier in 2013, supplanting Russia, France and Israel. Interpreting arms sales is an inexact science, but various compilations, such as one by Dinshaw Mistry of the US-based East-West Center, concludes US sales have topped $9 billion over the last decade.

India’s arms purchases of $400 million from 2001-2004 expanded during 2005-2008 to over $3.2 billion. This includes the USS Trenton, an amphibious ship, for $50 million, twenty General Electric F-404 engines for the Tejas fighter for $100 million, six C-130J Super Hercules special mission aircraft for almost $1 billion, and eight Boeing P-8I maritime control aircraft for $2.1 billion.

From 2009 to 2013, India’s defence purchases from the US grew to $5.7 billion. These include 500 CBU-97 sensor-fuzed weapons for Jaguar aircraft for $250 million, 40 Harpoon anti-ship missiles for $370 million, six additional C-130J Hercules for about $1 billion and ten Boeing C-17 Globemaster III transport aircraft for $4.12 billion.

Over the coming year or two, India could buy another $8.3 billion worth of US kit. In the procurement pipeline are 145 howitzers from BAE Systems for about $700 million, 22 Apache AH-64E attack helicopters for $1.4 billion. 275 F-125 aircraft engines for Jaguars for about $2 billion, 50 F-404 aircraft engines worth $250 million, four additional P-8I aircraft for $1 billion, 15 Chinook CH-47F heavy-lift helicopters for $1 billion, and six more C-17 transport aircraft for $2 billion.

Now Modi’s “Make in India” campaign is reinforcing New Delhi’s longstanding preference for co-manufacturing and co-developing weaponry, rather than simply buying equipment from the US. This faces structural constraints, given America’s rigid export control regimes that condition technology transfer on close scrutiny and time consuming permissions. To bridge this gap between New Delhi’s and Washington’s bureaucracies, and to jointly identify opportunities for defence cooperation, the two governments set up the Defence Technology and Trade Initiative (DTTI) in 2012, co-chaired by senior officials from both sides.

Though the DTTI was driven hard from Washington by then Deputy Secretary of State Ashton Carter, it achieved little due to the UPA defence ministry’s reluctance to engage on this platform. National Security Advisor Shivshankar Menon co-chaired the DTTI from the Indian side, with the defence ministry playing almost no role.

Now, circumstances are again propitious for a rejuvenated DTTI. The India-friendly Ashton Carter has been named US Secretary of Defense, while the NDA government has named Secretary of Defence Production, G Mohan Kumar, to co-chair the DTTI alongside US Under Secretary of Defense for Acquisition, Technology and Licensing, Frank Kendall.

A highlight of Obama’s visit could be the signing of a New Framework Defence Agreement between the two countries, which would be valid for a decade from mid-2015. The earlier agreement, which was signed in Washington in 2005, mandated 13 areas of cooperation, but the Pentagon believes New Delhi has stonewalled throughout. US negotiators are now trying to incorporate oversight and review mechanisms in the new framework agreement so that cooperation targets can be set and monitored.

Tuesday, 20 January 2015

Is there a message in DRDO chief’s exit?

In removing Avinash Chander last week, the government sacrificed the DRDO's most potent symbol of success

By Ajai Shukla
Business Standard, 20th Jan 15

In November, while accompanying Prime Minister Narendra Modi to Nepal, Special Protection Group chief Durga Prasad learned of his unceremonious exit from his job of providing personal security to the leader he was travelling with.

In similar vein on Tuesday, Defence R&D Organisation (DRDO) chief, Dr Avinash Chander, at the fag end of a trip to Pune with Defence Minister Manohar Parrikar, learned that he was being removed from his job. The information came from journalists who had read a notification (hastily taken down later) on the website of the government’s Department of Personnel and Training. Since nobody bothered to inform Chander, he went to office next morning as if nothing had happened, until Parrikar told the media that the accomplished missile scientist was being removed to make way for “someone good from the DRDO, who has the urge for development.” Parrikar said he wanted someone young as DRDO chief; a retired employee, hired on contract, should not hold the job.

Parrikar did not explain why his own ministry had, just 45 days earlier, on November 28, 2014, granted Chander an 18-month extension to head DRDO till May 31, 2016. The most charitable explanation could be that Parrikar had taken over as defence minister just 18 days before that and had signed off on Chander’s extension without considering it properly. Yet, that does not explain why Chander was removed so peremptorily without even the dignity of an advance warning. If Parrikar was signalling to the DRDO that failure was no longer an option, he chose for a sacrificial lamb the organisation’s most potent symbol of success.

