India’s VSHORAD program off flight path
Defence ministry faces problematic result after 20 years of shopping around

Earlier this year, the defence ministry opened the commercial bids of competing manufacturers of air defence systems after a lengthy technical evaluation concluded in January, clearing all three systems under consideration. But as it turned out, the defence ministry is now faced with the prospect of taking a decision that could be open to serious challenges and create even greater controversy than the current political storm over the order for 36 Rafale fighters. This is a decision that will come 20 years after India first began its search for the system and appears headed towards a result that will be operationally deficient and strategically problematic.

As such, it is also a cautionary tale for any company considering the Indian defence market. But let’s begin with a recent quote.

“Igla-S has been used by the Indian ministry of defence for some years now. This system was supplied by Rosoboronexport contract before. And in international markets it is a well-known, very effective system. We also have some partners around the globe that have license production of the Igla-S.

So the tender was conducted, the envelopes were opened and Russian proposal seemed — it proved to be better in terms of price than the competitors. It has some other competitive advantages with it being much more ergonomic than its competitors. If this Swedish system for instance should be operated by three personnel, the Russian system needs only one.

So we are waiting for an official decision made by the Indians.” — Alexander Mikheev, Director General of Rosoboronexport, addressing Indian news media through an interpreter in Moscow on August 23, 2018 [Note: India has operated the older Igla-M, not the Igla-S.]

Background

In June of 1999, as the Kargil War raged in India’s Jammu and Kashmir, the Indian defence ministry initiated a case to acquire the Russian Igla-S air defence system to replace the Igla-M system, then already in service in India.

A Very Short Range Air Defence (VSHORAD) system allows forces on land to target low flying manned or unmanned aircraft. There are two major differences among the types of VSHORAD systems available today. Their guidance system employs either heat-seeking infra red seekers or works on laser guidance.

At the time, the Russian system was the only one under consideration. In 2002, Russia’s agency for arms exports, Rosoboronexport said the development of the new Igla-S system had been completed and in 2004, the Indian defence ministry’s Defence Procurement Board (DPB) recommended the procurement on a single vendor basis, for what was now considered a tri-service requirement. The following year, a Request For Proposal (RFP) was issued to Rosoboronexport.

But two years later, in 2007, the RFP was retracted because the Russians failed to show up with the Igla-S system for trials in India.

India’s defence ministry decided to try again three years later, in January 2010, and issued a global Request For Information (RFI), soliciting data on VSHORAD systems for a new acquisition process.

11 years had passed since the process was first initiated to replace the Igla-M system and the Indian armed forces were no closer to induction of the new kit.

Take 02

Still, this time the process moved a little quicker and in September 2010, a new Request For Proposal (RFP) was issued, beginning a new acquisition process through global multi-vendor competitive tendering, for an order worth INR 27,000 crores or USD 3.66 billion (Current Rate USD 01 = INR 73.57).

Four systems managed to clear the Technical Evaluation Committee’s (TEC) scrutiny in January 2012.

• MBDA Mistral
• Saab RBS-70
• ROE Igla-S
• LIG Nex1 Chiron

The last system, the South Korean LIG Nex1 Chiron, did not show up for trials and was eliminated. The Thales Starstreak had already been eliminated for inability to show compliance at the paper evaluation stage.

This left three contestants: French, Swedish and Russian.

Trials

In May 2012, trials for the three systems began in India.

Multiple rounds of trials were held until 2017. Each vendor was required to show compliance of their system with the physical and operational requirements of the RFP – except, as it became apparent, the Russians.

In the summer trials held at the Mahajan range in India in 2012, all three systems were required to demonstrate the ability of low-level short-range firing at targets at a height of 10 metres and at a distance of 500 metres. Both missiles fired from the Igla-S ended up in the dirt.

Successful summer targeting in the daytime summer desert at low altitudes is especially difficult for systems guided by infra red seekers. This is why the Igla-S managed a hit in December, because of significantly lower ambient temperatures.

