An L&T-Russian partnership

Embattled by the controversy over the procurement of 36 Rafale fighters from France, the defence ministry is initiating a slew of defence acquisitions, worth almost Rs 4 trillion. These would take years to fructify but would allow the Bharatiya Janata Party to claim while campaigning for elections that it was safeguarding India’s defence. These include the procurement of 110 fighter aircraft worth about Rs 1.25 trillion, 57 naval fighters worth Rs 750 billion, S-400 air defence systems worth Rs 400 billion, artillery guns worth Rs 150 billion, rifles worth Rs 100 billion, warships worth Rs 350 billion and two naval helicopter purchases for an estimated Rs 250 billion. All these are, while urgently needed, potentially controversial. But there is a low-hanging fruit: Project 75-I — a Rs 400-billion purchase that is operationally vital, relatively non-controversial and which includes a sizeable component of “Make in India”. This involves building six submarines in the country, with an Indian vendor taking essential technology from a foreign original equipment manufacturer (OEM).

The tendering process has already begun. Global submarine OEMs were issued a “request for information (RFI)" in June 2017 and responses received in October. The navy chief has revealed that four global vendors had responded: Rosoboronexport from Russia, ThyssenKrupp Marine Systems (TKMS) from Germany, Kockums from Sweden, and Naval Group from France — which is already partnering Mazagon Dock Ltd (MDL), Mumbai, in building six Scorpene submarines in India. Japan’s Mitsubishi Heavy Industries was asked whether it would offer its vaunted Soryu-class submarine but, surprisingly, given Tokyo was willing to supply submarines to the Australian navy, declined to participate. To partner the four OEMs in the fray, the Navy has launched the process to select an Indian “strategic partner (SP)”, which would, under the new SP model of procurement, receive technology from the OEMs to build the submarine in India. The procurement process involves selecting the right combination of OEM and SP, evaluating technical capability, technology on offer and the price quoted.

While Admiral Lanba breezily stated he was hopeful “we’ll be able to make progress on this case by the end of 2018”, he did not define “progress” and the complexity of this procurement seems likely to delay it interminably. Given India’s need to counter China’s growing presence in the Indian Ocean, many more submarines are urgently needed. China will soon operate 60 submarines and, with the Indian Navy down to barely 15 submarines, even the neglected Pakistan Navy poses a daunting submarine threat. India’s 30-year plan, made out in 1999, to build 24 submarines has so far yielded just one boat (submariners quaintly refer to their lethal vessels as “boats”) with five more in the pipeline. It is essential, therefore, to kick-start Project 75-I.

Instead of wasting another five years toing-and-froing on the procurement (a conservative time-frame, given the defence ministry’s contracting record), Indian interests demand that Project 75-I must be awarded immediately on “nomination” basis. The winners select themselves: Larsen & Toubro with Russia’s Rosoboronexport as the technology partner. The two must work together to build six Amur-class boats, driven by air independent propulsion (AIP) developed recently by the Defence R&D Organisation (DRDO). The defence ministry must mandate indigenous content of 50 per cent for the first boat and 60 per cent for subsequent vessels. Tight timelines must be laid down, with financial penalties for infringements.

It is essential to spell out the logic for this bold recommendation. First, the selection of a Russian partner would conform to India’s 30-year submarine plan, in which the Union cabinet has mandated that if the first six boats are of western origin, the second six be of eastern origin, with the last 12 of Indian design, incorporating the best of east and west. The Navy has had a positive experience with its Foxtrot-class and Kilo-class Russian submarines, and with the two nuclear-powered boats taken on lease. The Amur class, a vast improvement on the Kilo-class vessels the Navy currently uses, promises to continue the Russian tradition of sturdy, economical, relatively silent boats. Continuing with the Kilo-based logistics infrastructure would save money. Fitting the BrahMos cruise missile, which the Navy wants on Project 75-I submarines, would be far easier on a Russian boat. The Russian Navy is buying four Amur-class vessels under the Russian Armament State Programme for 2018-2025, with the builder, Admiralty Shipyard, having already built two prototypes as the Lada-class. 

L&T selects itself even more forcefully. Amongst Indian private-sector shipyards, it is the only one with both infrastructure and credentials to build a line of submarines. Its new Kathupalli Shipyard, near Chennai, compliments its Hazira facility in Gujarat. While building hulls and machinery for the Arihant-class nuclear submarines, L&T has accumulated extensive experience of working to Russian designs and with Russian metallurgy, both of which find a prominent place in our indigenous warship design and construction traditions. The DRDO-developed AIP system that is required to be integrated into Project 75-I submarines, has L&T as its principle integrator. A senior L&T engineer says the company already has 85 per cent of the technology needed for fabricating a Russian-designed boat for Project 75-I. Besides L&T, only the Pipavav Shipyard, belonging to Anil Ambani’s Reliance Naval and Engineering Ltd, has the infrastructure to build submarines, but its abysmal record of delivery — it is years late in delivering five naval offshore patrol vessels, a far more simple warship than a submarine — makes it a dubious choice. Further, the continuing political uproar over offset-related orders placed on Reliance Defence by Dassault after the Rafale deal would give the government pause.
 

The other contender is MDL, which is pitching strongly for Project 75-I, arguing that its experience gained while building six Scorpene submarines under Project 75 should not be wasted and a follow-up submarine construction order be urgently placed. Even if the public sector MDL were to be allowed to bid as an SP (the model is actually intended to bring the private sector into defence manufacture), it would be hard pressed to match L&T on price. MDL has the infrastructure but would need to pay more for technology transfer. MDL has absorbed French manufacturing practices in the Scorpene programme, but building Russian is another game. 

Further, MDL has submarine work aplenty even after delivering all six Scorpenes. The Navy’s four German-origin Shishumar-class submarines — which were commissioned between 1986-1994 and have completed 24-32 years of service — are overdue for their life cycle extension overhauls, which would take until 2030 to complete. At the same time, the Scorpene submarines are already becoming due for mid-life upgrades and for retrofitting the AIP system during the upgrade. The first boat, INS Kalvari, commissioned last year, will fall due for an upgrade in 2023, followed by the other five. With MDL having built both the Shishumar-class and the Kalvari-class, it would be logical to entrust it with their upgrades.

That leaves only the question: What would Washington, already riled over India’s purchase of the S-400 from Russia, have to say about an equally strategic submarine purchase from Moscow. Here the US has a weak case, given that it has steadfastly refused to share submarine technology with India. If threatened with sanctions under the Countering America’s Adversaries Through Sanctions Act, New Delhi, has only to reply: Let us co-manufacture the Virginia class nuclear attack submarine instead, and we will drop the Amur immediately. After all, that is what defence partners do!

Twitter: @ajaishukla