IAF accuses BEL of supplying poor equipment

BS SPECIAL - PART 1

Last week, Defence Minister A K Antony presented before the Parliament's standing committee on defence a glowing report on the performance of India's defence public sector undertakings (DPSUs).

In 2006-07, the eight DPSUs made Rs 17,855 crore, comfortably exceeding their Rs 15,625 crore target. Profit after tax was Rs 2,445 crore, two and a half times the target of Rs 1,034 crore.

Antony, however, did not tell the committee about the growing chorus of complaints from the military about being railroaded into buying from the DPSUs equipment that was actually developed and manufactured by foreign original equipment manufacturers (OEMs).

The DPSUs' role, allege the services, is restricted to importing the equipment from OEMs, adding a hefty margin to the price.

The Indian Air Force (IAF) has had enough. On August 31, the deputy chief of Air Staff, Air Marshall NAK Browne, fired a letter to the chairman of Bharat Electronics (BEL), with a copy to the Ministry of Defence (MoD), complaining that BEL is misusing its status as a DPSU to arm-twist the IAF into buying equipment that is substandard, or is developed abroad, with BEL incorrectly claiming ownership.

In the letter (Air HQ/S 96135/12/2/ASR(TY BM-IV), which has been reviewed by Business Standard, Browne complains, "When BEL equipment fails to meet the IAF's requirements during field evaluation, the company tries to overturn the rejection by sending representations to MoD."

The "In all the cases, these representations have been found to be devoid of merit," the letter points out.

In the purchase of a critical electronic intelligence system (called the Ground Based Mobile Elint System), "BEL imported sizable and critical sub-systems from sub-vendors abroad."

Apparently, BEL was not developing the system, but merely purchasing components, slapping them together, and selling them to IAF.

This became evident when the IAF was evaluating the sub-systems, where air force officers were surprised to find that "most of these sub-systems were demonstrated by OEM representatives and not by BEL."

That BEL was merely a front for foreign companies like M/s Elisra, Israel, and M/s Indra, Spain was clear from the fact that, "BEL representatives were mere observers and could not participate in the demonstration in any manner."

"Despite knowing nothing about the equipment," complains the IAF deputy chief, "letters are being repeatedly sent by BEL to IAF and MoD extolling BEL's capability to manufacture and support them."

Browne's letter expresses outrage that when the (foreign origin) equipment was found inadequate during testing, it was BEL that represented.

The letter says the Defence Procurement Procedure 2006 (DPP-2006) treats all vendors equally, implying that BEL should stop expecting favoured treatment.

Finally, Browne points to the sub-standard quality of BEL equipment, suggesting that it "refrain from adopting these types of measures and instead focus more on improving the technical specifications (of equipment)."

Commenting on the letter, MoD has not denied that BEL does buy equipment off-the-shelf from abroad. K P Singh, secretary, defence production, says, "There is little point in re-inventing the wheel".

BEL is often praised for reducing reliance on foreign vendors in products like radars, sonars, wireless and electronic warfare systems.

It claims to have indigenised 80% of its turnover, but IAF's letter places a question mark over that figure. The army, too, has often complained about BEL's enormous clout in the defence ministry, which allows it to take procurement decisions to suit its own interests.