Monday, 26 September 2016

Mr Modi’s signature Indo-Pak initiative


By Ajai Shukla
Business Standard, 26th Sept 16

In a nuanced and careful speech on Saturday that had components of both pragmatism and jingoism, Prime Minister Narendra Modi skilfully created a narrative for deflecting war hysteria in India, redefining the burgeoning confrontation with Pakistan in terms of a Lagaan-style contest for eliminating poverty, illiteracy and deprivation in the two countries.

In Lagaan, a Hindi-language, Oscar-nominated 2001 motion picture, a land tax dispute between pre-independence British administrators and residents of a small, central Indian village was settled through a cricket match between the two sides (the Indians won!). On Saturday, with an inflamed India looking to Mr Modi for his first statement after Pakistan-based Lashkar-e-Toiba jihadis killed 18 Indian soldiers in Uri, Jammu & Kashmir (J&K) Mr Modi appropriated former Pakistani premier Zulfiqar Ali Bhutto’s threat of a 1,000-year war with India, challenging Pakistan to a 1000-year war to whittle away poverty, illiteracy and child mortality.

Mr Modi’s speech, delivered to a Bharatiya Janata Party gathering in Kozhikode, was a masterly balancing act. With the national temper at fever-pitch after Uri and the media resounding with anti-Pakistan warmongering --- such as BJP leader Ram Madhav’s threat to extract a jaw for every tooth --- Mr Modi had to placate public anger in India, while simultaneously defusing a situation that could only escalate if India extracted vengeance through cross-border military strikes on terrorist infrastructure or the Pakistani Army (numerous Indian commentators see little difference between the two). As it turned out, Mr Modi delivered a carefully crafted message that favoured peace, while delivering enough tough talk to placate Indian anger.

Mr Modi led, as expected, with a frontal attack on Pakistan for being the global leader in exporting terrorism. He followed up by apparently repeating, but actually toning down the promise of retaliation he had delivered just after the Uri attack. On that day he had tweeted: “I assure the nation that those behind this despicable attack will not go unpunished”, raising widespread expectations of retaliatory military action. On Saturday, he thundered: “The sacrifice of our 18 soldiers will not be forgotten. We will ensure that the international community works to isolate you.” This suggested that working to make Pakistan an international pariah would be sufficient retribution. For those in Pakistan who carefully parse the New Delhi tealeaves, the juxtaposition of cause and effect was significant, “the sacrifice of 18 soldiers” being the cause; and “the isolation of Pakistan” being the effect. Nor did the PM mention or endorse his military’s earlier threat to retaliate at “a time and place of [its] own choosing”.

Mr Modi’s layered messaging will take time to be clearly understood within Pakistan. Given the prevailing climate of confrontation, even the moderate English-language media in Pakistan interpreted the speech in the light of the threats it contains, not the outreach. The headlines in Daily Times say: “Modi vows campaign to ‘isolate’ Pakistan”. Dawn headlined: “Modi says India will work to ‘isolate’ Pakistan internationally”. Only the relatively sophisticated Express Tribune headlined its coverage: “India backs off after frenzied war rhetoric”. Pakistani audiences would also be keenly attuned to Mr Modi’s taunts about unrest in Pakistan Occupied Kashmir (POK), Gilgit-Baltistan, Khyber Pakhtunkhwa and Baluchistan, so not much can be expected in terms of immediate win-over. Only when the dust settles on the current confrontation will the Pakistani media and the populace take note of the Indian PM’s ground breaking outreach. Towards that day, Mr Modi differentiated between Pakistan’s leaders and the people of that country; a radical departure from New Delhi’s customary lumping together of Pakistan’s political class, the public and even its terrorists. But the most important component of Mr Modi’s speech was to de-escalate current tensions. Policy analysts in Rawalpindi (Pakistan Army headquarters) will immediately note that the battle Mr Modi is talking up is not military, but a long-term developmental campaign relating to the uplift of the masses.

