Sunday, 26 October 2014

Defence panel clears projects worth Rs 80,000 crore ($13 billion)

MoD to choose yards for building submarines;Israeli Spike anti-tank missile chosen over US Javelin

By Ajai Shukla
Business Standard, 26th Oct 14

The ministry of defence (MoD) on Saturday took a major step to address India’s critical submarine shortage,. A committee has been set up to evaluate which Indian defence shipyards can build six high-tech, conventional submarines under Project 75I at an estimated cost of Rs 50,000 crore.

The government has also cleared the procurement of the Spike anti-tank missile from Israel, effectively rejecting the US proposal to co-manufacture the Javelin missile and then co-develop a next-generation version of the Javelin for the US and Indian militaries. The government has also cleared several smaller projects whose worth, according to ministry officials, totals Rs 80,000 crore. The details of these smaller approvals, though, are not immediately available.

To identify shipyards that will bid for the tender, the high-level committee, under Secretary (Defence Production) G Mohan Kumar, has been given six-eight weeks to screen five public sector and two private shipyards --- Mazagon Dock Ltd, Mumbai (MDL), which is currently building six Scorpene submarines under Project 75; Garden Reach Shipbuilders and Engineers, Kolkata; Hindustan Shipyard Ltd, Visakhapatnam (HSL); Goa Shipyard Ltd; Cochin Shipyard Ltd; Larsen & Toubro (L&T) and Pipavav Shipyard.

Highly credible MoD sources say the shortlisted shipyards will be invited to submit bids, in partnership with a foreign shipyard that meets the navy’s specifications for the submarines. These include air-independent propulsion; the capability to fire land attack cruise missiles; and advanced stealth features that make them hard to detect.

Project 75I stems from a “30-Year Submarine Construction Plan”, approved by the cabinet in 1999, for constructing 24 conventional submarines in India. Two separate construction lines were to build six submarines each, one using western technology; and the other with Russian know-how. Based on this experience, Indian designers would build the next 12 submarines.

So far, only six submarines are being built under Project 75 --- the Scorpenes at MDL.

Further production has remained stalled, with three committees having been constituted by the defence ministry to identify Indian shipyards that can build Project 75I. In 2003, a committee, under a defence joint secretary, cleared L&T and MDL. Yet, in 2008, a similar committee ruled out L&T.

So incensed was the private engineering giant, which is playing a leading role in building India’s nuclear submarine, INS Arihant, that the chairman, AM Naik, met then prime minister, Manmohan Singh, to protest. That led to the setting up of a third high-level committee, headed by the National Manufacturing Competitiveness Council chief, V Krishnamurthy, which again cleared L&T and MDL.

Meanwhile, to ensure early delivery, the Indian Navy has pushed for building two submarines abroad, while the domestic manufacturer absorbed technology and cranked up production. Now, in keeping with the Modi government’s “Make in India” policy, and in accordance with the 1999 plan, it has been decided that all six vessels will be built in India.

Gone too is the impractical United Progressive Alliance (UPA) plan to divide production between two public sector defence shipyards (MDL and HSL) --- a device proposed by then defence minister, AK Antony, to keep HSL in business. Instead, a single shipyard will build all six submarines.

The big potential gainer from today’s decision is L&T, which is back in contention for winning, single-handedly, Indian warship-building’s largest-ever order.

Speaking to Business Standard today, MV Kotwal, L&T’s defence business chief, said: “L&T would welcome any decision to evaluate Indian shipyards for both capacity and capability in building submarines. We have both the infrastructure and the experience in our Hazira shipyard, and also in our new Katupalli shipyard (at Ennore, Tamil Nadu). Most importantly, we have established a state-of-the-art submarine design centre in Chennai and a virtual reality centre in Mumbai, both essential for Project 75I.”

Separately, Business Standard learns the MoD has cleared the Rs 2,000 crore procurement of two midget submarines, used for special operations like landing commandoes on enemy shores. It is likely that HSL Visakhapatnam, the defence ministry’s newest shipyard, will build these in partnership with a foreign vendor.

In another major decision on Saturday that is loaded with politics, the MoD has cleared the procurement of the Israeli Spike anti-tank missile for the army’s infantry battalions to destroy enemy tanks. MoD sources say the Rs 3,200 crore contract is for about 300 launchers and more than 8,000 missiles. Production facilities will be established in Bharat Dynamics Ltd, Hyderabad.

