Thursday, 27 September 2018

Reliance Naval’s eligibility question holds up warship orders worth Rs 63,000 crore (Rs 630 billion)

The MoD is unable to decide whether to permit, or to disqualify, Reliance Naval from a clutch of impending tenders

By Ajai Shukla
Business Standard, 27th Sept 18

On Wednesday, the defence ministry announced a contract for building two diving support vessels (DSVs) awarded to the defence public sector undertaking (DPSU), Hindustan Shipyard Ltd (HSL) for an estimated Rs 2,000 crore (Rs 20 billion).

Obscured by the fanfare around this relatively small order, warship building projects worth at least Rs 63,000 crore (Rs 630 billion) have ground to a standstill. In all these cases, the defence ministry has halted tendering in wait for a government decision on whether to allow, or to exclude, Anil Ambani’s shipbuilding firm – Reliance Naval and Engineering Ltd (RNAVAL) – from those contracts.

The navy has a major grouse with RNAVAL, which has failed to deliver five Naval Offshore Patrol Vessels (NOPVs), an order that Pipavav Shipyard won in 2011. It was to deliver the first NOPV in November 2014 and all five before November 2016. But, four years after the delivery date, not even the first NOPV has been handed over.

“For a similar infringement, the navy cancelled an order on ABG Shipyard, leading to its bankruptcy,” points out a shipbuilding industry executive.

The defence ministry is also undecided on allowing RNAVAL to bid in warship tenders because IDBI Bank – one of its biggest lenders -- has taken RNAVAL to the National Company Law Tribunal (NCLT), seeking debt resolution. An 18-member consortium of lenders has reportedly declined RNAVAL’s settlement offer for at least Rs 9,000 crore (Rs 90 billion) in outstanding loans. The NCLT is understood to have granted time till October 10 for resolution.

At least one lender – Vijaya Bank – has classifed its loan to RNAVAL as a non-performing asset. The company’s auditors, Pathak HD & Associates, have noted that cash losses, erosion of net worth, recalled loans and other adverse indicators “may cast significant doubt on the company’s ability to continue as a going concern.”

In the circumstances, RNAVAL’s presence has stalled a tender, worth an estimated Rs 20,000 crore (Rs 200 billion), for building four Landing Platform Docks (LPDs) in India – large vessels that carry helicopters, tanks and vehicles for amphibious landings, or for disaster relief. 

In 2014, the navy issued a “request for proposals” (RFP) to three private shipyards: Larsen & Toubro (L&T), ABG and Reliance’s Pipavav shipyard, later renamed RNAVAL. The winner was to build two LPDs, with HSL nominated to build the other two. However, with ABG going bankrupt, a fresh RFP was issued in May 2017 to L&T and RNAVAL for building all four LPDs. Since then, action has stalled on the of whether RNAVAL is eligible. The bids still remain unopened.

“The LPD provides us an important capability. It will take minimum two years from RFP to contract signature and another three years to build the LPDs. So 2023 is the earliest we can get this capability”, says a senior navy admiral.

Worse, at least 42 vessels, urgently needed by the navy and coast guard, are facing similar or longer delays because the final list of eligible bidders is not finalised. There are no questions over the eligibility of the four DPSU shipyards – Mazagon Dock Ltd, Mumbai; Garden Reach Shipbuilders & Engineers, Kolkata; Goa Shipyard and HSL – and private shipbuilder L&T has demonstrated both engineering capability and shipyard capacity. However, one question is holding up the tendering: Is RNAVAL also eligible, given its building record and financial condition?

Sources in the navy say the 42 vessels lined up for tendering are: seven next-generation corvettes, six next generation missile vessels, six next generation OPVs, four multi-purpose support ships, three cadet training ships, five survey vessels and one survey training vessel. The coast guard is waiting to tender two pollution control vessels and eight fast patrol vessels.

Industry sources say the total value of the navy’s contracts would be at least 60,000 crore (Rs 600 billion). The coast guard vessels would require another 3,000 crore (Rs 30 billion). 

Finally, the decision on RNAVAL’s eligibility will be crucial for the execution of Project 75I, to build six conventional submarines in India. The government is working on guidelines for choosing “strategic partners” for submarine building, based on technology transferred by a chosen foreign vendor.

The defence ministry and Reliance Defence did not respond to requests for comments on these issues.

On Tuesday, after clearing changes to the Defence Procurement Procedure (DPP), the defence ministry stated: “These measures will go a long way in obviating procedural delays and will hasten activities besides shrinking the procurement timelines giving due preference to indigenization.

However, private shipyards that have invested heavily in creating capacity for warship building, say their financial viability depends upon whether the order bottleneck can be resolved quickly. Central to that is a decision on RNAVAL’s eligibility.

Tuesday, 25 September 2018

Book review... “Sizzle” turns into “fizzle”: Evaluating Modi’s strategic and economic performance

Staggering Forward: Narendra Modi and India’s Global Ambition
Bharat Karnad
Penguin Random House, 2018
476 pages; Rs 599/-

Many of the themes in Bharat Karnad’s latest offering were earlier fleshed out in his 2015 book, “Why India is Not a Great Power (Yet)” and have since been amplified in his prolific writings, blogposts and speaking appearances. Mr Karnad, who styles himself in his blog as “India’s foremost conservative strategist”, has robust views. He believes that if India wants to be treated like a Great Power, it must start thinking like one. New Delhi’s defence and security focus should be on China, without wasting effort on minnows like Pakistan. To ward off China, India must abandon its pusillanimous “No-First-Use” nuclear doctrine and be ready to go first with nuclear weapons to halt a Chinese conventional attack. To persuade Beijing from responding in kind, Mr Karnad wants India to develop, test and deploy thermonuclear weapons, which he regards as the final arbiters of power. Washington, he believes, constrains not benefits India. The relationship with Moscow must be nurtured more carefully. Karnad also wants India to outflank China and Pakistan through military bases in Central Asia and the Gulf.

