Friday, 31 January 2014

Arms acquisitions languish without funds or coordination



By Ajai Shukla
Business Standard, 1st Feb 14

India’s cumbersome arms procurement procedures and a plodding ministry of defence (MoD) bureaucracy have long been blamed for shortfalls in combat capability. Now there is another, more worrying, reason --- a growing crisis of funds, magnified by the lack of tri-service coordination.

Slowing economic growth and a weak rupee have left insufficient money for the military’s ambitious modernisation programme. With no tri-service chief to coordinate and prioritise the needs of the army, air force and navy, their 15-year “Long Term Integrated Perspective Plan” is just an unaffordable wish list.

So dire is the funding shortfall, say senior ministry officials, that negotiations with vendors are dragged on simply because there is insufficient money for new contracts. The capital budget (meant for new equipment) goes almost entirely on previous years’ purchases, for which instalments are paid over 5-10 years. This year only Rs 2,955 crore of the military’s capital budget of Rs 73,444 crore was available for new purchases.

Meanwhile, revenue expenditure rises as the army grows in size, even as pay commissions increase the cost of manpower. Last month, Rs 7,870 crore was transferred from the already stressed capital account to meet the burgeoning revenue expenditure.

In these circumstances, major acquisitions languish. These include the planned purchase from BAE Systems of 145 M777 light guns for a mountain strike corps (MSC) on the Himalayan border. With no order forthcoming, BAE Systems has halted its M777 assembly line in the USA; the contract cost has risen from $647 million to a potential $885 million. Instead of raising the MSC in five years as planned, it will now be raised in eight years to spread its Rs 64,700 crore cost.

Also stuck in the pipeline are contracts with US company, Boeing --- for 22 AH-64 Apache attack helicopters and 12 CH-47F Chinook multi-mission helicopters, together worth some $2 billion; and a billion-dollar repeat order for four P-8I maritime aircraft to supplement the eight already bought. Delay is inevitable in the purchase of another ten C-17 Globemaster III, worth $4 billion; as also in the $3 billion purchase of Honeywell engines to extend the service life of the IAF’s hundred-odd Jaguar fighters.

Seemingly impossible now is a contract for 126 Rafale medium multi-role combat aircraft (MMRCA). The IAF would need to fork out Rs 15,000 crore as the 15 per cent signing amount, even at the lower end of the Rafale’s estimated price band of $16-20 billion.

Meanwhile, the weaponry bought this financial year --- like the December 27 purchase of six C-130J Super Hercules transport aircraft for a billion dollars --- will swell the “committed liabilities” for coming years, leaving a diminishing percentage for new purchases. If the Hercules are delivered over four years, the MoD would need to pre-commit four annual instalments of Rs 1,560 crore each.

The proportion of pre-committed instalments has risen each year (see Fig 1 below). In 2010-11, the capital budget allocated Rs 17,278 crore for new contracts and Rs 28,408 for “committed liabilities”, or instalments due. In 2011-12, there was Rs 9,467 for new contracts, while Rs 32,995 crore went on committed liabilities. Last year, the money for new contracts dropped to Rs 5,520 crore, with Rs 54,840 crore pre-allocated for instalments. This year, there is just Rs 2,955 crore for new contracts, while Rs 64,680 crore is pre-committed. Next year, without a sharp hike in the defence budget, there may be nothing for new contracts.

Fig 1: Capital Budget: declining purchasing power


Year
Capital Budget
Expenditure
New Contracts
Committed Liabilities
Total





2010-11
43799
17278
28408
45686





2011-12
52998
9467
32995
42462





2012-13
66032
5520
54839
66032





2013-14
73444
2955
64680







(Figures include expenditure of army, navy and air force only)

This crisis has been predictable in the absence of a tri-service commander to coordinate army, air force and navy spending. Each year, budgetary figures show no correlation between planning and expenditure (see Fig 2 below). In 2011-12, the military asked for a capital allocation of Rs 88,680 crore; the government allocated far less, and the military eventually spent just 59 per cent of what it had projected. Last year, capital expenditure was just 63 per cent of the Rs 93,828 crore the military had asked for. This year the military will spend a mere 58 per cent of the projected requirement of Rs 1,23,911 crore.

