Tuesday, 29 March 2016

Pakistan’s joint probe team’s visit to Pathankot will yield nothing: Experts

By Ajai Shukla
Business Standard, 29th March 16

A war of words has broken out over the government’s decision to allow five Pakistani counter-terrorism officials, including one from the Inter-Services Intelligence (ISI) and another from Military Intelligence (MI) to visit the Pathankot Air Force Base. They are in India to investigate the fidayeen attack from January 1-4, when four-to-six terrorists crossed the border from Pakistan, sneaked into the air base and killed seven Indian military personnel before getting killed.

The Congress and Aam Aadmi Party (AAP) have charged the Bharatiya Janata Party (BJP)-led government with endangering national security by allowing the Pakistani joint investigative team (JIT) into the base. On Tuesday, as the JIT officials flew from Delhi to Amritsar and then drove to Pathankot, Congress protestors gathered outside the air base with black flags and placards reading “Pakistani JIT go back!”

In Delhi, AAP minister, Kapil Mishra, alleged an “ISI-BJP coalition” and asked: “Why is ISI being served biryani by Modi?”

Defence Minister Manohar Parrikar had earlier ruled out allowing the Pakistani JIT inside Pathankot air base. However, after a political decision to co-opt Islamabad into the investigation, the Indian Air Force (IAF) is learned to have cleared their entry into the air base, subject to being allowed to visit only the “non-technical areas” that the terrorists had breached.

These include areas not directly involved in flight operations, including airmen accommodation, kitchens and messes, family quarters, schools, etc. No access will be granted to “technical areas”, which are directly related to flight operations. These include aircraft hangars and pens, logistics installations, ammunition dumps, radar centres, air defence missile batteries and flight control facilities. The terrorists had failed to breach the “technical areas” during their attack.

Objections to the JIT’s visit centre on two allegations. First, that the JIT’s visit serves no purpose since Pakistan has never been serious about investigating terrorist attacks launched from its soil. Second, that allowing Pakistani officials entry into the air base would give away sensitive details, compromising operational security.

Ajai Sahni, of the Institute for Conflict Management says: “Pakistan has never seriously investigated a single terror attack, including 26/11 (the Mumbai strike of 2008). By hosting the JIT, we will allow Pakistan to falsely claim that they are doing what is needed. We must wait until Islamabad satisfies us that it is seriously cracking down on anti-India jihadis.”

Sahni says Islamabad is yet to do even a tenth of what Bangladesh has done against terrorists that were targeting India from its soil. “The burden of proof lies on the country from where terrorists operate. Dhaka has fully demonstrated its bona fides. Islamabad has not even begun to”, says Sahni.

Others, like former IAF officer, Air Vice Marshal (Retired) Manmohan Bahadur, say the Pakistani JIT visit serves no investigative purpose, but achieves a strategic aim. “If the visit serves to deny Pakistan an excuse for avoiding action, it serves a strategic aim. Nothing would be lost by allowing the team to visit”, he says.

Air Chief Marshal SP Tyagi, who has served at Pathankot as a fighter pilot and later oversaw the base as chief of western air command points out “there is nothing that a Pakistani visitor to the air base can see from the ground, which cannot be seen from commercially available satellite photographs. The IAF has already done a security assessment and I fully endorse it.”

Tyagi says the IAF has designated areas where the JIT can go and others where it cannot. “Areas that are at all sensitive will be physically screened off”, he says.

Tyagi also points out that commercial flights use about 30 operational IAF bases on a regular basis, without endangering security. “If scheduled civilian flights and hundreds of passengers can fly daily in and out of airports as sensitive as Srinagar, what will the Pakistani team gain from driving through a screened, “non-technical” route in Pathankot.”

Another former air chief, Fali Major, endorses Tyagi’s opinion. “In today’s world, software like Google Earth gives everyone a view into military installations. Military intelligence users can get high-resolution Russian satellite imagery that is far more useful than a ground visit”, says Major.