In this book, Mr Karnad looks inwards at the trajectory Indian politics and policymaking has followed since Prime Minister Narendra Modi came to power in 2014. Given the author’s unapologetic, nationalistic, India-first approach to security policy, many would logically expect him to endorse the Bharatiya Janata Party’s (BJP’s) policies and achievements. But the hawkish Karnad of foreign and security policy reveals himself as slightly leftish liberal on domestic policy. This revealing sentence sums up his book: “This book is in the main a critique of Modi’s foreign and national security policies – an audit if you will… If readers find the analysis suffused with disappointment, they will not be wrong.”

Mr Karnad’s divergence with Modi’s worldview stems from a sophisticated understanding of India’s delicate social geography, and the way this impacts security dynamics – both internal and external. Mr Karnad writes that Modi has “nudged the fairly tolerant social order that has evolved over the millennia to accommodate an extraordinarily complex Indian society into a Hinduist straitjacket in line with the thinking of the RSS (Rashtriya Swayamsevak Sangh).” Quite clearly the author regards the BJP’s assault on internal social faultlines as more damaging to national security than any potential challenges from external foes. 

In a provocative chapter, Karnad attempts to decode Modi’s political psychology, based on his documented actions since his days as an RSS sevak, emerging on the political landscape of Gujarat. Professor Ashish Nandi has elsewhere declared that Modi bears all the characteristics of a fascist. But the author chooses between David Rosen’s six psychological types – which are narcissist, obsessive-compulsive, Machiavellian, authoritarian, paranoid and totalitarian – and concludes that Modi is a narcissist. In Rosen’s theoretical framework, narcissists are “charismatic, attention-seeking… extremely convincing liars and are the ultimate users of people – demanding loyalty from others they seldom give in return, and don’t always make the best decisions but… [they] generally make the best leaders.”

In a disparaging analysis of Modi’s international policy, Mr Karnad terms it a “creeper-vine foreign policy”, based on the logic that it cannot stand on its own, without the support of a Great Power. He contrasts that with Jawaharlal Nehru’s policy of non-alignment, which forced the two superpowers of that time to compete for India’s favour, while retaining our freedom of action and choice. Mr Karnad is dismissive of the nominal policy of “strategic autonomy”, which he considers a veil behind which India is cozying up to the United States and bending to its diktat.

In the book’s most original strategic construct, the author suggests New Delhi could obtain genuine strategic autonomy and counter the “proto-hegemons” – the US and China – through two new security coalitions. The first is BRIS – named after Brazil, Russia, India and South Africa – which is BRICS, with China removed. Mr Karnad does not clarify who will expel China, or how. 

The other coalition India should join is the catchily named Mod Quad – short for Modified Quadrilateral. This weaponised grouping cuts out America from the current Quadrilateral (India, US, Japan and Australia), replacing it with a rash of south east Asian countries. Myanmar and Vietnam book end the landward side, while Indonesia and the Philippines anchor the sea end; with other countries like Singapore, Thailand, Brunei and Malaysia in the middle. Given the difficulties these very countries face in presenting a united front in the Association of Southeast Asian Nations (Asean), Karnad should have clarified how they would manage with the additional contradictions of the Quadrilateral.

In a well-written book with lots of catchy phrases, the author concludes that Mr Modi’s sizzle – based on promises to end corruption, improve delivery, structurally transform the economy and use technology to provide development solutions – has ended in a fizzle.

Notwithstanding several contradictions, Mr Karnad presents an interesting evaluation of Modi’s strategic and economic performance, which will probably be widely read in an election year. The reader’s complaint would, however, be that he has taken too many pages to do so. This, despite an inordinately small font that makes reading difficult – the hallmark of a publisher that has chosen the wrong way to economise.

It is time the prime minister spoke on Rafale and cleared the air

The government’s rebuttals on Rafale deal lack conviction

By Ajai Shukla
Business Standard, 25th Sept 18 

The controversy over how the Bharatiya Janata Party-led (BJP-led) led government has gone about purchasing 36 Rafale fighters for the air force, and over the selection of Anil Ambani’s Reliance Defence group for discharging offsets related to this deal, has taken on a new dimension. Former French president, Francois Hollande, has claimed that the Indian government ordered that Dassault, which builds the Rafale in France, should enter into offset partnerships with Reliance Defence, and that Paris had no choice in the matter. Hollande’s allegation that Mr Ambani was New Delhi’s nominee directly contradicts what Defence Minister Nirmala Sitharaman and Finance Minister Arun Jaitley have been saying – that Dassault chose to partner Reliance of its own free will.

The “rebuttals” to Mr Hollande’s allegations – emanating from Paris, Dassault and New Delhi – fail to convince. The French government’s statement does not contradict Mr Hollande. Instead, it backs him in stating that Paris had no role in selecting Mr Ambani as the offset partner. It further states that the Indian procurement procedure provides full freedom to French companies to select offset partners, but that only bypasses Mr Hollande’s implicit allegation that New Delhi had violated its own procurement procedures. Similarly Dassault’s statement does not contradict Mr Hollande directly, stating only that partnering Reliance was Dassault’s choice. Whether Dassault enjoyed a free choice remains a question. New Delhi’s rebuttal, in contrast, began by directly attacking Mr Hollande, claiming that he was motivated by a “conflict of interest” relating to his personal life, since his partner, French actress Julie Gayet, was granted Euro 1.6 million of financing by a Reliance Group company in 2016. But again, for many, this sounds more like a “conflict of interest” for Mr Ambani.