When Mr Modi borrowed the inspiring phraseology of one of his predecessors, Atal Behari Vajpayee, about dealing with Kashmir in the ambit of “insaaniyat, jamhooriyat aur Kashmiriyat” (humanism, democracy and Kashmir’s syncretic culture), it carried little conviction, making Mr Modi seem like a peacock in borrowed feathers. But his rousing call from Kozhikode --- “I want to tell the people of Pakistan. We are ready to fight you, if you have the courage. Come, we'll fight poverty in our country and you fight in yours. Let's see who eradicates poverty first” --- could become his signature initiative in India-Pakistan relations.

This depends on whether and how Mr Modi instrumentalises this rhetoric to resurrect India-Pakistan relations, which are currently in the deepest freeze since the 26/11 Mumbai strikes. Sceptics are already declaring that the Pakistani deep state --- the military-bureaucratic syndicate that call the shots in that country --- does not particularly care about development. That, however, is an outdated argument. With Washington’s funding to Islamabad becoming increasingly conditional and New Big Brother China far less munificent than Uncle Sam, the Pakistani establishment recognises fully that a sickly and under-developed economy can no longer afford a military that is capable of warding off India.

As the contours of Mr Modi’s new direction come more clearly into view, he will face flak from opposition parties for back-tracking on his strident campaign rhetoric about how toughly he would handle Pakistan, and about what a strong PM he would be in contrast to Manmohan Singh. The Congress Party will heckle him for citing India in his speech as a globally-respected, well-developed state that “exports software to the world while [Pakistan’s] leaders export terrorism”; with this modern India presumably having been built during the “60 years of Congress misrule” that Mr Modi routinely slams. Even so, the PM has done well to de-escalate the current crisis. It makes little sense to confront Pakistan, for benefits that are not readily apparent, only because of a hard line taken earlier.

Anti-Modi sceptics are already voicing fear that domestic politics might induce the PM to balance his conciliation of Pakistan by doubling down on domestic intolerance and galvanising campaigns like the beef ban and love jihad, perceived as anti-Muslim. It is incumbent on Modi to alleviate these fears. Finally, Pakistan can be managed only up to a point; beyond that remains in the hands of that country’s unpredictable leaders. What Mr Modi does have full control over is his management of Kashmir and the initiating of a calibrated, all-of-government campaign to defuse tensions and address long-standing problems in that state. That would not just solve a major internal problem for New Delhi, but snatch away from Pakistan its most potent instrument for meddling in India.

Saturday, 24 September 2016

India signs Euro 7.8 billion deal for 36 Rafale fighters; no options for more

Each bare-bones Rafale to cost Rs 686 crore; will be IAF’s most expensive fighter

By Ajai Shukla
Business Standard, 24th Sept 16

On Friday, India drew the curtain on a tortuous, nine-year selection process for a medium, multi-role fighter, signing up to buy 36 Rafale fighter aircraft from French aerospace vendor, Dassault, for Euro 7.8 billion (Rs 58,000 crore).

In New Delhi, Defence Minister Manohar Parrikar signed an inter-governmental agreement (IGA) with his visiting French counterpart, Jean-Yves Le Drian; while officials signed commercial components of the actual contract.

“Rafale is a potent weapon which will add to the capability of IAF,” Parrikar said.

Senior ministry of defence (MoD) officials, speaking anonymously after the signing, said the average cost of each Rafale was fixed at Euro 91.7 million (Rs 686 crore). This included 28 single-seat fighters, each costing Euro 91.07 million (Rs 681 crore); and eight twin-seat fighters priced at Euro 94 million (Rs 703 crore).

Surprisingly the contract for 36 fighters has no “options clause”. This means the Indian Air Force (IAF) must operate just two squadrons of this new fighter --- the seventh type in the IAF inventory --- or negotiate afresh for additional Rafales.

With 36 bare-bones aircraft costing Euro 3.3 billion, the remaining Euro 4.5 billion is for India-specific enhancements (Euro 1.7 billion); spares (Euro 1.8 billion), logistics (Euro 350 million) and weaponry (Euro 700 million), say MoD officials.

The weapons package includes a stockpile of Meteor “beyond visual range air-to-air missiles” (BVRAAMs), which can shoot down enemy fighters that are 120-140 kilometres away. Each Meteor missile, built by Franco-British-Italian vendor MBDA, has a ticker price of some Euro two million. The Meteor is currently integrated into three fighters --- the Eurofighter Typhoon, Gripen NG and Rafale.