Fig 2: Capital Budget: Demands and allocations

Year
BE
RE
Expdr
Projected
Allocated
Projected
Allocated






2011-12
88680
64150
72406
62199
52038






2012-13
93828
74518
80973
64535
59277






2013-14
123911
81241
---
---
Likely 72000.00


(Figures include budget for Defence R&D Organisation, Lands & Works, etc)

Former army vice chief, Lieutenant General Shantanu Chaudhary, says that appointing a tri-service chief is essential for easing the pressure on military budgets ---both capital and revenue. A permanent chairman of the chiefs of staff committee (COSC), which the Naresh Chandra Task Force recommended to the prime minister last year, would rationalise the roles and capabilities of the three services, many of which are wastefully duplicated today. Expenditure could be reduced and efficiency increased by getting the army, navy and air force to share infrastructure, logistics, command systems and even platforms. He cites multiple examples of needless duplication --- electronic warfare capabilities created by all three services; complex command, control and intelligence networks that each service has created separately, instead of a common platform; and separate surveillance systems that result in thrice the expense and half the efficacy.

“The three services essentially look out for themselves. The senior-most service chief, who is the ex-officio Chairman COSC, naturally looks out for his own service rather than the tri-service good. Sensible modernisation demands a tri-service chief, who can prioritise procurement, plan budgeting and slash the duplication and triplication,” says Chaudhary.

Monday, 27 January 2014

Broadsword book review: "A window into strategy" by Gen VP Malik



India’s Military Conflicts and Diplomacy: An Inside View of Decision Making
By General V.P. Malik (Retired)
HarperCollins Publishers, India
300 Pages
Rs 699/-

After his important debut book on the Kargil conflict, which he had personally overseen as chief of the Indian Army, General VP Malik has now opened another small window into the functioning of government with what he titles an “inside view of decision making” during several strategic crises. Malik personally played a role in each incident that he describes, having occupied key appointments in the military operations directorate during his long and distinguished military career. In describing these events, he provides useful primary source inputs for historians and sets an example for high government officials who are too often held back from documenting events by out-dated notions of secrecy.

Malik’s book provides vignettes into India’s misconceived intervention in Sri Lanka in the late 1980s, which eventually took more than a thousand soldiers’ lives; the more successful intervention in the Maldives in 1988, when Indian paratroopers were landed in Male to neutralize an attempted coup; and the multinational operation led by Indian peacekeepers in Sierra Leone in 2000 to rescue comrades who had been held hostage by armed rebels. A long and interesting chapter adds fresh detail and insights to Malik’s earlier book on the Kargil conflict of 1999.

The author writes in the simple, straightforward prose of a professional soldier, without obfuscation or rhetorical flourishes. There is none of the self-obsession that permeated the recent book by another army chief, General VK Singh. The author simply recounts events as they happened without disassociating himself from setbacks, or suggesting that he was the driving force behind every success.

The exception to this is when the author apportions responsibility for the glaring intelligence failure at Kargil, which left the door open for hundreds of Pakistani soldiers to cross the Line of Control (LoC) and occupy Indian defences overlooking Kargil, Dras and Batalik that had been vacated for the winter. Malik notes that the civilian intelligence agencies had provided no warning, but he glosses over the fact that this was, first and foremost, a military intelligence and operational failure. This will disappoint the many who believe that the army should have apportioned blame all the way up to the corps commander in Srinagar, rather than merely making a scapegoat of the local brigade commander at Kargil.

