Friday, 30 November 2018

Saab threatens MoD with legal action over Russia contract for VSHORADS

Weapons OEMs complain MoD contracting is unpredictable and opaque

By Ajai Shukla
Business Standard, 30th Nov 18

Mirroring frustration amongst international arms firms at the unpredictability and opacity of India’s weapons procurement, Swedish company Saab says it could take the ministry of defence (MoD) to court over the November 19 award of a $1.5 billion contract for Igla-S air defence missiles to Russian entity, Rosoboronexport.

Last Saturday, Business Standard reported (“Air defence missile contract embroiled in vendor protests”that Saab had shot off four protest letters to the MoD alleging grave irregularities in user trials of the “very short range air defence system” (VSHORADS). Rosoboronexport, Saab and French firm MBDA competed in that tender.

On Thursday, Saab’s Asia-Pacific head Dean Rosenfield told the media in Bangkok: “We are evaluating the situation in the VSHORADS program and considering all the options, including a legal challenge.”

Sources close to Saab say the firm has not yet made a final decision to go to court. The company must consider the possible repercussions on Saab’s prospects in other tenders in India, including the Indian Air Force’s (IAF’s) on-going, multi-billion dollar procurement of 114 fighter aircraft.

Global defence original equipment manufacturers (OEMs) have been increasingly critical of the MoD’s procurement management. However, given their stakes in India – the world’s biggest arms customer – frustrations are mostly voiced off the record.

The heaviest criticism is reserved for the MoD’s insistence on evaluating weaponry on a “no-cost, no-commitment” (NCNC) basis. This stipulation, which is laid down in the defence procurement procedure (DPP), means that OEMs must pick up the bill for all costs they incur – transporting their products to India, fielding it in trials that are widely regarded as the most prolonged and intensive in the world, and the cost of maintaining equipment, crews and executive offices in India for the duration of the evaluation, very often over a decade.

“My company, like the others, spent over $50 million on the MMRCA (medium multi-role combat aircraft) contest. And at the end of it, what do we have? A handful of Rafale fighters bought and a fresh process initiated, on which will have to spend millions more,” says a senior executive in an aerospace OEM.

Since the turn of the century, the MoD initiated repeated contracts for 155 millimetre artillery guns. After repeated rounds of NCNC trials, involving several vendors, the procurement was finally shelved. 

Similarly, the IAF carried out extensive trials for light utility helicopters. Eventually, Russian Helicopters, whose Kamov 226T had not participated in those trials, walked away with the contract.

Last year, the MoD abruptly cancelled the procurement of the short range surface to air missile (SRSAM) – a tender in which Saab and Israeli firm, Rafael, were competing. The MoD also cancelled the procurement of anti-tank guided missiles after Rafael’s Spike was chosen in extensive trials.

“So far, we have always returned to India, given the attractiveness of the market. But, at some stage, we would not be able to justify the expenditure to our boards. That will mean India will gradually have fewer options to choose from”, says a senior aerospace OEM executive.

The MoD has not responded to an email seeking comment.

It is not clear whether going to court would benefit Saab, since the government could cite national security to cloak the decision making that led to Rosoboronexport’s victory. In 2009, Italian electronics giant, Selex, petitioned the Delhi High Court against the award of a Rs 1,094 crore contract to Tata Power (Strategic Engineering Division) for modernising 30 IAF airfields. That went up to the Supreme Court, which rejected Selex’s plea in May 2010.

Saab’s letters to the MoD contain multiple allegations that Rosoboronexport’s Igla-S missile, which won the VSHORADS contract, shot down only two out of the six targets it engaged, before the MoD diluted the requirements to the Igla’s benefit. 

Saab has also complained the Igla-S failed to turn up for summer trials on July 28, 2014 – for which the DPP mandates automatic and immediate disqualification.

Thursday, 29 November 2018

Army chief talks “hybrid war”, says first bring our side of Kashmir under control, then look at Pakistani side

General Bipin Rawat rules out Parrikar’s proposal to “fight terror with terror”

By Ajai Shukla
Shorter version in Business Standard, 29th Nov 18

On Wednesday, soon after Pakistan’s Prime Minister Imran Khan messaged to New Delhi that his army and people were “all on the same page in wanting to establish a civilised relationship with India,” army chief General Bipin Rawat stated in New Delhi that India should be defensive, rather than offensive, in countering Pakistan’s “hybrid war” in Jammu & Kashmir (J&K).

Rawat was speaking in the Institute for Defence Studies and Analyses (IDSA) to elaborate India’s strategy for hybrid war – the new-age conflict in which conventional military force is boosted with the use of propaganda and rumours on social media, separatism, terrorism, fifth columnists and cyber disruption to cause social, economic and security chaos in a target country.

Rawat said India has two options: First, countering Pakistan’s hybrid war by India’s own hybrid offensive. Second, pro-actively defending against this threat.

Rawat said the offensive option “would force our enemies to look inwards… and attack their internal dynamics, conflicts and fault lines”, without India having to wage a large scale war. 

“However, India strongly believes in living in peace and harmony with its neighbours. The well being and development of our people through sustained economic growth remains our continued focus and our core national interest. Thus, creating unrest in our neighbour’s country should not be our first choice”, declared Rawat.