The contract also includes a stock of the million-dollar SCALP missile --- a French acronym for General Purpose Long Range Standoff Cruise Missile --- also known as the Storm Shadow. The SCALP, which can be fired from standoff ranges at ground targets 500 kilometres away, allows the Rafale to strike heavily-defended airfields, military headquarters and strategic infrastructure.

Like the Mirage-2000 that Dassault supplied the IAF earlier, the Rafale can be modified to carry nuclear weapons. Its long operating range --- it can strike targets more than a thousand kilometres away --- make it especially suitable as an aerial nuclear delivery platform.

Following the model of the C-17 Globemaster III procurement from the US, a large share of the Rafale payout is for “performance based logistics” (PBL). This means that for the first five years of a Rafale’s service, Dassault will supply all spares and components, including engines, and technicians needed to keep the fighter flying. The vendor is liable to ensure that 75 per cent of the fleet is available at all times.

The IAF has the option to extend PBL to 12 years, subject to a fresh contract being negotiated for the next seven years.

Says a top ministry official: “We are currently getting 55-56 per cent availability from the Sukhoi-30MKI fleet. The Rafale will give us 20 per cent more.”

Air power experts note that this sounds better than it actually is. Over a fleet size of 36 Rafales, an extra 20 per cent amount to 7 extra fighters operational at any time.

MoD officials cite Dassault’s claim that the Rafale’s quick “turnaround time”, or the time between two sorties, allows each fighter to do five operational sorties each day. While this claim would need verification during actual usage, the IAF has determined during trials that the Rafale’s engine can be replaced in just 30 minutes, compared to eight hours for replacing a Sukhoi-30MKI engine.

The contract stipulates that the first Indian Air Force (IAF) Rafale must be delivered within 36 months, i.e. in September 2019. The entire order must be delivered within 67 months, which means the last Rafale must join the IAF by April 2022.

Even though this is a significantly slower induction rate than what the MoD had promised, Dassault will be hard pressed to deliver in this time frame. It was building 11 fighters per year for the French air force and navy, which are likely to slow down induction. Last year, Egypt and Qatar ordered 24 Rafales each. It is not clear how quickly Dassault can raise production or how it will sequence these commitments.

Indian officials say some delay was inevitable because the IAF demanded a range of India-specific improvements to customise the Rafale and “make it more potent than the French air force Rafales”.

These include operational features like “helmet mounted display sights” that allow pilots to aim their weapons merely by looking at a target; a “radar warning receiver” to detect enemy radar and “low band jammers” to foil it; a radio altimeter, Doppler radar, extreme cold weather starting-up devices for airfields like Leh, and others.

The contract requires the IAF to pay a 15 per cent advance of about Rs 8,700 crore today. Since the IAF budget does not cater for this, an additional allocation would be needed. Another 25 per cent would be paid next year, for which the IAF would have to budget Rs 14,500 in addition to its other commitments. The balance amount would be paid to the vendor at stipulated delivery milestones over the coming years.

MoD officials say one of their biggest achievements during price negotiations was to peg annual cost inflation at the actual inflation level; or a maximum of 3.5 per cent. Earlier contracts with French vendors had stipulated annual inflation at 4-4.5 per cent.

“Actual inflation in Europe is barely one per cent, while we were paying four per cent. That means we have saved about three per cent per year; or Rs 4,000-14,000 crore over the contract period, depending upon the actual inflation in Europe”, says a senior MoD official.

The Rafale contract makes French vendors, Dassault and Thales, responsible for discharging offsets worth 50 per cent of the contract value, i.e. Rs 29,000 crore. While the vendors get to choose their offset partners, the contract stipulates that 74 per cent of the liability value must be discharged through component exports from India. There is also a “technology sharing component”, amounting to six per cent of the total offsets, which the vendors will negotiate with the Defence R&D Organisation.