Another expert, who wishes to remain anonymous, says secrecy exists mainly around communications and radar frequencies, and combat tactics. “The infrastructure on the ground is pretty much the same on every combat air base. What needs to be safeguarded is digital electronic frequencies and codes, and mission tactics. The Pakistanis are welcome. They will glean none of that”, he says.

A policy environment for defence

By Ajai Shukla
Business Standard, 29th March 16

On Monday, the Defence Procurement Procedure of 2016 (DPP-2016) was finally released, except for a still-disputed chapter on choosing “strategic partners” from the private sector, which would be granted monopolies for manufacturing complex weapons platforms like ships, aircraft and tanks. These monopolies would be identical to those that defence public sector undertakings (DPSUs) have long enjoyed. Clearly, now, a private sector monopoly is superior to a public sector one.

This ill-conceived notion of private sector “strategic partners” originates from the Dhirendra Singh Committee, which the National Democratic Alliance government constituted in 2014 to shoehorn Prime Minister Narendra Modi’s “Make in India” slogan into a new DPP. The Dhirendra Singh Committee, consisting of defence ministry mastodons, past and present, chose not to throw open the doors to competition, opting instead for governmental discretion, ignoring the lessons of the spectrum and coal allocation fiascos where market forces were abandoned in favour of the government’s discretionary largesse. In the self-procreating manner of government committees, this led to another committee --- designated a Task Force, under former Defence R&D Organisation (DRDO) chief, VK Aatre --- to specify the criteria for selecting private sector companies as “strategic partners” in six technology areas: aircraft/helicopters, warships/submarines, armoured vehicles, missiles, command & control systems, and critical materials. While the Aatre Task Force recommendations remain nominally classified, this newspaper has already reported that it divided the technology areas into two groups. Each of the seven technology areas in Group 1 --- aircraft; helicopters; aero engines; submarines; warships; guns and artillery; and armoured vehicles --- would have one designated strategic partner. Meanwhile, two strategic partners would be chosen for each of the three technology segments in Group 2 --- metallic material and alloys; non-metallic materials; and ammunition, including smart munitions.

All this effort would be going not into selecting “strategic partners” for designing or developing high-tech weaponry for India. These would be mere production agencies that manufactured equipment to blueprints bought under the “Buy & Make” category of procurement. Earlier, the ministry would have nominated a DPSU to build the product under licence; now a private sector “strategic partner” would build it.

In parallel, the design and development of defence equipment in India would take place in the “Make” category, which would see open competition between private and public sector companies, culminating in the selection of two “development agencies” (DAs). Under DPP-2016, the defence ministry will subsidise 90 per cent of the DA’s development costs, and assure the DA of the lion’s share of the production order. It is unclear whether companies participating in “Make” development projects can simultaneously be chosen as “strategic partners” for manufacturing equipment in “Buy & Make” projects. However, the Aatre Task Force mandates, inexplicably, that a company can be chosen as a strategic partner in no more than one technology area. Predictably, this is being strongly contested by private corporations like Larsen & Toubro and the Tata Group, which have built multi-disciplinary capabilities. They say their capability to build a warship should not be a disqualification in building a tank.

Meanwhile, it remains unclear why the excellent option of selecting private sector companies as Raksha Utpadan Ratnas (RuRs) continues to gather dust. This option, which flowed out of the Vijay Kelkar Committee report in the mid-2000s, requires the defence ministry to select private sector companies as RuRs, based on their financial, technological and infrastructural strengths. These RuRs, which would have the same status as DPSUs, would be eligible to compete for defence ministry contracts to design, develop and manufacture complex weapons systems for the military. The RuR option allowed the ministry adequate assurance of the technological competence and financial strength of defence company aspirants, while also introducing competition into defence contracting. These fully vetted Indian companies could be relied upon to support products through their service lives, providing maintenance, spares, overhaul and upgrade, which add up over decades to 4-10 times the cost of acquisition.