While Mr Hollande has not revealed who asked Paris to discharge offsets through The Reliance Group, it is clear that Mr Modi was the interlocutor to the French president at the time the Rafale purchase was first agreed upon. The Indian government can no longer issue answers and rebuttals from officials and ministers who were not party to direct conversations between Mr Hollande and Mr Modi. Ms Sitharaman, who is the government’s points-person in the debate over the Rafale, was not even defence minister at that time; and then defence minister, Manohar Parrikar, was sitting in Delhi. Mr Jaitley was not involved in the deal in any way. The former French president has raised allegations and it is up to India’s prime minister to respond to the growing number of questions that remain unanswered.

The defence minister’s promise last year to reveal the details of the Rafale cost, and her subsequent backtracking on the grounds of inter-government confidentiality, has already created enough confusion and encouraged the impression that there is something to hide. Mr Modi’s steadfast silence will only add to this impression. On Monday, Ms Sitharaman declared that the government needed to “fight the perception battle”, for which many BJP leaders would be speaking across the country. This is unlikely to be enough. It is time for the prime minister to defend the deal himself.

Sunday, 23 September 2018

Drama on the high seas: saving Commander Tomy

Abhilash Tomy and Dilip Dhonde -- the two Indians who have completed solo circumnavigations --- seen here on the sailship Mhadei, which they sailed solo around the world

By Ajai Shukla
Business Standard, 23rd Sept 18

The Indian Navy's most decorated and accomplished sailor, Kirti Chakra winner Commander Abhilash Tomy, is fighting the battle of his life. On the bleak Southern Ocean, somewhere between India, Antarctica, Africa and Australia, Tomy is lying alone on a sailboat, incapacitated with a severe back injury after a furious gale and giant waves rolled his boat over and ripped off its main mast. 

With communications fading and rescuers still far away, Tomy’s latest message reads: “Can move toes. Feel numb. Can’t eat or drink. Tough to reach grab bag.”

On Sunday evening, for the first time since he was injured, Tomy was finally able to consume and keep down some liquid. "He is a superbly trained survivor. By starting to drink, he has multiplied his survival options," says Pablo Raiz, Tomy's long-time sailing compatriot from Spain. 

Three days ago, Tomy was at third place in the Golden Globe Race (GGR) – a solo, non-stop sailboat race around the world. But on Friday, one of the howling storms that the Southern Ocean is known for transformed his challenge from sport to survival. Dismasted by a 130-kilometre gale and 40-foot-high waves, something slammed him to the floor. Tomy's survival instinct made him crawl into the sailboat's tiny cabin, where he activated an emergency beacon that beamed round the world.

Two days later the storm is abating, though the ocean is still heaving and a gale still blowing. But there is now a glimmer of hope for Tomy. In a multinational rescue effort that illustrates how sport can bring nations together, ships and aircraft from India, Australia, France and even Tomy’s competitors are racing to his rescue.

The Thuriya, spotted on Sunday by a navy P-8I

On Sunday morning, an Indian Navy P-8I Poseidon aircraft, flying from Mauritius, spotted the Thoriya– Tomy's tiny, 36-foot sailboat. Indian Navy frigate INS Satpura and fleet tanker INS Jyoti are racing to the site, but cannot reach before Monday night. An Australian warship, RANS Ballarat, has sailed from Perth, but will reach only on Tuesday. A French fishing vessel (Osiris), with a doctor on board, is heading for the Thoriya. And Tomy's nearest GGR rival, Irishman Gregor McGuchin has put aside the contest to come to his rescue. McGuchin’s sailboat suffered equal damage, but the Irishman was spared injury.

Australia’s Navy Fleet Commander, Rear Admiral Jonathan Mead, summed up the spirit thus: "I'm crash sailing one of my warships to rescue Commander Abhilash Tomy... His yacht is dismasted, 2,000 miles south west of Perth, Australia. His last communique was: ‘yacht rolled, dismasted, severe back injury’. Weather is 70 knots winds and 14 meter seas. My ship will depart in 2 hours and it's a 6-day journey in treacherous conditions. We will find your man."

Meanwhile a tweeted message from the Indian Navy chief, Admiral Sunil Lanba, assured Tomy: “We'll get you out of this crisis soon.”

The Indian Navy P-8I, which spotted the Thuriya today, readying for another mission from Mauritius

Sweltering tensely as the drama unfolds is Tomy’s wife, Urmi, a Goa-based graphics designer, who had already endured three months without substantive communication with her husband, before this unfolding shocker.

That is because the Golden Globe Race 2018, which commemorates Sir Robin Knox-Johnston’s historic first-ever solo circumnavigation of the globe half a century ago, allows only technologies and equipment available to Knox-Johnston. That rules out satellite communications and the internet, allowing only vintage, high-frequency radios. Only for emergencies is modern equipment allowed.

Abhilash has done long voyages before, but we remained in touch through satellite phones and internet chats. The separation on this voyage has been tough. But all that matters now is to rescue him unharmed”, said Urmi.

Underlining the unpredictability of the elements, competitors some distance behind Tomy and McGuchin, now face a similar ordeal. “A second storm has been building for several days and is forecast to overrun them within the next 24 hours, bringing the potential of 30-45 feet swells for 48 hours,” says the GGR website.

Meanwhile, the lucky race leader, Jean-Luc van den Heede, is approaching Tasmania in a different weather system. The day Tomy was being mauled by the storm, the Frenchman reported: “Quiet sunny day. Lunch on the terrace! What a change!”

