President’s Visit to Further Boost India-Vietnam Ties

Maj Gen (Retd.) 

P K Chakravorty

Introduction

India’s External Affairs Minister Sushma Swaraj recently completed a visit to Vietnam from 24 August to 26 August 2014. During the visit, she interacted with the top leaders of the country and candidly stated that our ‘Look East Policy’ should soon become ‘Act East Policy’. The visit witnessed discussions on the exploration of oil in the South China Sea and measures to deepen defence ties. As is known, Vietnam has offered India five new oil blocks for exploration in the South China Sea. India has to decide how she could exploit these assets as also assist Vietnam in freedom of navigation, maritime safety and security in the disputed South China Sea. During her visit, Swaraj also chaired a brainstorming session with 15 Indian Heads of Missions in South East Asia and East Asia in Hanoi to chart out foreign policy initiatives to be undertaken in the strategically important region by the Indian Government.

Indian President Pranab Mukherjee is due to visit Vietnam in mid September and preparing the grounds for a successful tour was another objective of the External Affairs Minister’s itinerary.

Issues of Importance

As is well known, Vietnam shares an acrimonious relationship with China following their recent standoff in the wake of China escorting a mobile deep sea oil rig with escort ships 20 miles off the Vietnamese coast in the South China Sea. India and Vietnam enjoy strong strategic relations which emerged with the first MoU on Defence being signed in 1994, the formal Defence Protocol in 2000 and the Strategic Partnership in 2007. Ever since we have an annual Strategic Defence Dialogue with the Defence Secretary representing India. Considering the intensity of our relations, the upgradation of these talks to the Ministerial levels would be more beneficial. The other issues which are currently important are elucidated in succeeding paragraphs.

The Cam Ranh Bay has been often described as one of the jewels of Vietnam. The long protective seaward peninsula and natural inner and outer harbours form what many believe to be possibly the best deep water sea port facility in the entire world. There is also an Air Force base with excellent runways for state of the art aircraft. The usage of these facilities by the Indian Navy and Indian Air Force would help us to strengthen our strategic partnership and enable us to undertake actions to protect our assets in the South China Sea. These issues are extremely sensitive and would not ever be expressed publicly.

Based on Vietnam’s requirements, India could provide Dornier surveillance aircrafts, mini Unmanned Aerial Vehicles (UAVs), upgraded T-72 tanks, few of the old ships of Indian Navy and indigenously manufactured Artillery equipment once the same has proved trials. Vietnam has been provided a US $ 100 million Line of Credit to possibly purchase four Offshore Patrol Vessels (OPVs) from Goa Shipyard Limited.

Vietnam is impressed with India’s Missile development and is keen to purchase the Supersonic Cruise Missile BrahMos which could be used on land and sea. The issue merits serious consideration as there are no objections from the foreign joint developer. Vietnam is also keen that opportunity be accorded to train their scientists in missile technology.

Training: Vietnam admires the professional training of India’s Armed Forces and looks forward to assistance in training in the following areas:-

• Conversion training for SU-30 pilots of the Peoples Vietnam Air Force by the Indian Air Force.
• Submarine crew training of the Peoples Vietnam Navy by the Indian Navy.
• Training in Counter Insurgency and Jungle Warfare with the Indian Army.
• Training in English language.

While the strategic field remains extremely important, a crucial issue which merits attention is the exploration of oil. During Sushma Swaraj’s visit, exploration in two oil blocks was extended for one year. Vietnam has offered five more blocks to India for oil exploration. India has to consider two factors before arriving at a decision. The first is the technical feasibility of ONGC to undertake the task. It is pertinent to note that it would be a worthwhile challenge to our private players undertaking the task with Government assistance. The second issue relates to the objection from China which should not affect us as we have made our stand clear that these explorations are being undertaken in international waters and therefore not violating international rules. Energy remains a major concern for India and we must seriously consider the Vietnamese offer and undertake exploration.

As regards other sectors, considerable efforts have been undertaken to make the two way trade between the countries to about $ 6 billion. This is indeed meagre considering that the two way trade between Vietnam and China is $ 50 billion. Efforts must be made to enhance the two way trade to $ 20 billion by 2020. Apart from economic activity, India is culturally very close to Vietnam. The Hindu temples at My Son in Vietnam bear testimony to the centuries old relationship between the two countries.

However, these temples need to be repaired by the Archaeological Survey of India. Further, as regards connectivity, despite a lot of discussions as on date there is no direct flight between India and Vietnam. Proposals exist of Jet Airways and Vietnam Airlines operating these flights but the same is yet to fructify.

Expectations from the President’s Visit

The President’s visit in a few days from now will provide a fillip to the close relations between the two countries. The President who has an excellent understanding of the country would do well to focus on the strategic relationship by formalising the $ 100 million Line of Credit to Vietnam to enable them to procure Off Shore Patrol Vessels from Goa Shipyard Limited. Further, the issue regarding sale of BrahMos Supersonic Cruise Missiles could be discussed. Training in the fields of Sukhoi pilots, submarine arm of the Navy and scientists in Missile Technology could be concluded.

The exploration of a total of seven oil blocks by India in the South China Sea could be considered. While exploration is currently on in three blocks, it would be in India’s interest to view the issue pragmatically. The two way trade needs to be enhanced and both sides need to identify measures to ensure that the same is stepped up to $ 20 billion by 2020. This would occur only if direct connectivity exists between the two countries. Direct flights must commence between the two countries at the earliest. Culturally it would be appropriate for India to repair the My Son temples by Archaeological Survey of India after working out the details. Overall relations will be strengthened if the Strategic Dialogue is held between the two Defence Ministers rather than the Defence Secretaries.

Conclusion

India and Vietnam are intense strategic partners and they perceive issues in the Asia Pacific region with tremendous convergence. The visit of President Mukherjee will further strengthen the existing relationship by looking into areas that merit importance.

(The author was India’s Defence Attache to Vietnam)

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Published Date: 10^th September 2014, Image source: http://carimg.sulekha.com

(Disclaimer: The views and opinions expressed in the articles published in the e-journal are those of the authors and do not necessarily reflect the official policy or position of the Vivekananda International Foundation)

Urgent Defence Reforms including CDS Need of the Hour

Brig (Retd) Vinod Anand, 

Senior Fellow, VIF

Higher defence management has continued to remain the focus of the politico-military establishment for last several years without much progress having been made in the key areas of defence reforms that have been underway since the Kargil conflict. A 14-member Naresh Chandra Task Force (NCTF) had reviewed the gaps in defence reforms and submitted a report to the government in August 2012.

