Implosion: India’s Tryst with Reality
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52. http://ridingtheelephant.wordpress.com/2008/11/11/india%E2%80%99s-telecom-minister-%E2%80%9Cshould-be-?red%E2%80%9D-for-allowing-a-company-700-profit/
53. ‘Raja should be fired’, Mint, 11 November 2008, http://www.livemint.com/2008/11/10212808/Raja-should-be-fired.html?atype=tp
54. Arun Shourie talking to JE, September 2013, said he met Manmohan Singh in October 2009 in the gallery of the Rajya Sabha. He also explained the events in August 2013 in a television interview – video here: http://ibnlive.in.com/news/narendra-modi-has-the-best-poll-agent-in-manmohan-singh-arun-shourie/417441-37-64.html
55. ‘Here’s how CAG report on 2G scam blasts Raja’, Rediff.com, 16 November 2010, http://www.rediff.com/business/slide-show/slide-show-1-tech-what-the-cag-report-on-2g-scam-says/20101116.htm
56. http://ridingtheelephant.wordpress.com/2010/11/15/another-corrupt-indian-politician-sacked-but-can-anything-ever-change/
57. ‘Underbelly of the Great Indian Telecom Revolution’, Economic and Political Weekly, December 2010, http://www.epw.in/insight/underbelly-great-indian-telecom-revolution.html
58. ‘Lawmaker Kanimozhi Arrested in Telecom Case’, Wall St Journal on line, 20 May 2011, http://online.wsj.com/article/SB1000142405274 8704904604576334762982058284.html
59. http://ridingtheelephant.wordpress.com/2010/12/03/radia-tapes-highlight-media-flaws-that-fit-with-modern-india/ and http://riding theelephant.wordpress.com/2011/01/04/jairam-ramesh-wins-in-2010-for-tackling-india%E2%80%99s-corrupted-environment/
60. http://www.thehindu.com/multimedia/archive/01181/Coal_Block_ Questio_1181374a.pdf
61. http://www.hindustantimes.com/India-news/NewDelhi/Coal-scam-Firms-in-Chhattisgarh-and-Jharkhand-benefited-most/Article1-917932.aspx
62. http://indiatoday.intoday.in/story/coal-scam-bjp-demands-pm-resignation/1/213587.html
63. CBI ‘made to’ share Coalgate report with government, Times of India, 27 April, 2013 http://articles.timesofindia.indiatimes.com/2013-04-27/india/38861258_1_status-report-coal-scam-probe-coal-ministry
64. Coal block allocation scam: K M Birla named in CBI’s report, Business Standard, 16 October 2013, http://www.business-standard.com/article/current-affairs/coal-block-allocation-scam-k-m-birla-named-in-cbi-s-report-113101500114_1.html
65. Prime minister’s office press release, 19 October 2013, http://pmindia. gov.in/press-details.php?nodeid=1720
66. ‘PM’s statement in Parliament on the Performance Audit Report on Allocation of Coal Blocks and Augmentation of Coal Production’, Prime Minister’s office press release, 27 August 2012 http://pmindia.gov.in/pmsinparliament.php?nodeid=62
67. http://www.bjr.org.uk/
68. http://ridingtheelephant.wordpress.com/2010/12/03/radia-tapes-highlight-media-flaws-that-fit-with-modern-india/
69. ‘Paid news in the Hindi press’, The Hoot, 12 May 2010, http://thehoot.org/web/home/story.php?storyid=4545&mod=1&pg=1&sec tionId=4&valid=true
70. ‘Paid-for news – News You Can Abuse’, Outlook, 21 December 2009 http://www.outlookindia.com/article.aspx?263242
71. Revolution 2020: Love, Corruption, Ambition, Rupa Publications India, 2011, http://www.chetanbhagat.com/books/revolution-2020/
72. ‘Chetan Bhagat, India’s Charles Dickens’, Rediff.com, 27 December 2012, http://www.rediff.com/getahead/report/chetan-bhagat-indias-charles-dickens/20121227.htm
17
Indefensible Defence
Poor governance and extensive corruption have such a strong and negative impact on the way that India’s defence establishment operates that it is reasonable to wonder what the Ministry of Defence and the armed forces, with their annual budget of approaching $40bn and a vast defence establishment of over four million people, see as their primary role. It should be to protect India by building up the defence capability with the latest technologies and efficient well-trained manpower, utilizing the best available domestic manufacturing industry to produce world-class aircraft, tanks, guns and ships. Instead, it seems to be to protect jobs for bureaucrats, armed forces officers and other public sector employees, giving prestige and powers of patronage to those at the top of the establishment, and maintaining India’s position as the world’s biggest arms importer, while sustaining extortion and bribes at every level of government from ministers and top bureaucrats down through the defence ministry and the armed forces to poorly performing public sector corporations and ordnance factories.