It remains unclear why the defence ministry is bypassing the free market, and opting for governmental judgment. True, all governments tightly control defence industries, since these are national strategic assets. Yet, every defence economist agrees that market forces enhance efficiency and lower costs. Successive Indian governments, however, have remained woolly-headed about their role vis-à-vis defence industry.

A defence ministry’s first role is to keep defence industrial policy ahead of evolving trends in the global defence industry. Mr Modi’s “Make in India” policy, which aims at creating large numbers of low-to-medium-skill defence production jobs, is out of synch with global trends. Paradigm changes under way in manufacturing technology are already seeing low-wage assembly lines being replaced by robotic manufacture, in which computerised machines churn out products faster, cheaper and more precisely than low-wage labour. Germany, a technology hub for robotic manufacturing, refers to this as Industry 4.0. The impact of this is being felt in America, which is experiencing resurgence of manufacture, but without job growth. As the icing on the cake for defence corporations, robotic manufacture and 3-D printing are giving managers major advantages in dealing with labour unions. The foundational logic of “Make in India” is already sinking.

The defence ministry, therefore, must focus on creating white-collar jobs through a “Create in India” policy; in which Indian entities do systems engineering, rather than mere systems integration, in which largely foreign components, sub-systems and systems are assembled in India into what remains essentially a foreign weapons platform. For example in the Futuristic Infantry Combat Vehicle (FICV) project that is now underway, the defence ministry has defined roles so loosely that Indian vendors can “front” for global giants like, say, General Dynamics or BAE Systems, with whom technology partnerships exist. An “Indian” consortium can adopt an existing FICV, engineering it at the periphery to conform to Indian requirements. However, this would remain a foreign platform on Indian soil, no different from the Russian T-series tanks that were designed for colder climes and different operational doctrines.

Instead of wasting policy mind space on monopolistic “strategic partnership” models that are directed towards blue-collar jobs whose future is uncertain, the defence ministry should focus on creating white-collar, high value-add “Create in India” jobs. A key element of this is to provide the private sector with incentives and subsidies for research and development, and access to low cost capital that is available to overseas defence companies. This would raise technology levels, generate higher salaries, and create truly Indian platforms that can be supported through their service lives without large additional expenditures for each level of overhaul and upgrade. 

Sunday, 27 March 2016

Calling for opinions: "Strategic Partnership" model of defence production

Given the number of well-informed military experts who visit this blog, may I tap into the bank of their wisdom.

We have all heard about the "Strategic Partnership" model mooted by the Ministry of Defence (MoD). The Aatre Committee has submitted recommendations (see my article in January) for choosing one private companies in each of seven "strategic segments" --- aircraft; helicopters; aero engines; submarines; warships; guns and artillery; and armoured vehicles --- and two private companies for each of three other segments --- metallic material and alloys; non-metallic materials; and ammunition, including smart munitions --- who will be the MoD's "preferred partners" for manufacturing in India, based on foreign ToT.

The committee has also laid down eligibility norms for being chosen as a "strategic partner".

My question is: does the "strategic partner" model merely replace a public sector monopoly with a private sector one? Should the MoD leave it to market forces to choose the Indian partner, rather than forcing a pre-nominated "strategic partner" on the foreign vendor?

Would it be wiser to narrow down the field by specifying eligibility norms for private companies, along the lines of the Raksha Utpadan Ratna (RuR model) that had been mooted between 2005-2007?

Your thoughts please.

Thursday, 24 March 2016

Over 1,000 arms vendors to attend Goa Defexpo 2016

MoD says will increase indigenous sourcing from 40 per cent today, to 60 per cent in five years

By Ajai Shukla
Business Standard, 24th March 16

Even as the Defence Exhibitions Organisation (DEO) scrambles to patch together a new location in Goa and access roads for Defence Exposition 2016 (Defexpo 2016) --- the first one to be held outside Delhi --- enormous interest in the Indian arms bazaar will bring 1,030 Indian and international defence companies to India’s premier defence exhibition that kicks off on March 28.