In early April 2013, the National Security Council chaired by the Prime Minister discussed the recommendations by the NCTF on National Security. However, some of the contentious proposals were referred to yet another body for further scrutiny. The government instructed the Strategic Policy Group (SPG), chaired by National Security Advisor (NSA) Shivshankar Menon and Cabinet Secretary, to examine the contentious proposals, including those connected to the defence ministry and armed forces. They were expected to take a view on a host of proposals ranging from a permanent Chairman of the Chiefs of Staff Committee (COSC), cross- posting of Service officers to MOD, and the creation of Advanced Projects Agency (APA) to undertake futuristic military R&D and review of the practice of blacklisting armament companies.

The Ministry of Defence while reviewing the NCTF’s recommendations has stuck to its old narrative and has not been in favour of even creating a permanent Chairman Chiefs of Staff Committee which is a much diluted version of the Chief of Defence Staff recommended by the Group of Ministers’ Report of 2001 which was again based on inputs provided by Kargil Review Committee.

The MOD, true to its bureaucratic traditions has not approved of many of the other recommendations like cross-posting of officers and some other suggestions of the Task Force on defence reforms. Jaswant Singh, a former Defence Minister in his book ‘Defending India’(Bangalore: Macmillan India, 1999,p.109) had remarked that "-the Defence Ministry, in effect becomes the principal destroyer of the cutting edge of the military's morale; ironic considering that very reverse of it is their responsibility. The sword arm of the State gets blunted by the state itself." In July 2013, the MOD in its recommendations to the National Security Council Secretariat cited several reasons for its negative views on NCTF proposals.

MOD Rejects ‘Permanent Chairman of COSC’ Proposal

The 2001 GOM Report’s main recommendations regarding management of defence included creation of Chief of Defence Staff (CDS) with a designated defence staff with a view to establish synergy and promote jointness among the armed forces. It is also true that the concept of CDS however does not evoke an unequivocal and positive response from the three Services. The apprehension from smaller Services being that their interests may be disregarded and perhaps the status of single Services Chiefs lowered. Though, these apprehensions need to be allayed by a providing careful balance on vesting centralised responsibility and power to CDS, the absence of CDS on the other hand leaves the field open to the civil servant to become the 'decider' instead of a uniformed person for inter-Service issues. Recommendation for CDS based on GOM Report 2001 could not be realized because the government threw in a googly in the shape of obtaining political consensus from respective political parties; little or no efforts were made to obtain consensus. A letter to the political parties was written and that was the end of it.

While negating the NCTF proposal for a permanent Chairman of COSC, the MOD in its recommendations to the NSCS has given the reasons in June this year as lack of consensus amongst the three services on the issue. According to the MOD submissions to the NSCS, only the Navy supports the proposal for permanent Chairman COSC, the Army is against the proposal and the Air Force’s concurrence is conditional. Further, the MOD says that the present system of the three Service chiefs and the collegiate COSC briefing the Defence Minister has been functioning well.

And to ward off further criticism of MOD’s attitude, the stock reply given is that in any case the Government has as yet not decided on the issue since the NCTF proposals would be considered by the Cabinet Committee on Security. It appears that the government would continue to stall the issue in keeping with its erstwhile policy on the matter. Apparently, there was also some pressure on the members of the NCTF to not to give such a recommendation. However, wisdom prevailed and the proposal was included in the report.

However, turf battles between services have been part and parcel of even the militaries of advanced nations like the U.S. before their services were forced to move towards integration and jointness through legislative measures. The U.S. forces were brought together under one umbrella through Goldwater Nichols Act of 1986. When the need for creating the institution of CDS/Permanent Chairman COSC has been felt and approved by expert groups consisting of strategists, politicians and bureaucrats and endorsed many times by Parliament’s Standing Committee on Defence, it is only political will that would be instrumental in fructification of this vital reform.

Not only this, a simple measure like cross-posting of officers between the MOD and Service HQs to bridge the civil-military disconnect has also been rejected for some flimsy reasons. Cross-posting of officers would have generated synergies in functioning of the MOD and without this the integration would remain ‘cosmetic’ even while the MOD claims that the present system has been functioning well. Many reports of the Parliament’s Standing Committee on Defence have been urging the MOD to implement this recommendation of the GOM Report and the same has been endorsed by the NCTF but the bureaucrats have been adamant on not executing an already approved recommendation.

Unless there is a CDS with some degree of authority vested in him to promote interoperability, jointness and integration, the armed forces would not be able to efficiently pursue their missions in the wars of knowledge age. CDS is also necessary for commanding eventually the Integrated Theatre Commands which are inescapable for adopting a unified approach in envisaged theatre of military operations. Differences in the respective services on their approaches to a single point military advisor for the government have also enabled the bureaucrats to stymie the unification and integration of the defence services. Further, in our despondency on the government’s approach to the institution of CDS, we should not accept the half-baked idea of the permanent Chairman, COSC.

Defence Planning

HQ IDS has prepared Technology Perspective Capability Roadmap 2013 which is somewhat of a modified version of TPCR-2010. This document identifies the military technologies needed by the armed forces in consonance with its 15 Years Long Term Integrated Perspective Plan (LTIPP). This is an unclassified document that provides information to the defence industry (both private and public sector undertakings) as to what kind of capabilities armed forces would be looking for in the next 15 years period. According to the Defence Minister Mr. AK Antony, the objective is “to establish a level playing field for the Indian defence industry, both public sector and private sector.” Regular interaction between the defence industry and the MOD would help in developing ‘contemporary and future technologies as well productionising equipment required by the armed forces’.

As is well known, a major modernisation programme of the armed forces is under way and it is expected that a capital budget of 150 billion US dollars is expected to be spent over the next decade or so. The question remains whether our Defence Procurement Procedures are up to the mark despite many upgrades. And what can our indigenous defence industry offer us?

Firstly, the problem of perspective plans remaining an amalgam of the individual service plans has not been overcome as yet. This is mainly because there is no CDS or permanent Chairman, COS with the necessary mandate (i.e. budgetary control) to ensure that Five Year Defence Plans (FYPD) and consequently 15 years LTIPP are in fact not integrated.

Secondly, it is rare that FYPD and LTIPP are approved by the government in time. While the Defence Acquisition Council headed by the Defence Minister approved the 12th FYDP (2012-2017) in April 2012, the same continues to await approval by the Ministry of Finance and CCS. The LTIPP (2012-2027) was also approved in principle by the MOD but continues to await the government’s nod. The approval of the two vital documents by the MOD is of no consequence unless the same are approved by the government. Thus, even after introduction of the defence reforms in 2001, the defence planning process continues to suffer from inadequacies which can be surmounted if there is a political will.