The GGR started from Les Sables-d’Olonne, France on July 1. They are to round the five Great Capes – Cape Agulhas (Africa), Cape Leeuwin (Australia), South Cape (New Zealand) and Cape Horn (South America) – before finishing at the start point. This involves sailing 30,000 miles, of which Tomy has sailed over one-third.

The GGR website describes the race as follows: “To create a unique ‘Retro’ non-stop, solo, around the world yacht race, in the image of the original Sunday Times Golden Globe that draws sailors back to the Golden Age of ‘one sailor, one boat’ facing the great oceans of the world.”

Saturday, 22 September 2018

MoD rebuts Hollande’s claim on Rafale deal

French govt issues unconvincing "denial"; Dassault claims it took the call

By Ajai Shukla
Business Standard, 22nd Sept 18

The government on Saturday rebutted former French president Francois Hollande’s explosive allegation that New Delhi had nominated Anil Ambani’s Reliance Group as the industrial partner in the purchase of 36 Rafale fighters from France.

The Government has stated earlier and again reiterates that it had no role in the selection of Reliance Defence as the offset partner”, said a statement from India’s ministry of defence (MoD).

The rebuttal came even as the opposition Congress intensified its attack on the Narendra Modi government, citing Hollande’s claim.

The MoD statement starts by implying that Hollande was motivated by a “conflict of interest” relating to his personal life. “[His] reported statement perhaps needs to be seen in its full context – where the French media has raised issues of conflict of interest involving persons close to the former President,” it said.

The implied “conflict of interest” relates to The Reliance Group’s investment of Euro 1.6 million in 2016, in a film produced by Hollande’s partner, actress Julie Gayet. Bharatiya Janata Party (BJP) spokespersons have already taken the line that Hollande had falsely alleged that New Delhi had done Ambani a favour, in order to deflect charges that he had done the favour himself, as a quid pro quo for the financing extended to Gayet.

French journalists indicate this makes further intervention by Hollande almost inevitable. On Saturday, Hollande’s office told NDTV that the former president stands by his statement to Mediapart.

Late on Friday night, the French government issued its own carefully worded “denial”. Without explicitly contradicting Hollande, it stated: “The French government is in no manner involved in the choice of Indian industrial partners who have been, are being, or will be selected by French companies. In accordance with India’s acquisition procedure, French companies have the full freedom to choose the Indian partner companies that they consider to be the most relevant…”

French observers, speaking anonymously, point out that Paris had no choice but to issue a denial given the importance of India’s Rafale purchase for France’s aerospace industry. However, they underline its linguistic ambiguity. “The statement says Paris is not involved in selecting the Indian offset partner. This, in no way contradicts Hollande’s statement that New Delhi selected Ambani,” said one observer.

The second part of the French government statement that says: “In accordance with India’s acquisition procedure, French companies have the full freedom to choose the Indian partner companies…” is also a bland recitation of the procurement procedure. “This does not address Hollande’s implicit allegation that New Delhi violated its own acquisition procedure”, pointed out the observer.

Meanwhile, Dassault, which had refused to comment for the Mediapart report, has also issued a statement contradicting Hollande. “Dassault Aviation has decided to make a partnership with India's Reliance Group. This is Dassault Aviation's choice…” it said.

The MoD statement unusually cites “media reports” to argue that the Dassault-Reliance partnership was not related to the 36-Rafale purchase. Instead, it went back to 2012, when Dassault was competing in the tender for 126 medium multi-role combat aircraft (MMRCA).

“It has been reported that a JV (joint venture) between Reliance Defence and Dassault Aviation came into being in February, 2017.  This is a purely commercial arrangement between two private companies.  Incidentally, media reports of February 2012 suggest that Dassault Aviation, within two weeks of being declared the lowest bidder for procurement of 126 aircraft by the previous Government, had entered into a pact for partnership with Reliance Industries in defence sector.”

In its statement, Dassault cites Reliance Group’s ownership of land abutting a runway in Nagpur as a reason for deciding to partner Anil Ambani. “Dassault Aviation and Reliance have built a plant in Nagpur for manufacturing parts for Falcon and Rafale aircraft. The Nagpur site was chosen because of the availability of land with direct access to an airport runway, an essential condition of aeronautic activities”, said Dassault.

Reliance Group’s involvement in the Rafale controversy relates to its selection as one of Dassault’s offset partners. In all Indian defence procurements worth more than Rs 2,000 crore (Rs 20 billion), an offset policy requires the overseas vendor to plough back 50 per cent of the contract value into Indian defence production. Euro 3.9 billion worth of offsets arise from the Euro 7.8 billion contract for 36 Rafale fighters. However, The Reliance Group says it has benefited only from Euro 778 million worth of offsets orders from Dassault.

This latest twist in the Rafale controversy was triggered on Friday, when the well-regarded French investigative website, Mediapart, published an interview with Hollande, in which he said: “It was the Indian government that proposed this group (Reliance), and Dassault which negotiated with Ambani. We did not have a choice, we took the interlocutor who was given to us.”

Former French president, Francois Hollande says Indian govt chose Anil Ambani as Rafale partner

Hollande: “We did not have a choice, we took the interlocutor who was given to us”

By Ajai Shukla
Business Standard, 22nd Sept 18

The government’s repeated denials that Anil Ambani’s Reliance Group got special favours in the purchase of 36 Rafale fighters lay in tatters on Friday with former French president, Francois Hollande, revealing that New Delhi nominated Ambani as the Indian offset partner.

Hollande was the French president in April 2015 who hosted Prime Minister Narendra Modi in Paris when the latter publicly announced his decision to buy 36 Rafales from Dassault in “flyaway” condition.