Malik is characteristically restrained while recounting his few disagreements with his civilian masters. At the height of the fighting in Kargil, when India accepted Pakistani Prime Minister Nawaz Sharif’s offer to send his foreign minister, Sartaj Aziz, to New Delhi, Malik worried that a mixed message might go out to his soldiers, who were engaged in bitter hand-to-hand fighting in Kargil. His solution was to send out a cable to all the formations involved in the fighting, which is a case study for his clarity on the military and political dimensions of the conflict. Clausewitz would have approved.

Malik conveys a sense of the army’s frustration, when the Pakistan Army flatly denied that its soldiers had crossed the Line of Control, even as the Indian Army was recovering identity cards and documents from Pakistani bodies in Kargil, which clearly identified them as soldiers, not militants. Bizarrely, after the Pakistani director general of military operations (DGMO) refused to accept this in his phone conversations with his counterpart, the Indian DGMO, General Nirmal Vij, eventually took his fax number and faxed the documents to him.

Interestingly, Malik makes a powerful case that Nawaz Sharif was not the dupe that he has successfully portrayed since then, but was fully aware of Operation Badr, as General Musharraf codenamed the Kargil plan.

Operation Cactus, India’s intervention in the Maldives after Sri Lankan Tamil mercenaries attempted a coup against President Abdul Gayoom, is often hailed as a case study for the notion of Indian power projection. However, Malik’s gung-ho eyewitness account --- he travelled to Male with the paratroopers --- does not evoke the impression of a highly professional national reserve force responding to a crisis. The Agra-based parachute brigade had no Rapid Response Force that the could quickly deploy (a shortcoming that has been rectified since), as a result of which Indian paratroopers landed in Male a full 14 hours after President Gayoom’s early-morning SOS.

Fortunately, the operation went off flawlessly. Even as order was restored in Male, an Indian warship, INS Godavari, rescued that country’s education minister, Ahmed Mujuthaba, his Swiss wife and his mother-in-law from the Tamil mercenaries who had taken them hostage. Malik recounts that Rajiv Gandhi, after being informed about the success, congratulated the naval chief, Admiral JG Nadkarni, with the quip, “Good job, Admiral, but I doubt if Ahmed Mujuthaba will forgive the Indian Navy for rescuing his mother-in-law!”

Like service chiefs before him, Malik highlights the disconnect between military leaders and the national political leadership, particularly in the realm of nuclear weaponry and strategy. Noting that “the military tends to be excluded from the nuclear decision-making process”, Malik prescribes the early appointment of a chief of defence staff or tri-service chief.

In this consistently interesting book, the reader’s interest flags only in the longish sections on diplomacy, and on relations with neighbouring countries like Myanmar and Nepal. Nevertheless, Malik has conveyed important lessons, albeit in short story style, that our defence planners must heed. 

Sunday, 26 January 2014

Pentagon report on the P-8A: Indian Navy’s new submarine hunter is ineffective



By Ajai Shukla
Business Standard, 26th Jan 14

An unexpected and worrying question mark has been placed over the Indian Navy’s expensive new Boeing P-8I multi-mission maritime aircraft (MMA), which were bought to allow the navy to monitor the Indian Ocean and to destroy enemy submarines that it detected.

According to a Bloomberg news report, the US Department of Defense (Pentagon) has found that the US Navy’s version of the aircraft, the P-8A, is ineffective at both surveillance, and in detecting and destroying submarines.

Michael Gilmore, the Pentagon’s chief weapons inspector, has reported that the P-8A “is not effective for the intelligence, surveillance and reconnaissance mission and is not effective for wide area anti-submarine search”, according to Bloomberg, which cites Gilmore’s annual report on major weapons.

The Indian Navy, which has bought eight P8-I aircraft for US $2.1 billion, is Boeing’s first international customer for this platform. Its cutting-edge sensors, radios and submarine-killing weaponry are integrated onto a special Boeing 737 aircraft, giving it the endurance to fly 1,100 kilometres to a patrol area, remain “on station” for six hours, and then fly back to base.

