Tuesday, 7 November 2017

Facilitating “Make” projects



By Ajai Shukla
Business Standard, 7th Nov 17

Defence ministry officials, military officers and new defence ministers – of whom we have had rather a lot under the Bharatiya Janata Party-led government – like to periodically intone their commitment to indigenisation. Few bother to explain what they mean by that, not being entirely clear about the nuances themselves. Last fortnight, almost three years after Broadsword carried a column titled “Made in India versus Make in India”, top government officials spoke on the same subject at a Ficci-organised seminar in New Delhi: “Solutions to Problem Statements: Make in India to Made in India”.

Yet, none of the key participants, including Minister of State for Defence Subhash Bhamre and army chief General Bipin Rawat, clarified their version of indigenisation. Did they refer to the indigenisation of Prime Minister Narendra Modi’s “Make in India” initiative, which is no more than the licensed manufacture of foreign defence kit? Successive defence ministry procurement manuals, most recently the Defence Procurement Procedure of 2016 (DPP-2016), place this within the acquisition categories of “Buy and Make” and “Buy and Make (Indian)”. Or were the speakers referring to the ground-up development of indigenous defence platforms, a genuine “Made in India” effort that the DPP covers under its “Make” category? 

The “Make” category is an altogether different (and implicitly more desirable) category from the “Buy” or “Buy and Make” categories — aimed, according to DPP-2016, at “developing long-term indigenous defence capabilities”. But “Made in India” projects, which require serious planning, structuring and implementation, have been largely crowded out by the prime minister’s “Make in India” slogan, and by the military’s wish to buy ready-built weaponry over-the-counter. A scan of the multi-billion-dollar procurements over the last decade – such as C-130J Super Hercules and C-17 Globemaster III transport aircraft, P-8I maritime surveillance aircraft, CH-47F Chinook and AH-64E Apache helicopters, Rafale fighters and Mi-17 medium lift helicopters – highlights the government’s preference for “Buy Global” solutions. A look at the major procurements currently in the pipeline – single-engine fighters, carrier-borne naval medium fighters, conventional submarines, light utility helicopters – suggests that licensed manufacture through private sector “strategic partners” will only provide a fig-leaf of indigenisation, behind which billions of dollars will continue flowing to global vendors.

Proving this reliance on foreign vendors unnecessary is the Indian Navy, which has consistently endeavoured and largely succeeded in building its own warships. But for most others, “Buy” and “Buy and Make” remain the mantras.

Highlighting the lack of defence ministry commitment to the “Make” procedure that was first proposed by the Kelkar Committee in 2005-06, is the lack of funding for “Make” category projects since then. Not a penny was spent on “Make” projects in two years (2012-13 and 2015-16). And the highest allocation this category ever received was in 2016-17: ~184 crore, a laughable 0.25 per cent of the capital budget.

Budgetary allocations for “Make” procedure

(Rs crore)

2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18









Allocated
Nil
118.32
89.22
1.00
35.71
144.21
Nil
44.63









Spent
81.95
29.10
Nil
28.86
0.50
Nil
183.79
???

(Source: Finance Ministry budget documents)

This despite, several declarations of government support to “Make” projects. In March 2012, the defence ministry’s director general of acquisitions, Vivek Rae, described the “Make” procedure as “modelled on the American DARPA”. Mr Rae was referring to the US Pentagon’s Defence Advanced Research Projects Agency, which functions with 120 administrators and an annual budget of $3 billion (~20,000 crore) to achieve its self-declared intention “to prevent and create strategic surprise”. Amongst DARPA’s innovations are the internet, stealth technology, global positioning satellites, unmanned aerial vehicles or drones, and micro-electro-mechanical systems (MEMS). Its modus operandi is simple: To fund selected short-duration projects that must be completed in 3-5 years by a mission-oriented team of experts from diverse organisations. The “Make” category is similar to DARPA in its funding model: the defence ministry pays a private firm(s) 80 per cent of the cost of developing a prototype, with the chosen development agency (DA) paying the remaining 20 per cent. DPP-2016 takes the ministry’s commitment to 90 per cent.

Mr Rae recognised that generating activity through “Make” projects, with the government funding Indian technology entrepreneurs, would energise the country’s defence industrial base. He promised to put a list of 150-180 “Make” projects on the MoD’s website. In January 2015, the defence ministry’s secretary for defence production, G Mohan Kumar, declared that at least 8-10 “Make” projects would be kicked off every year. But delivery has been sobering: Only the first two “Make” projects have been tendered so far — the Tactical Communications System (TCS) and Battlefield Management System (BMS). The development agencies (DAs) for these were selected in June 2012 and February 2014 respectively. But price negotiations continue; and not a single contract has been signed so far.