The Rafale deal has come under concerted attack from the opposition, which has charged the government with paying an inflated price; with endangering national security by cancelling an on-going tender for 126 Rafales; and with facilitating the selection of The Reliance Group as a partner to Dassault. 

Asked by French news website, Mediapart, “Who selected Reliance as a partner and why?” Hollande responded: “We did not have a say on this subject"

"It was the Indian government who proposed this service group (The Reliance Group), and Dassault who negotiated with Ambani. We did not have a choice, we took the interlocutor who was given to us," said Hollande.

Bharatiya Janata Party’s (BJP’s) defenders of the Rafale deal, notably Defence Minister Nirmala Sitharaman, have repeatedly rejected opposition charges of “crony capitalism” to favour Ambani. They have claimed that, in accordance with the Defence Procurement Procedure (DPP), Dassault chose the Indian offset partner of its own choice. 

On Friday, with Sitharaman unavailable to comment, her spokesperson tweeted: “The report referring to [former] French president Mr. Hollande's statement that GOI (Government of India) insisted upon a particular firm as offset partner for the Dassault Aviation in Rafale is being verified. It is reiterated that neither GoI nor French Govt had any say in the commercial decision.”

While all 36 Rafale fighters are being manufactured in France, an offset requirement, which is a part of all Indian defence procurements worth more than Rs 2,000 crore, requires French companies that build the Rafale – Dassault, Thales and Safran – to plough back 50 per cent of the contract value into Indian defence production.

That means offsets arising from the Euro 7.8 billion contract for 36 Rafale fighters require the French vendors to plough back Euro 3.9 billion worth of business into Indian defence industry.

To benefit from offsets business, The Reliance Group formed a joint venture with Dassault, called Dassault Reliance Aerospace Ltd (DRAL). While the Congress has charged DRAL with cornering the bulk of the Rafale-linked offsets, The Reliance Group – in a series of legal injunctions issued to various media houses – has claimed that it benefited only from Euro 778 million worth of business.

So far the French government, which has enormous economic and strategic stakes in letting the Rafale purchase go through smoothly, has remained silent on the Indian government’s “nomination” of DRAL as a key offset partner.

However, French sources say that Hollande, who Emmanuel Macron succeeded as president in May 2017, was motivated to speak out after an Indian media report revealed that The Reliance Group had part-funded a film venture by his domestic partner, French actress Julie Gayet. Hollande wanted to make clear there was no quid pro quo with Ambani.

"This group [The Reliance Group] did not have to give me any thanks for anything, I could not even imagine that there was any connection to a film by Julie Gayet,” said Hollande in the interview.

Friday, 21 September 2018

Govt sources reject HAL ex-chief’s claim that 126-Rafale tender was on track

By Ajai Shukla
New Delhi 

A government source on Thursday rebutted the statement by recently retired Hindustan Aeronautics Ltd (HAL) chairman and managing director (CMD), T Suvarna Raju, that the 126-Rafale tender was on track at the time it was cancelled and that Dassault and HAL had agreed on a work share and submitted it to the government.

In the Hindustan Times on Thursday, Raju rejected the notion that irreconcilable differences between Dassault and HAL had forced the government to abandon the tender for 126 Rafales. Raju also contradicted Defence Minister Nirmala Sitharaman’s statement that HAL was incapable of building the advanced Rafale fighter.

Facing concerted attack from the opposition for abandoning a 2007 tender for 126 Rafale fighters at the last moment and substituting it in April 2015 with Prime Minister Narendra Modi’s announcement in Paris of the purchase of 36 Rafales in “flyaway condition”, Sitharaman has cited HAL’s incapability to build the Rafale, and its non-conclusion of a production arrangement with Dassault to manufacture over a hundred fighters in India.

Raju, who headed HAL until September 1 and who was a member of the ministry of defence (MoD) cost negotiation committee, told Hindustan Times: ““When HAL can build a 25-tonne Sukhoi-30, a fourth-generation fighter jet that forms the mainstay of the air force, from raw material stage, then what are we talking about? We could have definitely done it (licence produced the Rafale jets).”

Reacting to Raju’s statement on Thursday, Congress President Rahul Gandhi launched his sharpest-ever attack on Sitharaman, calling her a liar and the “Rafale Minister” – a play on her official title of Raksha Mantri (defence minister). 

Now the government source, which has declined to be identified, calls Raju’s statement  “factually incorrect” and says: “There were many areas of disagreement between HAL and M/s DA (Dassault Aviation). HAL, in its letter dated October 11, 2012 addressed to the MoD brought out these disagreements pertaining to the work share between them. Subsequently, in July 2014, HAL in its letter to MoD has also highlighted one major unresolved issue regarding responsibility sharing between M/s DA and HAL for licence manufacture of aircraft. 

The source did not explain why, if just “one major unresolved issue” remained by July 2014, earlier negotiations over work share that had been resolved should be cited as a reason for abandoning the tender.

Nor did the source explain how Dassault chief, Eric Trappier, had stated just 17 days before Modi’s Paris announcement, in the presence of the IAF chief and the HAL chairman, that he was delighted with the HAL partnership and expected the deal to be signed in a matter of a few days.”

On Tuesday, Sitharaman, who has shifted positions rapidly as the opposition attack has gathered steam, blamed the United Progressive Alliance (UPA) government for dropping HAL from the 2007 tender.

The source on Thursday also stated: “The man-hours required for manufacture of various components of the aircraft in HAL was also a point of disagreement between M/s DA and HAL. There is therefore a contradiction in the claims attributed to Ex-CMD HAL.”

In fact, HAL’s former chief had highlighted that HAL’s manpower would have to go through a learning curve. “If the French are making 100 jets in says 100 hours, I will take 200 hours as I am doing it for the first time. I can’t do it in 80 hours. It’s a scientific process,” Raju said.