The Rafale contract comes 15 years after New Delhi first issued a Request for Information (RFI) for 126 medium multi-role combat aircraft (MMRCA), of which 18 would be supplied in fly-away condition and 108 progressively built in India. After a tender was issued in 2007, the IAF evaluated six fighter aircraft --- Boeing’s F/A-18E/F Super Hornet: Lockheed Martin’s F-16IN Super Viper; RAC MiG’s MiG-35; Saab’s Gripen C, the Eurofighter Typhoon and the Rafale --- in what was hailed as “the world’s most professionally run fighter competition.”

In 2011 the IAF shortlisted the last two fighters, and finally named Rafale the winner in 2012. That was followed by three years of fruitless negotiations, dragged out by inconsistencies detected in Dassault’s commercial bid. The deadlock was broken in April 2015, when Prime Minister Narendra Modi announced on a visit to Paris that the IAF would buy just 36 Rafales, off the shelf.

Friday, 23 September 2016

As Rafale agreement is inked, many concerns remain

By Ajai Shukla
Business Standard, 23rd Sept 16

On a warm Delhi evening on April 3, 2015, Defence Minister Manohar Parrikar had left his South Block office and was driving to catch his flight to Goa, when his mobile phone received an incoming call from the prime minister’s office (PMO). Could he come in urgently, an official asked, the PM would like to talk briefly.

When Parrikar reached the PMO, Prime Minister Narendra Modi sprang a bombshell. Parrikar was told that, on Modi’s forthcoming trip to Paris, he and French President Francois Hollande would announce an agreement for India to buy 36 Rafale fighters. During Modi’s nine-day tour of France, Germany and Canada, Parrikar would have to manage the media and field the inevitable questions.

Taken aback, Parrikar still caught his flight to Goa. Over the next week, he batted loyally on behalf of his PM, publicly defending a decision he neither understood nor agreed with, that was taken over his head, and that senior ministry of defence (MoD) officials warned him would be difficult to defend.

Today, 17 months later, most pledges that Parrikar issued in defence of Modi’s Rafale agreement have proven incorrect. He told PTI in Goa that all 36 Rafale fighters would join IAF service within two years; in fact more than six years will elapse before the final delivery is made. He repeated the Modi-Hollande undertaking that the price would be “on terms that would be better than” Dassault’s bid in the now cancelled tender for 126 medium multi-role combat aircraft (MMRCA). It now turns out that India will pay a vastly higher price.

But Parrikar, through 17 months of defending a deal that was not his, has become the face of the Rafale. And after Friday, when he and his visiting French counterpart, Jean-Yves Le Drian, sign an inter-governmental agreement (IGA) for 36 Rafales, Parrikar and not Modi will answer for the purchase.

There is disquiet within the MoD about the acquisition, with officials concerned about subsequent scrutiny by constitutional authorities like the Comptroller and Auditor General. Their key worries are as follows.

Exorbitant cost

A key element in price negotiations is “benchmarking”, or comparing Dassault’s price with other contracts involving the same fighter. With India, Dassault had already established a benchmark in the MMRCA acquisition, where it had quoted a price for 18 fully built Rafales, just like the 36 fighters that India is now buying.

Speaking to Doordarshan on April 13, 2015, Parrikar had revealed Rafale’s bid for 126 fighters, stating: “When you talk of 126 [Rafale] aircraft, it becomes a purchase of about Rs 90,000 crore”, i.e. Rs 715 crore per fighter after adding all costs.

Now Parrikar would be buying 36 Rafale fighters for Euro 7.8 billion (Rs 58,000 crore), which is over Rs 1,600 crore per aircraft --- more than double the earlier price.

True, the current contract includes elements that were not there in the 126-fighter MMRCA tender --- including a superior weapons package with Meteor missiles; and performance-based logistics (PBL), which bind Dassault to ensure that a stipulated percentage of the Rafale fleet remains combat-ready at all times. The percentage is guessed to be about 75-80 per cent, an unchallenging target for western fighter types.

Even deducting Euro 2.8 billion for the weapons and PBL from the anticipated Euro 7.8 billion contract amount, a Euro 5 billion price tag for 36 Rafales puts the ticker price of each at over Rs 1,000 crore. For that the IAF can buy two-and-a-half Sukhoi-30 MKI fighters --- a heavy fighter as capable as the Rafale.