Hasty farewell

It was an unceremonious end to the distinguished career of a child from a refugee family from Mirpur, now in Pakistan Occupied Kashmir. Recounting his personal story to Business Standard after taking over as DRDO chief in June 2013, Chander described his family’s harrowing journey to India and a childhood in a one-room home in Old Delhi. After a succession of government schools, Chander was selected to join IIT Delhi, from where he went straight into the DRDO in 1972. His M.Tech and Ph.D. came later in his career.

Those were heady days for a fledgling organisation that was building ballistic missiles that could carry nuclear bombs to targets hundreds of kilometres away. After India’s “peaceful nuclear experiment” on May 18, 1974 --- codenamed “Smiling Buddha” and conducted on Buddha Jayanti --- international technology sanctions forced DRDO to build everything from scratch. Fortunately they had the men for the job. Avinash Chander quickly emerged as leader of the team that designed navigation systems; another youngster, Vijay Kumar Saraswat, who joined the DRDO just 10 days before Chander, masterminded the development of propulsion systems.

The band of young scientists who coalesced around these two were taken under the wings of DRDO legend APJ Abdul Kalam --- later India’s president. Kalam’s Integrated Guided Missile Development Programme was successful from the start, even as DRDO struggled on other technology fronts. The liquid-fuelled Prithvi missile was developed in the 1980s and 1990s, followed by the Agni-series, culminating in the Agni-4 and Agni-5 missiles that --- with ranges of 4,000-5,500 kilometres --- provide India the ballistic missile capability it needs to deter China. Chander and Saraswat also delivered the underwater-launched K-15 missile, which allows nuclear-powered Arihant-class submarines to fire nuclear-tipped ballistic missiles, completing India’s nuclear triad. This is now being developed into the 4,000-kilometre range K-4 missile.

Given the almost unalloyed career success of both these scientists and the wide respect they enjoyed within the organisation, it was hardly surprising that both rose to head the DRDO --- first Saraswat, from 2009-2013; succeeded by Chander on June 1, 2013. Far more remarkable is the contrasting fortunes of these two after achieving that pinnacle. Last week, Saraswat was appointed full-time member of the NITI Aayog, the revamped planning commission, with the rank of minister of state. This week, Chander lost his job.

Conspiracy theorists have been quick to conclude that Saraswat somehow engineered Chander’s exit. In fact, the two have been close friends and colleagues for decades. Speaking to Business Standard soon after taking over as DRDO chief, Chander warmly described his relationship with Saraswat thus: “We have been good, close friends from the beginning.”

The reality is that the hard-driving Saraswat was temperamentally inclined towards the Bharatiya Janata Party, joining a technology think-tank associated with the Sangh Parivaar-linked Vivekananda International Foundation, which served as his springboard into the National Democratic Alliance government. The laid-back Chander, as technologically gifted but visibly an appointment of the United Progressive Alliance government, found himself in the firing line. He was particularly vulnerable being a contract employee. While he had been appointed on June 1, 2013 for a three-year tenure as DRDO chief, his regular employment terminated in November 2014 when he became 64 years old --- the age of retirement of scientists with the Central Government. For the next 18 months, he would have had to serve on contract.

Since May, when the National Democratic Alliance (NDA) government came to power, it was whispered that Chander would not be retained on contract when he superannuated in November. The rumours became more persistent after Modi, at the DRDO’s annual awards ceremony on August 20, appeared underwhelmed by the organisation’s achievements. While it was widely reported that the PM criticised the DRDO’s “chalta hai”, or easy-going, attitude; he had actually referred to a nation-wide lackadaisicalness. Modi’s more trenchant criticism centred on the disconnect between the DRDO and the military (“Has the jawan ever seen the rishi who has laboured in a laboratory for 15 years? When this happens, it will be very good”). The PM also implicitly criticised the DRDO’s focus on high-tech equipment while jawans hankered for better personal kit, including lighter boots and water bottles. In a statement that resonated after Chander’s termination, the PM proposed empowering younger scientists by manning 5 of the 52 DRDO laboratories exclusively with scientists under 35. "We need labs in India which utilise raw talent, which employ people only below the age of 35. Let us allow these young scientists full decision-making power," Modi had said.

