Blow to Make in India and Navy as Modi govt scraps minesweeper project

Govt orders fresh process for procurement even as Chinese submarines regularly patrol the Indian Ocean and could deploy mines

The Indian Navy will have to soldier on for the foreseeable future with a glaring capability gap in detecting and countering naval mines, even as Chinese submarines regularly patrol the waters of the Indian Ocean and could potentially deploy said weapons that would prove to be a danger for the country's sea warriors.  

The government has scrapped the Rs 320-billion (Rs 32,000-crore) project to build 12 advanced minesweepers at the Goa Shipyard in collaboration with South Korea, at once striking a blow to both the Navy and its own 'Make in India' plans in the defence sector, the Times of India reported on Monday. The Navy began the process of acquiring these vessels more than a decade ago in July 2005 and it still needs 24 mine counter-measure vessels (MCMVs) to safeguard the country's east and west coasts, the report said, adding that the defence force, however, is carrying on its duties with only four 30-year-old minesweepers.

MCMVs, the report explained, weigh close to 900 tonnes and are specialised warships employed to detect and destroy underwater mines, which can render harbours and offshore installations unsafe for use, thereby disrupting shipping and commerce. 

Citing unnamed sources, the national daily reported that the government has directed the Goa Shipyard to begin the entire process from scratch. "Goa Shipyard has been asked to issue a new global expression of interest (EoI) for the MCMVs. The fresh RFP (request for proposal) or tender will follow thereafter," the sources told the national daily. 

Why was the already long-delayed project dealt another blow? According to a source quoted by the report, South Korean shipyard Kangnam, which was part of the project, wanted deviations from the original RFP, which resulted in final negotiations getting stuck for a long period. Further, the source said that certain problems regarding cost and transfer of technology had also marred the project.  

However, Goa Shipyard Chairman Rear Admiral Shekhar Mital (retd) supported the government's move and told the national daily that the decision to issue a fresh RFP would result in the project moving at a "very fast" pace "as all intricate technical details and specifications of the MCMVs have been finalised over the last two years". The EoI, the report added, would be issued to Kangnam, Italy's Intermarine, and other foreign shipyards specialising in building MCMVs soon. 

Blow after blow for Make in India?

The Indian Army is looking to shut down the Rs 50-billion (Rs 5,000-crore) 'high-tech soldier' programme called the Battlefield Management System (BMS) project, as reported in December last year.  

Cancelling the project would be a "blow to the oft-stated plan to build indigenous defence systems through the 'Make' category of procurement", defence analyst Ajai Shukla explained while reporting the development. 

This project was meant to network the Army's combat units and digitally interlink fighting soldiers, "providing them a common tactical picture in the battlefields of the future". 

While the BMS project entails a smaller kitty for the concerned companies and entities involved in the project, at least when compared to the MCMV procurement, its scrapping would be particularly damaging to the government's Make in India plans in defence. As Shukla explained, as of December 1, 2017, project BMS stood as "one of only three ongoing 'Make' category procurements, in which chosen Indian firms design and develop strategic, high-technology platforms". 

In fact, according to Shukla's report, at a defence industry workshop in Delhi in October last year, top industrialists described the "Make" category as the "soul of indigenisation" while interacting with Defence Minister Nirmala Sitharaman. In fact, the concerned industrialists had recommended launching 8-10 "Make" projects every year to build Indian capability in the sector. 

However, just a few days later, the Army formally recommended scrapping the project. In November last year, the Defence Production Board agreed in principle with the Army. 

"If the BMS project is closed, no private industry will participate with any conviction in any subsequent 'Make' project. If you are looking to build a military-industrial complex, killing the BMS is the worst possible step," the chief executive officer of a private firm involved in defence production had told Shukla back in December last year. 

As reported earlier, as of November last year, not a penny was spent on "Make" projects in two years (2012-13 and 2015-16) and the highest allocation this category ever received was in 2016-17: Rs 1.84 billion, or just 0.25 per cent of the capital Budget. This dearth of funding, according to Shukla, highlights "the lack of defence ministry commitment to the 'Make' procedure that was first proposed by the Kelkar Committee in 2005-06". 

A bright spot on the horizon?

Even as certain defence projects face hurdles, the indigenously designed and built Light Combat Aircraft (LCA) appears to have received a boost.  

The Indian Air Force (IAF) has put in a formal request to Hindustan Aeronautics Limited (HAL) for an additional 83 Tejas Mark-1A LCA, a government official informed news agency in December last year. 

The official said the RFP for the supply of 83 indigenous LCAs had been received by HAL. The IAF wants 73 Mark-1A upgraded versions of the combat aircraft and 10 trainer versions. 

HAL, according to reports, would respond to the RFP in three months. 

An 'acceptance of necessity' for 83 Mark-1A LCAs, at a cost of Rs 500.25 billion (Rs 50,025 crore), for the IAF was cleared by the Defence Acquisition Council in November 2016.