The army chief also warned against the use of terrorist proxies to fight Pakistan – a threat that former defence minister Manohar Parrikar had raised in 2015.

Rawat said: “As evidenced in Pakistan, there are no good terrorists and bad terrorists. Sooner or later, such use of irregulars as a strategy destabilizes the country internally. Also, it takes the focus away from development. Thus in my opinion, we should prefer the pro-active defence option against hybrid warfare, which would involve a “whole of government” approach.

““I advocate three lines of action. Firstly, work together [which] implies inter-agency cooperation in India, and working with international friends to blunt the hybrid advantage of the terrorist states. Secondly, we must communicate the right narrative to our people. Thirdly, we must be able to harness technology and make use of it optimally. This would require both offensive and defensive technology options, especially in the cyber domain,” said Rawat.

Rawat underlined the limitations of India’s “surgical strikes”, in which his army commandos had retaliated against the killing of 16 Indian soldiers in Uri by striking terrorist targets across the Line of Control in 2016 before quickly, and publicly, calling a halt to operations.

“We must have the capability to hit out at the perpetrators of hybrid warfare across [the border]. We do have the capabilities. But once we know we are going to employ those capabilities, we have to be prepared for an escalation. We have to very carefully prepare our escalation matrix, as to how far we are willing to go. Where will we call the end state?” said Rawat. 

“We have to be prepared to see if it leads onto something bigger.”

In bad news for Kashmir, Rawat indicated that the high tempo of operations would continue, since he did not want militants to use a ceasefire to recuperate.

“Insurgency, which started in 1989, has had its ups and downs. We [several times] came down to a situation that we believed was hunky dory. But when things become comfortable, we went into a kind of limbo, thinking that peace has returned. Not knowing that every time peace returns, the terrorists have utilized this period to rebuild their capacity and strength. Therefore, sustained pressure is required… Let us look at tiring the other side”, said Rawat.

Demonstrating a practical approach to Indian political rhetoric claiming ownership of the entire J&K state, Rawat said: “I think first we have to resolve what is with us. Let us get control of what is with us, rather than looking across.”

“Pakistan has very cleverly changed the entire demography of so-called Pakistan Occupied Kashmir (POK) and Gilgit-Baltistan. So one is not very sure who is actually a Kashmiri… Is he a Kashmiri or is he a Punjabi who has come in there and occupied those areas. Gilgit-Baltistan is also being taken over gradually. To say that there is identity [similarity] between our side of Kashmir and the Pakistani side of Kashmir, I think that identity thing has gradually been eroded very cleverly by the Pakistanis. That is an issue we have to look at. First, let’s take control of our own part of Kashmir, bring it under control, get the system moving there and then start looking at POK,” said Rawat.

Wednesday, 28 November 2018

Why India pushed for sovereign guarantee on Rafale; and how the cabinet decided to do without one



By Ajai Shukla
Business Standard, 28th Nov 18

The Ministry of Defence’s (MoD’s) negotiators for the purchase of 36 Rafale fighters from French vendor Dassault during September 2016 were unable to obtain “sovereign guarantees” from Paris that would have bound the French government to always support the deal.

Instead, as Attorney General KK Venugopal admitted before the Supreme Court on November 14, New Delhi contented itself with a “Letter of Comfort” from the French prime minister (PM).

Aletter of comfort amounts to a non-binding intention to support the contract. It is not a legally enforceable contract, like a sovereign guarantee.

This shortcoming was also flagged by the Ministry of Law and Justice (MoL&J), in its pre-review of the contract documents. 

Government officials tell Business Standard that a key reason New Delhi saught sovereign guarantees was to prevent Paris from ever citing international instruments, such as the Arms Trade Treaty of 2013 (ATT), to interrupt, modify or cease delivery of the Rafale fighter at any stage.

Contacted via email for comments, the MoD did not respond.

The ATT is a multilateral treaty that regulates international trade in conventional arms. France has signed the ATT, but India has consistently rejected it as discriminatory.

The ATT allows weapons exporting countries to deny or cancel export permissions at any stage. In such an event, the treaty’s provisions relieve the exporting country and its defence manufacturers from any contractual liability.

On the other hand, a sovereign guarantee is a pledge that supersedes the ATT. Had Paris provided a sovereign guarantee in the Rafale contract, it would not have been able to cite the ATT to explain any lapse in its execution. 

An MoD file noting dated August 22, 2016, which Business Standard has reviewed, explains how India climbed down from its demand for a sovereign guarantee. Despite resistance from French negotiators the law ministry insisted on sovereign guarantees. Eventually, the decision was left to the Cabinet Committee on Security (CCS).

“MoL&J had brought out that Government/Sovereign Guarantees should be requested for, in view of the Contract involving huge payouts value… The French side responded by stating that the letter to be signed by the French Prime Minister (the Letter of Comfort) along with the guarantees being provided through the IGA (Inter-Governmental Agreement) constitute a unique and unprecedented level of involvement of the French government… and therefore the French side does not accept inclusion of additional wording regarding guarantees,” says the MoD noting.

The noting continues: “This aspect was discussed in DAC (Defence Acquisition Council) on 11 January 2016. The DAC directed that the decision on the final acceptance of the ‘Letter from French PM along with the outstanding guarantees provided through [the IGA]’ in lieu of Government/Sovereign Guarantees shall be that of the CCS.” 