Then in 2013, during trials in Leh, the Russians were allowed to change the complete sighting system on their Igla-S demonstrator — something questionable since only in situ repairs are allowed during trials.

Meanwhile, the official service life of the Igla-M systems in service in the Indian Army came to an end in 2013, leaving them no longer safe to operate anymore. These systems were acquired in the late eighties and mid-nineties and have a service life of seven years. Bharat Dynamics Limited (BDL) has since attempted to extend the service life of these systems with mixed results and there continue to be concerns about the safety of these systems in operation. Only a few thousand remain in the inventory of the Indian Army. In fact, Russia began replacing the Igla-S systems in its inventory with a newer system called the Verba in 2014.

In 2014, the Russians were required to contest in summer trials and fire the Igla-S, again. Once again, they simply did not show up.

A few months later, they were due for trials at Visakhapatnam (you know where this is going). And again, they were conspicuous by their absence.

They finally appeared for the summer trials held at Pokhran in 2017. Fortunately for them, this time there was no requirement for them to fire. They were only required to demonstrate their tracking ability. Out of 48 attempts allowed to them, they succeeded only 16 times, failing to track even targets as large as a fighter aircraft or an Unmanned Aerial Vehicle (UAV) without flares.

All of this notwithstanding, the Russian bid had a charmed life. No failure during the trials was too great to allow them to stay in the contest. No absence from any stage of the trials was too significant for them to be disqualified. No transgression of the rules of the trials was enough for their bid to be thrown out.

Commercial Bids

In January 2018, the Russians, along with the French and the Swedes were declared technically compliant. And in May 2018, when the commercial bids were opened, the Russian bid was found to be, apparently, the lowest.

A system that had never been able to successfully prosecute a target under the summer sun in the deserts of Rajasthan had been declared compliant by the defence ministry and then discovered to be, seemingly, the cheapest.

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It is important to understand how this came about.

Firstly, the criminal case underway in the corruption scandal that broke in 2013 over the purchase of 12 AgustaWestland AW101 helicopters for VIP transportation has seen the prosecution of former senior officers of the Indian Air Force (IAF), most notably, former Chief of Air Staff, Air Chief Marshal S.P. Tyagi.

It is alleged that certain requirements listed in the Air Staff Qualitative Requirements (ASQRs) of the RFP, like service ceiling and dimensions of the aircraft were modified, in addition to an implicit preference for the number of engines so as to allow the AW101 to come into play and change the contest.

The fallout of this case is the chilling effect it has had on decision-making in defence acquisition cases, especially decisions that impact the elimination of bids.

After the withdrawal of the IAF tender for 126 Medium Multi Role Combat Aircraft (MMRCA) and the order for 36 Rafale fighters, then Defence Minister Manohar Parrikar had concluded that, in line with the IAF’s requirements and the government’s objective to encourage Make in India for advanced defence technologies, the defence ministry would initiate a case for the acquisition of single-engine fighter aircraft, thereby reducing the number of aircraft from the six aircraft types under consideration in the MMRCA to simply two possible fighter aircraft.

But before this policy was put on paper, Parrikar left the defence ministry to become chief minister of Goa.

Under the stewardship of Arun Jaitley (India’s finance minister, who had additional charge of the defence ministry from March to September 2017, when Nirmala Sitharaman was appointed) Chapter 07 of the Defence Procurement Procedure (DPP) was published at the end of May 2017, which had been expected to include provisions for the production of single-engine fighters in India via strategic partnerships with Indian industry.

When published, there was no specific reference to single-engine fighter aircraft in the chapter, which employed the more general description, ‘fighter aircraft’.

Later, in April 2018, the IAF issued an RFI for fighter aircraft, again, without restricting the type of fighters it was planning to consider.

The result has been farcical. Not only does the new contest include all six of the fighters extensively tested by the air force during the MMRCA tender under a process that, according to one former IAF chief, should have been ‘patented’, there is also a seventh contender. Russia’s Sukhoi has also thrown its hat in the ring with the Sukhoi-35 as the seventh fighter in the contest.

