By Capt. DALIP KUMAR SHARMA (Retd.)
Former Spokesperson, Indian Navy
In the aftermath of COVID19, the government has offered fiscal tranches, financial stimuli, revolutionary monetary policies thereby doing the best to change the hue of self-reliance from “Make in India” to “Atma-Nirbharta”. Will this slew of measures herald this dream and transform the present state of Indian economy or is there something else required? For any idea to be successful at the national stage there needs to be strategic vision, policy guidelines and framework of rules for implementation.
The 111 Naval Utility Helicopters (NUH) program is one such strategic project aimed at galvanising the aerospace sector in the country. In August 2018, the Defence Acquisition Council (DAC) had directed that the procurement of NUH be processed under the Strategic Partnership (SP) model. An Empowered Project Committee with representatives from almost 10 departments of the Government including DRDO, Defence Finance, Production, Acquisition and Quality Assurance was formed to progress the procurement case from issuance of ‘Expression of Interest’ to contract conclusion in accordance with Chapter VII of DPP 2016.
- The NUH case has been a lot in the news lately with parleys between Hindustan Aeronautics Limited (HAL) and eminent journalists as well as revered retired naval officers especially aviators. Recently, CMD HAL was on social media wanting the Advanced Light Helicopter (ALH) to be included in the NUH Project levelling allegations against the Navy by stating ‘Earlier they had gone through the SP route wherein they were looking at some foreign OEM aircraft particularly one of the aircraft’. I am sure that prior to making a statement, CMD of HAL was aware that the decision to progress the case under SP Route was that of the DAC and that the entire procurement process for NUH is being progressed by an Empowered Project Committee (EPC) and not by the Navy. Moreover, the SP Model envisions an Indian Private company to partner with a foreign OEM and therefore helicopters of foreign OEMs can only be considered as NUH. With the CMD stating that ‘particularly one of the aircraft’ he has cast aspersion on the entire governmental acquisition process which squarely rests on the shoulders of the bureaucrats, the Defence Secretary being at the apex. It surprises me to see such blatant and open criticism and allegations by head of a DPSU against the bureaucracy. Has our system become so open to accept allegations from another Governmental organisation head in the media?
The Naval QRs for NUH were first uploaded in 2008 followed by revision in 2014 as directed by DAC. HAL had in a written correspondence provided to the Navy informed that the ALH does not meet the QRs laid down by the Navy and that the Navy could purchase a suitable foreign helicopter. The same has also been stated by Shiv Aroor in the interview of CMD HAL. The moot point is that ALH has never met the QRs and nor does it meet the QRs presently. Is it appropriate for a CMD of a DPSU to make such sweeping statements that the ‘specific NUH RFQ/RFI was designed for that’ without assessing the facts?
What is interesting to note in this spat is – why has the Indian Navy been a mute spectator? There have been no statements by the Indian Navy even to defend the allegations levelled on it by CMD HAL. Has anyone asked why? The reason most likely is that the Navy is interested in a Utility Helicopter that meets its requirements and does not have any preference on the ‘Type of Categorisation’. This is the mandate of the Defence Acquisition Council (DAC) (with Raksha Mantri as its Chairman) and the Navy understands this very well. The Navy rightfully appears to have put its foot down that it would not accept any concessions to its requirements. This makes the ALH unsuitable as the NUH.
But I am not questioning the compliance/ non-compliance of ALH to the Qualitative Requirements of the NUH. I am not even questioning the ability of HAL to undertake required modifications albeit on a helicopter which is not designed for naval roles in the first place. I am more interested in seeking answers to the levels of autonomy enjoyed by DPSUs like HAL and hold of the DPSUs on the Government mechanism. I say this after listening to every word of the CMD HAL. It also appears to me that there are a few bureaucrats in the procurement process who are playing the DPSU card and backing HAL. I am intrigued. Is the SP Model not a Government policy? Who among the bureaucracy are questioning this policy? Why was the NUH programme progressed under SP Model when after five years of wait and progressing the case to this advanced stage HAL was to be considered for inclusion? If this was the case, why not close the SP Model and accord HAL the contract under Nomination regressing to patronising the DPSUs as was hitherto done. How can four to five years of work and conceptualisation of a policy and framework of rules (in this case the SP Model) by qualified Empowered teams of the Government be cast aside just because of a DPSU’s point of view? Is a DPSU like HAL so empowered to project opinions on Government decisions in media indirectly through Consultants to MoD and now directly with even the CMD appearing on media?