Yet the Pentagon’s report, which has not been officially released, points out flaws in the aircraft’s radar performance, sensor integration and data transfer. It says that current version of the P-8A had not overcome “major deficiencies” identified in combat testing in 2012-13.

Contacted for a response, the Indian Navy and the MoD did not reply. The Boeing Company has declined to comment, stating that the Pentagon report had not been officially released. The US embassy in New Delhi did not respond to an emailed request for comments.

For Washington, as for New Delhi, this news is worrying. The first P-8A of 117 that the US Navy plans to buy was deployed to Kadena, in Japan. It is operating along with others in the tense maritime environment of the Sea of Japan, tracking Chinese submarines. The three P-8Is already delivered to India (with five more due to come by 2015) are based at Arakonam, near Chennai, to watch over India’s 7,500-kilometre coastline and the ocean stretch from the Strait of Malacca to the Strait of Hormuz.

In November, the US Navy had declared the P-8A ready for combat deployment, while admitted that the US Navy had developed “software upgrades to correct deficiencies.” Vice Admiral Robert Thomas, who commands the US 7th Fleet, backed the P-8A, stating on January 10 that it “represents a significant improvement” over the P-3 Orion, which it replaced in the US fleet.

The P-8I’s sensors include a Raytheon multi-mode radar to detect aircraft, ships and submarines, while another belly-mounted radar looks backwards, like an electronic rear-view-mirror. When a submarine is suspected, the aircraft drops sonobuoys into the water, which radio back suspicious sounds. A “magnetic anomaly detector” on the P-8I’s tail also detects submarines. The P-8I can destroy ships and submarines with Harpoon missiles, Mark 82 depth charges and Mark 54 torpedoes mounted on the aircraft. 

Saturday, 25 January 2014

Shinmaywa US-2 seaplane could be showpiece of Indo-Japan defence partnership


Shinzo Abe to discuss inter-governmental agreement this weekend in Delhi

By Ajai Shukla
Business Standard, 25th Jan 14

New Delhi’s growing defence partnership with Tokyo could take wing with the US-2 (Utility Seaplane Mark 2), a one-of-a-kind amphibious aircraft that has Indian naval planners goggle-eyed. The mammoth 47-tonne aircraft, carrying 18 tonnes of load, can take off from, or land on, a 300-metre stretch of water or land, its four giant engines needing just 7 seconds to get airborne. With a range of over 4,500 kilometres, it can patrol areas 1,800 kilometres away, and react to an emergency by landing thirty armed troops, even in 10-foot waves. Like the C-17 Globemaster III, which lands vast payloads on high altitude dirt runways, the US-2 attracts the Indian military for the unprecedented options it provides.

India and Japan have discussed a US-2 sale since 2011, when the Indian Navy sent several companies a Request for Information (RFI) about amphibious aircraft. Only Shinmaywa offered capabilities that the navy wants for patrolling island territories like the Andaman & Nicobar chain, which is 1,200 kilometres from Chennai and hundreds of kilometres long; or for flying out spares and technicians to disabled warships out in the Indian Ocean.

Business Standard understands that New Delhi and Tokyo are discussing signing an Inter-Governmental Agreement (IGA) to cooperate on the US-2, similar to the IGA between New Delhi and Moscow to co-develop a fifth generation fighter. An IGA recognizes the strategic importance of a procurement programme, and takes it out of the purview of the restrictive Defence Procurement Procedure (DPP).

When Prime Minister Manmohan Singh visited Tokyo last May, the joint declaration issued after his meeting with Japanese Prime Minister Shinzo Abe noted: “They decided to establish a Joint Working Group (JWG) to explore modality (sic) for the cooperation on the US-2 amphibian aircraft.”

Interestingly, the JWG is not headed on the Indian side by a ministry of defence (MoD) official, but by Secretary DIPP (Department of Industrial Policy and Promotion). This suggests a perspective larger than merely a defence acquisition, with the programme including industrial partnership, capacity building and finance, in addition to issues like certification, flight-testing, training, etc.