Not even a local political movement that is protesting the land use and environmental effects of shifting Defexpo 2016 to Quepem Taluka of South Goa has dampened interest from the United States (93 companies), Russia (71), UK (46), Germany (39), France (38), Israel (38) and other arms producers like South Korea and Italy.

“More than 47 countries will participate in Defexpo 2016. For the first time, we will be holding live demonstrations of equipment, which was a constraint in Delhi”, said AK Gupta, Secretary Defence Production, on Wednesday.

Defexpo’s future location will depend upon how this exhibition goes off. Asked in writing by Business Standard whether subsequent Defexpos would also be held in Goa, the defence ministry responded: “No final decision has been taken on permanent venue of Defexpo. Future course of action will be based on the experience of the Expo in 2016 and the view of the Government of Goa.”

Gupta indicated the success of Defexpo 2016 would not be gauged by the contracts signed, but by how effectively it would provide a business-to-business forum for Indian and foreign companies to tie up partnerships to benefit from the “Make in India” policy.

On Monday, Defence Minister Manohar Parrikar had cleared the new Defence Procurement Policy of 2016. Not coincidentally, DPP-2016 will be available on the defence ministry website on March 28, the day Defexpo 2016 will be inaugurated.

Underlining the new commitment to “Make in India”, Gupta stated that 90 per cent of the procurement approvals by the National Democratic Alliance government had been accorded under the “Buy Indian” and “Buy & Make (Indian)” procurement categories. He said DPP-2016’s new category of “Indian Designed, Developed and Manufactured” equipment would further add to indigenous production.

Interestingly, Gupta provided the first official assessment of the real foreign content of India’s total defence procurement, which he put at 60 per cent. “We do 60-65 per cent of our procurement from domestic companies. If you take out the foreign content that these companies put in and work out the indigenous content, it comes to about 40 per cent,” Gupta estimated.

He also laid down a target of 60 per cent indigenisation in the next five years, a target that most defence industry analysts consider unrealistic.

Amongst the 1,030 companies participating will be controversial Italian company, Finmeccanica, which is the holding company for AgustaWestland, the helicopter maker whose contract for AW-101 helicopters was cancelled by the defence ministry after Italian prosecutors began investigating charges of bribery of Indian officials to get the AW-101 contract.

In the last Defexpo 2014, Finmeccanica had been asked to stay away, with then defence minister AK Antony wary of the cloud over it. Now, with a more liberal “blacklisting policy” being evolved, Finmeccanica is back in the limelight.

However, Gupta confirmed that two other blacklisted companies --- Rheinmetall Air Defence and Singapore Technology Kinetic --- would not be participating.

He also confirmed that Pakistan would not be amongst the 47 countries participating, as it had not been sent an invitation. China had been invited to send an official delegation, but has not responded.

Military seethes at Pay Commission suggestions

Resentment stems from the widespread belief that civilian officials are whittling away at the military's relative status

By Ajai Shukla
Business Standard, 24th March 16

The Seventh Central Pay Commission recommendations, handed over to the government in November, have 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 is looking into the recommendations. The army, navy and air force are waiting to see if this panel will tone down clauses that former army chief, General VP Malik, has termed “a killer for the military.”

This impression is rampant amongst soldiers, sailors and airmen even though the Seventh Pay Commission 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 is significantly lower than the 40 per cent hikes handed out by the Fifth and Sixth Pay Commissions. One of the Seventh Pay Commission members, Rathin Roy, underlining the imperative to curb government spending, has admitted unapologetically: “We are the stingiest pay commission, ever.”

In addition to pay, soldiers get a special allowance called “military service pay”, which exists in most militaries in forms such as the British army’s “X-Factor Pay”. The Seventh Pay Commission raises it for officers from Rs 6,000 to Rs 15,500 per month; and for persons below officer rank from Rs 2,000 to Rs 5,200 per month.

In addition, soldiers get a “risk and hardship allowance”, based on the profile allocated to every military station. The highest grade on the matrix is Rs 25,000 per month, but serving on the Siachen Glacier and Antarctica entitles a soldier to a special grade of Rs 31,500 per month.

