The deals in question

Published : Mar 31, 2001 00:00 IST

A look at the defence deals on the table that have figured in the latest scandal.

SINCE assuming power some three years ago, the Bharatiya Janata Party-led government in New Delhi has been on a shopping spree in the international arms bazaar. It concluded among others the Rs.560-crore Barak anti-missile systems deal, the Rs.250-crore Armed Recovery Vehicles deal, and agreements relating to the purchase of Su-30 fighter planes, T-90 tanks, the aircraft carrier Admiral Gorshkov and Krasnopol artillery shells. According to the Russian media, the deals signed in the last two years betwee n India and Russia are worth more than $3 billion. Defence Minister George Fernandes had with fanfare proclaimed in Parliament last year the government's commitment to excluding middlemen and agents from defence deals.

The Tehelka tapes show former Samata Party treasurer R.K. Jain as saying that he had passed on Rs.1 crore to Fernandes for expediting the Barak deal. The allegation against the Defence Ministry is that it went against the advice of the Defence Research a nd Development Organisation (DRDO) headed by A.P.J. Abdul Kalam, which wanted the Navy to go in for the indigenous Trishul missiles instead of the Barak system, which is twice as expensive as the former. The Barak system is claimed to be capable of destr oying anti-ship missiles and aircraft.

Fernandes has said that the DRDO was fully involved in the selection of the system and that the first contract for the Barak system, to be installed on board INS Viraat, was concluded in 1997 when Admiral Vishnu Bhagwat was the Chief of the Naval Staff. But Bhagwat had given his assent to the import of only one Barak system, on the grounds that it was too expensive. The Trishul was still not available at that time.

However, after Bhagwat's dismissal, the Defence Minister ordered six more Barak systems for the Navy. Fernandes has now claimed that this decision, taken during the Kargil war, was made after consultations with the DRDO and the Navy. However a section of the Navy is known to be of the view that the Barak system is not designed to tackle supersonic anti-ship missiles, which may constitute a major threat in the years to come.

An article in a recent issue of the American journal Bulletin of Atomic Scientists says that New Delhi has been showing considerable interest in Israeli fences for the country's borders. Israeli fences use electronic sensors to track human movemen t. The Indian media have also reported that the Army is considering buying an electronic intruder alarm system for the border areas from foreign companies, including an Israeli one.

Officials of the DRDO have said that they have produced an indigenous Remotely Activated Acoustic Warning System (RAAWS), costing Rs.6 lakhs to Rs.8 lakhs per kilometre installed. The foreign firms have reportedly quoted Rs.50 lakhs to Rs.55 lakhs. The D RDO developed RAAWS three years ago. The government had stated in parliament in December 1999 that indigenously produced sensors were ineffective in hill terrain and that approval had been given for the procurement of "unattended ground sensors" from abr oad. The DRDO scientists who had worked on the project claimed that their alarm system had not been tested in hilly terrain as claimed by the government. They maintain that their product is as good as any foreign system.

The government recently abandoned the Airborne Warning and Control System (AWACS) programme of the Centre for Airborne Systems (CABS) of the DRDO just because the aircraft which carried the test system had crashed a couple of years ago. It has been tryin g to secure Israeli help for the AWACS project while the CABS' facilities remain idle.

Bulletin of Atomic Scientists notes that "Israeli equipment is costly and it is doubtful whether New Delhi will be offered the generous financing terms it enjoys with Russia". The Israeli newspaper Haaretz has said that the Israeli arms ind ustry is looking for a market worth $2 billion in India. Israel is known to be good at sanctions-busting, as was proved during the 1970s and the 1980s when it actively colluded with the apartheid regime in South Africa.

The NDA government is of the view that increasing defence ties with Israel will reduce the dependence on Russian suppliers and at the same time give the armed forces access to high-quality equipment which would otherwise have been impossible to get becau se of the U.S. sanctions after Pokhran II. However, there are many risks involved in dealing with Israel, as Washington has considerable leverage in Tel Aviv on defence matters. Last year Israel went back on its decision to sell AWACS planes to China aft er the U.S. intervened.

