Monday, 24 March 2008

The story of the Sarvatra: hurdles for the private sector in defence production

(Concluding part of a four-article series on the private sector in defence production)

by Ajai Shukla
(Business Standard: 24th March 08)

The private sector is playing a growing role in defence production, even though the playing field --- when compared with Defence Public Sector Undertakings (DPSUs) --- remains far from level. During the seven years since 2001, when the private sector was first entitled to licenses for producing defence equipment, the Ministry of Defence (MoD) has officially declared that private defence manufacturers would be supported. But the gap between rhetoric and reality has proved difficult to bridge. The story of a military assault bridge, ironically, best illustrates the private sector’s challenges.

The Sarvatra Bridge was to allow Indian mechanised forces (strike formations, equipped with 40-ton tanks and infantrymen travelling in BMP combat vehicles) a quick crossing over canals and rivers that came in their path, in a non-stop advance into the heart of enemy territory. Carried in five giant, high-mobility Tatra vehicles, and capable of bridging a 75-metre canal or river in less then two hours, the Sarvatra would leave the enemy with little time to side-step their forces to block the Indian advance. It is a technological leap over what India presently uses, PMS Bridges of East European origin, which is both cumbersome (one set, which bridges a little over 100 metres, is carried on 57 Tatra vehicles) and expensive. A PMS bridge costs Rs 60 crores; the Sarvatra, being indigenous, costs one-third that amount.

But thirteen years after the Sarvatra project began, it is mired in an ugly battle over who should manufacture it: L&T, the private company which spearheaded its development; or Bharat Earth Movers Limited (BEML), the DPSU which insists that they build the Tatra vehicle, so they should build the Sarvatra. The MoD has backed BEML.

The Sarvatra is a Defence R&D Organisation (DRDO) project; L&T was closely associated with the difficult work of creating the bridge which opens, scissors-style, across any obstacle. The major engineering task of mounting the bridge on the Tatra vehicle was also done by DRDO, with the assistance of L&T; BEML’s role consisted merely of providing the Tatras on which the Sarvatra is mounted;

DRDO and L&T sources describe the difficulties in the project. The Sarvatra is made of special aluminium, as strong as mild steel; engineering aluminium structures is a crucial L&T specialisation. Aluminium welding is another L&T strength; each bridge has 1.2 kilometers of welding. In 2002, ahead of time, L&T completed a full Sarvatra bridge, consisting of five bridging vehicles. An impressed MoD asked L&T to build five more full bridges. By 2005, they were ready.

In the Sarvatra programme, there was a heady sense of being on track. With the DRDO satisfied, the army keen on quickly inducting the Sarvatra into service, and L&T ready to execute orders, the stage seemed set for placing an order on L&T. Instead, in 2006, the MoD ruled that BEML would be the nodal agency for manufacturing the Sarvatra.

BEML Deputy General Manager, R Gopinath, told Business Standard that, “We made our case before the MoD that we have the expertise to make foldable bridges. We are making the PMS Bridge.”

BEML made the request despite not having a significant role in developing the Sarvatra, a process largely handled by DRDO and L&T. Mr Gopinath admits, “We were not involved during development. We only provided the (Tatra) chassis on which the bridge was built. But the MoD has appointed us as the nodal agency.”

Top MoD sources recount the firestorm that the decision set off within the MoD. L&T objected to then Secretary of Defence Production, KP Singh, pointing out that a licensed defence company was being discriminated against. KP Singh ruled that L&T should be allowed to compete for the order. But Defence Minister AK Antony overruled him, nominating BEML in December 2007, to manufacture the Sarvatra.

L&T is furious that its expertise, and the expenses it had incurred on development, have been disregarded. The company’s Senior Executive VP, Mr MV Kotwal told Business Standard that, “This sends out a message that there is no future for (private companies) who get involved too early in the design stage. This is symptomatic of the whole game.”

The MoD has ignored a written questionnaire sent by the Business Standard on this issue.

7 comments:

Anonymous said...

Didn't L&T get money for developing it ?

Anonymous said...

They should compete. Who can manufacture it cheaper wins the contract.

Anonymous said...

The nominations are killing the suceesful projects and entry of pvt sectors in defence manufacture. LCA may be in pipeline for this massacre.

Anonymous said...

To the first comment abt the development money...
All companies undertake development projects and try and reduce their prices based on amortisation of prices over a larger series production order that might follow. So by not getting the series production order its a loss to the company. Hope it clarifies

Anonymous said...

L & t has rights to deny sharing of expertise with BEML and it has to do that.....

Ankur said...

With regards to the cheaper manufacturer winning the contract, this is only fair on the R&D parties if they are fully refunded for their efforts and further incentivised to continue this line of work.

There is no better incentive than a full order of the product being designed, the ties to the Services and the long-term revenue streams in repair and developing future models/improvements.

Taking these into consideration, it is beyond idiotic for the MoD to push the BEML. It is also a complete slap in the face of future R&D partners who bring in special expertise and a strict finance-focused corporate culture.

Anonymous said...

There ate two devils who are killing R&D in defence public and pvt sectors.They are CEMILAC and DGQA(CRI). We dont need any ISI pakistan or china to destabilize us. The above agencies are sufficient. With lack of experience,expertise and professionalism ,they make the lives of design and production engineers miserable. You talk of these agencies to any pvt sector company for approvals, the pvt company just runs away ,unable to meet the high handed demands. The QC dept should take over qualification and approvals. The
govt should close down the two agencies in the interse of pvt and public R&D in defence sector.These agencies are stumbling blocks as they can neither participate in design and development nor allow others to grow.