Problems of defence preparedness are further compounded by the defence acquisition woes. While the Defence Procurement Procedure (DPP) has undergone a series of modifications and iterations, the evidence on the ground does not indicate that the acquisition process has acquired any momentum. The latest version is of 2013 vintage which is said to be based on experience gained on DPP of 2002, 2003, 2005, 2006, 2008, 2009 and 2011. The saga of acquisition of 126 Medium Multi-role Combat Aircraft still continues without any aircraft being inducted so far; the defence budget is also facing cuts again in the financial year 2013-2014 due to the economic downtrend. Similarly, though a deal for import of 145 Ultra-Light 155mm was concluded with the U.S. through the Foreign Military Sales (FMS) route some years ago, it has not fructified. Meanwhile, not only the U.S. has revised its prices for the guns, the Rupee has also depreciated against the dollar thus further compounding our budgetary problems. But then these are recurring problems which our politico-bureaucratic decision-makers have been unable to address.

Another factor which needs to be paid attention is the fast rate of obsolescence of technology which has made the operational life cycle of equipment shorter. The technology upgradations would be required in 10 years or so compared with much longer period in the earlier years. It is also being said that India has already missed two technology cycles and in the bargain two acquisition cycles. And therefore, the critical gaps in our armed forces’ capabilities are widening which needs urgent attention.

Thus, the much required institution of CDS that was diluted by the NCTF to the concept of permanent Chairman COSC has also not found acceptability with our MOD mandarins. But then as mentioned earlier, there is no point in accepting any watered down version of the CDS. The Parliamentary Standing Committee on Defence which had been a strong votary of the concept of CDS has omitted to take any views on the subject in the last few reports submitted to the government. Given the trend and views of politico-bureaucratic class it would be no surprise if the Naresh Chandra Task Force proposal is finally rejected by the CCS. The adhocism in our defence planning process and its concomitant adverse impact on the modernization programme of the Armed Forces continues. This has been so despite the cautions given by the previous and current Army chiefs as also by the Air Force and Naval Chiefs. The critical hollowness and gaps in our capabilities are widening tempting our known adversaries to take advantage of our vulnerabilities. The Parliamentary Standing Committee on Defence has been pointing out to the various ills connected with our defence planning and procurement processes and mechanisms without the same being addressed meaningfully by the government.

There are many useful recommendations made by the NCTF but they are likely to meet the same fate as earlier reports. Further, optimal utilization of resources cannot be achieved unless greater emphasis and attention is given to the process of budget formulation and implementation including forecasting, monitoring and control of defence planning processes. While Technology Capability Perspective Roadmap 2013 has been made yet there are many imponderables attached with it. Our politico-bureaucratic and military leadership needs to move fast in ushering in the recommended defence reforms to meet the security challenges from our assertive adversaries.

Prime Minister’s Visit to Russia and China: New Equations in a Fast Changing Global Order

Kanwal Sibal, 

Dean, Centre for International Relations and Diplomacy, VIF

Prime Minister Manmohan Singh’s back to back visits to Russia and China from October 20 to 24 reflect the evolution of India’s external relations in a world with shifting power balances and the challenges faced in consolidating relations with tried and trusted friends with declining power and forging understanding with adversaries with rising influence who seek to advance their interests through tactical overtures of friendship.

Russia

Russia remains a vital strategic partner of India. The long term geopolitical interests of both are compatible. Russia is not interfering in sub-continental affairs where it recognises India’s primacy. On principles that should govern international relations such as respect for sovereignty and non-interference in the internal affairs of countries, combating international terrorism without double standards and opposition to regime change policies, India and Russia have shared views.

Russia is India’s principal defence partner, offering over the years platforms and technologies that have fortified our defence capabilites, whether it is the aircraft carrier Vikramaditya, the leased nuclear propelled submarine Chakra, technical assistance for Arihant, licensed manufacture of front-line combat equipment such as the Sukhoi 30 MKI aircraft and T90 tanks, the joint development of the potent supersonic missile Brahmos, besides participation in co-developing the fifth generation fighter aircraft as well as a multi-role transport aircraft.

Russia’s politically significant role in India’s civilan nuclear sector is epitomised by the construction of two 1000 MW nuclear power plants at Kudankulam, honouring a commitment made prior to its Nuclear Suppliers Group (NSG) membership. The techno-commercial negotiations for building two additional reactors at Kudankulam have been completed, but the contract’s finalisation awaits resolution of issues raised by India’s nuclear liability legislation.

With China our territorial disputes endure. China has strenghtened its military infrastructure on our frontiers, forcing India to belatedly raise additional forces and allocate enhanced infrastructure expenditure on its side. China seeks substantial territorial concessions by India, not simply an agreement on border adjustment, which makes settlement a distant prospect. The confidence building border measures that China backs are intended to prevent military incidents that would distract it from dealing with far bigger challenges in the east presented by US and Japan constraining China’s regional dominance and its naval power expansion.

China

China interferes actively in our region, feeding fears of Indian hegemony amongst our smaller neighbours and preventing India from raising its global profile by consolidating its regional base. Pakistan, which has been fully complicit in this, receives Chinese political and military backing for pursuing its confrontational policies towards India. China is Pakistan’s principal defence partner. By transferring nuclear weapon and missile technology to Pakistan, China has profoundly damaged India’s security.

In the civilian nuclear field, as a counter to India-Russia nuclear ties, before joining the NSG, China “grandfathered” its supposed commitment to supply two nuclear reactors to Pakistan. It then decided to supply two additional reactors on the same pretext, this time as a riposte to the India-US nuclear deal. China is aiding in the construction of plutonium reactors in Pakistan to enable it to build smaller warheads for tactical nuclear weapons.

Despite political closeness, India’s economic relationship with Russia remains modest, with two-way bilateral trade at only $11 billion plus last year. The target of $20 billion by 2015 seems unachievable. Several business promotion efforts have failed to boost economic exchanges. India is proposing Russian investments in the Delhi-Mumbai industrial corridor, while the expanded energy partnership with Russia that India has long sought remains unrealised.

In contrast, despite serious political differences, India-China trade relations have flourished, expanding to nearly $ 70 billion in 2012, making China India’s largest trading partner in goods despite the damage done to our manufacturing sector in the process and security concerns emanating from China’s huge penetration of our power and telecom sectors. However, the $100 billion target set for 2015 is unlikely to be achieved because the trade deficit- likely to reach $40 billion this year- is becoming unsustainable.

Strategy

Improved India-US ties impact our relations with both Russia and China. Russia’s primary concern would be the erosion of its dominant position as our defence partner as we increase our acquisitions of US defence equipment, as this affects political equations. India will need to continually re-assure Russia concretely that its expanded strategic ties with the US would not be at Russia’s expense.