The note describes then-Defence Minister Manohar Parrikar’s ruling that the French insistence on providing only a “Letter of Comfort” in lieu of sovereign guarantees should be considered by the CCS, taking into account the MEA’s (ministry of external affairs) and NSA’s (national security advisor’s) views on the subject – which are not stated. Parrikar pointed out that sovereign guarantees were waived for Russia, which provided only corporate guarantees, backed by a Letter of Comfort; and for the US, where purchases were made via the Foreign Military Sales (FMS) programme.

Just days before the Rafale contract was signed on September 22, the CCS – chaired by Prime Minister Narendra Modi – chose to proceed without a sovereign guarantee from France.

The ATT was adopted by the UN General Assembly (UNGA) on 2 April 2013 and it entered into force on 24 December 2014.Currently, 190 countries have signed, and 89 of them have ratified the treaty.

The ATT covers all conventional arms, including tanks, armoured vehicles, artillery, combat aircraft, attack helicopters, warships, missiles, small arms and light weapons.

The ATT’s stated aims are: “Regulating or improving the regulation of the international trade in conventional arms; [and to] prevent and eradicate the illicit trade in conventional arms and prevent their diversion.” 

Informing the UNGA that India was abstaining from the ATT, India’s Permanent Representative to the Conference of Disarmament in Geneva, Sujata Mehta, stated:“India cannot accept that the Treaty be used as an instrument in the hands of exporting states to take unilateral force majeure measures against importing states parties without consequences. The relevant provisions in the final text do not meet our requirements.”

But now, on the Rafale deal, India remains exposed to the ATT.

Sitharaman urges defence industry to create more patents

Mission Raksha Gyan Shakti (being inaugurated in photo by Nirmala Sitharaman, aims to create 1,000 patents each year

By Ajai Shukla
Business Standard, 28th Nov 18

Defence Minister Nirmala Sitharaman today launched Mission Raksha Gyan Shakti (Power of Defence Knowledge), aimed at educating scientists and technologists in defence public sector undertakings (DPSUs) and ordnance factories (OFs) to create more patents.

Stating that this required spreading awareness of intellectual property rights (IPR), the defence ministry (MoD) announced: “A target has been set to train approximately 10,000 persons of OFs and DPSUs on IPR in the financial year 2018-19.”

The MoD has set an aim “To achieve filing of at least 1,000 applications for IPRs by OFs and DPSUs within the current financial year (2018-19) and to sustain the momentum thereafter.”

The MoD says results are already evident. “126 IPR requests were filed in the last two quarters. In QE June 2018, 45 requests were filed, which went up to 81 in QE September 2018.”

Unveiling the scheme before a large number of OF and DPSU officials, Sitharaman said DPSU and OF technologists created many new processes and hardware, but were not aware of the need to file for IPR, or the process of obtaining it.

“Neem (Indian Lilac) was first patented for its properties abroad. So was Haldi (turmeric), which was first patented abroad for its medicinal properties… Ghar ki murgi daal barabar,” said Sitharaman, using a Hindi proverb for the tendency to downplay our own achievements, and take them for granted. 

Secretary for Defence Production, Ajay Kumar, elaborated on the need to shift from “transfer of technology” (ToT)-based manufacture to design-based manufacture.

Kumar cited the example of a brake pad switch developed by Hindustan Aeronautics Ltd (HAL) for the Tejas fighter. With design knowledge of the brake pad switch, HAL can now adapt it for use on other fighters as well. This would not be possible if HAL was only manufacturing a Tejas brake pad switch, based on ToT from a foreign vendor.

Kumar pointed out that, despite producing defence equipment worth Rs 60,000 to 65,000 crore in the public sector, and another Rs 15,000 crore in the private sector each year, India has had “a manufacturing based eco-system, with little focus on design.”

The MoD revealed that a “Nodal Centre for IP Facilitation” had been created in April 2018. “So far 23 officers have been trained as master trainers in RGNIIPM (Rajiv Gandhi National Institute for Intellectual Property Management), Nagpur. Up to October 2018, 5,283 personnel have been trained in IP.”

The DRDO chief, G Satheesh Reddy, cited the example of the Defence R&D Organisation (DRDO), which he said is awarded about 500 patents every year. “The DRDO stands at number two in the country in IPR portfolio,” he said.

Reddy pointed out that the award of a patent could take up to five-to-seven years, depending upon how well the patent application is structured and written.

Awards presented for successful patents, however, were all for projects that were several years old and, in some cases, even decades old: the now ubiquitous Electronic Voting Machine, patented by Bharat Electronics Ltd; the composite rotor blade for the Dhruv helicopter and a landing gear lock for the Tejas fighter, developed by HAL and a special alloy steel for defence applications.

Tuesday, 27 November 2018

What India’s controversial Rafale fighter jet contract could mean for the Modi government

Prime Minister Narendra Modi awaits a Supreme Court decision on the Rafale deal

By Ajai Shukla
South China Morning Post
26th November 18

India’s Supreme Court is considering a petition that calls for an investigation into the government’s purchase of 36 Rafale fighter jets for an allegedly inflated 7.85 billion euros ($8.96 billion). At stake is not just the modernisation of the Indian Air Force’s (IAF’s) ageing fleet, but also the credibility of Prime Minister Narendra Modi, who came to power in 2014 promising an end to corruption. With general elections due in early 2019, the opposition is on the attack.