R.K. Jain has mentioned on tape a deal with another Israeli company, Soltam, which was given the contract to convert the Army's ageing 130mm field guns into the more powerful 155mm guns. It is argued by apologists for the government that the Israeli comp any was the only one that had the expertise for the job. Another reason mentioned for awarding the contract to the Israeli company is that it was the only one that brought its products for trial in 1993.

THE other "deal" involving the Navy that figures in the Tehelka tapes concerns the plan to acquire Admiral Gorshkov along with 22 MiG-29-Ks. Although the deal has not been clinched, the price currently quoted for the refurbishment of the ship is said be on the high side. Admiral Vishnu Bhagwat has said that the original price tag of $400 million has been jacked up to $700 million over the last three years.

The Russian media quote $2 billion for the refurbished aircraft carrier and its contingent of MiG-29K deck fighters. The Indian Navy claims that several delegations have gone to evaluate and scrutinise the Gorshkov "for its possible induction into the In dian Navy after refit and modernisation". Three of these delegations were headed by a senior Flag Officer who is well-versed with carrier operations. According to informed sources, the Navy is examining the detailed project report submitted by the Russia ns on the refitment and the armaments. The Navy says that "it is premature to quote any figure as the agreed price of the Gorshkov". A senior Russian official said that all defence contracts signed between India and Russia were state-to-state deals with no private parties involved.

Another defence deal involving Russia that has come in for media attention is the purchase of the Krasnopol Guided Artillery Weapons System for the Army. Major S.J. Singh, one of the Army officers caught on the Tehelka tape, is heard boasting that he arr anged for the multi-crore-rupee contract despite the ammunition having failed in five of the six trials. It is suggested that the Krasnopol shells used by the tanks and Bofors guns are ineffective at high altitudes.

A senior official of KBP Instrument Bureau, which produces the ammunition, vehemently rebutted this allegation. He said that Krasnopol shells had already been sold to leading Asian countries including China. The U.S. has applied sanctions against KBP Ins trument Bureau, one of the biggest and oldest Russian armament companies, because it has dealings with Syria, which the U.S. treats as a "terrorist" state.

The official said that the tests were first carried out in the Indian deserts and then in the Siachen area. The desert tests were a total success but the results in Siachen were not good, the official said, and explained that the shells had until then b een used only up to altitudes of 3,000 metres while the altitude in Siachen was around 4,500 metres. Another reason, the official said, was that the Indian defence establishment did not allow the transfer of a Bofors gun to Russia to prepare the shells a s per the Army's specifications. The official said that the Russian Army had never possessed a gun of the calibre of the Bofors gun.

The problem was rectified within a year, according to the official. His company, he said, had spent more than $1 million to design "a projectile specifically for India as India is our strategic partner". On November 2, 1999, the shells were successfully tested in the Himalayas. Four of the five projectiles fired hit their targets. They have now been certified as combat-effective. The Chinese army has already entered into a deal with KBP Instrument Bureau to produce the Krasnopol shells under licence, t he official said.

A Czech company's offer to supply 250 Armoured Recovery Vehicles used to recover damaged tanks, figures in the Tehelka tapes. Fernandes said in his resignation speech that he had rejected the offer, which quoted the lowest price, because the company was not an original equipment manufacturer and it was trying to hawk second-hand equipment. He said that the contract for the Armoured Recovery Vehicle was given to public sector undertakings; a contract for 87 vehicles was shared equally by Bharat Heavy Ele ctricals Limited (BHEL) and Bharat Earth Movers Limited (BEML). But these two companies are not known to have the expertise to make such vehicles, and it is reported that what they are going to produce for the Army will be the same Czech vehicles importe d in a knocked-down condition.

In his speech Fernandes also denied that he was unduly influenced by the Russian MIG MAPO company in connection with the Advanced Jet Trainer (AJT) contract. He said that requests with regard to the proposal had been issued only to two companies which th e Indian Air Force (IAF) had shortlisted - the manufacturers of the British Hawk and the French Alpha Jet. Fernandes, however, admitted that the Russians had been "constantly requesting the Government of India to consider their aircraft". In the last wee k of March the Hinduja brothers denied that they had either received commissions or played a role in the Hawk deal.