This constitutes a flat rejection of the US proposal to co-manufacture the Javelin anti-tank missile in India and, unprecedentedly, co-develop with the Defence R&D Organisation (DRDO) a next-generation version of the Javelin. That proposal was made under the Defence Trade & Technology Initiative, a high-level defence channel established to boost defence ties between New Delhi and Washington With the US lobbying New Delhi at multiple levels, including during Prime Minister Narendra Modi’s recent visit, this is an unmistakeable snub for Washington.

Amongst other procurements cleared are: 363 new BMP-2 infantry combat vehicles from Ordnance Factory, Medak, for the army for Rs 1,800 crore; 761 radio relay containers for army communications for Rs 662 crore; 1,768 railway wagons for Rs 740 crore for quickly moving army units over long distances; and 12 additional Dornier aircraft for the navy, which Hindustan Aeronautics Ltd (HAL) will build for Rs 1,850 crore.

Speaking at the MoD’s apex Defence Acquisition Council (DAC) on Saturday, where the procurement decisions were made, Defence Minister Arun Jaitley said “National security is a paramount concern for the government. All hurdles and bottlenecks in the procurement process should be addressed expeditiously so that the pace of acquisitions is not stymied.”

Financial effect

Decisions on Aug 29

197 Light Utility Helicopters
Tender scrapped (to be built in India)
6 submarines
Refit part in India
Rs 4,800 crore
118 Arjun Mark II tanks
Build in India
Rs 6,600 crore
40 Catapult SP guns
Build in India
Rs 820 crore
22 Apache and 15 Chinooks
Buy overseas
Rs 15,000 crore
Sonars for 11 warships
Buy overseas
Rs 1,770 crore
Naval multi-role helicopters
Buy overseas
Rs 1,800 crore
Army mobile network
Build in India
Rs 900 crore

Decisions on Oct 25

6 submarines (Project 75I)
Committee set up All built in India
Rs 50,000 crore
300 Javelin launchers, 8,000 missiles
Build in India with ToT
Rs 3,200 crore
363 BMP-2 infantry carriers
Build in OF Medak
Rs 1,800 crore
761 radio relay containers
Buy in India
Rs 662 crore
1,768 railway wagons
Buy in India
Rs 740 crore
12 Dornier aircraft
Build in India (HAL)
Rs 1,850 crore

Friday, 24 October 2014

First Sukhoi-30 overhauled at Nashik, highlights HAL’s growing capability

By Ajai Shukla
Business Standard, 24th Oct 14

Next week, Hindustan Aeronautics Ltd (HAL), Nashik will, complete the first ever overhaul of a Sukhoi-30MKI fighter. HAL test pilots will now test-fly the aircraft to ensure that it has emerged from the overhaul as good as new. Indian Air Force (IAF) chief, Air Chief Marshal Arup Raha, has been invited to Nashik next month to accept the overhauled fighter back into his combat fleet.

HAL’s new overhaul facility will save the IAF hundreds of crore rupees, while giving leases of life to its Su-30MKIs. Not even Russia overhauls this fighter, a process that involves stripping it to its bare bones, checking every system and sub-system, replacing numerous components, and then reassembling the fighter anew.

A Su-30MKI is overhauled after flying 1,500 hours or 14 years, whichever is first. Over its total service life of 6,000 flying hours or 30-40 years, each fighter undergoes three overhauls. Eventually the IAF’s fleet of 272 Su-30MKIs will undergo 816 overhauls --- three per fighter.

HAL officials say overhauling in India costs far less than what “original equipment manufacturers”, or OEMs, charge --- typically 35-40 per cent of the cost of a brand new fighter.

“OEMs usually price new fighters reasonably, but make their money by charging heavily for repair and overhaul. Establishing overhaul capability in India defeats this pricing strategy,” says Wing Commander Neelu Khatri, a former IAF logistics specialist.

HAL Nashik also stands to benefit from business from other air forces that operate the Su-30. Says a MoD official; “Nashik is the world’s only overhaul facility for the Su-30MKI. Potentially, it could get overhaul orders from countries like Vietnam, Malaysia, Algeria, etc, which fly variants of the Su-30”.

Through years of building the Su-30MKI, HAL Nashik has gradually mastered the expertise that makes it one of the world’s most feared fighters. Says the chief of HAL’s Nashik facility, S Subrahmanyan: “More 51 per cent of the Su-30MKI by value is currently made in India, a little more than the 49 per cent agreed with Russia in the contract signed in 2000 to build 140 fighters in India.

Of the 43,000 components that go into a Su-30MKI, 31,500 components --- or 73 per cent --- are now being built in India.

Further indigenisation is blocked since the Indo-Russian contract mandates that all raw materials that goes into the Su-30MKI --- including 5,800 titanium blocks and forgings, aluminium and steel plates, etc --- must be sourced from Russia. The contract also stipulates that another 7,146 items like nuts, bolts, screws and rivets must be sourced from Russia.