The third “Make” project, which has been ambling along for a decade, presents an even more sobering saga. The army needs to replace 2,600 BMP-2 armoured carriers with a Future Infantry Combat Vehicle (FICV) — an armoured vehicle in which infantrymen keep pace with tanks, while protected from small arms fire. In 2010, the ministry issued expressions of interest (EoIs) under “Make” category to four vendors but cancelled them in 2012, realising it had neglected to specify how the two DAs would be chosen. It took the ministry three more years to issue a fresh EoI in 2015. But now, a year after five industrial consortia submitted their FICV proposals, the defence ministries acquisition chief, Smita Nagaraj, has belatedly noted that the selection criteria laid more emphasis on firms’ commercial and financial strength than a demonstrated ability to design and develop complex systems. She has also noted that, while the first FICV EoI emphasised technological capabilities, the current EoI focuses on the financials. This runs contrary to the DPP-stipulation that: “The contribution of the Indian industry in the critical technology areas (sic) should be the key criterion in assessment of various proposals”. The DPP also enjoins the ministry to “ensure that the Indian industry does not become a conduit for entry of foreign company without any significant value addition by the Indian partner”.

Caught in a dilemma, Ms Nagaraj has proposed that all five respondent consortia be asked to submit Detailed Project Reports (DPRs) based on which the two winning DAs would be selected. The army has objected, since this would involve technical assessment of five DPRs, rather than just those of the two selected DAs, but the acquisitions chief has realised that preparing and defending a full DPR would provide an assessment of whether an Indian private firm is merely fronting for a foreign partner or possesses inherent technological strength. 

All this will naturally delay further a “Make” category acquisition that has already dragged on for a decade. The ministry must learn from the first three projects to ensure that future “Make” projects are processed expeditiously. Finally, a suitable percentage of the acquisitions budget must be separately earmarked for “Make” projects and managed separately from regular procurement funds.

3 comments:

Anonymous said...

I feel how much support establishment gave to help the researchers to do their work. Take example of HTT 40 where the Air Force fought tooth and nail not to get the work started and pilutus to be imported. How much support was given to IJT whichneeds the back portion redesigned and center of gravity adjusted and winglets given with a reliable more powerful engine like HTFE 25 todevlop it into a decent plane. What support was given to tejas , why can they have a LCA MK 1 A fully developed in 8 months and have two prototypes ready for testing which would be a more than nescessary platform to kill the F16 and thunder of PAF. Why are they taking so long , I have done it and so please don't think I am talking ridiculous nonsense. I was always talking about inlets of tejas as they are suboptimal and someone now thinks that's the case and I strongly believe the tejas should get F 35 like large supersonic inlets. I talked already about naval tejas would not have the range to launch an attack from aircraft carrier and it would be too risky to bring the carrier too close and I had that time suggested that naval LCA should be used in china border with very small 350 mts. Runway and wire arrest as it is difficult to find large straight piece of land and if you have two hundred planesin Ladakh and two planes in arunachal china can never win any war . There has to be lot of other support needed , Astra needs to be perfected , namica has to be perfected and various bombs like glide bomb and bombs with multiple bomblets needs to be manufactured in huge numbers. Someone wrote aomment that he was ROFL with this . Let me put it one who adapts himself well to be situation wins , Japan for the first time used carriers in Second World War in an era of battleship was revolutionary. Tejas needs to have GE414 EPE engine with body little widened and height reduced to have more aerodynamic shaped and should carry six thousand liters of fuel and still have a decent T/W ratio with 120 KN engine which is more fuel efficient and on return would have a decent weapon load which is dropped , and consumed atleast half the fuel would definitely supercruise if the shape is aerodynamic. Devlop best possible electronic self protection suite , devlop as best to achieve stealth and have a electro optic system which can target the stealth planes. How much of a support was given to LCA MK 2 by the Air Force staff. How much interest they took to co devlop the plane. Regarding fighter engines , these are high end engines and Evan Russia does not have reliable technology. Have some one try to devlop civilian planes , start with 20 seater , then progres , .has anyone try to fit the Kaveri engine into a civilian test plane and try it out and work it to perfection and then with that success try to devlop high end fighter engine. What about artillery and tanks and indigenous products are not supported. Nothing is perfect but someone needs to work with it and attain excellent results. China pursued with their own effort and they got it. In dying days of Second World War few of the best planes were desiegned, P 51 mustang was made in just 102 days and the prototype was modified with Merlin engine and a decisive weapon was born and which changed the course of the war. The game changer was the scoop below using the Meridith principle greatly improved its performance.

All I want is be brave , take calculated risks and such adventures must be duly supported by the establishment to. Achieve results.

Tejas is a. Wonderful plane. And if you fail to achieve a production of less than 40 planes per year after 2020 then forget the dream of your own plane and keep paying 45 millions formirage upgrade which does not include an AESA radar and mark my words tejas MK 1 A would beat the upgraded mirage hands down.

Try systematically to devlop a compitation and let two groups race for excellence. Do everything else that is nescessary but built atleast 400-500 LCA as their maintanence would be very less expensive.

TIMBAKTOO

Manoj Channan said...

Incisive and to the point, MoD must put on it's thinking cap, perhaps the RM could spend time addressing these issues than be on Photo Ops mission

Anonymous said...

Not sure whether it was a deliberate or an inadvertent mistake from author in reporting that in ficv case 'ministry issues eoi and cancelled it'.
Author being so knowledgeable about DPP and all procurement procedures should know that it is a proj mgmt team headed by armed force wing/shq which issues eoi, vet it, selects agencies, removes them or 'cancel eoi'.
It seems MOD has become an easy target to attribute all delays in procurement to it and no accountability of forces in delays is fixed and
neither analyzed and reported. Unless this serves other motive. I hope that's not the case here.