The paralysis that has set in in the defence establishment in the aftermath of the latest expose is bound to have an adverse impact on future defence procurement processes. Even some deals that have been signed and sealed could come under scrutiny, now t hat the role of middlemen is difficult to deny. The Parliamentary Standing Committee on Defence, in its report in the fourth week of March, criticised the Defence Ministry in the fourth week of March by saying that secrecy in the name of national securit y should "not be used as a potent weapon to merely cover up corruption and inefficiency in defence procurement procedures."

The Committee had suggested in the past that the bottlenecks in defence procurement procedures be removed. It had recommended that the government avoid "wasteful expenditure on purchases and plug the sources on the leakages of funds". Another suggestion, made in the wake of the report of the Vice-Chief of the Army Staff's committee on modifying the defence procurement process, was that the government form a broad-based, high-power committee for "a deeper look into the acquisition process". The current s ituation, the Committee report noted, was not conducive to buying weapons on time, and that too at a juncture when the armed forces faced a high-risk security situation in many parts of the country.

The Parliamentary Committee remarked that the delivery of specific systems such as the T-90s, the weapons-locating radar and the refurbished MiG-21 aircraft should be expedited. It observed that it was imperative that the armoured corps were kept strong. For this, the Committee suggested that the final price of the T-90s should be negotiated quickly. The Committee also wanted the upgradation schedule of the MiG-21BiS to be adhered to. Further delays, it noted, would make the aircraft's life-extension fi nancially unviable.

The Chief of the Army Staff (COAS), Gen. S. Padmanabhan, while supporting the establishment of the post of a chief of defence staff and the proposal to merge the civilian dominated Ministry of Defence with a single Service headquarters, had said that the se steps would lead to greater operational efficiency and encourage an efficient and transparent procurement policy. The Army chief has initiated a 20-year-plan to modernise the Army's equipment. He has said that the T-90 tanks the Army is acquiring will stay in service for the next 30 years. The Army's inventory of towed and self-propelled guns will be standardised on 155mm weapons. The infantry will be provided with better anti-tank weapons and combat armour.

Critics of the T-90 deal feel that it would lead to the marginalisation of the indigenously built Main Battle Tank (MBT) Arjun. It is reported that the German company that supplies the Arjun with its diesel engines has since hiked the price. Each engine now costs more than Rs.5 crores, making the Arjun a more expensive proposition than the imported T-90s. The Comptroller and Auditor-General (CAG) had criticised the Arjun for its technical deficiencies and poor operational mobility, in a report published in 1999. It is also reported that the indigenous content of the Arjun has diminished considerably, with imported parts now constituting nearly 60 per cent of it.

The DRDO has sunk a lot of money and expertise in the Arjun project, but the Army does not seem to have much confidence in the tank's prowess. The Public Accounts Committee (PAC), which tabled its reports in April last year, had been told by the Defence Ministry that the T-90s were being inducted as an "interregnum" purchase, until the Arjuns were made available. With more than 300 T-90s to be inducted into the Army, not many people believe in the assertions of the Defence Ministry.

Many important deals signed with foreign defence equipment manufacturers will mature soon. They include the modernisation of the T-72 tank, the purchase of the Smersh multi-barrel rocket launcher, the Kornet E anti-tank guided missile, the unmanned aeria l vehicle Mark-2, weapons locating radar, medium self-propelled guns, medium towed guns, thermal imaging systems and assault rifles for para commandos. Some foreign vendors feel that the expose has come at a bad time, just as the financial year is coming to an end. Several delegations representing big companies are in Delhi, and some of them are cooling their heels.

The Navy also wants the Barak system it has contracted for but there are many unanswered questions regarding this and other deals that were signed in the last three years. The first batch of the Su-30 MKI jets and T-90 tanks are scheduled to arrive soon. Both the deals may now come under scrutiny. The AJT deal could be a major casualty of the latest scandal. The IAF is in dire need of trainers if the current accident rate is any indicator.

After the Bofors scandal of the 1980s, defence procurements had temporarily come to a halt. Finance Minister Yashwant Sinha pointed out during the Budget session that Rs.3,146 crores earmarked for defence purchases had not been utilised in 2000-01. The m ajor reason for the non-utilisation of the funds was the delays in finalising deals.

Sign in to Unlock member-only benefits!
  • Bookmark stories to read later.
  • Comment on stories to start conversations.
  • Subscribe to our newsletters.
  • Get notified about discounts and offers to our products.
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide to our community guidelines for posting your comment