This Gujarati goes up to a shop and says, “Give me 126 apples for INR 1100.” The shopkeeper isn’t too pleased that he is getting so little for his prime golden apples plucked off the most prized trees in his orchard. But the market is bad so he expects to make money out of the trimmings and the basket and maybe sell him some nice cherries to go. So he starts putting them into the basket. Suddenly, the Gujarati changes his mind. He tells the apple seller, “You know what, forget it. Give me 36 for INR 1100.”
Those who know their Gujarati will tell you that no good Gujju even has such nightmares.
Yet, that about sums up how the Indian Air Force (IAF) is on the verge of achieving its dream of having those French birds called Rafale, 36 for the price of 126. The action on the no-name, no-format, no-logic 36 had started with the last government’s MMRCA (IAF tender for 126 Medium Multi Role Combat Aircraft) process. That was handled more or less in the same fashion where you would ask your driver to go and buy a car he likes and he returns with a Ferrari.
Having inherited that tidy mess from the predecessor government, the incumbent one saw the issue squarely. And then proceeded to magnificently lose its way.
There were half a dozen inescapable realities that faced the Modi government:
First, we needed new planes. A rash of them. About 600 by any count by 2030.
Second, the LCA (Tejas Light Combat Aircraft) was a great patriotic flying machine that could at best be used for kamikaze manoeuvres in the event of a war, if HAL (Hindustan Aeronautics Limited) did manage to churn them out at a rate more than two a year.
Third, there was a clear mismatch between aircraft required and aircraft that were being sought. Yet another twin engine aircraft (indeed two) had emerged ‘victorious’ in an air force that was getting crippled by a continuous bleeding of single-engine MiG-21 aircraft.
Fourth, we just didn’t have enough money to spare to buy the 126 aircraft if one peeked at the numbers. The air force having smartly eliminated the single engines, had smugly put on the table one expensive and another even more expensive aircraft to choose from. There was clearly no irony in the self-congratulatory ‘we-should-patent-our-process’ back-slaps that a former air chief gave himself.
Fifth, the chosen aircraft was a bad choice in every way possible, especially when the LCA didn’t look like it would be able to make up the numbers. The French had no purpose larger than getting an order of 126 aircraft, maybe more. They had to sustain the aircraft and its ancillary industry back home. They had been virtually shepherded through the process by the IAF.
The only plausible reason that the Rafale had snuck through was because the other contenders were no better off: The F-16 and F-18 were long in the tooth; the Gripen NG and the MiG-35 were more on paper than flying aircraft and the Eurofighter was more or less on par with the Rafale and its original orders were getting whittled down due to prohibitive costs.
The other big point that was missed in the entire process was that you don’t buy aircraft like gizmos, you buy them with a larger objective – it’s not about choosing between an iPhone 126.96.36.199 and a Samsung 188.8.131.52 with a checklist.
A lot of water has flown under the bridge since and the Rafale looked like a bad, bad choice. The costs of the Rafale had turned out to be prohibitive. This government, unlike the last one, had come in with a clear industrial outlook to defense – it was quite clear that it would buy aircraft only if it resulted in actually implanting a whole industry in defense.
Without the ‘Public Sector’ and ‘Strategic Defense industry’ fetters shackling its mind, the Modi government figured that such a large outgo could be that one big shot needed to build a defense industry, create jobs and, along the way, ensure that there were sufficient numbers of big corporate beneficiaries for its political war chest.
In that context, the American and Swedish offers of transferring everything lock, stock and barrel looked enticingly welcome. The Gripen E had finally taken off from the drawing board and become a real aircraft that ticked all the boxes except one – global strategic weight. The Boeing F/A-18 offer looks just as tempting given that that India was also ramping up its aircraft carrier fleet and the Navy’s MiG-29 were spending more time resting on the ground than up in the sky. The reason why the older F/A-18 still held merit was simply because it provided the potential of a large industrial base shifting to India in a short duration – with little resistance from US domestic interests.
And, finally, the LCA was dead as a dodo as a frontline fighter. Urgent measures were needed to not only take the LCAs to their next generation but to create a platform where development was accompanied by the creation of a manufacturing framework. As things stood, they were bespoke aircraft where replacements for failed parts had to be literally machined together.
The best kept secret – rather, the big dung heap in the room that everyone in the know publicly refuses to mention (except now and then a CAG report that lets out a worm or two) – was that the aircraft’s biggest failing was that someone had forgotten to do the planning for standardized production. The aircraft that are flying are held together by customized pieces, literally machined and tailored. In cultured English, they call it bespoke fighters; in Hindi they call it jugaad.