There is a dispute over whether junior DRDO scientists believe they are stifled and denied growth opportunities. Some argue that junior-and-mid-level DRDO scientists look to quit the organisation because promotion avenues are blocked by service extensions routinely granted to top officials. The counter-argument is that few DRDO scientists wish to leave a top military research establishment that provides both cutting-edge technological challenges and an annual budget of about Rs 15,000 crore (2014-15). Figures presented in parliament on December 9, 2013 support the latter argument. In the five years from 2008-2013 (excluding the month of December 2013), just 487 of the DRDO’s 7,500 scientists resigned, a remarkably low annual attrition rate of about 1.3 per cent per year.

The elusive young head

Even so, following Modi’s comments, rumours swirled about a government “search committee” that was finding a successor, with Sekhar Basu of the Department of Atomic Energy (DAE) believed to be the outsider chosen to revitalise the moribund DRDO. The rumours held that Chander would not be put out to pasture. Instead, the three posts that he held --- i.e. secretary (defence R&D), director general of the DRDO (being upgraded to chairman, DRDO); and scientific advisor to the Raksha Mantri (SA to RM) --- would be split. Shekhar Basu would take over as director general of DRDO, while Chander would continue as scientific advisor to the defence minister. One of them would additionally hold the post of secretary (defence R&D).

All this appeared to be water under the bridge when, on November 28, two days before Chander was to superannuate, the MoD granted him an 18-month contract from December 1, 2014 to May 31, 2016, under the same terms and conditions that he currently enjoyed as secretary (defence R&D). The matter seemed settled; Chander apparently enjoyed the government’s confidence.

Parrikar’s media statements on Wednesday have confused the speculation. The defence minister says he wants someone from the DRDO, while Basu is an outsider from the Department of Atomic Energy. Nor is Basu young by any reckoning; he is already on a two-year extension after having retired at the age of 60.

Within the DRDO, shocked senior scientists are also looking around them warily for the man who might succeed Chander (no women are realistically in the running). The seniormost after Chander is S Tamilmani, the aeronautics chief, who is closely associated with the Tejas light combat aircraft (LCA) programme. Yet Tamilmani, who is nearing 62 years, has already received one extension. This is also the case with the next in line, the brilliant Dr VG Sekaran who has long been a key mastermind of the DRDO’s Agni missile programmes and currently oversees all missile projects. Further down in seniority is another hot contender, radar specialist S Christopher, who heads the project to develop an Airborne Early Warning and Control (AEW&C) aircraft, a flying command post from where the air force battle would be controlled. Christopher turns 60 in mid-2015.

Those who believe that the political leadership might carry out “deep selection” of a relatively young scientist who would bring a brand new perspective and serve a long tenure as chief, are placing their money on Satheesh Reddy, who currently heads the missile electronics laboratory, Research Centre Imarat (RCI) in Hyderabad. Elected last year as a fellow of the Royal Aeronautical Society, UK, Reddy is internationally recognised for his work in navigation systems. Missile scientists like Sekaran and Reddy benefit from their roots in the DRDO’s most successful vertical, one that still consumes most of the organisation’s budget.

While DRDO scientists lick their wounds after Chander’s contract termination, several believe that he remains in the picture. Top defence ministry officials confirm they are still examining the proposal to split the three positions traditionally held by the DRDO chief. That could see the organisation headed by a new, young chief, while Chander continues as the advisor to the minister. That would only be justice for a scientist whose name would feature prominently in anyone’s history of the DRDO. 

Yokel at a country fair


by Ajai Shukla
Business Standard, 20th Jan 2015

Prime Minister Narendra Modi’s bold custodianship of the US-India relationship will bring President Barack Obama to India next week for his second visit, which promises to be as rich in symbolism as Modi’s star turn at the Madison Square Garden last September. With Washington and New Delhi already engaged in multiple fields, there is expectation that the US-India defence relationship will drive the defining strategic convergence of the early 21st century. Yet, for this to happen both must focus less on cheesy platitudes --- liberal democracies, freedom-loving people, etc. --- and give sober thought to how they can reconcile entirely different styles of thinking, planning and executing national defence.

Washington’s geopolitical vision --- as articulated in its “Rebalance to Asia” policy --- perceives an emerging bipolar power contest between the US and China, with India being the crucial swing player. The US-India security relationship aims at building up India as a power that punches above its weight. The assumption underlying American support is that New Delhi will inevitably come down on the US side because of its geopolitical circumstances and its civilizational nature. American realist thinker, Ashley Tellis, argues: “The real gains in the US-Indian partnership will be manifest only over the long haul and will be realised less by what India does for the United States than by what it becomes and does for itself.”