HAL has also partially indigenised the Su-30MKI’s giant AL-31FP engines, which are built in Koraput, Odisha. 53 per cent of the engine by cost has been indigenised, with the remaining 47 per cent consisting of high-tech composites and special alloys --- proprietary secrets that Russia will not part with. Even so, HAL builds 87.7 per cent of the engine’s components in India.

Given HAL, Nashik’s growing expertise, it is surprising that the overhaul facility at Nashik has taken 14 years to overhaul its first fighter. This is because the initial contract, signed in 2000 for building 140 fighters in India, did not include provisions for overhaul --- a mistake, say contract lawyers.

The delay was compounded because Russia itself has no Su-30 overhaul facility (the Russian Air Force did not buy the fighter until well after India). Only in 2008 did New Delhi and Moscow sign an overhaul contract. Until last year, aircraft parts and systems were going to Russia for overhaul.

In 2010, the first IAF Su-30MKI fighters, which had joined the fleet in 2000, were due for overhaul, in accordance with the original schedule, which was 1,500 flying hours or 10 years. Since the fighters had flown far less than 1,500 hours, Sukhoi was approached to extend the time period between overhaul. After numerous inspections and “accelerated aging tests”, Sukhoi revised the overhaul schedule to 1,500 flying hours or 14 years, whichever comes first.

“The MoD has sanctioned an overhaul capacity of 15 fighters per year; next year we will overhaul 10-12 fighters and then stabilize at 15 fighters annually. We have already approached the MoD to step up capacity to 30 fighters per year, which will cater for our requirements into the 2030s” says Subrahmanyan.

Of the thirty Su-30MKIs that will be overhauled each year, HAL will do 20, while an IAF base repair depot will overhaul the other 10. 

Thursday, 23 October 2014

Government takes note of Su-30MKI’s poor serviceability

By Ajai Shukla
Business Standard, 23rd Oct 14

Even before an Indian Air Force (IAF) Sukhoi-30MKI crashed on October 14, near Lohegaon Air Base outside Pune, concern has been mounting over growing numbers of crashes, incidents involving engine failure, and the worrying fact that, at any given time, barely half the Su-30MKI fleet is available for combat missions.

According to ministry of defence (MoD) figures accessed by Business Standard, the serviceability rate of the Su-30MKI was just 48 per cent till last year. The remaining fighters were undergoing repair or maintenance.

Today, availability has risen slightly to 55 per cent, far lower than advanced western air forces, which generate 80-85 per cent availability rates. In terms of aircraft numbers, only 106 of the 193 Su-30MKIs that the IAF flies today would be available in war. The remaining 87 fighters, each worth Rs 358 crore at current prices, would remain on the ground.

“That’s more than Rs 30,000 crore just sitting there in hangars”, notes a senior MoD official.

Last month, the MoD held two high-level meetings to find solutions to this problem. According to figures presented in those meeting (a) 20 per cent of the fleet, i.e. some 39 Su-30MKIs, are undergoing “first line” and “second line” maintenance or inspections at any time, which is the IAF’s responsibility; (b) Another 11-12 per cent of the fleet is undergoing major repair and overhaul by Hindustan Aeronautics Ltd (HAL); and (c) 13-14 per cent of the fleet is grounded, awaiting major systems or repairs --- the technical terms is: “aircraft on ground”.

For decades, the IAF has accused HAL of poor workmanship and maintenance. At the MoD meeting on Su-30MKI serviceability, HAL turned the tables on the IAF.

The MoD was informed about serious problems with the IAF’s management of spares. By standard norms, a fighter fleet consumes 5 per cent of its worth in consumables and spares each year. By that benchmark the Su-30MKI fleet, currently worth about Rs 69,000 crore --- 193 Su-30MKIs at Rs 358 crore per fighter --- should consume spares worth Rs 3,450 crore annually. Yet, IAF orders from HAL add up to less than Rs 50 crore, including ground handling equipment.

Without competent inventory management by the IAF, and with spares ordered piecemeal when defects arise, Su-30MKI fighters spend weeks on the ground awaiting spares.

To ensure that 13-14 per cent of the Su-30MKI fleet is not grounded for want of spares, HAL has stockpiled spares worth Rs 400 crore in Nashik. According to S Subrahmanyan, the chief of HAL’s Nashik facility, the inventory is based on a study of consumption patterns of Su-30MKI spares over the preceding five years.

HAL says this buffer stock includes spares that are still purchased from Russia, because low consumption volumes make indigenisation non-cost-effective. Even so, non-availability of these spares could ground aircraft.

