Will the
new regime come to Indian Armed forces rescue?
Text by Sandeep Unnithan. Graphic by Saurabh Singh
At a national security meeting in Delhi on April 16, 2010,
then-defence minister A.K. Antony assured top military commanders that budget
constraints were a thing of the past. "There will never be a paucity of
funds," the minister said confidently, "as far as it concerns the
modernisation of the armed forces." It was music to the ears of the
officers.
Click to enlarge
The economy was on an upswing and military purchases were on
track. Barely a month before the meeting, India had signed a $760 million deal
for 12 VVIP helicopters for the Indian Air Force (IAF). Other big-ticket
acquisitions were being processed. Among them was a $4.1 billion contract for
10 strategic lift aircraft from the US-unheard of for the IAF, which had till
then bought entire fleets of Russian fighter aircraft for lower. Military
planners of all three services in the room, therefore, had no reason to
disbelieve their minister. A few days later, a serving armed forces chief would
remark that money was no longer a concern: "It's a blank cheque. Funds are
not an issue any longer, what matters is what we need and when we need
it." But the heady days the four-star officer was looking forward to-the
creation of a modern force with enough firepower to blunt any conventional
misadventure in the region-would never come.
Defence scandals surfaced in the following months, starting with
the Sukna land case, and combined with a sliding economy, paralysed policy and
decision-making. With Antony willing to err on the side of caution and stall
rather than risk a scandal, his ministry all but shut down for business. The
result: India's defence modernisation plans have crumbled into a mess.
The lost years
The policy paralysis has hit the armed forces the hardest, with
little progress made in most of their ambitious projects and plans to
modernise. The irony is that the Indian military is the only one of its kind
that is swimming against the global trend of being "lean and mean" by
raising the number of troops. Key suppliers such as Rheinmetall, Rolls-Royce
and Finmeccanica were blocked from dealing with India under the 'put on hold'
principle for firms suspected of corruption. The only major defence deals
sealed by the UPA government in its last years in power was a contract to equip
the IAF with basic trainers and another to upgrade the Mirage 2000 fighter
fleet.
As decision-making came to a standstill, thorny issues were kept
pending for months before being quietly taken off the agenda, say members of
the Defence Acquisition Council (DAC), the apex body of the ministry on
purchases. Though in some cases, the laborious process of floating tenders, and
evaluating and shortlisting suppliers is on, the process seems tailored to delay
or stall final agreements. The lack of drive in the defence ministry has led
international companies to scale down operations in India. Major firms such as
BAE Systems are cautious about expanding in India while the likes of Textron
(Bell) and Sikorsky have shifted focus to the civilian market. Even European
giant EADS, now being renamed Airbus, has downsized. Rheinmetall has shut shop.
Months after the new Government came to power, many modernisation plans remain
in disarray and funds for emergency purchases are hard to find.
The chronic 'Antony delay' in decision-making, as some in the
forces call it, together with a falling rupee and rising inflation has meant
that India's pending military modernisation projects are today worth more than
$35 billion. Many of these projects are stuck in their final stages, and
several are not expected to make it due to the severe funds crunch the NDA
Government cannot overcome in a hurry. These range from critical artillery for
the mountain strike corps coming up on the China border to aerial equipment
crucial to maintain a conventional edge and undersea capabilities. At the heart
of the problem, officers and analysts say, has been the UPA government's
tendency to not only stall modernisation attempts but also shrink the slice of
national resources allotted to the forces.
Indian defence spending has come down to an all-time low over the
past four years. In terms of the most acknowledged global measure of spending,
the amount of money India allots to defence as a percentage of GDP is at its
lowest in more than four decades at 1.74 per cent. This has steadily declined from
an average 3 per cent in the 1980s. The global average is 2.5 per cent even
though there are wide variations. NATO guidelines for its members stipulate 2
per cent of GDP for defence while China has never spent below 2 per cent of its
vastly higher GDP on security. "It is clear that current allocation is
insufficient to undertake military modernisation which is necessary to meet
emerging threats and challenges. Defence spending has been stagnating over the
years," says defence analyst Brigadier Gurmeet Kanwal (retd).
Arming without aiming
Not only has India's defence spending fallen but another unhealthy
trend that is crippling modernisation of the forces has emerged-the steady jump
in revenue expenses such as paying salaries, maintaining infrastructure and
filling of diesel tanks. This head will account for more than 60 per cent of
the defence budget for 2014-15. Although the defence budget has grown by an
average 12 per cent annually in the last few years, much of the increase has
been gobbled by the increasing salary bill, rising fuel costs and exchange rate
spikes. Last year, the government had to transferRs.7,800 crore earmarked for
modernisation to meet rising fuel costs. "There is a crunch that no one
can deny," laments a three-star IAF officer.
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"The money we have this year for new contracts is just around Rs.2,500
crore. The rest of the capital budget is committed to tranches of payments for
previous long-term acquisitions." Those past deals include the Sukhoi
Su-30MKI fighters, Boeing C-17 planes and C-130 transporters. A brigadier told
INDIA TODAY that the Army's budget for signing new deals is limited to just
around Rs.500 crore this year, a pittance for the million-plus force.
In February this year, at a gathering of the world's top defence
suppliers who had come to Delhi to showcase their products at the Defence Expo,
Antony dropped a bombshell many expected. Commenting on what has been called
the biggest ever global tender- the acquisition of 126 fighter aircraft for the
air force-Antony said "there is no money left for this now". By
confessing that "almost all money has been spent", he dealt a mortal
blow to the Defence Expo on its first day, leaving top global defence
executives wondering about the point of participating in the event.