China closely monitors US arms sales to India, viewing them as integral to the American strategy to create a security ring around China. With China under an arms embargo by the West, Russia has been China’s principal arms supplier, with the potential sale of Russia’s Su 35 combat aircraft to China under discussion. Russia’s concerns about Chinese reverse engineering are pitted against its need to export to sustain its domestic defence industry, besides solidifying strategic understandings with China as a consequence of western geopolitical and economic pressures on it. Russia has also supplied RD-93 engines to power the JF-17 fighter aircraft, a China-Pakistan joint venture. Our triple challenge is to avoid entanglement in Russia-US tensions, manage to our advantage US-China strategic competition and attenuate the negatives for us of increased Russia-China collaboration.

PM’s Moscow visit for the 14th summit meeting would be successful if it delivers the Kudankulam 3 and 4 contract. The deliverable from the China visit would be the Border Defence Cooperation Agreement, valuable for avoiding incidents, not solving their cause.

Our challenge then is to build a larger edifice of relations with Russia on existing strong political and security foundations, whereas with China it is ensuring the safety of the impressive edifice that is rising on foundations that are not only weak but can shift.

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INS Sindhurakshak Tragedy: Navy should Strengthen and Safeguard its Submarine Fleet

Radhakrishna Rao, 

Visiting Fellow, VIF

Even as the Indian Navy, the youngest of the three services, had every reason to rejoice over India’s home-grown nuclear powered submarine INS Arihant attaining criticality and the launch of the indigenous aircraft carrier INS Vikrant in the first fortnight of August, a massive blow in the form of the wrecking of the INS Sindurakshak submarine in a devastative explosion on August. 14, turned the” mood of celebration” into a “moment of sorrow and introspection”.

The death of eighteen Indian Navy personnel on-board the ill fated Sindhurakshak, considered the key, frontline conventional submarine in service with the Indian Navy, made the tragedy all the more painful and shocking. Evidently, Sindhurarkshak was a sort of prized possession for the Indian Navy as it had come back from Russia after an extensive refurbishment. Incidentally, Sindhurakshak was deployed at the Mumbai dockyard following a US alert about the possible LeT(Lashkar-e-Toiba) attack along India’s coastline.The 2,300-tonne Sindhurakshak was, by all means, the operationally best submarine at the command of the Indian Navy since it got new sensors and underwent structural modifications which extended its lifespan by almost a decade .Following its midlife refit programme at Russia’s Zvezdochka shipyard at an estimated cost of US$80-million, Sindhurakshak, originally built in 1997, was equipped with the tube launched Club-5 cruise missile effective against the surface vessels and submarines at a range of about 200-kms. Sindhurakshak is one of the ten kilo class submarines that India bought from Russia between 1986 and 2000.

In the aftermath of this tragedy, Defence Minister A K Antony informed the Indian Parliament that “The navy has ordered a Board of Inquiry (BoI) and it has started with all the seriousness. Its terms of reference are to look into all aspects of causes of this incident. Nothing is ruled out. All likely aspects would be examined by BoI” said Antony. In a way, Antony’s statement implies that sabotage angle could not be ruled out.

Antony also revealed that the entire operational submarine fleet of the Indian Navy is currently undergoing extensive checks on the weapons related safety system and an audit of the current standards operational procedure has also been ordered. But then a serious question that begs answer is as to why the political dispensation in New Delhi slept over for more than a decade over a proposal for the acquisition of the submarine rescue system. Naval warfare experts point out that the timely deployment of the state of the art Deep Submergence Rescue Vessel (DSRV) could easily save the lives of the sailors on-board the submarine under disintegration. Naval forces of Russia, USA, China, UK and Singapore all have deep sea rescue systems in place. It may be recalled that in August 2000, more than 100 Russian sailors on-board the nuclear powered submarine Kursk, which sank in the Barents Sea, had to pay with their lives on account of the failure to deploy DSRV on time. The moral of the story is that by deploying a submarine rescue system, India could have easily managed to save the lives of the sailors on-board Sindhurakshak.

And in what seems to be the case of bolting the stable after horses have left, just a week before the Sindhurakshak tragedy, an RFI (Request for Information) was issued for a “Submarine Rescue Bell System with LARS”(Launch and Recovery System). Whether it is the procurement of the much needed artillery systems for the Indian armed forces or the acquisition of submarines for the Indian Navy, dithering and delay reinforced by a “deadly indifference” seems to have become the order of the day. And the country and its defence forces ultimately pay a very high price for the painfully slow decision making process of the poorly motivated bureaucracy associated with the defence acquisition programme.

On the other hand, India as a country has not exactly covered itself with glory in so far as ensuring safety in all its manifestations is concerned. It is high time that the Indian Navy took steps to decongest its facilities at Mumbai and Vishakhapatnam. To begin with, quickening impetus should be given to the completion of the phase two of the “Sea Bird” project at INS Kadamba at Karwar in Karnataka to help relocate some of the ships and submarines from Mumbai. It is in the fitness of things that it has been decided to berth the retrofitted aircraft carrier INS Vikramaditya at Karwar naval base. In Vishakhapatnam, where the nuclear submarines are stationed, a refinery and a fertilizer plant are in close proximity to the naval facilities. What’s more, the harbour here with its narrow entrance can easily be blocked by sinking trawlers. As such, there is a need for a new green-field naval yard somewhere on the eastern coast. The principle that one cannot put all the eggs in one basket should be the guiding force of the Indian Navy.

Becoming wiser after the event seems to have become a norm rather than an exception for the Indian ruling elite. Antony has now directed for according a top most priority for sustaining the “operational efficiency” of the thirteen conventional diesel electric submarines left with the Indian Navy after the Sindhurakshak tragedy. Of course, an overwhelming majority of them are already into the evening of their lives .And only half of them will be available for deployment at a given time since the ageing submarine fleet is being forced to spend much of their time for repairs and maintenance. Further, Antony had made it clear that there should be no more delays in the construction of the six Scorpene submarines with the technology to be provided by the French firm DCNS. Antony has also asked for expediting the thirty year submarine building project which was approved by the Cabinet Committee on Security (CCS) way back in July 1999.

By all means, submarines constitute the sinew of under-sea warfare strategy for they play a key role in neutralizing hostile naval vessels and blockading enemy harbours by laying mine fields. And now it looks as if India’s under sea combat arm stands compromised. Indeed, a fact filled CAG (Comptroller and Auditor General) report tabled in the Indian Parliament in 2008 had raised the alarm bells by stating that due to “ageing fleet and prolonged refit schedules, the average operational availability of the Indian Navy submarine was as low as 45%”. The report had also pointed out that the “the availability of the submarines with the Indian Navy is much below the envisaged force level and a large number of submarines in the existing fleet have become due for decommissioning in the immediate future.” Indeed, the grim ground reality is that Indian Navy has not been in a position to boost its sub-sea patrol by acquiring new submarines after the year 2000.

