Defence Industry

Defence Procurement Update
Star Rating Loader Please wait...
Issue Vol 24.3 Jul-Sep 2009 | Date : 04 Aug , 2009

Since the 1960s, the Indian Armed Forces have been the main source of sustenance fuel to the erstwhile USSR and later Russian weapons industry. Over 80 percent of our military hardware is of Soviet origin. In the first 15 years of independent India, no new weapons were procured. The governments then were focusing on the indigenization of the weapon systems. That is why the Indian Army had to fight the 1962 Indo-China war with Second World War era weapons, while the Chinese soldiers were equipped with latest automatic weapons.

After the war, New Delhi learnt the tough lesson and turned towards, USSR for the modernization of its forces. Soon all the three services started getting weapons of USSR make. Initially it was a win-win situation for both the countries, as most of the western countries were not willing to sell their modern weapons to India as they considered it close to the Eastern Bloc. Moreover, western weapon systems were too expensive for the very modest Indian economy. India therefore had to turn towards the USSR which did not ask for hard cash and was willing to sell weapons in lieu of grain, wool, etc. India also got a reliable friend to strategically distract its enemy, China. USSR seized the opportunity of getting a permanent customer for its weapons industry. It helped to ensure a smooth flow of money to the USSR for the development of the next generation weapons. USSR also got a reliable friend in South East Asia to counter the growing influence of the USA.

But the situation has changed now. The IAF has made a great strategic move by turning towards the West for most of the main weapon platforms.

The main reasons for this shift are:

  • Consequent to the 1992 financial reforms, India has evolved as the biggest arms market for companies all over the world. So most of the western countries have been doing serious business with India. This has helped in creating a relationship of trust between India and the western countries.
  • India is now a strong economy with an average growth rate of almost 9 percent. Increased defense budgets allow Indian Armed Forces to go for more advanced, reliable and technologically sophisticated western weapon systems.
  • In next 10-15 years, India will procure weapon systems worth $40 billion. All the big daddies in the weapon business want to grab the biggest piece of the cake.
  • In the past, India had put all its eggs in the same basket. More than one vendor will remove dependency and competition will force all the competitors to field the best weapons and offer the best possible deal.
  • Quality standards of western weapons are far superior than that of Russian make. French Mirage aircraft and Israeli weapon systems have scored their impression on the Indian Armed Forces.
  • Indian Armed Forces, especially the IAF, have suffered great losses due to lack of spare parts.
  • Russia has given India a difficult time in fulfilling its promises like the transfer of technology of T 90 tanks.
  • On most occasions, Russia has been failing to meet the promised deadline of delivery, like Project 11356 Krivak IV class guided missile frigates (built in 2004), Aircraft Carrier Gorshkov and IL 76 aircraft for AWACS. Russia miscalculated the time taken to modernize the IL 76 (for AWACS program) by integrating new engine and avionics that caused the whole program to be delayed by 1.5 years.
  • $964 millions Aircraft Carrier Admiral Gorshkov deal was signed in 2004 after long negotiations of six years. About two years ago, Moscow informed that it had miscalculated the length of wiring to be done inside the ship. Moscow demanded more money and raised the total cost of the project to $2.2 billion and then to $2.9 billion. Finally, India agreed to pay $2.2 billion, but Moscow insisted on $2.9 billions. This proved to be the last nail in the coffin.

Due to all these factors, Indian forces are now considering and selecting western weapon systems. The contract for of French Scorpene Submarines and contract of developing Barak-NG Missiles are few examples. New Delhi is so annoyed that on the induction ceremony of the AWACS, Defence Minister AK Antony gave a dressing down to Russian and Israeli ambassadors and asked them to ensure that the defence equipments are delivered on scheduled time. There are couple of follow-on orders that Russia was sure of gettin, but the IAF has favored western platforms. These two orders are aircraft for AWACS system and mid-air refueller aircraft.

India is set to place a follow-on order for three more AWACS systems and is seriously considering American Gulfstream, Brazilian Embraer jets and European Airbus. An official said, “We will replace the IL-76 by a modern aircraft like the Gulfstream or Embraer. Both have an endurance of nine hours – that is close to what the Russian aircraft has”. But selecting any of these two aircraft will have the problem of having too many platforms in the inventory, as the IAF will have to maintain separate maintenance line for each type of aircraft. The IAF is already considering Airbus A330 multi-role tanker transport (MRTT) for an order of six more mid-air refuellers as the IAF found MRTT far better than IL-78 in the crucial flight evaluation. In case the IAF selects Airbus MRTT for both the orders then this the issue of having too many platforms in the inventory will be resolved.

Currently the IAF is using IL-76 and IL-78 and their maintenance line is already in place. Selecting Airbus MRTT will require one more maintenance line but this will remove dependency on Russia and send a signal to Moscow that arm-twisting will not be tolerated any more.