Exempted from the economic liberalization measures of 1991, the defence establishment has resolutely resisted attempts to open up the sector, apart from rare exceptions. This has ensured that it can continue on its jugaad path of mixing expensive imported equipment with the worst practices and outdated systems, relying on chalta hai to cover its tracks. As a result, India’s defence preparedness for possible conflicts is declining, despite occasional advances such as the launching, in 2012 and 2013, of the first nuclear-propelled submarine and aircraft carrier built in India, and a partially successful Russia-assisted missile programme.
With a capital expenditure budget of some $16bn (2013–14), India has been the world’s largest buyer of foreign defence equipment since 2006, accounting for 10 per cent of global arms sales.1 It spends at least 70 per cent of the budget on importing aircraft, tanks, guns and other weapons and equipment that it should be fully capable of making itself. Of the remaining 30 per cent, two-thirds is spent on equipment produced, mostly inefficiently, by the public sector, which leaves only about 10 per cent for Indian private sector companies. In the mid-1990s, a committee headed by A.P.J. Abdul Kalam, a senior defence bureaucrat and scientist and later India’s President, said that the indigenous content of India’s weapons should rise from 30 per cent to 70 per cent by 2005, but nothing happened.
China was the world’s biggest weapons importer till 2006–2007, mostly buying old Soviet-era technology from Russia,2 but it has dramatically modernized its defence manufacturing industry in recent years. This has not only cut its need for foreign equipment, but has also turned it into the world’s fifth-largest arms exporter with $11bn orders between 2011 and 2012.3 (Pakistan, its close ally, takes 55 per cent of the sales,)4 This sort of transformation is something that India has singularly failed even to try to do despite its success in other areas such as space technology (in November 2013, it launched a ten-month spacecraft mission to Mars).
Manmohan Singh’s national security advisor, Shivshankar Menon, has warned that talk of India’s strategic autonomy and of increasing degrees of independence has little meaning unless there is ‘a quantum improvement’ in India’s defence production and innovation capabilities.5 ‘A country that does not develop and produce its own major weapons platforms has a major strategic weakness, and cannot claim true strategic autonomy. This is a real challenge for us all,’ he said.
A chief of army staff, General V.K. Singh, highlighted inefficiencies (during a public row over his retirement age), in a letter he sent to the prime minister that was leaked to the media.6 He said that 80 per cent of India’s armoured tanks were night blind, and listed tank ammunition and air defence problems. The infantry had ‘deficiencies of crew-served weapons’ and lacked night-fighting capabilities. Elite special forces were ‘woefully short’ of ‘essential weapons’, and there were ‘large-scale voids’ in critical surveillance capabilities. ‘Like the medieval times you fight morning to evening and take rest at night – Pakistan has 80 per cent of tanks capable to fight at night,’ said Rahul Bedi, a defence journalist.7 ‘Planning and strategic thinking of the Indian Army’s procurement programme is in complete shambles. Bureaucrats and politicians are throttling the procurement process’.
The high level of foreign purchase has been needed because India’s generally inefficient defence research and its defence public sector undertakings (DPSUs) could not meet demand – not even, till recently, for high-technology equipment like modern helmets and night-vision goggles, let alone the latest fighter aircraft, submarines and guns. This is primarily because the private sector has
generally been kept out of doing more than supplying minor components, while the defence establishment enjoyed the combined benefits of protected jobs, patronage, prestige and foreign kickbacks. Yet private sector companies in the field of automobiles, engineering systems and information technology have proved themselves in the past decade to be internationally competitive and have the potential to become significant defence manufacturers.