Totting up these allowances, the Seventh Pay Commission chairman, Justice Ashok Kumar Mathur, in an interview to The Economic Times on December 20, claimed he had recommended 30 per cent higher salaries for the military than civilian services would draw.

His logic was based on the dubious premise that military service pay constitutes a component of salary. In western military salary structures, such allowances are not salary, but compensation for the “intangible hardships” of military service. These include long separation from families, wives being unable to work, and children changing schools frequently and growing up without their fathers, et cetera.

During its deliberations, the Seventh Pay Commission commissioned a study by the Institute for Defence Studies and Analyses (IDSA), which compared military salaries in India with those of major foreign armed forces. While the IDSA study was relatively unbiased, the Seventh Pay Commission chose to interpret them selectively, applying purchasing power parity (PPP) to boost the value of Indian military salaries; and then comparing them with the per capita income of the concerned country. Given India’s abysmal per capital income, military salaries look good by comparison. The Seventh Pay Commission uses this to argue that India’s military is paid very well by international standards.

It’s the comparison, stupid!

Since the hefty raises of the Fifth and Sixth Pay Commissions, few soldiers claim they are poorly paid. Even so, festering resentment stems from the widespread belief that civilian officials, particularly from the Indian Administrative Service (IAS) conspire to whittle away the military’s relative status. Soldiers point to a host of generous allowances, and assured promotion benefits that are triggered for entire civilian batches as a result of the first officer of that batch getting promoted. A key element of this was instituted by the Sixth Pay Commission through a mechanism called “non-functional financial upgrade”. This mandates that when an IAS officer from a particular batch (everyone who joins service in a particular year) is promoted to a certain rank, all his batchmates from some sixty Group ‘A’ central services also start drawing the higher pay scale two years later, irrespective of competence or vacancies in that rank. The military had taken up a case for a similar upgrade, but this was not agreed to. The Seventh Pay Commission does not recommend its extension to the military either.

Thus, while practically every civilian central service officer would make it to the top pay grades, the army will remain a sharply pyramidal meritocracy, where less than one per cent of officers are promoted to lieutenant general rank (higher administrative grade, in pay commission scales). Those soldiers who do not make the cut --- including meritorious officers, who are held back only because of limited promotion vacancies at each rank --- are entitled to neither the power nor the pelf of higher rank since the army has no non-functional financial upgrade. The military’s demand for parity has been one of the five “core anomalies” of the Sixth Pay Commission; and was strongly pressed before the “Empowered Committee” last week.


Adding to the bitterness amongst soldiers is the argument, increasingly voiced by civil service officers, that soldiers’ emoluments should be evaluated in terms of “cost-to-company”, taking into account all their emoluments and facilities. Top generals argue that the armed forces constitute “the cheapest gun fodder”, since they incur the least lifetime cost to the government. They point out that soldiers incur the lowest induction cost, since they do not get paid salary during their training period, unlike civilian officials and Central Armed Police Forces. They have the lowest retention cost, since they retire early, thus drawing salaries for less time than civilian counterparts; and they also have the lowest advancement cost, since relatively small numbers are promoted to higher rank, leaving many languishing at lower pay grades. Finally, soldiers also incur the lowest pension costs, since their pensions are fixed at 50 per cent of the last pay drawn --- at lower pay grades in most cases.

The army has slowly --- and sullenly --- come to terms with the “first amongst equals” status of the IAS, which has been inexorably institutionalised since the Third Pay Commission noted that “an IAS officer gets an unequalled opportunity of living and working among the people, participating in planning and implementation of developmental programmes, working with the Panchayati Raj institutions, coordinating the activities of government departments in the district and dealing directly with problems of law and order.” Given this, the Third Pay Commission granted the IAS (and the Indian Foreign Service) three extra increments at each of three successive seniority grades --- “senior time scale”, “junior administrative grade” and “selection grade”, to which IAS officers are promoted at four, nine and 13 years of service respectively. Since the other services got just one increment at these grades, IAS/IFS officers accumulate six extra increments by the time they served 13 years. This lead in emoluments continued through their service.