The IAF is also considering Boeing C-17 Globemaster III as its new heavylift aircraft. C-17 is one of the latest and most modern cargo aircraft that has a capability of taking-off and landing on short runways with 70 tons, whereas IL-76 has a capacity of 45 tons only. Moreover, IL-76 is a thirty year old platform and can be upgraded with more powerful engines, better equipments and avionics, but the old platform has its own limitations. Sources said, “The IAF has selected C-17 as the new heavylift aircraft and is all set to place an initial order of 10 aircraft through the US government’s Foreign Military Sales (FMS) route, and may later go in for a follow-on order. The defence ministry is considering the proposal and the first aircraft will be delivered in three years after signing of the contract.”

In August this year, India will start the flight evaluation trials for the 197 Light Utility Helicopters LUH. Five competitors for the $3 billion contract are Russian Kazan and Mil, American Sikorsky, Italian Finnmeccanica and European helicopter manufacturers Eurocopter. Last year, Request For Proposal (RFP) was sent to six companies. Five out of the six companies responded. Bell Helicopters of America backed out of the race due to 50 percent offset clause associated with this contract. Previously, Eurocopter was selected by the armed forces but the contract was cancelled by the Defence Ministry in December, 1997 because Eurocopter had sent the civilian version of the helicopter for field trials. This time, Eurocopter will be sending the military version of the helicopter and is expected to win the contract. Out of the 197 helicopters, 133 will be given to the Army and the rest will be given to the Air Force to replace their aging fleet of Cheetah and Chetak helicopters that are being used in high altitude conditions in air maintenance roles and for surveillance, as well as search and rescue missions.

All these developments are giving the desired results to New Delhi. Moscow is now on the back-foot and has understood that it will face competition in the market it has been ruling. Russia has indicated that it is ready to look at a downward revision of the price for the Aircraft carrier, Admiral Gorshkov. Moscow has also resolved the issue of Transfer of Technology of T-90 tanks and has released $64 million for the development of multi-role transport aircraft (MTA). Russia and India signed an agreement in 2007 to develop a 20 ton cargo capacity plane to fulfill futuristic needs of both the countries. Ilyushin design bureau, Irkut Corporation and Hindustan Aeronautics Ltd will develop the aircraft. Production of the aircraft is expected to begin in about eight years and both the countries will equally share the cost of the $600 million project. India will procure about 45 aircraft and Russia is expected to get 100 aircraft to replace An-12, An-26 and An-32 aircraft. Thus the IAF will have three different maintenance lines for three types of aircraft of different cargo capacity (Boeing c-17, Airbus A330 MRTT and Russian MTA) and will not be dependent on of any particular vendor. IAF will also have the option to switch to any vendor at any time.

Progress Towards Blue Water Navy

The Navy is an unique arm of the Indian Armed Forces. True to the nature of the seas it sails over, the Navy has vast imagination, tons of potential and patience to wait till it transforms into a true blue water Navy. The Navy is the only arm of the armed forces that has been trying to remove dependency on foreign vendors and has been encouraging indigenous efforts to become self-reliant. The Navy has its own design bureau that started working on designing small ships like patrol boats, corvettes, etc and kept on honing its design skills. It has successfully designed 7000 ton class destroyer and is now designing the 44000 ton aircraft carrier. The project, codenamed P-71, started in 2002 with the initially sanctioned amount of Rs 3,260 crore. The project started gaining momentum in 2006, when the production of warship building blocks began in Cochin Shipyard Ltd. This is the latest technology in building large ships. The Cochin Shipyard Ltd. has already procured 8,000 tons of steel from SAIL and DRDO. The keel of the Indigenous Aircraft Carrier (IAC) was laid on 28th February, 2009 and it is expected to be handed over to the Navy in 2014. India will become the fifth nation in the world to have the capability of making aircraft carriers. The other four nations are the US, Russia, France and the UK. Among these four, UK is still to produce a ship of 44,000 ton capacity. The IAC will have the capacity of handling 30 aircraft, i.e. Russian Mig-29K, indigenous Light Combat Aircraft and Kamov 31 helicopters.

Indian pilots are already training to fly Mig-29 K in Russia. The deal for 12 Mig-29K fighters and 4 Mig-29K UB operational conversion trainer aircraft. The total deal which includes the aircraft carrier Admiral Gorshkov is worth $740 million. These 16 medium multi-role combat aircraft are being upgraded into dedicated, network-centric information warfare platforms that possess force-multiplier capabilities such as airborne early warning and control. The first batch of four aircraft is expected to be delivered by the end of this year and the rest will be delivered by 2010. It is interesting that all the Mig-29Ks will be here by 2010, but the aircraft carrier Admiral Gorshkov for which Mig-29Ks were bought will not be delivered to India before 2013. Russians raised the total cost of the aircraft carrier to $2.2 billion and then to $2.9 billion. Though Moscow has agreed to look at the downward revision of the final amount but the aircraft will not be delivered before 2013 against the original deadline of 2008.