How important is the Rafale contract for India?

India faces two powerful regional adversaries – Pakistan and China – but the IAF is worryingly short of combat aircraft. New Delhi planners assess that the IAF needs 42 combat squadrons (each with 18 aircraft) to meet this dual threat. However, it currently has just 31 squadrons including 10 squadrons of obsolete Russian MiG fighters soon to be junked. The replacements for these have long been delayed. 

The domestically developed Tejas light combat aircraft, already a decade late, will take another five years to enter service in substantial numbers. And with the Sukhoi-30MKI, which India builds under licence from Russia, at the tail end of its production run, no new fighters are in sight. The smooth introduction of the Rafale jets is, therefore, imperative.

Why is there such controversy over the deal?

Modi rode to power in 2014 on a wave of right-wing nationalism and a flurry of promises that he would overcome his predecessors’ neglect of national defence by fast tracking the introduction of modern weaponry. A tender for 126 fighter aircraft that had been in limbo for over a decade was low-hanging fruit that Modi could have easily plucked. The previous government had homed in on Dassault’s Rafale fighters, but then got bogged down in prolonged negotiations. Yet instead of pushing that deal through, which would have seen the jets being built in India, Modi announced its cancellation in favour of a government-to-government purchase of 36 ready built planes during a visit to Paris in April 2015. This went against Modi’s hyped “Make in India” initiative and the declared intention to leverage that purchase to build up India’s aerospace industry. 

Making matters worse, Anil Ambani – an Indian industrialist with no experience in aerospace manufacture seen as close to Modi – set up a joint venture with Dassault to benefit from so-called offset provisions linked to the contract. The government claimed Dassault had exercised its own choice in selecting Ambani as a partner. But former French president Francois Hollande, with whom Modi had announced the deal, insisted that New Delhi had picked Ambani.

The opposition has charged the government with weakening the IAF by buying fewer fighters, undermining India’s aerospace industry by scuppering the plan to build the jets in India, and indulging in “crony capitalism” to benefit Ambani. Modi stands accused of unilaterally slashing the Rafale purchase without following due procedure, which should have required consulting the IAF, the defence ministry and his council of ministers. The government denies the charges and has ruled out the opposition’s demand for a joint parliamentary investigation, realising that this would provide a public platform for political theatre. A clutch of public interest petitions have been filed with the Supreme Court, which is expected to make a pronouncement soon. Simultaneously, the Comptroller and Auditor General (CAG), is scrutinising the Rafale deal.

What is the Rafale controversy likely to cost Modi politically?

While the opposition’s accusations strike directly at the prime minister’s assiduously cultivated image as a “strong leader”, Modi still enjoys credibility among the masses. Previous missteps by his government, such as the chaotic demonetisation of high-value banknotes and the poorly planned introduction of a countrywide goods and services tax, have invited heavy intellectual criticism but the public remains unwilling to blame or punish Modi directly. The extent to which the Rafale controversy will damage Modi’s reputation depends on how much blame the Supreme Court apportions him with regards to three aspects of the procurement – the decision making, the price paid and the extent to which Ambani was favoured. Clear criticism of Modi in any of these areas would galvanise opposition protests and damage the prime minister’s image. The next challenge after the Supreme Court’s decision is the CAG’s audit report.

Is there a possibility of New Delhi cancelling the Rafale contract?

This is unlikely, especially given that one-third of the contracted price has already been paid, even before the delivery of a single aircraft. The Rafale contract contains an “integrity clause”, which stipulates that if any corruption or bribery is detected, the contract can be cancelled, with India entitled to a refund of all payments made. However, this would impinge on the IAF’s operational readiness.

Has the IAF closed the door on Dassault with the purchase of 36 Rafale fighters?

Given the IAF’s shortage of fighter jets, which will continue even after the Rafale deal is complete, India’s defence ministry initiated a fresh tender last April for another 114 medium-range combat aircraft. Dassault has offered the Rafale in this tender as well and theoretically enjoys a head start, thanks to the existing contact, over the six other fighters in the fray: Boeing’s F/A-18 Super Hornet, Lockheed Martin’s F-16 Block 70, Saab’s Gripen E, Eurofighter GmbH’s Typhoon, and Russia’s MiG-35 and Sukhoi-35. At the same time, the ongoing political dogfight could translate into negative baggage for the Rafale.

Rafale marine fighter on aircraft carrier, Charles de Gaulle 

The French jets are also being considered in an Indian Navy tender for 57 fighters for its two upcoming aircraft carriers. In this contract, the Rafale would compete against the Boeing F/A-18E/F Super Hornet, which enjoys a clear advantage given the US Navy’s help in designing and equipping India’s future aircraft carriers.

Monday, 26 November 2018

In the Maldives, India’s Modi sees the Glint of a Chinese Pearl

India welcomes change in the Maldives but China still holds the high ground (Photo: Modi meets Solih)

By Ajai Shukla
South China Morning Post
25th November 18

It was political change in the Maldives that prompted Prime Minister Narendra Modi’s to make his first visit to the Indian Ocean archipelago last weekend. 