Simultaneously, HAL has proposed to the MoD that the IAF must order spares required over a 5-year period, stocking them at 25 Equipment Depot, the IAF’s holding depot for spares at Nashik.

Separately, HAL has offered the IAF “Performance Based Logistics” (PBL) for the Su-30MKI fleet --- a solution common in advanced western air forces. PBL would bind HAL to maintain the Su-30MKI, providing the IAF a specified serviceability rate --- calculated in flight hours, or as a percentage of the total aircraft fleet --- in exchange for an annual service charge.

Besides saving maintenance costs for the IAF, PBL has been found to encourage quality manufacture, since manufacturers know they will be responsible for keeping the aircraft serviceable through its operational life.

MoD officials say the IAF dislikes the PBL model, because outsourcing maintenance to HAL threatens a large maintenance empire built around “base repair depots”, manned by IAF personnel. In 2008-09, the IAF rejected HAL’s proposal for a PBL contract for maintaining the Hawk advanced jet trainer.

HAL is confident that it can deliver higher serviceability rates for the Su-30MKI than the current 58 per cent. The company has argued that raising aircraft availability by 20 per cent would make 40 Su-30MKI additionally available to the IAF, effectively adding two fighter squadrons to its strike power.

The Su-30MKI fleet, which currently numbers 193 fighters --- 50 built in Russia and 143 built by Hindustan Aeronautics Ltd (HAL), Nashik --- will rise to 272 fighters by 2018-19, when HAL delivers the last of the 222 fighters it will build.

(This is the first of a two-part series)

Sukhois grounded after pilot seats ejected on their own

By Ajai Shukla
Business Standard, 23rd Oct 14

The Indian Air Force (IAF) has released disturbing details of why a Sukhoi-30MKI fighter crashed on October 14 near Lohegaon Air Base, Pune, while coming in to land after an uneventful flight. According to the IAF, the fighter’s ejection seats fired without reason, leaving it without either of its two pilots.

The IAF has now grounded its entire fleet of 193 Su-30MKI fighters, to allow a Court of Inquiry (CoI) to investigate the accident. That puts one-third of the IAF’s fighter fleet out of action, a blow for a force that makes do with just 34 squadrons, against an authorized establishment of 39.5 squadrons.

The ministry of defence (MoD) announced on Wednesday: “(A)s is the procedure in such cases, the flying of the Su-30 fleet has been temporarily suspended.  The CoI is in progress and certain specific checks are being conducted on the aircraft.  As and when the checks are complete and the Court is satisfied, the Su-30s will be put back into flying.”

This unprecedented incident has the potential to cause a serious loss of confidence in an unusually safe fighter that is considered the backbone of the air force. The aircraft that crashed --- as evident from its tail number, SB 050 --- was the last of the 50 Su-30MKIs that Russia supplied to India, after building it in Sukhoi’s Irkutsk plant.

The IAF has named the pilots as Wing Commander Sidharth V Munje and Flying Officer Anup Kumar. Both pilots were from the Lohegaon-based 30 Squadron, which calls itself “The Rhinos”.

“In my 40 years of flying, I have never heard of such an incident of automatic ejection. For the morale of the pilots who fly the Su-30MKI, the cause of this crash must be found and remedial measures transparently instituted”, says Air Vice Marshal Kapil Kak (Retired), a veteran who has extensively flown the Canberra light bomber.

Fortunately, both the pilots (in the Su-30MKI, one is designated pilot and the other is weapon systems operator) parachuted down safely. The IAF has stated that, “No loss of life or damage to property was reported.”

Miraculously --- and fortunately for the investigation --- the aircraft survived the unpiloted crash without major structural damage. Serving IAF officers say that a bad crash and fire might have destroyed crucial evidence.

Experts say the crash was obviously caused by a technical defect, since both pilots appear to have ejected without any emergency or malfunction. Nor could one of the pilots have accidentally triggered the ejection, since the Su-30MKI requires each pilot to operate his ejection seat independently.

The Su-30MKI is fitted with Russian K-36DM “zero-zero” ejection seats, which allow pilots to safely bail out at zero altitude (i.e. from an aircraft on the ground), at zero speed (i.e. from a stationary aircraft).

Earlier Russian ejection seats, such as those fitted on the MiG-21, often caused spinal injuries during bailout. The K-36DM seat, however, is considered as safe as the most modern western ejection seats.

This is the fifth crash of a Su-30MKI since the IAF began flying the fighter in 2000. There were no crashes in the first 9 years, but the last 5 years have seen five crashes involving the total write-off of the fighters involved. One IAF pilot has been killed in one of these crashes.