Tatra Tangle
A scandal that dominated Indian newspaper headlines for weeks in 2012 brought together all the corruption, poor public sector production, lack of technological development and defence establishment intrigue that has been allowed to develop since India’s independence, especially in the army. This was coupled with disarray at top levels, exposing intense personal and caste-based rivalries among generals, especially those in line to become the chief of army staff.8 The scandal emerged during General Singh’s humiliating public row with the government over his birth date, which dictated when he would have to retire. In addition to criticizing poor army equipment, he also alleged that he had been offered a Rs 14 crore ($2.8m) bribe by another general in the army to continue to buy nearly 1,700 all-terrain Tatra army trucks that he claimed were faulty (not to be confused with India’s Tata Motors, which also makes army trucks).
The vehicles, which are widely admired for their flexible-axle agility on rough ground, are made (complete or as components) in the Czech Republic by Tatra Trucks, which is controlled by an Indian-owned UK-based company called Vectra. They are assembled in India by Bharat Earth Movers (BEML), a PSU, under a deal that was struck in 1986 when Rajiv Gandhi’s Congress government was in power. Technological know-how was to be gradually transferred to BEML so that 85 per cent of the trucks would be made in India by 1991, but only 50–60 per cent Indian content had been achieved 21 years after that date. The left-hand drive had not even been changed to India’s right-hand drive, yet some 7,000 trucks had been delivered to the army. BEML also incredibly waived its rights to the axle technology, which was the trucks’ key asset. The business was investigated by the CBI with allegations that the army was charged as much as 100 per cent, and maybe more, for the trucks above their ex-factory cost and that spares were also overcharged, but little progress was made on the case.
Manoj Joshi, a journalist and defence specialist who was a member of a government security taskforce in 2013, says the army chief of staff in 1987 told him that he had wanted to import the trucks direct from what was then Czechoslovakia, but had been persuaded to allow BEML to handle them and indigenize the production. ‘Over the years, BEML has merely taken kits and put them together and passed them on to the army after marking up their prices. As the army chief forecast, the trucks would have been cheaper to import,’ wrote Joshi.9
A Trail of Inadequacy
To see the problems in perspective, follow this trail. The inefficient, heavily protected public sector’s involvement with new weapons starts with a massive spread of defence research organizations under a vast Defence Research and Development Organisation (DRDO) that has had a monopoly on design and development. Then there is an equally massive spread of nine DPSUs, and 39 government ordnance factories run by an Ordnance Factory Board. Together employing some 1.8m people,10 these organizations have had first rights to virtually all orders unless a prior decision has been made to buy abroad. They are supposed to secure India’s defences by producing the best that the country can obtain, but instead they are self-sustaining monoliths that have blocked the entry of the increasingly capable and more entrepreneurial private sector which, they claim, cannot be trusted to handle India’s defence secrets. Yet they themselves share secrets with foreign private sector suppliers, as do the armed forces.
Equipment specifications frequently aim at a level of technological perfection and precision that slow down heavily bureaucratic tendering processes, and are often designed to favour either a specific Indian public sector producer and/or a specific foreign supplier. Decision making is so cumbersome and lethargic that expensively produced equipment is often years out of date by the time it is delivered – some projects are never completed such as a Trishul SAM missile that was abandoned after 17 years. Public sector maintenance is inadequate and undermines reliability. Foreign orders often involve large bribes of perhaps five per cent or more of the contract value, and the use of agents who have been officially but unsuccessfully banned since the 1980s, which companies expose to trip up rivals.
The government has no illusions about the damage that is being done. Pallam Raju, minister of state for defence from 2006 to 2012, warned at an army seminar in February 2010 about the risks, implicitly ceding potential victory to China which has, for example, better field and rocket artillery and conventional battlefield ballistic missiles. ‘History is a testimony that no nation has been able to prevail in a conflict with lower threshold of technology in the defence sector,’ he said. ‘Countries or the armies with lower technologies would have won a battle here and there, but you will find hardly any example, wherein a higher technology military power has been overwhelmed by lower technology power in the long run’.11
A background paper prepared for the seminar revealed what General Singh talked about later, saying that ‘most of India’s ground-based air defences are obsolete’. Upgrades of basic artillery equipment were ‘ten years behind schedule’.12 An array of generals attending the event, which was being held at India’s biennial national defence exhibition, did not blink at such unpatriotic statements – they knew only too well they were true. Three months later, in a discussion document arguing for more foreign direct equity investment in defence companies, the commerce ministry said that ‘only 15 per cent of equipment can be described as ‘state-of-the-art’ and nearly 50 per cent is suffering from obsolescence’.