Defence cooperation between New Delhi and Tokyo has been growing, in tandem with apprehensions about an assertive China. Japan’s National Security Strategy, which was published on December 17, 2013, and a follow up document --- the National Defense Programme Guidelines (NDPG) --- mandate increased cooperation with India. The NDPG states, “Japan will strengthen its relationship with India in a broad range of fields, including maritime security, through joint training and exercises as well as joint implementation of international peace cooperation activities.”

In contrast, the NDPG views China thus: “China has been rapidly advancing its military capabilities in a wide range of areas without sufficient transparency through its continued increase in military budget. China is also rapidly expanding and intensifying its activities in waters and airspace, showing its attempts to change the status quo by coercion. Japan needs to pay careful attention to these activities with strong interest. They are also concerns for regional and global security.”

There are a mere seven US-2 in service worldwide, all in a “search and rescue” role with the Japanese Maritime Self Defense Force (JMSDS), as the Japanese navy is termed. Some twenty countries want to buy the US-2, but Article 9 of Japan’s Constitution holds it back from warlike activities, including the export of military equipment. In 2011, Japan’s cabinet issued a waiver, citing the strategic partnership, to allow the US-2 to be supplied to India. The utility of the US-2 in “benign constabulary missions”, such as anti-smuggling and anti-poaching, allows it to be passed off as a non-military aircraft.

With Japan self-limiting defence spending to under 1 per cent of GDP, Tokyo regards India’s military as a partner for achieving economies of scale in defence production. Japan’s National Security Strategy, published on December 17, 2013, notes that “it has become mainstream to participate in international joint development and production projects in order to improve the performance of defense equipment, while dealing with the rising costs… the Government of Japan will set out clear principles on the overseas transfer of arms and military technology, which fit the new security environment.”

After just five Japanese prime ministerial visits to India in half a century, the Indo-Japan strategic relationship was kick-started in 2000 with Prime Minister Yoshiro Mori’s visit to New Delhi. In 2006, his nationalistic successor, Shinzo Abe, signed a Global and Strategic Partnership with India. The two prime ministers meet yearly, and a “two-plus-two” meeting brings together the defence and foreign ministers. Japan has a “Security Cooperation Agreement” with India, which it earlier had only with the US and Australia. In June 2012, the two navies conducted the first JIMEX (Japan-India Maritime Exercise) in the Sea of Japan, which was repeated last month in the Bay of Bengal.

Asia watcher Dan Twining, writing in Foreign Policy, sees Tokyo as the core of a coalition that prevents China from dominating East Asia, just as Great Britain prevented Napoleon and Hitler from dominating Europe in earlier centuries. That is why, says Twining, when Japan, Australia, US and India joint forces in the Malabar naval exercise in 2007, “Chinese analysts correctly identified the grouping as one that could stymie China's ‘natural’ leadership of Asia.”

Wednesday, 22 January 2014

ICRIER survey: Indo-Pak trade continues despite harsh politics


 By Ajai Shukla
Business Standard, 22nd Jan 14

The Indian Council for Research on International Economic Relations (ICRIER) has released a survey on how Indian and Pakistani companies perceive trade normalization between the two countries.

The survey, which was unveiled in New Delhi today at ICRIER’s 2nd Annual Conference on Normalizing India-Pakistan Trade has found optimism amongst 400 Indian and Pakistani firms, 200 from each country, spread across several cities, and including manufacturers, traders, freight forwarders and clearing agents.

According to Nisha Taneja, who headed the survey, Indo-Pak bilateral trade, which is currently $2.7 billion dollars in the formal sector and an estimated $1.79 billion dollars in the informal sector (2012-13 figures), has the potential to grow by a multiple that ranges from 0.5 to 27.


