Are the Army workshops going private?

Print edition : October 20, 2020

A front-line Army vehicle before overhaul, file picture. Photo: Ravi Sharma

A BMP tank ready for rollout. Nearly 2,500 Armoured Fighting Vehicles await overhauling. Photo: Ravi Sharma

BMP tanks at various stages of overhaul. India has an inventory of over 4,200 Armoured Fighting Vehicles and 8,686 armoured vehicles. Photo: Ravi Sharma

The Modi government’s plan to introduce the Government Owned Corporate Operated model for the maintenance, repair and overhaul of battle tanks and other such Class A vehicles of the Indian Army at Army Base Workshops is seen as an act of misplaced adventurism.

Even as the spectre of a confrontation between Indian and Chinese troops looms large at the Line of Actual Control in eastern Ladakh, the Ministry of Defence appears to be confused over the handling of the close support and rebuild operations of the Army’s front-line strike elements. The Ministry is unsure what methodology to adopt in order to keep the Indian Army’s Class “A” vehicles—an inventory that includes Armoured Fighting Vehicles (AFVs), more commonly known as battle tanks; Infantry Combat Vehicles (ICVs); Armoured Recovery Vehicles (ARVs); and Guns and Snow Vehicles—in ready-to-fight (RTF) condition. The AFVs include fleets of T-72 (inducted in 1979), T-90 (inducted in 2002 and the mainstay of the Armoured Corps), and MBT (main battle tank) Arjun (inducted in 2004); the 1985-inducted Soviet-origin, amphibious tracked ICVs BMP II (Boyevaya Mashina Pekhoty, which is the Russian for infantry fighting vehicle); and multiple versions of ARVs.

With a backlog of nearly 2,500 AFVs to be overhauled, the Army urgently needs a robust, well-oiled and efficient system that can accomplish this task on time and with an assurance of quality workmanship. India has an inventory of over 4,200 AFVs and 8,686 armoured vehicles.

The lack of a “womb to tomb” life cycle support management system, which could spread over three decades for most equipment in terms of maintenance, repair and overhaul (MRO) facilities for the T-72s, T-90s and the MBT, has been an area of serious concern to many in the military establishment. However, does the solution to this lie in the Defence Ministry’s decision to hand over the command and control of the Army’s MRO facilities to the private sector? Or does it lie in the Ministry’s sudden and surprising decision to seek supply of critical spares from the private sector in the form of kits to undertake the overhaul of the T-72 tanks?

In May 2020, the Army issued a request for information (RFI) from Indian private sector companies to undertake operations at the 505 Army Base Workshop (ABW) in Delhi—one of the Army’s premier MRO facilities—under the Government Owned Corporate Operated (GOCO) model. Defence public sector undertakings (DPSUs) and ordnance factories were barred from participating in this project. The 505 ABW, which has carried out base repairs of tanks as well as engines and major/minor assemblies of tanks, is slated to start overhauling of the T-90 tank from the 2020-21 financial year. It currently overhauls around 50 T-72 tanks annually. As per the RFI, the corporate bidder will have to primarily carry out the overhaul, including engine and base repair of major and minor assemblies, of T-72 and T-90 tanks. Sources disclosed to Frontline that around 25 corporates, ranging from L&T, Bharat Forge, Tata Defence, Tata Motors, Reliance, Mahindra, and Caterpillar to companies building railway wagon items, props for ONGC oil rigs and even load carriers, participated in the RFI.

Even as a decision on this GOCO RFI was pending, five of the eight ABWs issued a series of RFIs between September 2 and 5 for the private sector on the supply of spares, in the form of kits, directly to the ABWs before the April 2021 production year. Again, DPSUs and ordnance factories were not eligible.

This is the first time that ABWs, which normally make only local emergency purchases, are a) directly issuing RFIs for spares for the next production year, and b) seeking to outsource a task normally done by the Army’s Ordnance Directorate. Seen in isolation, the RFIs are a step in the right direction given the fact that the ABWs’ independence in the procurement of spares has been a constant and crying need. But it also means that there will be three processes in operation in the procurement of spares in the coming production year: the normal procurement through the Ordnance Directorate, a process that started three years ago; procurement by ABWs initiated now; and the GOCO process for which an RFI has been issued and a request for proposal (RFP) will be out any time.