To make the matter worse, Indian Navy is yet to acquire air independent propulsion (AIP) system driven submarines which can stay under-sea for longer periods in comparison to the conventional diesel electric submarines which are required to surface once in a few days for recharging their batteries. In the context of the expanding responsibilities being thrust upon it, the Indian Navy would need a minimum of 24 submarines to take care of the security on both the eastern and western coasts of the country. In comparison, China has about 60 submarines of which ten are nuclear powered. China is also into building ten more nuclear powered submarines.

Indeed, India’s ambitious plan for building six new generation conventional submarines under Project 75I stands behind schedule by three years due to the delay in decision making and finalizing the purchase of equipment to be fitted into the submarine including sensors and propulsion. As things stand now, the first of the six Scorpene submarines will be delivered only by 2015 with 2022 as the deadline for the delivery of the entire lot. Under Project 75I, two of the six submarines will be delivered in ready to use condition by the French firm DCNS. The DCNS will transfer the technology to India for building the remaining four submarines. The Indian part of the project will be executed by Mazagon Docks Ltd (MDL) in Mumbai and Hindustan Shipyard at Vishakhapatnam. These submarines will come equipped with the advanced AIP system. This project forms a part of the thirty year plan to boost the under- sea capability of the Indian Navy and strengthen the indigenous base for the design, development and production of the submarines. As part of the thirty year plan, it is envisaged that 24 new submarines will join the Indian naval fleet.

Currently, the only operational nuclear powered submarine at the command of the Indian Navy is INS Chakra which was launched in 2012. It was acquired on lease for a period of ten years from Russia. This Akula-II class “Nerpa” submarine has a maximum speed of 30 knots and can go to a depth of 600-metres.Chakra armed with four 533-mm and four 650-mm torpedo tubes is, by all means, a formidable undersea combat system .Of course, under the lease terms, Chakra cannot be equipped with nuclear weapons. But then Chakra would substantially strengthen the Indian Navy’s capability for power projection in the Indian Ocean region and beyond.

Indeed, India’s home grown nuclear powered submarine Arihant going critical on August 10 as a first step towards its extensive sea trials was a landmark event for the Indian Navy. Unlike the conventional diesel driven submarines, the 6,000-tonne Arihant will remain submerged in water for months on end, thus making its detection a really difficult task. Powered by a compact, indigenous Pressurised Water Reactor (PWR) capable of generating 83-MW of power, Arihant has catapulted India into the elite league of a handful of countries which have mastered the technological complexities involved in building a nuclear powered submarine. Incidentally, India happens to be the only nation in the IOR (Indian Ocean Region) to possess a nuclear powered submarine.

On its part, the Defence Research and Development Organisation (DRDO) is planning to induct BO-5 medium range nuclear missile into Arihant. It is also planned to equip Arihant with K-15 nuclear tipped missile which has a range of 700-km.Further into the future, Arihant can serve as a formidable platform for launching the under sea version of the Indo- Russian supersonic cruise missile BrahMos. Three more nuclear propelled submarines would be constructed under Indian Navy’ high profile Advanced Technology Vessel (ATV) programme.

Clearly and apparently, Arihant and its follow on submarines including Aridhaman will substantially strengthen India’s nuclear strike capability. In the context of India’s national policy of “no first use of nuclear weapons”, the submarine arm of the nuclear triad will provide India a “credible second strike capability” to inflict “unacceptable damage” on the adversary. By all means, the submarine based ballistic missiles are considered the most effective and difficult to detect nuclear weapons delivery system.

But then it would be sometime before India’s fully home grown nuclear powered submarines go operational and become a part of the under sea arm of the Indian Navy. As such, with a view to beef up the rapidly dwindling submarine capability of the Indian Navy in the immediate future, India is now negotiating with Russia for the lease of the another nuclear powered submarine. All said and done, ensuring the safety of submarines is as critical as acquiring and maintaining them. For not long back, a US navy lieutenant who chose to remain anonymous through his blogs had expressed his unhappiness over the poor empowerment of Indian Navy personnel in terms of enforcing safety measures at all levels in a professional manner. Evidently, the US Navy blogger is known to have spent a few days with an Indian Navy ship in the Arabian Sea under the exchange programme.

Because the entire submarine fleet with the Indian Navy is both old and obsolete, the problems associated with ensuring their safety are too many and complex. For example, the fighting equipments past their designed life span are prone to mishaps and accidents. And the delay in procurement of new systems to replace the older ones only adds to the problem of ensuring safety. As is the case with the proposals for the procurement of battlefield hardware for the Indian Army and the Indian Air Force (IAF), the plan for the acquisition of submarines for the Indian Navy has been hanging fire for many years now. Unless our defence bureaucracy develops a vision and motivation for fast tracking the battlefield hardware in a time bound, transparent and cost effective manner, accidents like the Sindhurakshak tragedy is bound to repeat time and again. It may be recalled that the diesel electric driven submarine INS Sindhughosh had run into collision with a fishing boat in 2006 followed by a merchant vessel in 2007.

India should also probe thoroughly the observation of the Russian side that the violations of safety regulations could be the most likely cause of the explosion that wrecked Sindhurakshak. But here again, it would also be appropriate for the Indian Navy to evaluate the quality of Russian workmanship as well as the integrity of the systems and weapons forming part of the submarine. Of course, Indian Navy has in place well formulated and time tested procedures for ensuring the safety of submarines. But then to what extent they are implemented with all the seriousness they deserve, no one is sure as yet. And in particular this angle should be probed in depth.

For the navy personnel, living and operating in an undersea environment of the submarine, makes for a demanding and unforgiving task, for they lead a check by jowl existence with a bank of chemical batteries requiring periodic charging, inflammatory and dangerous gases as well as highly explosive warheads. This implies that even a small “mistake or lapse” could be dangerous and could cause a huge explosion leading to a certain catastrophe. Especially, while working in a submarine acquired from overseas source, the Indian Navy sailors should display a greater level of circumspection and caution as there are many “grey areas” in the safety measures and principles devised for them. There is no denying the fact that only a home grown system could ensure a greater level of safety and security in comparison to imported hardware. For here Indian naval personnel could have access to the entire range of data—starting from design phase to the level of integration and final assembly. In case of doubt, they can always go back to the original source. And this advantage would not be available with an imported system. This is one more major argument that goes to boost the case of indigenization from the word go.