The Maldives was the only member of the South Asian Association for Regional Cooperation (SAARC) that Modi had yet to set foot in after more than four years in power. New Delhi’s relations with Male had steadily deteriorated, as China cultivated ties with Abdulla Yameen, the strongman president who many believed was in Beijing’s pocket. Chinese firms poured money into infrastructure projects, including an US$830 million upgrade of the airport and a US$400 million bridge linking the airport with the capital. Simultaneously, the Maldives had squeezed out Indian firms and workers from the country. Then, in elections in September, Yameen lost to a consensus opposition candidate, Ibrahim Mohamed Solih – and for his inauguration, Modi finally decided to visit.

Why the Maldives matters

The Maldives remains an important component of New Delhi’s plan to preserve its influence in the Indian Ocean. The Indian Navy oversees the waters between Qatar – the forward headquarters of the United States Central Command (Centcom) – and the Malacca Strait, beyond which lies the hotly contested and militarised South China Sea. Each year, more than 100,000 ships carrying oil, minerals and manufactured goods travel the international shipping lanes running through the northern Indian Ocean. The Indian Navy has dominated these waters, thanks to two Indian archipelagos: the Lakshadweep Islands to the west and the Andaman and Nicobar Islands in the eastern Indian Ocean. 

However, a Chinese base in the Maldives, not far from Lakshadweep, would enable a countervailing Chinese naval presence. New Delhi worries that Beijing – having obtained naval basing rights in Djibouti, in East Africa, while also building a port at Gwadar in Pakistan – is also flexing its financial and commercial muscle to create bases in Myanmar, Bangaladesh, Sri Lanka and the Maldives. These bases would be China’s vaunted “string of pearls” – a potential maritime chokehold on India.

New Delhi has openly taken sides in the domestic politics of the Maldives. They welcomed Yameen being replaced by a more accommodating leader, evidence by the joint statement released by Modi and Solih.

“The two leaders, while noting the resilience of the relations between India and the Maldives, expressed confidence in the renewal of the close bonds of cooperation and friendship with the election of Mr Solih as the President of the Maldives,” it said.

The statement also emphasised “the importance of maintaining peace and security in the Indian Ocean and being mindful of each other’s concerns and aspirations for the stability of the region”.

Beijing’s influence over Yameen illustrates the raw power of financial incentives and how they can override physical proximity – the Maldives is barely 100 miles from the southern tip of Lakshadweep – traditional links and also long-standing security ties.  

India has long been the security guarantor for Indian Ocean island states – not just the Maldives, but also Seychelles and Mauritius – providing them patrol vessels, helicopters and training. Throughout the region, New Delhi has supported democracy but remained politically pragmatic. It backed the authoritarian Maldivian President Abdul Gayoom for three decades; even flying in armed paratroopers to the Maldives in 1988 when Sri Lanka-based mercenaries launched a coup against Gayoom. But this influence waned in the face of a concerted Chinese push. 

In 2012, China did not even have an embassy in Male. Yet, that year, Indian construction firm GMR, which was building an airport at Hulhule, found its contract annulled and its personnel asked to leave. Chinese firms were awarded the contract instead. By early this year, India’s influence in Male was neutralised. 

In February, with the political opposition united and the Supreme Court ruling against the president, Yameen imposed a 15-day state of emergency and ignored New Delhi’s protests. Even as former president Mohamed Nasheed called for Indian military intervention, Yameen ordered an Indian Navy detachment operating two helicopters gifted by India to leave the country. An estimated 2,000 Indian workers were told their work visas would not be renewed. Foreign Policy magazine carried an article entitled: “Is Abdulla Yameen Handing Over the Maldives to China?”

New Delhi’s weak hand

If the situation has improved from New Delhi’s perspective, Modi’s government can hardly take the credit. Rather, Beijing’s clumsy pursuit of strategic economic objectives in the Indian Ocean region has tipped the scales. This has been evident also in Myanmar, Pakistan and Sri Lanka. 

The China-built Sinamale Bridge in Male. Photo: Xinhua

Colombo could not resist China’s offer to build a US$500 million container terminal at Colombo Port but China Merchants Holdings International now owns 85 per cent of it. China’s overhaul of Hambantota – including a port, airport, economic zone and motorway network – was supposed to transform the economy of one of Sri Lanka’s least developed areas. Not coincidentally, it was also the political base of then president Mahinda Rajapaksa. Instead, with little traffic or economic activity to justify the billions spent, Colombo has been forced to lease the port and 15,000 acres of land around it to China for 99 years. Maithripala Sirisena, Sri Lanka’s new, more India-friendly president, says Hambantota would never be used for anti-India activities but the fact remains China has control of a key port next to India, with one eye on the lucrative shipping lanes.

India’s interests in Sri Lanka were salvaged not by clever strategy but because a pro-China leader happened to be voted out of power, when Sirisena defeated Rajapaksa in the 2015 general elections. India’s advantage is tenuous and temporary. Last month, Sirisena joined hands with Rajapaksa to try and reintroduce him as prime minister, a move narrowly defeated in parliament. Elections in January may decide the foreign balance of power within Sri Lanka.