Within HAL, there is a perception that Sitharaman has “thrown HAL under the bus”, in the words of a mid-ranking officer. Over the years, HAL has built numerous IAF aircraft, including the MiG-21, Jaguar, Hawk, Dornier and the Sukhoi-30MKI.

“We would have delivered on the Rafale too. I was the leader of the technical team for five years and everything had been sorted out,” said Raju.

Sunday, 16 September 2018

Reorganising the army: winds of change

By Ajai Shukla
Business Standard, 16th Sept 18

On Tuesday, army chief, General Bipin Rawat, brainstormed with his top generals in Delhi, seeking the consensus needed for a deep-cutting reforms to make the army a less manpower-intensive force. It is learnt that most commanders are on board what one described as: “The army’s most ambitious reform attempt since independence.”

India’s military has not changed radically since 1947, despite two waves of reform. The first followed the 1962 defeat at the hands of China and involved raising mountain divisions for the Himalayan frontier. Then, in the 1980s, two thinking army chiefs – Generals KV Krishna Rao and K Sundarji – initiated the mechanisation of the army that led on to the creation of three armour-heavy strike corps. Even so, the army’s combat force – infantry battalions, armoured regiments and artillery regiments – remain almost identical today to what it was in the Second World War.

The current drive for change stems from a recognition of the need to slash the army’s numbers. These have defied the global trend of force downsizing to rise from under a million two decades ago to 1.22 million today, according to figures tabled in December in Parliament. Consequently, the army’s budget for new equipment is just Rs 267 billion ($3.73 billion), while over four-fifths of its Rs 1.55 trillion ($21.6 billion) allocation goes on running expenses, primarily salaries and pensions.

This alarming situation has arisen from decades of “empire building”, where successive army chiefs have sought to expand their fiefdoms, making the army ever larger and creating ever more general rank vacancies. A decade ago, the army only allowed new roads along the Sino-Indian border in Arunachal Pradesh, if two new mountain divisions were sanctioned to defend these new approaches into India. That added 50,000 soldiers to the already bloated army. Then the generals successfully pushed for a new mountain strike corps, which is currently being raised and will add 60-70,000 soldiers. Only now has the army realised it can either pay and feed this multitude, or equip them with modern weaponry.

The army is also drawing lessons from the navy, which has kept its numbers at just 71,600, and consequently has 46 per cent of its budget available for equipment. The air force, with 142,500 airmen, spends a healthy 49 per cent on equipment.

Another example of manpower reform is presented by China, where the People’s Liberation Army (PLA) has cut back on well over a million soldiers in order to pay for a western style military, equipped with the weaponry for a modern, high-tech war. In the latest wave of manpower cuts that President Xi Jinping ordered in September 2015, the PLA reduced its size by 300,000 persons.

The Indian Army, however, has traditionally chosen the easy, incremental path, rather than radical surgery. An internal organisation called the Army Standing Establishment Committee (ASEC) periodically reviews the manpower of units and formations, evaluating authorisations and quizzing units about why their five authorised barbers cannot be reduced to four, or the authorization of 1.5 drivers per vehicle cannot be reduced to 1.3 drivers. The ASEC has made significant cuts in logistic units, but they tread softer with combat units, which enjoy the status of the army’s cutting edge.

That is where Rawat’s initiative departs from tradition: it intends taking the knife to combat units as much as to the support and services elements. The first of three committees that have already been constituted will scrutinise the field force – the combat units, brigades, divisions and corps that form the tip of the military spear. A second initiative will examine ways of paring down army headquarters (AHQ), which is considered bloated and overstaffed. Separately, a third committee will examine the army’s 49,500-strong officer cadre and consider how best to give the army the best possible commanders.

“The Shekatkar Committee [in December 2016] recommended cutting down 57,000 army employees, of which 27,000 are uniformed personnel and 30,000 civilians. Now we are looking at cutting down another 50,000 personnel. The aim is to stabilise the strength of the army at 10-11 lakh personnel,” said Rawat to Business Standard.

Reorganisation of combat units

Practically guaranteeing resistance from within, Rawat has directed that flab cutting must include that holiest of holy cows, the infantry battalion. Since the army has 450 infantry battalions (each with 22 officers and 850 soldiers) paring down 25 men from each battalion would result in the reduction of 11,250 men.

Wisely, the army chief has formulated an operational rationale for this reorganisation, which will be overseen by the army’s “perspective planning” chief, Lieutenant General Rajeshwar. An infantry battalion currently has four rifle companies, each with about 125 men. This is partly based on the logic that when the battalion is given a task, such as attacking an enemy position, it can attack with two companies, with the other two in reserve, in case added punch is needed. Now it will be considered whether, instead of pessimistically catering for reinforcing both forward companies, it would be wiser to keep just one company in reserve, while adding to the probability of initial success by strengthening each company to 170 men. In the new proposals, a company would also be authorised a ghatak(commando) section of 14 soldiers for special tasks. For example, a company attacking a hill feature could send its ghatak section to lay an ambush to cut off the enemy’s withdrawal. With three strengthened companies, the infantry battalion’s bayonet strength would remain the same, but eliminating one company headquarters would save 25 men.

Infantry reorganisation would extend to the grass roots, with a ten-man infantry section being strengthened to 14 soldiers, thus empowering the section commander, normally a havaldar (sergeant). A platoon, with three strengthened sections, would go up from the current 36 soldiers to 50 men.