Meanwhile, New Delhi inhabits a parallel reality, where it invokes a multilateral, consensual, UN-oriented approach to dealing with the region and the world. New Delhi’s reluctance to antagonise Beijing provides little traction to the narrative of a countervailing partnership. Howsoever strategic the vision of US leaders, its military and the Department of Defense (the Pentagon) remain important players in decisions on sharing weapons and technologies. For them, the crucial question remains: “are the Indians going to fight alongside us?” 

While a formal alliance is neither conceivable nor desirable, with its commitment to fight together, New Delhi has not seriously tried to understand the inter-agency framework that controls US high technology and the release of weapon systems even to friendly countries. If India wants co-development and co-manufacture, it must understand --- given America’s strategic view of defence technology --- how this is inseparably linked with arms control issues, licensing, technology control and cyber-security.

Without that understanding India will remain a mere buyer of American weaponry, with $9 billion worth of US arms bought in the last decade and another $7 billion worth in the procurement pipeline. Despite all the lip service that New Delhi has paid to the notion of co-manufacture and co-development, not even a single joint development project has kicked off so far.

To smoothen cooperation, the Pentagon and our defence ministry (MoD) agreed in 2012 to establish the Defence Technology and Trade Initiative (DTTI), a high-level, inter-agency body that would ensure that bureaucratic red tape did not trip up the broader strategic relationship, and that India-related proposals did not lose traction or momentum as they filtered through tendentious bureaucracies. It was co-chaired by US Deputy Secretary of Defence Ashton Carter, an out-and-out Indophile, and by National Security Advisor Shivshankar Menon. Since the defence minister of that time, AK Antony, wanted to have as little as possible to do with America, India’s NSA --- with scant experience of defence production and technology --- had to co-chair the DTTI.

The resulting confusion in New Delhi has occasioned grim humour in Washington. After the Defence R&D Organisation (DRDO) strongly advocated a joint US-India project to develop an anti-ballistic missile (ABM) system --- a defence against incoming ballistic missiles --- Carter broached the proposal directly with Menon. To Carter’s surprise, Menon turned it down flat, apparently unaware of the DRDO’s interest.

A similar lack of coordination was evident during Mr Modi’s visit to Washington last year, when an American official raised the possibility of US technology assistance in building India’s next aircraft carrier --- something that the Indian Navy wants. For India, technology assistance from the world’s undisputed aircraft carrier experts can only be welcome. Yet, NSA Ajit Doval --- whose grasp of military technology is minimal --- blandly turned down US assistance.

Even today, the Pentagon worries that the Indian co-chairperson --- secretary for defence production, G Mohan Kumar --- is not influential enough for the job. He is technically the same grade as his US counterpart, Under Secretary of Defense for Acquisition, Technology and Licensing, Frank Kendall. Yet the sorry truth is that Indian bureaucrats --- with little specialist knowledge --- are far behind their US counterparts in technical knowledge and in their level of empowerment.

Consequently, there is scepticism on the US side about the joint development proposals that India recently raised in the DTTI. In 2013, Carter had proposed five co-development projects, which involved US and Indian entities working together to produce the next generation of US arms like the Javelin anti-tank missile. During Defence Secretary Chuck Hagel’s visit to India last year, the US raised another dozen co-development proposals. Now, without responding to those proposals, India has proposed six projects of its own.

Given the mixed messages that have emanated from New Delhi in the past, there is understandable scepticism amongst American interlocuters about whether the six new proposals have been adequately thought out, or whether they even have broad acceptability across the Indian government. Asks one US interlocutor, “Have the highest levels in New Delhi identified the six proposals as clear strategic requirements and national defence priorities? Or have they been merely put forward as bargaining tools, with some official saying, “Present them and let’s see what the Americans say”.

It is time for South Block to stop behaving like a yokel at a country fair, unable to participate for fear of being pickpocketed. Indian officials must move forward confidently, understanding US export control and procurement frameworks and using bodies like the DTTI to obtain what India needs. With Ashton Carter heading the Pentagon and with a confident government in New Delhi, there has never been a better time. Identify India’s requirements clearly and put them on the table. Then the ball will be in the US court.