Even Pakistan, China’s “iron brother”, has discovered the pitfalls that accompany Beijing’s largesse. The China-Pakistan Economic Corridor (CPEC) initially seemed a godsend for Pakistan’s comprehensive development but a closer look at the fine print convinced Islamabad that high-interest loans baked into the project would eventually benefit China more than Pakistan. Newly elected Prime Minister Imran Khan visited Beijing earlier this month and reportedly urged projects be scaled back. However, China’s vice foreign minister Kong Xuanyou declared: “There is no change at all. If there were, it would only be to increase, not decrease [the number of projects].”

Shyam Saran, the former Indian foreign secretary, said countries accepting loans from China will need to learn this lesson the hard way.

“Like other countries, Pakistan is discovering the difficulty in walking back from China’s economic proposals, especially those related to the ‘Belt and Road Initiative’,” Saran said. “A reduction of China’s role is possible only at heavy political cost. Pakistan can limit its further exposure but not reduce what it has already committed to.”

What can India do?

Political good fortune notwithstanding, India has not developed the strategic capability to confront and turn back China’s geo-economic offensive. The harsh reality: it simply cannot match China’s financial resources. New Delhi has some countervailing advantages, including geographic proximity to the countries being wooed and, in economic terms, it can promote regional connectivity as the largest transit country for all its neighbours. 

This would require the building of not only physical infrastructure but also the dismantling of tariff and non-tariff barriers that delay delivery of goods and services. At the Indo-Nepal border, for example, trucks queue for miles, awaiting clearance. 
India also must also address limitations in creating connectivity structures with its neighbours. Many outreach initiatives founder against the politics of local economies. Bangladesh, for example, seeks to export textiles and fishery products to India but Indian trade lobbies object, preferring to protect the same sectors locally.

Politically, New Delhi has yet to pursue and sustain high-level political interaction with its neighbours. Relations with key interlocutors, such as Pakistan, remain episodic and mired in confrontation. With India’s Ministry of External Affairs woefully understaffed, there is a lack of commitment to coordinating strategic, commercial and military initiatives. 

The United States embassy in New Delhi reportedly has more diplomats than the Indian foreign ministry’s offices in that city. If India is to challenge China’s advances in the Indian Ocean region, practical capability creation will count for more than mere political good fortune.

During Modi’s visit to Male, President Solih gave him a detailed brief on what the joint statement termed “the dire economic situation facing the country as he takes office.” Solih asked for Indian assistance in building houses, and establishing water and sewerage systems in the outlying islands. Such projects are well within India’s capability, even though they are a far cry from the grandiose infrastructure projects the Chinese are so good at. But then look at where that got them.

Saturday, 24 November 2018

Air defence missile contract embroiled in vendor protests

Saab, which fielded the RBS-70 NG in the VSHORADS contest has protested the selection of the Russian Igla-S

By Ajai Shukla
Business Standard, 24th Nov 18

With Swedish arms giant, Saab, shooting off four protest letters to the ministry of defence (MoD) over its handling of the tender for the “very short range air defence system” (VSHORADS), the difficulties in conducting competitive, multi-vendor procurement have again been underlined. 

On Monday, the ministry of defence (MoD) announced the results of an eight-year-old tender for anti-aircraft missiles, informing all three competing vendors that it had selected Russia’s Igla-S missile for the army, navy and Indian Air Force (IAF).

On the face of it, the Igla-S seemed a clear winner in the VSHORADS tender. Russia’s export agency, Rosoboronexport (ROE) bid $1.5 billion for 5,175 missiles and 800 launchers – well below the “benchmark price” of $2 billion, which is the MoD’s internal assessment of what should be a fair bid. Sweden’s Saab had bid $2.6 billion, while French firm, MBDA, quoted $3.7 billion.

But Saab’s protest letters, say MoD sources, level multiple allegations about the army’s conduct of multiple rounds of user evaluation trials. They say the Defence Procurement Policy of 2008 (DPP-2008) was violated multiple times to favour ROE.

In summer trials conducted in 2012 in the blazing Rajasthan deserts, the Igla-S scored just one hit out of four missiles fired, say Saab and MBDA. In navy trials conducted in the Bay of Bengal that year, the Igla-S fired two missiles, out of which only one struck the target. That total of two hits out of six was well below the minimum required accuracy of four hits out of six. 

“Accordingly, ROE has not fulfilled the performance in accordance with the Indian armed forces stated requirements…” says the Saab complaint.

Saab writes that, from May 2014 onwards, the trial methodology was changed to benefit ROE. Instead of requiring to shoot down a target with a missile, it was enough for a missile pilot to successfully track the target from his control panel.

In contrast, Saab’s RBS-70 and MBDA’s Mistral systems are both learned to have met the firing requirements, scoring above four hits out of six.

VSHORADS are the soldier’s last line of defence against enemy combat aircraft. At the highest level, the IAF is responsible for air defence. It discharges this role by bombing enemy airfields to destroy combat aircraft on the ground and damage runways so that they cannot take off. IAF radars pick up enemy aircraft entering our airspace and then shoot those down with its fighters and long-and-medium-range ground-to-air missiles. Yet some enemy aircraft could get through, and VSHORADS provides ground troops and warships a weapon of last resort.

Saab has also complained that the Igla-S failed to even turn up for summer trials on July 28, 2014. DPP-2008 stipulates automatic and immediate disqualification for a vendor that absents himself from a trial. But ROE was allowed to continue.