Variation in fighter types

IAF logisticians, who already struggle to maintain, repair and support six different types of fighters --- the Sukhoi-30MKI, Mirage 2000, Jaguar, MiG-29, MiG-27, MiG-21 and the Tejas Light Combat Aircraft (LCA) --- are hardly welcoming the prospect of a seventh fighter type, which would require expensive, tailor-made base infrastructure, repair depots and spare parts chains.

Air power experts say more Sukhoi-30MKIs would eliminate this need, besides being cheaper. Alternatively, fast-tracking the Fifth Generation Fighter Aircraft (FGFA), which Russia and India intend to co-develop, would eliminate the need for Rafales.

Even if the IAF exercises an option clause for 18 more Rafales, there would be just three operational squadrons, like with the Mirage 2000. Besides the options clause, nine more Rafales would be needed, since an IAF squadron has 21 fighters.

Sovereign guarantees

While New Delhi is negotiating the Rafale purchase directly with private vendor, Dassault, the MoD wants sovereign guarantees from the French government, of the kind that come with American equipment bought through the Foreign Military Sales (FMS) route. In a FMS procurement, e.g. India’s C-130J Super Hercules purchase, the US Department of Defense (the Pentagon) sets up a dedicated “project management team” that negotiates on the buyer’s behalf, beating down the price, establishing training and logistics support, and providing assurance that the buyer gets everything needed to operate and maintain the product.

Alongside FMS support, corruption is deterred by the stringent US Foreign Corrupt Practices Act, which vendors seldom dare to violate. This provides comfort to Indian MoD officials against subsequent allegations raised against a deal.

Paris, in contrast, is only willing to give a lukewarm written assurance of support with the Rafale --- something that the MoD refers to disparagingly as a “comfort letter”.

Piecemeal contracting

India needs some 200-300 fighters to replace the MiG-21 and MiG-27 fleet that is being phased out of service. Just 36 Rafales provides little cover, so the IAF hopes to buy not just 18 more under the options clause, but perhaps another tranche later.

MoD officials complain that piecemeal contracting provides little leverage for beating down prices. The same problem will afflict the procurement of Gripen NG, or F-16s, which the MoD is weighing as possible options to replace retiring fighters.

With an IGA in the offing, and a formal contract yet to be negotiated, New Delhi would still have the opportunity to address these issues, say MoD officials. Yet, the IGA on Friday will be celebrated in the IAF as a giant step towards a fighter they have pursued tenaciously for 15 years. 

Military men will have their say on 7th Pay Commission

 By Ajai Shukla
Business Standard, 22nd Sept 16

All central government employees have the right to represent and air grievances against the awards of the 7th Central Pay Commission (7th CPC) to an “Anomalies Committee” set up for this purpose --- all except the military, which ironically constitutes the bulk of central government employees and pensioners.

Now servicemen, in uniform and retired, will have their say too. On Wednesday, the Punjab & Haryana High Court issued notice to the central government, directed the Anomalies Committee to take into account views of defence personnel.

Ruling on a petition by a serving officer, Colonel Preetpal Singh Grewal, the High Court notice could go some way in easing the vitiated civil-military relationship, and the trust deficit between civil servants and the military.

The 7th CPC recommendations, which were handed over to the government last November, aroused bitter resentment within the military. On March 11, the three service chiefs made a presentation to the “Empowered Committee of Secretaries”, a 13-member panel headed by the cabinet secretary, which was looking into the recommendations. After that brought no changes, the chiefs held the implementation of the 7th CPC in abeyance, forcing the defence minister to order them last month to implement the award.

In his petition, Grewal pointed out that the Anomalies Committee granting hearings to civil employees, their associations and the civil establishment but not to defence personnel or even the military establishment. He pointed out that the defence services were not even informed about the institution of the Committee and only discovered through press reports that several meetings had been held with civil government employees.

The petition admits that military employees cannot be allowed to form associations. However, there was a need for sensitivity within the system toward defence personnel, and the opportunity to present their views and demands.

Denying this would violate the principles of natural justice, the petition pleaded. It also pointed out that the Supreme Court has already held that defence personnel should not be treated in a ‘shabby manner’ or denuded of rights that are available to other citizens.