Another measure that Rajeshwar will consider is flattening the hierarchy of higher headquarters. Currently, the division, with about 18,000-20,000 soldiers, is the lowest formation that comprises all the elements needed for combat – infantry, armour, artillery, engineers, signals and logistics. In wartime, those elements are often decentralised to constitute a self-sufficient “brigade group” for independent missions. Extending that model of decentralisation to peacetime as well would eliminate numerous manpower-heavy division headquarters, placing the brigades directly under corps headquarters.

Naturally, a divisional headquarters would be useful for coordinating an operation that involves two or three brigades, such as a strike corps offensive, which requires several armoured brigades to operate in unison. Strike formations, therefore, might well retain the divisional structure.

Reorganisation of AHQ

The army’s chief of “financial planning”, Lieutenant General Ajai Singh, will propose ways of paring down AHQ. One widely discussed measure is to merge AHQ’s Military Training Directorate with the Simla-based Army Training Command, which performs overlapping functions. Another is to move the Rashtriya Rifles HQ from New Delhi to Udhampur or Srinagar, where all Rashtriya Rifle battalions operate. This would follow the model of the Assam Rifles, whose directorate is based in Shillong, close to its area of responsibility.

Similarly, there is a directorate of information technology and another of information systems, both performing overlapping functions. Merging these is a possibility. There is similar duplication of cells that deal with information warfare: one such cell works for the Military Operations directorate and another for Military Intelligence.

Officer cadre restructuring

The general who manages the army’s officer cadre – Military Secretary, Lt Gen JS Sandhu – is heading the third committee. He will examine whether the army’s current officer shortfall of about 8,000 officers must be made up, or whether the overall authorisation can be reduced by about 5,000. 

“Making up the full strength would make the competition for promotion even more intense than it already is. The percentage of officers approved for promotion in each board – already worryingly low – will fall even lower,” points out a senior general who briefed Business Standard on the rationale for reorganisation.

Instead, the army will examine whether a larger number of meritorious soldiers and junior commissioned officers (JCOs) can be promoted from the ranks to fill up officer vacancies. There is also a proposal to recruit JCOs directly – currently a soldier serves about 15-18 years in the ranks before being promoted to JCO. 

“A direct entry JCO can do one year of training at the Officers’ Training Academy at Gaya or Chennai. Both these are running at half capacity and one of them can easily be made over to training JCOs and soldiers who are selected for becoming officers,” says the senior general. 

Another major issue is the age of commanding officers (COs). After the Kargil conflict, when the army had found its 41-42 year-old COs struggling to operate at altitudes above 15,000 feet, it launched a successful drive to reduce the age of COs to about 37 years. But now some COs, who assume command with just 15-16 years of service, have been found to be lacking in experience and maturity. Further, since the CO has to be the senior-most officer in the battalion, there is no space for superseded officers, who have often served 17-18 years. The committee will explore whether promotion to Colonel can still be done at 15-16 years of service but then, before assuming command, these officers can serve a two-year tenure as a staff officer. That would develop their skills and experience, allow them to mature in service, and also create the space within units for superseded officers.

While increasing the age of COs, the committee will examine options for reducing the age profile of higher commanders. Currently, because of late promotions to higher ranks, officers serve just three years each as brigadiers, major generals and lieutenant generals, commanding their brigades, divisions and corps for just 12-15 months. Now, like the navy and air force, the army will try and give senior officers five years in each of those ranks.

That, however, would require more officers to be superseded at the ranks of colonel, brigadier and major general. As an example, the army has 14 corps commanders, each of them a lieutenant general. If 14 major generals are approved every year for promotion to lieutenant general, the serving corps commanders would have only a year in the saddle before the next batch is breathing down their necks. To increase command tenures, fewer officers would have to be approved for promotion, a deeply unpopular step.

Rawat shrugs off suggestions that he may have aimed too high. “I am definitely not the first chief to have attempted this. Such studies have been done since the days of General K Sundarji and General Bipin Joshi. However, we failed to implement those,” he said. It remains to be seen if reorganisation is an idea whose time has come.

Friday, 14 September 2018

Transparency on Rafale: the government owes the public the facts

By Ajai Shukla
Business Standard (editorial), 14th Sept 18

As the Opposition’s campaign against the purchase of 36 Rafale fighters from France grows in pitch, the government’s response has not been open enough. That has encouraged the impression that it has something to hide. The Opposition has made a three-point case: First, that Prime Minister Narendra Modi enfeebled the Indian Air Force (IAF) by scuppering a 126-aircraft contract, which was close to finalisation, and instead purchased just 36 Rafales without following due procedure. Second, that the government allegedly paid a higher price in the new deal, without obtaining a qualitatively superior fighter. Finally, the Opposition has charged the government with killing the “Make in India” component of the 126-Rafale tender, instead accepting French-built fighters in “flyaway” condition that left little for Indian industry to contribute. The Opposition alleges that only France would benefit, along with some Indian corporates. 

Presumeably the government has all the facts, figures and rationale needed to address these allegations, yet it has failed to make them public. Defence Minister Nirmala Sitharaman, who pledged last November to reveal what Dassault had bid in the cancelled tender and what India eventually paid, has said now in an interview to the Indian Express that the basic price of the French aircraft has been disclosed to Parliament and that the Air Force cannot absorb more than two squadrons in the given time because of infrastructure and other technical constraints. This raises fresh questions, as induction of the 36 aircraft is over five to six years from the contract signing. Meanwhile, the seniormost air force officers have taken up cudgels to defend the quality of the aircraft, which has never been the issue.