Sunday, 18 January 2015

BAE Systems offers to build sophisticated “ultralight” guns in India

A Chinook helicopter lifts a M777 ultralight gun for deployment in mountains

By Ajai Shukla
Business Standard, 18th Jan 15

BAE Systems Inc. has sweetened its offer to supply artillery guns for the army’s new mountain strike corps. The US-based company hopes this will resurrect the procurement of 145 M777 ultralight howitzers (ULH), which has been in limbo since July, when the defence minister told parliament that the price was too high.

The new proposal, which dovetails with the “Make in India” initiative, offers to build more components in India for the 155-millimetre/39-calibre M777 ULH. In another major step forward, BAE Systems has offered to build the gun in a plant in India. This would become the global assembly, integration and test (AIT) centre for the M777 once the US plant at Hattiesburg, Mississippi shuts down.

The ministry of defence (MoD) has faced sharp criticism, most recently from parliament’s Consultative Committee on Defence, for not buying equipment --- especially artillery --- for the new mountain strike corps being raised for the Sino-India border. In a television interview last Monday, Defence Minister Manohar Parrikar promised to prioritise funding for buying artillery guns.

“Encouraged by Prime Minister Modi’s call to Make in India, we have developed and submitted a strengthened proposal on the M777 case. This includes a significantly higher degree of indigenisation on the weapon system. Moreover, we have included in our offer the transfer of the Assembly, Integration & Test (AIT) capabilities into India. The AIT facility will not only provide in-country support to the army on its weapon system but will begin the process of indigenous manufacture of modern artillery in India,” said Mark Simpkins, the India head of BAE Systems.

Meanwhile, BAE Systems is finalising a more attractive offsets proposal, which involves fabricating a significant number of M777 components in India.

“We have already signed Memoranda of Understanding with around 40 Indian companies after assessing their capabilities to manufacture M777 components to the requisite standard. Nearly half of these are micro, small and medium enterprises (MSMEs),” says Simpkins.

Simultaneously, BAE Systems is seeking to assure the MoD that the price of the M777 ULH would be reasonable. Its cost has risen since January 26, 2010, when the Pentagon had quoted $647 million (Rs 4,015 crore) for 145 guns in a Letter of Acceptance (LoA) to the MoD. This was marginally raised to $694 (Rs 4,306 crore) in March 2013. But alarms bells went off in New Delhi on August 7, 2013, when the Pentagon notified the US Congress that the guns would cost “up to $885 million” (Rs 5,492 crore).

BAE Systems has clarified in discussions that $885 million is the “upper limit of the price envelope” in case negotiations drag on for years.  If finalized quickly, they say the cost would remain around $694 million, quoted in last year’s LoA.

India is buying the M777 through the Foreign Military Sales (FMS) programme. In this the MoD deals with the Pentagon; which negotiates terms with the supplier (in this case BAE Systems); while charging the buyer (the MoD) a small fee for its services.

The offer to shift M777 assembly from Hattiesburg to India is a win-win proposal for BAE Systems and India. After supplying over a thousand M777s to several armies, Hattiesburg has no new guns on order. Until 2013, BAE Systems Inc had spent over $50 million on keeping the Hattiesburg line open in anticipation of an Indian order. Shifting AIT to India would spare the company that on-going cost.

If shifting AIT to India were not enough to interest the MoD, BAE Systems Inc. is dangling a further carrot, by pointing out that a larger Indian order for the M77 would allow far more components to be built in India.

Most military experts regard the order for 145 guns as a preliminary one, which would equip just 6-7 artillery regiments of the mountain strike corps’ two divisions. The army’s failure to buy artillery since the 1980 --- which Parriker himself highlighted --- means that India’s 16 other mountain divisions also badly require light, air-portable artillery guns, adding up to a total requirement of over a thousand guns.

In addition, several projects are under way to meet India’s requirement of 1,580 towed guns for the plains sector.

The Ordnance Factory Board (OFB) has developed a 155-mm/45-calibre gun called the Dhanush, and is building 114 for the army. Separately, the Defence R&D Organisation (DRDO) is spearheading the Advanced Towed Artillery Gun (ATAG) project, to build a powerful 155-mm/52-calibre gun, in partnership with the private sector.

In August, the defence ministry cleared the manufacture of 40 self-propelled guns, called Catapults, for an estimated Rs 820 crore.

And in November, it gave the go-ahead for building 814 mounted gun systems (MGS) under the “Buy & Make (Indian)” category of the procurement procedure for an estimated Rs 15,750 crore.