A contractor who wins the GOCO RFI bid would surely rely on his own supply chain. As for ABWs, the Defence Ministry has not clarified on the financial powers accorded to the commandants of ABWs for such huge procurement, nor has it specified whether budgetary allocations have been made for these purchases. The ABWs do not have a cost accounting system that ensures optimum utilisation of resources, be it manpower, machines, spares or materials.

No tangible savings

The groundswell of opinion is that while efficiency, modern infrastructure, and best practices must be ensured, bringing in the private sector blindly will be foolish. The integration of systems and subsystems, in some cases even pertaining to nuclear devices, and the overall control of ABWs should always remain with the Army. Also, the Indian private sector still has a long way to go before it develops systems and spares inventories. Given the fact that the existing labour force at ABWs will have to be retained and that spares constitute 60 to 70 per cent of overhaul costs, the GOCO model will not translate into tangible cost savings.

On the contrary, a private player will only increase costs. Speaking to Frontline, Maj. Gen. K. Eswaran (retd), a former commandant and managing director of 505 ABW, said: “Shall we privatise the Army? But before that, we need to understand what we are talking about. A T-90, of Russian origin, is a lethal combination of mobility, firepower and protection. Costing around Rs.30 crore, it is a complex weapon platform with a mass of about 45 tonnes; a car weighs about a tonne. It is powered by a 39,000-cc engine producing about 1,000 bhp [brake horsepower]. It has the firepower of a 125 mm smooth bore gun and explosive reactive armour. It uses almost every discipline of engineering and technology. It is the biggest and most expensive mobile equipment on land in the country today. And we are talking about the overhaul and recapitalisation of such a complex weapon system. Will a private vendor be able to handle it?”

According to veterans like him, work involving non-classified systems such as the tank’s tracked wheel systems, transmission gears, engine overhauling, welding and painting and cleaning, along with supply of spares, could be outsourced to private players. With these jobs constituting over 50 per cent of the total cost for the comprehensive overhaul of a T-72/T-90 (the rule book cites figures ranging from Rs.4 to 6 crore for a comprehensive overhaul), the private sector will still find it a lucrative business. Said an officer posted at 505 ABW: “Though we can overhaul a tank in two months, we take six months to a year. We are currently overhauling under 50 tanks a year. Will the private sector, even with handholding, do 100? The Russians overhaul 400 to 500 tanks annually. For India to develop the capability to overhaul even 200 tanks a year it will take at least five years.”

Army Base Workshops

The ABWs are under the purview of the Army’s Corps of Electronic and Mechanical Engineers (EME). Established during the Second World War to keep the Indian Army operationally ready, seven of them—505 ABW Delhi, 506 ABW Jabalpur, 507 ABW Kankinara, 508 ABW Allahabad, 509 ABW Agra, 510 ABW Meerut, and 512 ABW Kirkee—are responsible for repairs and overhaul of weapons, vehicles, radars, night-vision devices and other electronic equipment, while the eighth, 515 ABW in Bengaluru, has been tasked with the responsibility of indigenisation and manufacture of spares. The ABWs are staffed by civilian defence and Army combat personnel in a 3:1 ratio, with the average manpower at one workshop numbering between 1,500 and 2,000. Typically, 505 ABW has had a workforce of 17 per cent combatants, 20 per cent re-employed defence personnel and the rest civilians.

The ABWs undertake “Zero Hour, Zero Kilometre-Restoration” overhaul of weapon systems, which entails stripping the entire equipment and reassembling it by changing worn-out/damaged parts, and repairing or replacing assemblies. The targets for overhaul to be undertaken by ABWs are decided by the Army’s Master General of Ordnance (MGO) branch and are dependent on a combination of factors such as periodicity of overhaul, condition of equipment, backlog of overhaul and capacity of ABWs besides the supply of spares by the Directorate General of Ordnance Services (DGOS) and other agencies, including ordnance factories. But the Director General EME (DGEME) is responsible for the overhaul and maintenance of all Army vehicles; ABWs work under his command. The ordnance factories mainly undertake overhaul of equipment manufactured under licence. At present, servicing, low-end repairs and the replacement of components and assemblies happen at the field formation, unit and division-level workshops. Intermediate workshops at corps level handle the quarter life and two-thirds life, and medium-level repairs. The ABWs are tasked with the mid-life overhaul as also the overhaul of major assemblies.