It can be nobody’s case that the government should divulge the confidential details of the Rafale’s operational capabilities. Nor can the government legitimately argue that every detail relating to the Rafale is confidential and putting anything out would endanger IAF pilots. The government has to explain the process and time line by which seven squadrons were reduced to two, since key government personnel seemed to have been unaware of the impending change when the prime minister went to France. It has to list the India-specific changes to the aircraft and itemised cost, especially since Dassault is on record that the plane is the same as the one negotiated earlier. It also has to give a break-up of the weapons suite which presumably was not in the original bid. Finally, it has to detail how the new maintenance commitments are different from the earlier ones. Like in all democracies, the government is duty-bound to account for the expenditure of public funds, and it would set a dangerous precedent to shirk that duty by citing national security. The French president, to whom the government turned to endorse its claim of confidentiality, obliged only half-heartedly, placing the onus on New Delhi to decide what was actually confidential.

If both the Opposition and the government reduce the Rafale procurement to a political blame-game, that would apply unwanted brakes on the procurement of urgently needed weaponry. To pre-empt being boxed into complete inctivity on defence, the government must defend the Rafale procurement boldly. It must put out whatever is needed to convince the public that this is a kosher deal for which a reasonable sum has been paid.

Thursday, 13 September 2018

IAF chief defends Rafale, but looks for the long-term towards Tejas

IAF will buy 250 Tejas Mark II, to operate 18 Tejas squadrons

By Ajai Shukla
Business Standard, 13th Sept 18

With controversy swirling around the purchase of 36 Rafale fighters from France, the Indian Air Force (IAF) boss, Air Chief Marshal BS Dhanoa underlined on Wednesday the “two front threat” from China and Pakistan to argue that the Rafale is urgently needed.

“Pakistan has over 20 fighter squadrons, with upgraded F-16s and [it is] inducting JF-17s from China in large numbers. China has 1,700 fighters, including 800 fourth generation fighters. But we do not have the numbers, with fighter squadrons down to 31 from sanctioned 42,” said Dhanoa, addressing a seminar in New Delhi.

In this, Dhanoa was ironically on the same side as the opposition. Its main criticism of the government is that it purchased just 36 Rafale fighters (two squadrons), while cancelling an on-going tender for 126 fighters (six squadrons) that would have made up IAF squadron deficiencies to a greater degree.

Besides charging Prime Minister Narendra Modi with unilaterally downsizing the Rafale deal, the opposition is accusing the government of undermining “Make in India” by cancelling a plan to build 108 Rafales in Hindustan Aeronautics Ltd (HAL); and of “crony-capitalism” in allowing Anil Ambani’s Reliance Group to benefit from offset deals arising from the Rafale buy.

Dhanoa sought to explain the cancellation of the 126 Rafale deal by stating that the plan to build 108 of them in India had “reached an impasse due to irresolvable differences between Dassault Aviation and HAL.”

The basis for Dhanoa’s contention remains unclear, given that on March 25, 2015, just 17 days before Modi announced the new deal in Paris, Dassault chief executive officer, Eric Trappier, told the press in Delhi that there was agreement with HAL on sharing responsibilities. Trappier said: “I strongly believe that contract finalisation and signature would come very soon.”

The IAF presentation on Wednesday defended the price paid for the Rafale, stating that it included: “Most modern sensors, best in class weapons, state of art EW (electronic warfare) and enhanced survivability, India specific enhancements, better price terms, better overall delivery terms and timeline, better maintenance terms, longer industrial support commitment, additional warranty and longer PBL (performance based logistics) commitment.”

Stating that the government had on several earlier occasions undertaken “emergency purchase” of fighters, he cited the purchase of two MiG-23MF squadrons in 1983 to counter Pakistan’s new F-16s, two squadrons of Mirage 2000s in 1985 and then two squadrons of MiG-29s.

On Tuesday, the opposition had sharply condemned what it sees as the government’s use of servicing officers to defend the Rafale deal. “Totally exposed, the Government is now shooting from the shoulders of the brave men and women in uniform,” stated a joint press statement by Yashwant Sinha, Arun Shourie and Prashant Bhushan.

Buying 12 more Tejas squadrons

For the first time, the IAF indicated that retiring MiG-21 and MiG-27 squadrons would be replaced by the Tejas Light Combat Aircraft (LCA), not by medium multi-role combat fighters (MMRCAs) like the Rafale.

Dhanoa said he was looking at inducting 12 squadrons of the Tejas Mark II fighter, in addition to two Tejas Mark I squadrons and four squadrons of an improved version, the Tejas Mark I-A, which are already being processed.

That would add up to 18 squadrons of Tejas fighters of all types, making it the IAF’s most numerous aircraft, even more than the 13 squadrons of Sukhoi-30MKI fighters. 

The first Tejas squadron, called the “Flying Daggers”, is already being populated with Mark I fighters as they roll off HAL’s production line – albeit far more slowly than planned.

The Tejas Mark I-A is currently under development with five specified improvements over the Mark I. These include an“active electronically scanned array (AESA) radar, an air-to-air missile with “beyond visual range” (BVR) capability, a “self-protection jammer”, air-to-air refuelling capability, and a sophisticated “software defined radio” (SDR). The defence ministry has initiated an order for 83 Mark 1-A fighters.

The Tejas Mark II is planned as a far more capable fighter, with its current General Electric (GE) F-404 engine being replaced by a more powerful GE F-414 engine, and a new generation of avionics developed in India. It will also feature a new-generation data-link – which could be the NATO standard Link 16, which India is now eligible to buy after signing the COMCASA communications security agreement with the US.

Dhanoa made it clear that implementing these capability improvements were a pre-condition for more IAF orders for the Tejas.

The IAF has also initiated the procurement of another 114 medium fighters from the global market, a tender in which the F-16, F/A-18, MiG-35, Rafale, Gripen E and Eurofighter Typhoon are competing. The bulk of those fighters are to be built in India under the Strategic Partner model.