One might have reasonably assumed that after conducting over a decade-long search for fighters with detailed trials of six aircraft, the IAF and defence ministry would be clearer about what they wanted in a fighter aircraft. One would be wrong.

The fear of the possibility of a future allegation of fiddling with the process has led to a situation where the defence ministry has abdicated its responsibility to make a judicious decision on selection, lest they be accused of impacting the competition. But this also completely defeats the purpose of the tender, the whole point of which is to eliminate options that don’t make the cut.

This is why, today, a system that has never successfully demonstrated its capability is on the verge of being acquired by the Indian armed forces because it was discovered as, apparently, the cheapest, after being given a free pass on technical compliance.

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At this stage, there are few good options for the defence ministry. It could go ahead and stick the armed forces with a system that doesn’t work. Or cancel the acquisition process — something that took two decades to reach this point.

Withdrawal Method

There is also a second, more general problem of perception. Trashing acquisition processes by withdrawing tenders after spending years, even decades on them is becoming an embarrassing habit with the defence ministry. Although hardly a new phenomenon, the frequency of the withdrawal method has increased significantly.

New Delhi has seen a reduction in the presence of staff of global defence companies interested in the Indian market for a variety of reasons; some down to less than a handful of employees, with one egregious example, Textron, having downed shutters in the capital altogether. Staff levels can be fairly reliable indicators of industry confidence in a market. Repeated cancellations of proposed acquisition cases along with insufficient budgets for already delayed defence modernization plans are increasingly pushing global manufacturers to take India less seriously.

In the last few years, India has seen the scrapping of a Short Range Surface to Air Missile (SRSAM) tender, and orders for helicopters for the Indian Navy and the Indian Coast Guard. The back-and-forth on the proposed purchase of the Israeli Spike ER Anti Tank Guided Missile (ATGM), and the designing and shredding of Indian Army requirements for assault rifles (some of which were patently absurd) are slapstick skits worthy of the Marx brothers. The acquisition process of Landing Platform Dock (LPD) for the navy is dead in the water. The proposal to set-up an assembly line for the C-295 aircraft in India, possibly the lowest hanging Make-in-India fruit, has gone into a black hole and there is no indication it will fly. The urgent naval requirement for minesweepers will now have to wait indefinitely even though India will not have any operational, come 2019, given that a decision has been taken to re-tender (because the government couldn’t agree on royalty payments on exports of licensed domestic production and tax waivers for foreign workers). There are more examples.

Another retraction will only have a further deleterious effect on the confidence of global manufacturers in India.

Complication No. 03

Finally, India has not, so far, provoked sanctions from the U.S. under their Countering America’s Adversaries Through Sanctions Act (CAATSA) for agreeing to order the S400 during the visit of Russian President Vladimir Putin to India two weeks back. But their tactic was the indulgence of a childish legerdemain that fooled no one, omitting it from the published list of agreements and pretending it never happened. U.S. President Donald Trump when asked about the possibility of U.S. sanctions over the order, said last week, “India is going to find out…sooner than you think.”

A second order of Russian systems would increase the risk of such sanctions, not something to be taken lightly, even by those who view the order as an assertion of strategic autonomy and celebrate it as a snub to the U.S. If the S400 purchase doesn’t kick the CAATSA sanctions into play, an order for Igla-S might well push them over the top.

Theory

The Russian bid has not been declared L1, yet, since the commercial bids are still being scrutinized by the Contract Negotiation Committee (CNC). And if there is one thing the defence ministry could be expected to have learned from the selection of the Rafale as L1 in the MMRCA contest, it is that the sticker price is not the cost of the acquisition. There are also other significant commercial and offset requirements to be satisfied. In theory, it could still be eliminated, which would resolve all the above difficulties, except the perennial problem of near-term funds for the acquisition.

But this would require a feat of institutional will and imagination — at this time, somewhat difficult to expect from a government being battered by the #RafaleScam.