The armed forces have been warning the Ministry of Defence for years to accelerate orders for urgently needed new equipment. In a September 2012 policy brief for the National Bureau of Asian Research, Gurmeet Kanwal, a retired army officer and former director of the Delhi’s Centre for Land Warfare Studies, wrote: ‘The army’s mechanized forces are still mostly “night blind”. Its artillery lacks towed and self-propelled 155-mm howitzers for the plains and the mountains and has little capability by way of multi-barrel rocket launchers and surface-to-surface missiles. Infantry battalions urgently need to acquire modern weapons and equipment for counterinsurgency and counterterrorism operations to increase operational effectiveness and lower casualties’.13 A year later, Jane’s Defence Weekly reported that it had been told by a senior army artillery officer that the range of some field guns on the Chinese and Pakistani frontiers ‘barely crosses India’s borders, rendering them ineffectual’.14 Yet the defence ministry failed to finalize a contract to buy 145 M777 lightweight howitzers from the US arm of the UK-based BAE Systems in October 2013, even though the company was saying it would have to close down its production line.15
In the Indian Air Force, the problem is different. Orders for new aircraft can be excessively slow – it took India 20 years to order Hawk trainers from the UK in 2004 – but they do happen. There is, however, a high rate of crashes. Out of 872 Russian (originally Soviet) MiG fighters bought, or partially made in India by the government-owned Hindustan Aeronautics (HAL), between 1966 and 1980, as many as 482 had crashed by mid-2012, killing 171 pilots. Reporting the figures to parliament in May 2012, Minister of Defence A.K. Antony said that the causes of accidents were both human error and technical defects16 – inadequate pilot training, poor-quality manufacture and maintenance by HAL, cannibalization of aircraft for spares, and tough conditions.17
Ajay Shukla, a journalist and former army officer who specializes in defence issues, wrote in March 2013 that over the previous five years, a total of 50 aircraft had crashed, including 37 fighters and 13 helicopters, causing the death of 17 pilots, 18 service personnel and six civilians.18 Quoting figures released by the defence ministry in parliament, he said that the air force lost the equivalent of one figh
ter squadron (16–18 fighters) in crashes every two years. Consequently, it had only 32 or 33 operational squadrons compared with a minimum requirement of 42. ‘With each [Russian] Sukhoi-30, the cheapest aircraft being currently inducted, costing close to Rs 350 crore, the loss of eight fighters per year to crashes amounts to an annual loss of over Rs 2,800 crore,’ he added. Costs would rise if and when the Rafale, a French fighter produced by Dassault of France which was then being considered, was purchased at perhaps Rs 450–500 crore per aircraft. That was also the anticipated price for an Indo-Russian fifth-generation fighter aircraft scheduled to become operational towards 2020.
The Indian Navy has a better record than the other armed services. It has been developing a capacity to design and build most of its warships in India,19 which the army and air force do not have for their equipment. It also goes for gradual improvements in its equipment, whereas the army and air force tend to look for dramatic new prestige weapons that slow down purchases.
India initially learned its shipbuilding skills from British Leander-class frigates that it built in the 1970s, and from Kashin-class destroyers sourced from Russia in the 1980s. The Delhi class destroyer was built in the 1990s followed by successfully designed frigates and corvettes and, more recently, an aircraft carrier that benefited, along with other navy ships, from the development in India of warship-grade steel at half the cost of imports.20 ‘The navy’s import content is noticeably lower than the other services,’ says Shukla.21 ‘In the current crop of warships being built, there is 90–95 per cent indigenisation in the “float” section such as the hull, about 60 per cent in the “move” section (engine, transmission), and 40–45 per cent on weapons and sensors.’ The DRDO’s few successes include the development of this special steel with the Indian public and private sector, and the design of a sonar radar. The navy’s weapons systems are still imported, the DRDO having failed with the Trishul missile.