Coming to the Sindhurakshak tragedy, greater stress should be placed on the safety of the propulsion system of a submarine. For it is speculated that the failure of the safety system related to the propulsion module of Sindhurakshak was responsible for the explosion. Because the diesel electric powered submarines are run on chemical batteries requiring occasional charging, the chances of their being subjected to explosion cannot be ruled out. By going in for the air independent propulsion system, the chances of submarine accidents could be minimized. All said and done, the argument of Uday Bhaskar, former Director of the National Maritime Foundation that “the zero error safety tenet will have to be reemphasized and internalized” should be the guiding principle of the safety procedures being implemented for the Indian submarine fleet. In the ultimate analysis, the security aspects of the mechanism of man machine interface should receive utmost priority to obviate the Sindhurakshak type tragedy. Under no circumstance should the safety principles be compromised. And the Indian Navy should lose no time in insulating its submarine fleet from “mishaps and accidents” by implementing safety rules and regulations at every stage of the operation.

Defence Acquisition: Urgent Need for Structural Reforms

Brig (retd) Gurmeet Kanwal 

(Visiting Fellow, VIF)

Allegations of corruption in the VVIP helicopter deal have once again brought to the fore the fragility of India’s defence acquisition process. Corruption appears to be endemic in defence procurement and a structural overhaul is now necessary.

India is expected to spend approximately USD 100 billion over the 12th and 13th defence plans on military modernisation. As 70 per cent of weapons and equipment are still imported, there is an urgent need to further refine the defence acquisition process and insulate it from the scourge of corruption. The Defence Procurement Procedure (DPP) being followed now was introduced in 2005. Since then it has been revised and modified several times based on the experience gained in its implementation. The current Defence Production Policy (DPrP) was unveiled in 2011. Its objectives are to: achieve self-reliance in the design, development and production of, weapons systems and equipment required for defence in an early time frame; create conditions conducive for the private sector to play an active role in this endeavour; enhance the potential of small and medium enterprises (SMEs) in indigenisation; and, broaden the defence research and development base of the country. While the objectives are laudable, the achievement of self-reliance remains in the realm of wishful thinking as most weapons and equipment continue to be imported, the defence PSUs have a stranglehold over contracts that are awarded to Indian companies and defence research and development is the monopoly of the DRDO.

Defence Research and Development

The Defence Research and Development Organisation (DRDO) has been conducting research at all levels of technology development – from the strategic to the mundane. It should actually concentrate its effort only in developing strategic technologies that no country will provide to India. The report of the P Rama Rao committee had reportedly asked the DRDO to identify eight to 10 critical areas which best suit its existing human resources, technical capability and established capacity to take up new projects. Since its inception in 1958, the DRDO has achieved some spectacular successes but also has many failures to its name. The successes include the Integrated Guided Missile Development Programme that produced the Prithvi and Agni series of ballistic missiles and, subsequently the BrahMos supersonic cruise missile in a collaborative venture with the Russians.

Among the failures are the main battle tank Arjun that took inordinately long to meet critical General Staff requirements of the Indian Army despite huge cost overruns. The LCA (light combat aircraft) still appears to be many years away from operational induction into the Indian Air Force. However, to DRDO’s credit, for many decades it worked under extremely restrictive technology denial regimes and with a rather low indigenous technology base. The time has come for the MoD to outsource defence R&D in non-critical areas to the private sector so as to encourage the development of indigenous technologies. In fact, funds should be allotted to the three Services for research aimed at product improvement during the life cycle of weapons systems and equipment.

Defence Procurement and Production Policies

The policy of self-reliance in defence production has not yielded the desired results. For several decades, the primary supplier of weapons systems was the Soviet Union and, later, Russia. If some MiG-21 aircraft and other weapons systems like tanks were produced in India, these were manufactured under license and no technology was ever transferred to India. The result was that even though India spent large sums of money on defence imports, India’s defence technology base remained very low.

The defence procurement and production policies (DPP and DPrP) continue to pay lip service to public-private partnerships and have so far failed to encourage India’s private sector to enter into defence production in a substantive manner – either on its own or through joint ventures (JVs) with multi-national corporations. The large-scale procurement of weapons and equipment from defence MNCs has been linked with 30 to 50 per cent “offsets”; that is, the company winning the order must procure 30 to 50 per cent components used in the system from within India. This will bring in much needed investment and will gradually result in the infusion of technology. However, the MNCs do not find the present level of 26 per cent FDI exciting enough. There is no credible reason why overseas equity investment cannot be raised to 49 per cent immediately for a JV to be really meaningful for a foreign investor.

As a growing economic powerhouse that also enjoys considerable buyer’s clout in the defence market, India should no longer be satisfied with a buyer-seller, patron-client relationship in its defence procurement planning. In all major acquisitions in future, India should insist on joint development, joint testing and trials, joint production, joint marketing and joint product improvement over the life cycle of the equipment. The US and other countries with advanced technologies will surely ask what India can bring to the table to demand participation as a co-equal partner. Besides capital and a production capacity that is becoming increasingly more sophisticated, India has its huge software pool to offer. Today software already comprises over 50 per cent of the total cost of a modern defence system. In the years ahead, this is expected to go up to almost 70 per cent as software costs increase and hardware production costs decline due to improvements in manufacturing processes.

Transparency in Decision Making

While the need for confidentiality in defence matters is understandable, defence acquisition decision making must be made far more transparent than it is at present, so that the temptation for supplier companies to bank on corrupt practices can me minimised. For example, tenders should be opened in front of the representatives of the companies that have bid for the contract. Before a contract is awarded, the file should be reviewed by the Chief Vigilance Commissioner (CVC). If the CVC has reservations about such scrutiny, either his charter should be amended or an eminent persons group should be appointed to vet large purchases. Surely, many such persons with unimpeachable integrity can be found in India.

In the past, the selective tweaking of the technical requirements during the procurement process has led to one company being favoured over another. All technical requirements must be frozen when a Request for Proposals (RfP) is issued by the MoD. It may seem heretical, but the conclusions contained in the reports of user trials must be made public. This step will not only amount to a huge leap forward in transparency, but also insulate the trials teams of the three Services from being unduly influenced to stage-manage trials in favour of any of the contending parties.

The frequent blacklisting of defence companies is having a deleterious effect on India’s military modernisation. Perhaps monetary penalties can be built into the contracts instead. The MoD must immediately undertake a structural overhaul of the defence procurement and production process. The aim should be to streamline it so that the armed forces get high quality weapons systems and equipment at competitive costs, preferably from indigenous suppliers. Soldiers must not be called upon to fight the nation’s enemies with inferior rifles made by the lowest bidder.

Still Comrades after all these years

Kanwal Sibal 

(Member, VIF Advisory Board)

Russia was the first country with which India established a strategic partnership in 2000 when Vladimir Putin became President and reversed the drift in ties under Boris Yeltsin when Moscow veered westwards and lost interest in its Soviet-era friendships. The declaration of a strategic partnership with India was a pragmatic step, calculated to restore Russia’s role in international affairs by linking up with independent-minded, friendly, economically resurgent countries like India that could help promote multi-polarity and resist United States-led policies of regime change and intervention in the internal affairs of sovereign countries.