The ABWs have frequently come under scrutiny for their work in maintaining and sustaining weapons systems and equipment in battle-worthy condition, their “under-performance in achievement of overhaul targets, overstatement of capacity utilisation, non-availability of spares, delays in overhaul, idling of manpower and delay in creation of overhaul facility”.

C&AG report

A Comptroller and Auditor General’s (C&AG) report in 2016 stated that the “inordinate time taken for overhaul, reduction in targets due to lack of adequate spares and delay and non-creation of timely infrastructure for (overhauling) had adversely affected the maintenance of equipment”; and that equipment spending a substantial part of their serviceable life in workshops/depots… had impacted “the operational preparedness of the Army”. The ABWs also face criticism for having “no long-range perspective plan for creation of infrastructure at the time of induction of equipment, leaving the expenditure unfruitful”.

The C&AG report points out the “non-availability of spares in adequate range and depth, and in time” as the main reason for delays in overhaul. This meant that overhauled equipment was issued to army units and formations with “deviation sanctions” (deviating from the standard norms prescribed during the overhaul of a particular equipment).

The C&AG report highlights the inordinate delay of items. A performance audit between 2010 and 2016 highlighted that against an existing norm of 153 days for the overhauling of a BMP-2 vehicle, it took up to 1,512 days for 512 ABW in some instances. During the same period, 505 ABW had taken up to 836 days against the norm of 144 days to overhaul a T-72 tank. Other backlogs listed were 90 per cent in the case of ARV WZT-2, 34 per cent for the TC Reporter radar, 33 per cent for BMP-2, 21 per cent for Battle Field Surveillance radar, 20 per cent for T-72, and 18 per cent for the Flycatcher radar. There were also no facilities for the repair/overhaul of the indigenously developed MBT Arjun, a critical component in an NBC (nuclear, biological, chemical) war scenario. Nor were there any facilities for the test firing of tanks and BMPs, which is mandatory after overhaul, or to check the fording and amphibious capability of tanks.

The C&AG was not satisfied with the MGO branch’s contention that non-availability of spares was the major reason for production hold-ups and non-achievement of targets. It stated: “The DGOS is responsible for provisioning of spares and [the] DGEME is responsible for overhaul and maintenance of fleet of Army vehicles. Both these agencies [that] work under MGO are required to work in close coordination on spares procurement and management to achieve the goal of timely and satisfactory overhaul. The lack of coordination between these two agencies had resulted in procurement of unwarranted spares and delays.”

Sluggishness of the MRO system

Despite the state of ABWs, successive governments and the bureaucracy at the Defence Ministry’s Department of Defence Production had for decades downplayed the pleas for a qualitative and quantitative overhaul mechanism to take care of front-line battle/operational weary equipment. Successive governments thought that any move to tinker with the existing system was akin to walking into a zugzwang. The sluggishness of the prevailing MRO system has in a large measure contributed to almost 60 to 70 per cent of the Army’s inventory turning out-of-date and unserviceable.

Said Maj. Gen. Sanjeev Khanna (retd), a former commander of the (Army) Base Workshop Group: “The commandant of the ABW must be allowed to plan his spares inventory. A battle tank has around 7,000 parts, of which 5,000 are exclusively needed at the base workshop level. Why aren’t the indent for these parts under control of the workshop commandant? Unlike his counterpart in the private sector, he cannot go to the source and buy the needed spares. Private operators can easily go into partnership with the Original Equipment Manufacturer, both for expertise and spares. Inefficiency in the spares supply chain is affecting the working of ABWs. Also, since he is not provided with a budget for manpower, spares, etc., he is not able to make an estimation whether an undertaken task is cost effective or not.”

The T-72s and T-90s, which have a capability to perform for around 300 km without any mission critical failures, generally come up for a comprehensive overhaul in 14-16 years. These depend on parameters such as usage and area— high altitude/desert—of deployment.

In January 2018, in keeping with the Narendra Modi government’s privatisation plan for the defence sector, the Defence Ministry announced that four of the eight ABWs would be handed over to the private sector, to operate and manage. Potential industry partners would be identified and this it was felt would drive “higher operational efficiencies”. The decision to implement the GOCO model for its base workshops drew sharp criticism from several quarters, not just labour unions like the 4-lakh-strong All India Defence Employees’ Federation. An RFI was sent out in 2019 and the same 20 odd companies, which responded to the May 2020 RFI had replied to this 2019 RFI. PSUs and the ordnance factories were barred from bidding.