There is a need to demystify and understand the objective of the SP Model which is being misrepresented in the media. Whether it be HAL officials or some correspondents, the impression that is being created is that only through DPSUs and selection of ALH as NUH would the mantra of ‘Make in India’ be realised and that ‘foreigners will bleed us’ (as brought out by HAL spokesperson in media recently) if we buy any helicopter through SP Model. To exemplify the misrepresentation created in the environment CMD HAL while referring to the IMRH Project in the interview with the Editor of Livefist stated that IMRH being a 2 lakh plus crores project, the money needs to be retained in country. This will be achieved by HAL manufacturing the IMRH. What the CMD has failed to illustrate is the import content and how much of the 2 lakh crore plus would be retained in country. Some startling facts about ALH pertaining to the indigenous content and FE outflow. Sources have indicated that after 17 years of manufacturing ALH, almost 65% (by cost) of ALH is imported. This means that for each ALH that costs around 120 crores, approximately 75 crores in Foreign Exchange (FE) goes to USA, UK, Switzerland, Singapore and EU with only 55 crores remaining in India. However, with up to 45 percent Indigenous Content (IC) by cost through the Project and 60 percent on the last batch of helicopters under SP Model for NUH, the FE component in NUH through SP Model would be much lesser than ALH manufactured by HAL.
So, what all advantages would the SP Model provide in addition to the reduced FE outgo? One of the main features of SP Model is to induct critical technologies (Maintenance ToT and ToT) in the strategic manufacturing sector. Consequently, a Committee comprising HAL, DRDO, CEMILAC and MoD representatives was constituted to identify technologies required in the helicopter manufacturing sector that could be included as part of the SP Model for Naval Utility Helicopter. A total of 65 technologies as part of helicopter manufacturing were identified for transfer into the country by the Committee of which nine were selected for the NUH project. This clearly indicates the state of indigenous technologies with HAL. SP Model provides for sole license to manufacture, export and undertake MRO on the specific helicopter type in the world, setting up testing and certification capability, an alternate R & D facility, skilling of MSMEs and job creation. Through all this, there would be considerable inflow of foreign exchange into the country thereby offsetting the initial outflow of FE which would not be possible with ALH. The SP Model therefore is in true sense a catalyst for the economy at no cost to the Government. Even the CDS in an article had quoted the Maruti example which heralded a revolution in the car manufacturing industry in India.
Despite such enormous advantages of the SP Model, why is it not being progressed? Bureaucrats in the procurement process are the advisers of the Government. It is they who need to evaluate the gains of the SP Model against the nomination of HAL for the NUH programme. Number crunching with facts and figures will speak for itself and quell the misinformation and accusatory tone of heads of DPSUs like CMD HAL. Another issue that needs to be addressed is the compromise of the trust in the procurement process caused by the statement of CMD HAL. Despite a diverse and qualified high level Empowered Project Committee steering the case, allegations on it do not augur well for the Acquisition Process. If Government policies made after due consideration and thought over years of labour when released into the environment are shelved, the Government loses credibility. There is a need to take this bold step and provide an avenue to the Private industry to enter the strategic manufacturing realm of helicopters as competition to the DPSU. Atma-Nirbharta would never happen if we depend only on DPSUs/ PSUs/ OFBs. The vision, policy and rules to support SP Model are strong – what is required now is an equally strong will and conviction to implement this vision of Make in India.
Capt. Sharma is a retired naval officer. He was spokesperson & public relations officer of the Indian Navy from till August 2019. He has handled communications for the Indian Navy during several critical episodes, including the mass evacuation of Indians from Yemen in 2015. The veteran officer is now a commentator on military & strategic affairs, and associated as a consultant with BharatShakti.in and StratNewsGlobal.com. The views expressed here are his own.