Since then, India has signed strategic partnership agreements with several countries, including the U.S. whose unilateralism was the motive for espousing multipolarity in the first place. The India-U.S. strategic partnership agreement shifts the balance in India’s foreign policy as its logic is both to deepen bilateral ties and build convergences in policies on regional and global issues. Because of the disparity of power between them, the U.S. has more capacity to influence India’s policies than the reverse, with the result that changes in India’s stance on some domestic and foreign issues is often attributed to U.S. influence, causing misgivings about India’s U.S. tilt.

Perceived westward tilt

If before 2000 it was Russia’s westward tilt that unsettled our bilateral relationship, it is now the perceived westward tilt of India that is causing some unease in Russian thinking.

To underline the claim that the India-Russia relationship is in fine fettle and distinguish it from India’s other strategic partnerships, the two countries declared last year that theirs was a “special and privileged” one. But such well meaning rhetoric does not match reality.

If the economic pillar of relationships is more important today than the political one, then the inability of India and Russia to build a strong bilateral economic relationship weakens the foundations of overall ties. At $10 billion currently, two-way trade, even with a 30 per cent increase over the previous year, is small, compared to $100 billion in economic exchanges with the U.S. and almost $73 billion of trade in goods with China. The target of $20 billion by 2015 appears optimistic. Many efforts at the government level to promote more business to business contacts have not galvanised the economic relationship because of the hangover of the state controlled trade arrangements of the past that blunt real entrepreneurship on both sides, the decline of the public sector in India and the state oriented structure of the Russian economy, and also because the most dynamic, technologically modernising sectors of our economy, especially knowledge-based, are west oriented. In this context, some agreements signed during the summit in IT and pharmaceutical sectors, as well as on satellite based navigation systems using GLONASS (the Russian GPS system), are encouraging.

In areas of obvious complementarities, as in the energy sector, achievements have remained modest despite several summit level discussions during the 12 years of strategic partnership. The joint statement issued at the end of the just concluded summit between Prime Minister Manmohan Singh and President Putin devotes considerable attention to the subject, with some indication of progress. We have, as before, reiterated our interest in equity participation in new projects in Siberia, Russia’s Far East and the Arctic shelf, as well as in discovered/producing assets and proposed LNG projects in Russia. In return, Russia has always pitched for a share in downstream activities in India, to which we are agreeable. The LNG deal between GAIL and the Gazprom group for long-term supply of 2.5 mmt mentioned in the joint statement is to be welcomed. We are looking to Russia to ease the tax liability on Indian investment in Imperial Energy which is making the project unremunerative.

As against this, the atmosphere for Russian investment in India has been soured by the problems Sistema has been facing in the telecom sector with its licences revoked by the Supreme Court’s 2G judgment, putting in jeopardy its multi-billion dollar investment that includes $700 million of Russian debt funds. The issue has got complicated because Sistema contends rightly that it acted within the policy framework and committed no wrongdoing and the Russian government seeks resolution through executive fiat and is unpersuaded that the government of India cannot disregard the Supreme Court judgment. Some amicable solution seems to have been explored as the issue does not figure in the joint statement, while India’s problem with Russian tax laws in connection with Imperial Energy does.

Disappointment

Russia’s disappointment with the delay in signing the agreement on Kudankulam 3 and 4, despite the attractive financial terms offered, is understandable. Having agreed to set up nuclear plants in defiance of U.S.-led international restrictions on civilian nuclear cooperation with India and supply nuclear fuel for Tarapur, the Russians are resentful that India wants to treat them and the Americans and the French alike with regard to our nuclear liability law, especially as the inter-governmental agreement pertaining to these reactors preceded our liability legislation. However, with Fukushima and the public agitation against Kudankulam 1 and 2, not to mention the Supreme Court’s involvement in the matter, the issue has become politically difficult for the government. The answer may lie in increased cost of Russian reactors to cater for liability exposure. If Russia explored a practical solution within the rules framed under our liability law that provides considerable scope for limiting the financial liability of the supplier, Kudankulam 3 and 4 could be signed and Russia would dramatically increase its head start over others in India’s nuclear sector.

Similarly, on defence contracts, the Russians are unhappy at the negative publicity over the inordinate delay in delivering the aircraft carrier, now slated for November 2013, even as the Government of India has been extremely accommodating over the delay. Russia retains its privileged position as the largest source of defence supplies to India, but gets upset when it loses some tenders. Because the India-Russia relationship is excessively defence weighted, such losses are felt all the more acutely. India has to manage Russian expectations even as it is obliged to diversify its sources of supply as part of building strategic ties with other partners. The answer lies in diversifying the India-Russia relationship and giving it strong non-defence legs. On the positive side, the two countries are engaged in joint projects such as the Fifth Generation Fighter Aircraft, Multi-Role Transport Aircraft and the BrahMos missile, while India has ordered an additional 12 MI-17v5 helicopters as well as technological kits for 42 additional Sukhoi 30-MKI aircraft. It is ironic that although India is the biggest user of Russian platforms which are used in exercises with the U.S. armed forces, military level contacts with the Russians, as compared to those with the U.S., are negligible. Beyond all this, it is a huge policy failure on our part that with so much access to advanced Russian equipment we have failed to establish an indigenous defence manufacturing base.

The joint statement has substantive paragraphs with positive formulations on several regional and global issues. Russia has expressed satisfaction with India’s cooperation as a non-permanent member of the U.N. Security Council and reiterated its strong support for its candidature for permanent membership. The formulation on terrorism is robust. Pakistan is not named, but the implication, including in the context of Afghanistan, is clear, easing doubts raised by Russia’s recent overtures to Pakistan. The Taliban is not named, but in the context of attempts to have a dialogue with it, both countries have recalled the redlines for this and have implicitly opposed the dilution of U.N. sanctions against the extremist elements.

The formulation on Syria reflects convergence in thinking on essentials, as also that on Iran where any military option is opposed. In the long paragraph on security in Asia, there is a call for inclusive regional security architecture. In the background of Chinese claims in South China Sea, the need for strengthening maritime security in accordance with the universally accepted principles of international law is stressed. The trilateral India-Russia-China mechanism gets a positive mention, with Russia conveying its support for India’s membership of SCO and APEC. The important role BRICS plays in a multi-polar order and collective decision making is noted. Both countries back a more representative and legitimate international financial architecture that includes an expeditious reform of the IMF.

Russia has extended support to India’s membership of the MTCR (Missile Technology Control Regime) and Wassenar Arrangement as well as the Nuclear Suppliers Group. The Australia Group is a notable omission. In the joint statement, India has “underscored its determination to actively contribute to international efforts at strengthening nuclear non-proliferation regime,” which, apart from the clumsy language, is unclear about what is implied.