In January 2020, the global consultancy firm PricewaterhouseCoopers was appointed as consultant to attract private players for the project. According to the Defence Ministry communique, “The government will provide land, infrastructure, plant and machinery, equipment system support, oversight and facilitate the contractor…. The contractor operates and utilises the facilities available, manages all types of work and is also responsible to get required licences, certifications and accreditations to deliver mutually agreed targets and maintains the plant machinery and services integral to the venture.”

Lt. Gen. N.B. Singh (retd), a former director general of the EME, explained: “The ABWs are the last port of call for force regeneration of combat equipment, as are the naval dockyards and base repair depots for the Navy and Air Forces respectively. An Army with a 70 per cent obsolescent inventory like the Indian Army needs to empower and modernise ABWs so that its vintage systems can be kept mission capable. But in the Indian conditions of high entropy, combined with conditions of profiteering, corruption, trust deficit and military careerism, privatisation of system readiness is not the answer though. Nowhere in the world has the MRO for tanks, the mainstay of an army, been handed over, lock, stock and barrel, to the private industry to manage. An army’s main ordnance, the production levels, radar frequencies for laser guided missile system, etc., cannot be in the hands of a vendor. As and when weapons get manufactured in the private sector, ‘D’ Level repairs may be taken up by them. It is important to sort out the root cause of the problem which is plant readiness and supply of spares as overhaul kits. If these two core issues are taken up by the private sector in a collaborative spirit, ABWs can get back to force regeneration as usual. How has the Army misconstrued corporatisation as being synonymous with privatisation of core rebuild operations of the ABW?”

Most military experts say the GOCO model is akin to handing over ABWs along with their vast land in prime locations, plant, tools and machinery to the private sector for free.

Also slated for restructuring along with the four ABWs are two army advanced base workshops, at Narangi (Guwahati) and Udhampur (Jammu and Kashmir); one static workshop at Delhi; three ordnance depots at Shakurbasti (Delhi), Chheoki and Kanpur (both in Uttar Pradesh); and a vehicle depot at Panagarh (West Bengal). While the base workshops at Jabalpur, Allahabad, Meerut and Kirkee were planned for handover to the private sector by April 2019, the remaining four, 505 ABW at Delhi, 507 ABW at Kankinara, 509 ABW at Agra and 515 ABW at Bengaluru, it was hoped, would be corporatised in the second phase, by December 2019.

The GOCO model is part of the government’s plan to rationalise Army manpower and reduce the ‘tail’ (supply and support) in the ‘tooth (combat soldier) to tail ratio (T3R)’ as recommended by the Committee of Experts (CoE) constituted in 2016 by the then Defence Minister Manohar Parrikar, under the chairmanship of Lt. Gen. D.B. Shekatkar (retd). One of the recommendations of the CoE was outsourcing the functioning of ABWs to private players. Curiously, though the Defence Ministry claimed to be acting on the recommendations of the CoE’s report, the report was not made public, raising doubts over the precise intentions of the Modi government.

Officers aver that 90 per cent of the ABWs’ woes would be resolved if the supply of spares was streamlined. Said Col. Vinod Tiwari (retd), a veteran EME officer: “If the ABWs aren’t delivering it is not an inherent fault of theirs. The fault stems from a paucity of spares. The Army’s Ordnance Directorate is not able to meet the supply of spares needed by the ABWs. The Ordnance Directorate is in turn majorly dependent on the ordnance factories. The quantum of spares needed at ABWs is forecast well in advance to the ordnance factories, despite which they have consistently failed to deliver. Weird, outdated procedures, including being able to place only 50 per cent of all orders on existing vendors, and channelling away spares for their own internal requirements is not helping.”

Military experts firmly believe that the Defence Ministry should create new sources and new vendors. But will it? According to military officers, the Ministry itself is manned by non-technical people. Said a general: “To most of the bureaucrats the gyroscopic stabilisation of a battle tank gun is viewed with the same yardstick as a sack of potatoes. The Defence Ministry lacks professionalism. So why blame the ABWs? We are stuck with decision-makers and procedures that do not allow for professionalism.”

This article is closed for comments.
Please Email the Editor