 Most firms polled believed that unfavourable events, like firing on the Line of Control (LoC) and terrorist strikes, do not have a highly negative impact on trade. All 200 Pakistani companies surveyed believed that political events had a “very low” to “average” impact on trade. Only 65 per cent of the Indian companies surveyed held the same view, with 35 per cent perceiving a “high” or “very high” correlation between politics and trade.

On the question of market access, only 28 per cent of Pakistani companies felt that they were allowed “low” market access in India. The majority --- 56 per cent --- believed that they were allowed “average” market access, while 16 per cent felt that they enjoyed “high” market access in India.

Indian companies were noticeably happier about their access to the market in Pakistan. Only 18 per cent believed that they had “low” or “very low” access. A quarter believed that the access was “average”, while more than half perceived “high” or “very high” access. Most of the 400 companies believed that there would not be much change to the current levels of access.


Interestingly, political animosity does not deter buyers in one country from buying goods from another. Importers and exporters in both countries were almost unanimous that a “Made in India” or “Made in Pakistan” label was no deterrent. Several exhibitions in India that featured Pakistani textiles had made inroads into the Indian market. And so big is the demand in Pakistan for Indian jewellery that jewellers in that country were now selling domestic jewellery under a “Made in India” label.

Expectedly, businesspersons from both countries reported serious difficulties in getting visas for travel. Only 8 per cent of Indian and 3 per cent of Pakistani traders found getting a visa easy. Another bugbear is mobile communications, since neither country allows roaming facilities to visitors from the other.

Despite the difficulties, businesspersons from both sides remain optimistic that bilateral trade will increase. Most believe that it will grow by up to 25 per cent next year, significantly higher than the average annual growth of 9 per cent for Indian exports and 23 per cent for Pakistani exports. A high percentage believe that is will grow by up to 50 per cent.

The Indo-Pakistan trade relationship has traditionally reflected the difficult political relationship. India granted Most Favoured Nation (MFN) status to Pakistan in 1996, but Islamabad linked reciprocity to the resolution of the Kashmir dispute. After the terrorist attack on India’s parliament in December 2001, New Delhi stopped trade via air and land till 2004.

Until 2005, a restrictive maritime protocol made trade by sea difficult. There is only one rail line --- across the Wagah-Atari border --- for rail trade. And road-based trade only began in 2005.

Trade normalisation began in 2004 with talks between the two commerce secretaries. Since then, political events have had a minimal effect on trade. Bilateral trade has risen almost ten-fold from about $300 million in 2003-04. Last year, after attacks on Indian soldiers on the Line of Control, cross-border trade was stopped, but resumed within days.


In November 2011, it was agreed that Pakistan would transition from a small positive list of items that could be traded to a negative list. In March 2012, Pakistan adopted a negative list of 1,209 items. Meanwhile, India took steps to address Islamabad’s longstanding complaint of “non-tariff barriers” against Pakistani imports.

Only now has Islamabad decided to accord India MFN status. Believing that this would be political sensitive, Pakistan’s commerce minister, Khurram Dastagir, told Business Standard, “We’re now officially calling it Non Discriminatory Market Access, or NDMA.” 

Tuesday, 21 January 2014

Is indigenisation just a slogan?


by Ajai Shukla
Business Standard, 21st Jan 14

The coming week will see an important battle in the struggle to transform India from the world’s largest arms importer into a country that produces a respectable modicum of the weaponry it needs. The battle will be fought in the Defence Acquisition Council, the apex decision making body of the ministry of defence, which will decide whether to scupper the development of an indigenous basic trainer aircraft (BTA) by Hindustan Aeronautics Ltd (HAL) by paying Swiss aerospace company, Pilatus, to build 106 BTAs in India.

The Indian Air Force (IAF), which has always backed import, howsoever expensive, over the painstaking process of development, is squeezing the MoD to give Pilatus the contract. HAL, with a record of time and cost overruns, but with a new confidence stemming from the successful Tejas fighter and proven helicopters like the Dhruv, insists that it can easily build a BTA. HAL rightly points out that 75 basic trainer aircraft --- the PC-7 Mark II --- have been contracted from Pilatus as the IAF had wanted; but the defence ministry had also ruled that the remaining 106, needed to make up the IAF’s overall requirement, should be developed and built in India. To this end, HAL has committed close to Rs 200 crore of its own money in designing the Hindustan Turbo Trainer–40 (HTT-40).