A trial team member says it was always going to be difficult for the Igla-S to meet the qualifying standards. That is because it has an infrared homing seeker, which locks onto a heat source and guides the missile there. In desert summers, the high ambient temperature of the sand confuses infrared seekers, diverting missiles into the ground.

The RBS-70 and Mistral missiles do not have infrared seekers. Instead, the missile operator shoots a laser beam at the target and a “beam riding” missile follows the laser beam. Standard decoys like flares and chaff can lure away an infrared seeker missile, but not a laser beam-riding one.

The Igla-S system, say army air defence experts, has been junked by even the Russian army, which has switched over to the 9K333 Verba. This is a fourth-generation missile that is the equal of the RBS-70 and the Mistral.

However, ROE did not offer the Verba, which was some way from completion when the MoD floated the current tender in 2010. According to one report, ROE requested permission to switch from the Igla-S to the Verba, but was told this was not permitted by the DPP.

Contacted for comments, ROE declined to comment on the VSHORADS tender but noted that the Igla-S is in high demand amongst customers around the globe.

The MoD has replied to two of Saab’s four letters, declaring that everything had been done according to procedure. On October 24, the ministry wrote the “case has progressed as per provisions of Defence Procurement Procedure with level playing field to all the participating vendors.”

The defence ministry did not respond to a request for comments. 

Thursday, 15 November 2018

Supreme Court reserves order after marathon, 4-hour Rafale hearing. The suspense continues...

Chief Justice of India summons IAF officers to testify, unwilling to accept MoD responses

By Ajai Shukla
Business Standard, 15th Nov 18

In the Supreme Court (SC) on Wednesday, a three-judge bench comprising Chief Justice Ranjan Gogoi, Justice Sanjay Kishan Kaul and Justice KM Joseph spent over four hours hearing a group of petitions filed against the government’s purchase of 36 Rafale fighters for Euro 7.85 billion (over Rs 600 billion) in September 2016.

Former Union miniters Yashwant Sinha and Arun Shourie and lawyer-activist Prashant Bhushan, who have filed a petition in the matter, demanded that the Central Bureau of Investigation (CBI) be ordered to register a First Information Report (FIR) and investigate “criminal misconduct by high ranking public servants” in cancelling the on-going tender for 126 Rafale fighters and instead buying 36 fighters at an allegedly inflated price. Other petitioners include Manohar Lal Sharma and Aam Aadmi Party legislator Sanjay Singh.

The petitions also alleged that Euro 3.9 billion (Rs 317 billion) worth of offsets that arose from this contract were improperly awarded, much of it to Anil Ambani’s Reliance Group.

At the culmination of daylong arguments, the bench announced that the hearing was concluded, and reserved judgement in the cases. That means that the court would pronounce judgement at a future date, which would be intimated later.

The petitioners’ verbal arguments in court on Wednesday centred on the government’s written response to the petitions, which it had submitted on Monday in accordance with the SC’s order on October 31. In response, the petitioners submitted their written arguments on Wednesday morning.

The government’s submission had three parts. The first part addressed the decision-making that led to the contract with French firm, Dassault, for 36 Rafales. A second part explained the process followed for the award of offsets. Both these were shared with the petitioners, as per the SC’s order. A third part related to the contract price, which the government submitted in a sealed cover to the Court, citing secrecy.

Attorney General KK Venugopal claimed that even he had not looked at the Rafale pricing. “I decided not to peruse it myself as in a case of any leak, my office would be held responsible,” he said.

In his arguments, Prashant Bhushan challenged the government’s assertion that the 36-Rafale contract did not follow the standard procurement process because New Delhi had signed an Inter-Government Agreement (IGA) with Paris due to “geo-strategic advantages that are likely to accrue to the country.” 

Bhushan contended that none of the three conditions for an IGA purchase, specified in the Defence Procurement Procedure of 2013 (DPP-2013) that governs the Rafale contract – were met. The first condition allows an IGA when “equipment of proven technology and capabilities… is identified by our armed Forces while participating in joint international exercises.” A second condition permits an IGA “when a very large value weapon system/platform which was in service in a friendly foreign country is available… normally at a much lesser cost than the cost of the original platform/weapon.” The third condition is when the seller country “might have imposed restriction on [a weapon’s] sale and thus the equipment cannot be evaluated.”

Next, Bhushan pointed out that the Law Ministry had flagged two objectionable issues with the 36-Rafale contract document that was referred to it. First, the French government refused to provide sovereign guarantees that it would back the contract through the lifetime of the Rafale fighter. Additionally, the contract specified that the arbitration of any dispute that arose would be conducted in Geneva, not in India.

In response, Venugopal admitted that, while Paris had not provided sovereign guarantees with the Rafale contract, it had provided a “Letter of Comfort”.

In contract law, a “Letter of Comfort” conveys a party’s willingness to discharge contractual obligation, but absent the elements of a legally enforceable contract.

The petitioners’ arguments also focused on the allegedly unilateral decision taken by Prime Minister Narendra Modi just before his meeting with French President Francois Hollande in Paris on April 10, 2015, when both leaders announced that India would get the Rafale.