Russia has also promised that it will meet the scheduled deadline of delivering three Project 11356 Krivak IV class guided missile frigates. The frigate has deadweight of 4,000 metric tons and speed of 30 knots. This was a follow-on order placed in 2006 at a cost of $1.6 billion. General Director of the Yantar shipyard, Igor Orlov confirmed that the first ship will be floated out this year, the second one in spring 2010 and the third a little later. All the three ships will be delivered by 2012 and will be equipped with Brahmos supersonic anti-ship cruise missiles and not the Club-N/3M54TE missiles installed on previous frigates.

Defence Acquisition Council (DAC) has given in-principle approval to the Navy’s proposal of construction of four more Kolkata class destroyers. The follow-on order will be given to Mumbai based Mazagaon Dockyards Limited under the project name “Project 15B”. MDL is currently constructing three Kolkata class destroyers under “Project 15A” and is expected to start the delivery (one each year) starting from 2010. Subsequently, the MDL will start working on Project 15B. The MDL has given an order for navigational equipments, based on the Consilium Selux radar, for three destroyers at a cost of $4.6 million. With a 6,800 ton displacement, these vessels will be able to cruise with a speed of 30+ knots. They will have advanced stealth features and will be armed with Brahmos missiles and Israeli Barak air-defence missile systems. They will also be equipped with ‘Nagin’ active towed array radar and ‘Humsa-NG’ hull mounted radar. In total, the Navy will have seven Kolkata class destroyers.

The Navy’s design chief, Rear Admiral MK Badhwar informed that the cost of each destroyer being built under Project 15-A is Rs. 3800 crore taking the total cost of the project to Rs. 11,000 crore. Project 15-B should be logically cheaper. Project 15-A is taking longer than expected as it incorporated significant changes and upgrades compared to its predecessor, Project 15 – Delhi Class destroyers. But Project 15-B will have fewer design challenges; it will differ from Project 15-A only in weaponry and sensors. The MDL thinks that if the order is placed by end-2009, the first 15-B destroyer will be commissioned in the mid-2015 as the design and planning will take about 1.5 years, and once the design is finalized, the first ship should roll out in about four years.

Under another indigenous project, follow-on order of four more Shivalik class guided missile stealth frigates has been approved by the government. The MDL is currently building the first batch of the frigates that are expected to be delivered to the Navy by 2012. Consequently, the MDL will start constructing the next batch of four frigates. GE LM 2500 gas turbines will be used to power the frigates. Earlier this year, the US State Department gave “stop all work” instructions to GE as these engines are dual-use power plants. They can be used on civilian as well as military vessels. For this reason, these were listed in the US Munitions List and did not require any export license from State Department’s Directorate of Defence Trade Controls (DDTC). However to be able to use the turbine on a military vessel, GE needed to obtain Technical Assistance Agreement (TAA) from the State Department. After the “stop all work” instruction, GE applied for TAA from the Political-Military Bureau at the State Department and obtained the same on March 12th, 2009. That brought the work on the Shivalik class frigates back on track.

The MDL and other shipyards are looking for larger orders to reduce the cost and construction time of the ships, but the Navy has its own problems. The Navy gives smaller orders of 3-4 ships because construction delays by the shipyards make the design outdated by the time the ship is rolled out.

In 2012, the Navy will start inducting a number of new vessels of different types, but the real challenge that it is going to face will be with its underwater arm. The Navy has 16 submarines – 10 Russian Kilo Class, 4 German HDW class and 2 Russian Foxtrot class. By 2016 the Navy will be left with about 50 percent, or even less of its current submarine strength. In October 2005, New Delhi signed a contract with French companies DCN-Thales and MDL to build 6 Scorpene submarines in MDL. Now the MDL is constructing hulls for the submarine but there is nothing to fit in them as French companies are asking for virtually double the money to supply the critical components. The MDL has sent a proposal to the Cabinet Committee on Security to approve the additional funds. This will cause a huge price escalation and delay of at least two years. The Navy was expecting to receive the submarines (one each year) from 2012, but now it is not possible before 2014. The Navy is hoping to cover this delay by getting a quick approval for its Project-75 for additional six submarines.

The Navy is looking for more stealth features, Air-Independent Propulsion (AIP) system and land attack capabilities in the new submarines. Pakistan has already strengthened its submarine arm by induction of three Agosta class French submarines, one of which has AIP system and is now looking to acquire three advanced Type-214 AIP-equipped submarines from Germany. China already has a strong fleet of 60+ submarines with 10 of them being nuclear powered. China also has at least one Xia-class and 2 Jin-class SSBN submarines. Indigenous nuclear submarines, Advance Technology Vehicle, will be launched later this year but will not be delivered to the Indian Navy before 2013. The Navy hopes to receive Russian 12,000 ton Akula-II class nuclear powered submarine on a 10-year lease this year. This will strengthen its depleting submarine fleet to an extent, but New Delhi has to give a serious thought to the Navy’s future requirements keeping our hostile neighbors in mind.

Rate this Article
Star Rating Loader Please wait...
The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Sumit Walia

is an IT Specialist. He is also a military history buff who continues to explore & research various facets of the Indian Military history in his spare time.

More by the same author

Post your Comment

2000characters left

One thought on “Defence Procurement Update

More Comments Loader Loading Comments