Besides pleading for the opportunity for serving and retired military personnel to be heard, the petition asked for an alternative participative mechanism that would compensate for the statutory bar on forming associations.

The petition pointed out that the defence ministry’s Standing Committee on Welfare of Ex-Servicemen, which Defence Minister Manohar Parrikar had himself ordered to hold meetings every three months, has not yet held a single meeting. The petition argued that this amounted to lower officials undermining political authority.

The petition suggested that differences be resolved in a conciliatory manner, instead of implementing ham-handed measures that created a gap between various services. It stated that the standoffishness of high government authority created a trust deficit that could be exploited by anti-national elements, which might spread discontentment through the social media.

The 7th CPC has raised baseline military salaries by about 15 per cent, taking the pay of a lieutenant (the entry grade for officers) to Rs 56,100 per month; and that of a sepoy (the entry grade for ratings) to Rs 21,700 per month. This was significantly lower than the 40 per cent hikes handed out by the Fifth and Sixth Pay Commissions. But the greatest resentment has taken place through the relative dilution of status, with the Indian Administrative Service, Indian Foreign Service, Indian Police Service and Indian Forest Service having been granted allowances that the military believes places them on a higher level. 

Wake up on air defence

By Ajai Shukla
Business Standard, 22nd Sept 16

The Indo-Pakistan war of 1965 should have taught us never to neglect our air defence. On September 6 that year, with fighting spreading across the western border, F-86 Sabre fighters from the Pakistan Air Force (PAF) pre-emptively swooped down on the Indian Air Force (IAF) base at Pathankot, destroying 10 fighters on the ground and damaging another three. Separately, Sabres struck Halwara air base and shot down two IAF Hunters. Next day, in the eastern theatre, the PAF destroying 12 Indian fighters on the ground in Kalaikunda. For the rest of the 1965 war, the IAF remained on the back foot. Since then, India has spent tens of billions of dollars on military modernization, but the absence of a strong air defence network means that a similar debacle could unfold again.

Former army chief, General VK Singh, now a government minister, had gone on record to say that India’s air defence is non-existent. The national air defence network, which the IAF oversees and commands, has four major components: Air defence fighter aircraft; anti-aircraft guns and missiles belonging to various units of the army, navy and IAF; a network of radars and observers that monitors the nation’s air space and detects enemy aircraft; and a command and control network that tracks intruding fighters, and assigns them as targets to be intercepted by IAF fighters or by ground gun and missile units. However, there remain serious deficiencies in three of these four functions --- the radar network, the fighter squadrons, and ground air defence units.

The most worrying shortfall remains in fighter aircraft, with a decade having been wasted in an ill-conceived global tender for procuring 126 medium multi-role combat aircraft aircraft. Dassault’s Rafale fighter was announced the winner, but the process stalled due to inconsistencies in the French vendor’s bid. Now, inexplicably, the government is buying just 36 Rafales. With about 200 MiG-21s and MiG-27 having retired or nearing retirement, the government plans to acquire F-16 or Gripen NG light fighters, even as Hindustan Aeronautics Ltd scales up production of the Tejas Light Combat Aircraft. This will leave the IAF with a multitude of different fighter types, and major logistics problems in operating and maintaining them across various fighter bases.

Meanwhile air defence gun units field antiquated Soviet-era guns and missiles that should have retired long ago. The mechanised forces too rely on Soviet-era air defence systems from the 1980s, which are ineffective, given the advanced electronic warfare equipment in modern fighters. The DRDO has worked for years with Israel on co-developing state-of-the-art air defence missile systems but those are only now reaching fruition. The government is buying the sophisticated Russian S-400 Triumf long range missile system, but that is unlikely to be delivered before 2018, since Moscow wants to equip its military first. Meanwhile, China is also buying the S-400, although, like India, China too would have to wait for delivery.

Lastly, obsolescent radars with inadequate coverage ranges leave gaps along the border that enemy aircraft can exploit to penetrate Indian airspace without being detected. The DRDO has developed modern radars, but the supply lags far behind the demand. India urgently needs to implement a comprehensive strategy that takes into account all four aspects of our national air defence network. A deteriorating environment in Kashmir and plummeting relations with Pakistan brook no delay.