However, successive governments have ensured the military remains the “first amongst uniformed services.” The Seventh Pay Commission now upsets this balance by recommending that: “the criticality of functions at the district administration level holds good equally for the IAS, Indian Police Service (IPS) as well as the Indian Forest Service (IFoS).” It recommends that six additional increments be extended also to the IPS and IFoS.

The military chiefs have argued strongly before the “Empowered Committee” that the military --- which they term “the instrument of last resort” --- does not have the option of “handing over an adverse situation to any other government agency”. They have argued that, while police and CAPF personnel often lay down their lives, including in cross border firing, they incur a “lower level of risk” compared with the armed forces, which “actively seek encounters with terrorists and close combat with the enemy, despite the high risk of death”. The chiefs have argued that military service demands higher levels of proficiency, commitment and sense of sacrifice.

There is little to suggest, however, that the government is listening. The anomalies of the Sixth Pay Commission still remain unresolved --- including five “core anomalies” that include the military’s demand for non-functional financial upgrade. A committee of secretaries that was constituted in 2011 heard the military for a month and then tossed the ball into the lap of the Seventh Pay Commission. There is little to suggest the military’s current representations would be treated with greater sensitivity.

Comparative chart of benefits

All India Services/ Central Police Forces
Defence personnel

3 increments for 3 promotions up to 13 years service for All India Services

Variable, up to 6 increments for DRDO personnel
Only one increment for each of these 3 promotions, which places military personnel six increments behind AIS/CAPF
Similar increment structure demanded for military personnel as for All India Services

Non-functional financial upgrade (NFFU)
When the first IAS officer of a batch gets promoted, his batchmates in Grade “A” Central Services start drawing the salary of that higher rank 2 years later. This is termed NFFU.
Military officers have a stringent selection procedure for colonel rank and above, with no NFFU benefits. Just 1% of military officer draw pay of Hr Administrative Grade (HAG).
7th CPC is divided on NFFU. One member says the military deserves NFFU. Another recommends doing away with NFFU, leaving IAS lead intact.

Special Duty Allowance (SDA) for J&K and NE
AIS get 30% of basic pay, i.e. 60,000 to 70,000 rupees for mid-senior officials

CAPF get 10% of basic pay as SDA. Can choose between SDA or Risk & Hardship Allowance
Risk & Hardship Allowance capped at Rs 31,500/- for officers in Siachen and Antarctica. No option for SDA
Civil service or CAPF officials in Leh/Guwahati draw higher allowances than military personnel in Siachen and Antarctica

Deduction of allowance during leave
No deduction for up to 180 days
Deducted for any absence beyond 28 days

Grant of pay and seniority on promotion
Granted for entire batch, the same day the first officer of batch is promoted
Each officer gets pay/seniority on the day of actual promotion/posting
Should be brought on par

Allowances for gallantry and distinguished service awards
7th CPC has raised allowances for police medals and awards higher than military
Military awards allowances not raised, have now become lower than police medal allowances

Training period salary
Training period is counted as service, and full salary paid
Not counted as service and no salary paid
7th CPC has not commented on this

Disability benefits
Covered fully under Disability Act, 1995. Govt bound to retain in service till 60 yrs
Act not extended to defence personnel. Can be boarded out of service with or without pension
Should be adequately compensated by adding disability component to pension

Entitled rations
Authorised to CAPF, no change to authorisation
4th CPC authorised entitled rations to military. 7th CPC recommends this be discontinued in peace stations
Authorisation had been granted for the exacting physical standards that military requires to maintain, including tests every quarter

Military Service Pay (MSP)
Not authorised to AIS/CAPFs
Authorised to compensate military for the “intangible hardships” of service
MSP has been used by CPC as argument that military pay is more than civilian counterparts.