In turning its face on this agreement, the IAF has cunningly played the “national security” card, declaring that India’s security depends on basic training, to hell with indigenisation. In a paper sent to the defence ministry on November 4, the IAF has said that it did not trust HAL to develop a trainer. This even though the Bangalore-headquartered company has played a major role in building the Tejas fourth generation fighter.

For the ministry, the options are clear. On one side is the logic of inducting trainer aircraft quickly to allow enough pilots to be trained. Opposing this is the urgent need for indigenisation; and the economic rationale of obtaining much cheaper maintenance, overhaul and spares all through the 30-40 year service life of an indigenous aircraft, compared to expensive overseas vendors. These life-cycle costs add up to four to five times the procurement cost of an aircraft. There is also the growing understanding that building indigenous aircraft will create an aerospace industry eco-system across the country, providing production volumes, jobs and expertise in high-tech manufacture.

The IAF’s fundamental logic is that HAL’s record of delays renders it unsuitable to be entrusted with a development programme. Aerospace enthusiasts know that delay is the only certainty while developing aircraft. Every major on-going fighter project has been marked by years of delay --- the F-35 Joint Strike Fighter in the US; the Eurofighter and the French Rafale that the IAF is buying. When even mature aerospace industries face chronic delays, it is short sighted to pillory India’s underfunded aerospace establishment for having taken three decades to learn what its foreign counterparts have assimilated in a century of government nurturing. The Tejas fighter is a tale of delay only to the thoughtless; in fact, it represents an admirable technological leapfrog.

The second major worry for the MoD should be the snake oil economics that the IAF backs its case with. Arguing that the Pilatus trainer is cheaper than the HTT-40, the IAF (speaking apparently for Pilatus) has quoted Rs 4,520 crore for 106 PC-7 Mark II trainers, i.e. Rs 42.64 crore per aircraft. In reaching this figure the IAF has strangely omitted the cost of ground equipment (Rs 452 crore); spares (Rs 678 crore); cost of ToT (Rs 252 crore); cost of manufacturing infrastructure (Rs 385 crore), simulator (Rs 218 crore); role equipment (Rs 226 crore) and transportation (Rs 63 crore). This takes the bill to Rs 6,925 crore, which comes to over Rs 65 crore per PC-7 Mark II. This is much higher than the HTT-40.

Moreover, the HTT-40 is being designed, developed and built in India, while the PC-7 Mark II is merely being assembled. The IAF proposal states that 10 of the 106 Pilatus trainers would be imported fully built; 28 in semi-knocked down (SKD) kits; and 68 completely knocked down (CKD). The IAF has proposed that one of its maintenance units, 5 Base Repair Depot in Sulur, Tamil Nadu, will assemble these kits into aircraft. Assembly imparts zero aerospace knowhow, and is a mere fa├žade of indigenisation. For this, Pilatus would be paid Rs 2,405 crore. It would be cheaper to just buy the PC-7 Mark II fully built rather than pay so much for a fig leaf.

Finally, in passing this hare-brained proposal the MoD would risk serious trouble with audit and vigilance agencies. The BTA tender was for purchasing 75 fully built aircraft, not for building them in India under ToT. Vendors who lost out to Pilatus could legitimately contend that they would have won had ToT been a part of the tender. Already, Korean Aerospace Industry had contested the award of the contract to Pilatus. Moreover, the Defence Procurement Policy of 2013 (DPP-2013) explicitly prefers indigenous development to buying from overseas or building in India with ToT. If it chooses to ignore this crucial policy directive, the MoD would have proven that indigenisation remains a slogan.