All in all, despite a truncated visit consistent with Mr. Putin’s matter-of-fact, businesslike style, the 13th summit was timely in providing an opportunity to the two sides to underline a shared understanding on several important issues and address some vexatious ones creating ripples across the smooth surface of the bilateral relationship.

Fiscal Pressures and Defence Budget: 2012-13

Vinod Anand 

(Senior Fellow, VIF)

The Finance Minister, Mr. P Chidambaram has begun a major exercise to rein in the burgeoning fiscal deficit which is likely to rise to 6 percent of GDP. The stated objective is to bring down the deficit to a level of 5.3 percent of the GDP as many financial and economic experts have recommended that maintaining a deficit of around 5 percent would be a prudent step looking at the current state of economy. This would prevent erosion of country’s fiscal credibility which has been somewhat under attack by credit rating agencies. Though plans have been proposed to reduce the government’s expenditure and obtaining funds from disinvestment, sale of spectrum and other assets and asking for special and enhanced dividends from Public Sector Enterprises, yet these measures may not be adequate to restrict the fiscal deficit to the targeted figure of around 5 percent.

In October, the Finance Ministry called for a reduction of non-plan expenditure by 10 percent which in effect means that over all savings, through this step, could amount to Rs. 75,000 crores. Though, it is not clear as to whether reduction of defence expenditure is part of this step yet, it is well known that generally the Ministry of Defence has not been quite up to the mark when it comes to spending the allotted funds especially from the capital account (meant for modernisation programmes) in time.

At the time of presentation of defence budget for financial year 2011-12 in February, 2011 it was claimed that funds allotted have been fully spent and this was as a result of a number of steps taken by the Ministry of Defence (MOD) to fast track the procurement process. However, while presenting the Revised Estimates (RE) for 2011-12, it came to light that from Army’s capital budget an amount of Rs. 3055 crores had been surrendered; Navy was allowed to spend more than its allotted budget by Rs. 2801 crores otherwise the amount of under-spending would have been higher. Total surrender of funds by the MOD which included those by the Air Force amounted to Rs. 5727 crores. This only indicates that despite frequent revision of Defence Procurement procedures the lingering problem of delays in acquisitions has not been entirely solved and the expenditure inefficiencies persist.

The problems of defence modernisation are further compounded by what is projected by the Services/MOD and what is finally allotted because of the budgetary constraints. The tables given below indicate the requirements projected and the funds allotted.

Projected requirement for Capital Modernisation Budget 2012-13 (In Crores of Rupees)




Capital Modernisation Budget 2012-13 (In Crores of Rupees)

As can be observed from the above figures there is a complete mismatch between what is projected and what is allotted. In fact, during the entire plan period of Eleventh Five Year Defence Plan (2007-2012) each of the services has got allocations that are less than the projections during each of the year. Further, the committed liabilities cannot be changed and therefore the axe falls on the capital budget for new schemes. The problem is more acute in case of the Army where DGOF Supplies has taken away large chunk of the capital modernisation budget of 2012-13. All this has been questioned by the Parliament’s Standing Committee for Defence (SCD); MOD representative in his reply obfuscated the issue by a giving a stock reply that Ministry of Finance would be approached for further funds. The SCD has expressed grave concern on the meager outlay for the new programmes. The Committee has also stressed that not only the committed liabilities should be taken care of but additional allocations should also be made to cover the huge gaps between the required and existing capabilities. There are deficiencies in force levels, armaments, munitions, aircraft and so on.

With the MOF’s continuing its efforts in restricting the fiscal deficit it might come about that defence budget for 2012-13 (Rs 193407.29 Crores) may be negatively impacted. Some estimates indicate that the allocations may be reduced by upto five percent or an amount of Rs. 5500 crores to about Rs. 10,000 crores. Since the scope for reducing the revenue budget is limited the capital budget would become target for major reductions. Further, it is the new schemes that will suffer rather than the past contractual obligations.

The critical hollowness as brought out by the present and previous Army Chiefs had moved the government to place orders for acquisition of missiles and ammunition for tanks and infantry combat vehicles. The IAF has also ordered for 200 Brahmos cruise missiles; apparently all such acquisitions might have to be met through better accounting/management between the revenue and capital account. But, the new programmes in the capital account are likely to suffer thus putting paid the plans for ushering in RMA at a faster pace in the Indian Armed Forces. As it is, the proposal for raising a Mountain Strike Corps has been sent back to the Chiefs of Staff Committee for a relook thus relieving the Finance Ministry from making any allocations for the same if it were to be raised in the current fiscal year. The Army’s plans for acquiring heavy and medium vehicles, artillery guns, air defence systems, communications equipment would also suffer a setback. The Army’s budget being over 50 percent of the defence budget is likely to be impacted the most. The Air Force and Navy programmes would fare no better. If the economic situation deteriorates further then there is a likelihood of large committed liabilities of the technology intensive IAF and Indian Navy being deferred which may again add to delays.

The economic growth has been showing a downward momentum and various estimates indicate that this year the growth would be less than 6 percent of the GDP (somewhat closer to 5 percent). The Prime Minister, addressing the Combined Commanders Conference some years back had promised to enhance the defence budget to 3 percent of the GDP if Indian economy continued to grow at 8 percent of the GDP. But that may not come about for some time. For last two years the defence budget has been less than 2 percent of the GDP which has prevented the acceleration of modernisation of the armed forces. Further, in the coming elections season the problems may be compounded by the need of the government to divert funds for development sector or other programmes which would have bearing on the forthcoming elections in 2014.

While there is a need for the armed forces to streamline its revenue expenditure it also needs to rectify its expenditure inefficiencies for which the MOD has been criticized many times. As underlined earlier, though Defence Procurement Procedures have been modified several times yet the same has not helped in removing the inefficiencies in procurement. If the MOD is unable to spend 2/3rd of the funds by end December then there is a great scope for reducing its allocations in the Revised Estimates stage for the current fiscal. There are indications that this level of expenditure may not be achieved by then.

Meanwhile, China and Pakistan have been adding to their arsenal and have vastly improved their strategic posture at the borders. The SCD in its report for 2012-2013 demands for grants has emphasised on ‘the urgent need for to build the Defence capabilities to face any of the challenges including the worst scenario of two front war. As such the Committee strongly recommends that the requisite allocations should be made available to the Ministry of Defence for their different programmes. Besides, the Ministry of Defence on their part should also build capacities to utilize the allocated resources.”

Thus, the modernisation programme of Indian Armed Forces needs to be kept on track. The Finance Minister should be looking largely at the other ministries and departments and other innovative ways to shore up government’s finances as the military has been, for many years, allotted funds which are much less than what is required.