How did India, in a short span of four years, slip from "no
paucity of funds" to "all the money has been spent" without
giving an exponential edge to the combat abilities of its armed forces? Some
part of the answer lies in the argument central to the book, Arming Without
Aiming: India's Military Modernisation, by defence experts of the Brookings
Institution, Stephen P. Cohen and Sunil Dasgupta. The book argues that India
lacks a security strategy and hence also a rudder for military modernisation.
But beyond that simple formulation, defence modernisation programmes ended up
getting muddled under the UPA even when there were clear, present and immediate
needs. Indecision within the ministry, open squabbling with the finance
ministry and political considerations have resulted in a 'procurement of
convenience' where projects deemed to be easy to process have gone through
while other, more critical requirements have been ignored. For instance, IAF's
$4.1 billion deal to buy 10 transport aircraft from the US was an easy-to-process
government-togovernment deal. The US pushed it strongly and India was willing
as it was seen as uncontroversial and clean. The only problem was that the
IAF's hard-bargained funds were spent on a logistic capability instead of on
acquiring firepower and bolstering the fighter squadron strength.
"Airpower is inherently an offensive force. We need to invest
in firepower delivery to take the war to the enemy instead of focusing largely
on what are logistic elements. The problem is that each of the three forces are
deciding acquisitions on their own. There is no national defence policy and
hence no coherence as to what is our intent when arming the military,"
says Air Marshal P.S. Ahluwalia (retd), former chief of the Western Air
Command. "Also, 80,000 new troops on the China border is strange. The
revenue budget will hit the ceiling. Do the Chinese intend to capture territory
here? I don't think so," Ahluwalia says, referring to the proposed
mountain strike corps.
No quick fix
In one of his few media interactions after taking charge as
finance and defence minister in May, a visibly exasperated Arun Jaitley remarked
that it remained to be seen "how many bills are pending and how much we
can do" before any action could be taken. He, however, ruled out a
quick-fix solution in the form of a jump in budgetary support. "As the
base of the economy expands, even a lesser percentage (of GDP) may increase the
amount. Whatever amounts are necessary, our endeavour in due course is to make
them available," Jaitley said.
The new Government is obviously being cautious as it tries to
figure out the mess and move forward. Over the last three months, new policy
decisions on manufacturing, export and procurement have been notified with a
view to give some direction to defence modernisation. The central theme,
officials say, is to encourage private sector participation in defence
production, promote joint ventures in India with foreign collaboration, give
incentives to Indian firms to lead all major procurements and reduce foreign
exchange outflow. And this is already beginning to translate into action on the
ground.
At a meeting in late August, a threestar air force officer met
senior representatives of four top Indian defence manufacturers in his office
in Vayu Bhawan. The agenda was to push three cutting edge projects the air
force has identified for private sector participation- the LCA MK II project to
create a new version of the fighter with more thrust; the planned Advanced
Medium Combat Aircraft (AMCA) project to develop a new indigenous fighter
aircraft; and the futuristic unmanned combat aerial vehicle (UCAV). The message
was clear: identify foreign technology partners, form collaborations and come
back with a viable plan and these projects could be yours, ending the tradition
of involving PSU Hindustan Aeronautics Limited (HAL) in every military aviation
programme.
The Army is preparing to go the Navy way-fully indigenous
manufacturing with foreign assistance if needed-when it comes to purchasing new
guns. About 4,000 artillery guns are expected to be bought in the next decade.
The plan now is to ensure that all future procurements will be made only from
Indian companies, many of whom have acquired technology from across the world
by buying out patents and even entire production plants. Besides policy
decisions, the new regime is taking tough calls on projects stuck in the pipeline.
Last month, it cancelled the deal for 197 light choppers for the Army. The deal
was hanging for almost four years as the UPA had put it on hold following
allegations of irregularities. The cancellation has delayed the modernisation
of the Army Aviation Corps, but some in the army are relieved that a decision
has been taken and a new process to buy the choppers can be initiated. The
defence ministry has also approved the contract for 15 Chinook heavy lift
choppers and the deal for 22 Apache attack helicopters. As part of its focus on
promoting modernisation projects that entail production and development in
India, the Government has approved procurement of 118 Indian-built Arjun tanks
at a cost of Rs.6,700 crore. The Army is also set to get its first
artillery systems in three decades with Jaitley clearing a Rs.900 crore
project to purchase 40 Arjun 130-mm Catapult systems, mobile artillery that the
Army needs badly.
Besides, the ministry has agreed to upgrade and refit six
submarines at a cost of nearly Rs.5,000 crore, a move that will partly
address concerns over the health of the underwater fleet. Another major
decision has been to eliminate HAL from an air force project to replace its
Avro transport aircraft fleet. The contract, likely to cost close to Rs.30,000
crore, will be handled by Indian private companies in collaboration with a
foreign partner. Although some defence analysts feel the policy of the new
Government is driven largely by a consortium of Indian private sector players,
the forces won't complain as long as these moves fulfil their demands. The
private sector, for one, is excited and this can create thousands of high
technology jobs even though the process of shifting manufacturing to India is
expected to be slow.
Fixing the Indian defence mess is not expected to be easy and the
new Government will be faced with several tough calls in the months and years
to come. And until a full-time defence minister is named, the task will sit
heavy on the shoulders of Jaitley, who is already burdened with the enormous
responsibility of fixing the Indian economy.
Follow the writer on Twitter @manupubby
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