“Nobody – not Defence Minister Manohar Parrikar, not Foreign Secretary S Jaishankar, not Dassault chief Eric Trappier, not the Indian Air Force (IAF)  and not Hindustan Aeronautics Ltd (HAL) – knew the contract was being changed from 126 fighters to 36 fighters, from Make in India to flyaway condition and with the offsets given to Anil Ambani,” said Bhushan.

In an unusual move, the Chief Justice asked for IAF officers to appear in Court and answer questions.“We are dealing with requirements of the air force and would like to ask an air force officer on the Rafale jet. We want to hear from an Air force officer and not the official of the Defence Ministry on the issue,” said Gogoi.

Eventually, three senior air marshals appeared in court, including the IAF vice chief. In response to Gogoi’s questions, they admitted that HAL was currently building two types of fighter aircraft – the Sukhoi-30MKI and the Tejas Light Combat Aircraft. 

Surprisingly, when asked by Gogoi which generation fighters these were, the IAF officers claimed they were only Generation 3.5 fighters. In fact, the Sukhoi-30MKI is globally recognised as a Generation-4 fighter and is invariably introduced as such by the IAF in air shows and exhibitions like Aero India.

There has been criticism over the Chief Justice’s unwillingness to accept arguments from a defence ministry civilian and his insistence on calling serving air marshals.

“The Chief Justice of India calling air force officers to testify is a low point in Indian constitutional law. This is a violation of civilian supremacy and sets a dangerous precedent,” said Pratap Bhanu Mehta, Vice Chancellor of Ashoka University.

Navy establishing high-tech control room to monitor Indian Ocean sea lanes

The IONS decadal celebration culminated with a "tall ships" group sail from Kochi to Muscat

By Ajai Shukla
Kochi, Kerala
Business Standard, 13th Nov 18

Underlining growing acceptance of the Indian Navy’s leadership as a “net security provider” in the Indian Ocean Region (IOR), representatives of 28 countries – including 11 naval chiefs – gathered in Kochi on Tuesday and Wednesday to commemorate ten years of the founding of the Indian Ocean Naval Symposium (IONS).

In 2008, in a foray into military diplomacy, the navy had established IONS as a multinational Indian Ocean platform for coordination on issues such as maritime security, piracy, disaster relief and the unfettered access to commons like the international sea lanes that transit through these waters.

Welcoming IONS delegates to Kochi, navy chief, Admiral Sunil Lanba announced that a master control facility would soon come up near Delhi to track commercial shipping in the Indian Ocean. This high-tech “maritime domain awareness” initiative would fuse data from multiple sources like satellite, radar, airborne surveillance and White Shipping inputs from multiple countries.

“The Indian Navy will soon be operationalizing the Information Fusion Centre for the Indian Ocean Region. The IFC-IOR will be staffed by personnel from multiple countries. It will analyse all inputs pertaining to maritime security in the IOR and pass on relevant information to the participating countries within an actionable time frame,” said Lanba.

Lanba told Business Standard that the navy would approach a number of “like minded countries” to participate in the IFC-IOR. The countries that would be invited were being worked out with the government. 

India has already concluded White Shipping Agreements with 18 countries, of which 11 had already been operationalized. This agreement binds member countries to share information about commercial shipping that enters or leaves one’s ports or is transiting through its waters.

Lanba expressed satisfaction at the headway IONS has made in a decade. We put in place a Charter of Business in just six years. In comparison, the WPNS (Western Pacific Naval Symposium, a similar body in East Asia) took close to 15 years to get a Charter of Business going.”

IONS has also set up three working groups to examine ways of increasing coordination on maritime security, humanitarian aid and disaster relief (HADR) and information sharing and interoperability. Now there is a possibility that members might vote on adding a fourth working group – on training.

Even while playing an outsized role in IONS, the Indian Navy has taken pains to create an environment in which smaller littoral states – whether in West Asia, Southeast Asia, East Africa or the Island states – enjoy equal status, a rotating chairpersonship and voting rights, with all decisions taken by consensus.

This method of working has its downside. The US is keen to obtain observer status in IONS, but has been blocked by Iran – and in the most recent vote, by Pakistan. 

Given the vast geography IONS covers, there is deft diplomacy required in handling friction amongst members. Saudi Arabia did not attend the IONS commemoration, because IONS is currently chaired by Iran.

China attended the gathering, having received an invitation from New Delhi. Sources say the navy was open to the idea of inviting the Pakistan Navy chief, but the ministry of external affairs shot down the idea.

Addressing the gathering, former naval chief, Admiral Arun Prakash (Retired), highlighted the many reasons for promoting IONS: a large number of natural disasters, such as the Indian Ocean tsunami of 2004, on-going piracy in half a million square kilometres of maritime space and joint efforts in events like the search for MH-317 – the still missing Malaysian airliner.

“Seven regional navies operate submarines, which are subject to accidents. India has just acquired a Deep Submergence Rescue Vessel. We would be glad to assist IONS members if required”, said Prakash.

Highlighting the growing appetite for Indian initiatives, it was suggested during the IONS commemoration that the Indian Navy could consider playing a larger role in training regional navies. Last month, the navy’s sea training department conducted the “work up” (progressive training) of two Royal Malaysian Navy warships. Now other countries are interested in benefiting from the same.

The culmination of IONS will be a “group sail” of “tall ships” (sailships) from Cochin to Muscat to highlight the ancient maritime trade routes in the region.