It goes to the maturity of the current government that it took little stocktaking to figure out that Saint Antony had left behind such a complex web of particular interests that it needed a bold stroke to cut through.
There were four measures that were politically implemented:
First, the MMRCA shop was shut. An order of 36 was placed to mollify the French. But so closely held was this manoeuver that someone forgot to check how many aircraft actually made up an operational squadron. The G2G (government-to-government) route was born. No one stopped to question that, while the Rafale G2G order got acquiescence simply because it had emerged as the ‘top choice’ of the IAF in the MMRCA roulette, it would take more than the say-so of the prime minister to sign the next G2G.
Second, the LCA Mk II was given a quick burial to stop another round of interminable wastage.
Third, a large order was placed on the LCA. Giving the best example yet of ‘Fake In India’, India would now have five squadrons of aircraft in operation somewhere around the time Rahul Gandhi’s children graduate (This, despite some fairly scathing CAG criticism on the penchant for placing premature orders).
But what it did do was to give the government the room to go ahead and put in place its alternative route to a quick, robust India-led defense aerospace industry, which would more or less follow the same principles as the development of the auto industry in India.
Fourth, and this is where it is turning the thinking on acquisition on its head, there seems to be a very clear direction that a large fighter order to fill the gap of a single engine (after accounting for the mythical beast Tejas) would be principally directed at breeding an aerospace industry.
It seems evident that the gameplan is to get the organization that can best deliver the numbers, technology, spin-offs and industry. The winner or winners would be those who deliver an industry rather than the aircraft that caters purely to our top guns’ flights of fantasy.
Having, in a manner of speaking, cleared the decks, the process then proceeded to lose its way. The reasons are plentiful. None of the Indian private companies setting up ‘aerospace’ centers have the faintest clue of either the defense or aerospace business. Worse, there is growing suspicion that their interest is limited to being beneficiaries of a government-mandated handout where orders would be furnished and technology from partners would be served up on a platter.
One of the most scathing criticisms of the Tejas has been its poor indigenization rate – less than 35 percent of the aircraft is indigenous. In essence, there has to be a very large and significant investment in upstream companies that would deliver components.
Given those challenges, it is quite evident that the supplying company would have to play a very large role in creation of both the manufacturing capacity as well as upstream development. However, that may prove easier said than done since it would essentially involve foreign partners handing over the keys to the full production chain without any control over the company. Further, there would remain that vexatious issue of not being able to secure sovereign guarantees from an Indian majority-owned company.
Another part that the Modi government understands well – from its prior experience in Gujarat – is that it takes a whole slew of policy sops and more to get industries to set up: Open access, land at throw away rates, tax holidays, energy infrastructure, freeing of restraints on imported inputs and a very free hand. A drive from Ahmedabad to Surat would show the large units that have come up across the state from investments made by companies with diverse origins.
Take the case of the Tata Nano. Modi is said to have offered sops that totaled up to INR 30,000 crore to get the project to the state. Across the board, the Modi government in Gujarat made business an attractive proposition by literally seed funding enterprises with land, loans and cash assistance. Yet, in the defense sector, global firms are being asked to take the shirts off their backs and come to the party.
In effect, there is possibly the understanding that a simple DPP (Defense Procurement Procedure) will not do the trick – except possibly setting down the process for a G2G order. Even that may not prove to be a cakewalk. Any selection of this nature has to have some basis. The large discretion that the decision-maker exercises may well prove to be, as in the case of Bofors, a political albatross of gargantuan proportions. It becomes, potentially, even murkier when an Indian partner is involved. Given that few of those who have raised their hand can qualify to be Caesar’s wife, it would be another messy minefield to deal with.
When the government strode into this situation, they were thinking of what they had done in Gujarat very well – picked the player for the sector; given him land, loans, sops and cleared out the regulatory mess. The result was setting up of units in a remarkably short time. And then, as the deeper implications of what it meant to do the same thing in Delhi sank in, bit by bit, the non-process slowed down, got muddled and is now mumbling its way through to what may turn out to be yet another dead-end.
As we come close to celebrating the fifth year after the famous down-selection of the MMRCA, let’s hope there is someone out there with the ability to cut the Gordian knot.
Note: All emphasis original.
Click on the links below to read Mark’s two-part analysis of the MMRCA tender process: