Army, DRDO want L&T; but Antony bats for BEML - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Sunday 14 February 2010

Army, DRDO want L&T; but Antony bats for BEML

The second section of a Sarvatra bridge being launched. The bridge consists of 5 sections, each bridging a distance of 15 metres

(Concluding a 3-article series on DPSU Dadagiri: hanging onto influence)

by Ajai Shukla
Business Standard, 15th Feb 2010

The Sarvatra, an assault bridge, which allows advancing tank spearheads to quickly bridge canals and water obstacles, remains denied to Indian strike forces even though its design was completed years ago. The reason: Defence Minister AK Antony wants to give the lucrative order for manufacturing Sarvatra bridges to MoD-owned Bharat Earth Movers Limited (BEML), rather than to Larsen & Toubro, the private company that spent a decade designing the Sarvatra in partnership with the Defence R&D Organisation (DRDO).

Mr Antony has ignored the recommendations of the army, the DRDO, and his own officials, while nominating BEML as the nodal agency for the Rs 170 crores contract to build the first 8 Sarvatra bridges. In a baffling order, Mr Antony has noted on file that he agrees with the army’s and DRDO’s recommendations in favour of L&T; but he nominates BEML as the nodal agency for the first 8 bridges. This controversial decision, with the potential to attract CAG and CVC intervention, has not yet been implemented.

The MoD has not responded to an emailed questionnaire on this subject.

BEML, one of the MoD’s eight Defence Public Sector Undertakings (DPSUs), claims that it should be the nodal agency because it manufactures the Tatra high-mobility vehicles on which the Sarvatra bridge is carried. Each of the Sarvatra’s five sections is mounted on a Tatra. But L&T points out --- and the army and DRDO agree --- that BEML has had nothing to do with the engineering of the Sarvatra, a complex, decade-long process of engineering aluminium structures.

Whichever of the two is the nodal agency, initially L&T will manufacture the bridges while BEML will build the Tatras. But the nodal agency will obtain more prestige and profit: recognition as the builder of the Sarvatra, and profit margins over the entire bridge. The nodal agency also decides the improvements in technology. It could choose an alternative partner in the future, or even go it alone.

L&T worries that the initial contract for 8 bridges is merely the thin end of the wedge. Once BEML is nominated the nodal agency for those, a precedent will have been established for the army’s entire requirement of 50 Sarvatra bridges. Priced at about Rs 22 crores each, the entire order is worth Rs 1100 crores.

BEML has not responded to an emailed questionnaire on this issue; and L&T officials have declined to be interviewed for this article.

However, in multiple interviews, entrepreneurs from private companies engaged in defence manufacture --- speaking off-the-record to avoid offending the MoD --- unanimously allege that South Block openly favours DPSUs. Besides the MoD’s obvious financial stakes in the DPSUs, point out private sector officials, MoD officials sit on the board of each DPSU.

BEML’s 11-member board includes two MoD joint secretaries, in their ex-officio capacity.

However, Minister of State for Defence Production, MM Pallam Raju, told Business Standard that there was no question of this impairing the MoD’s impartiality. Insisting that MoD officials would remain on DPSU boards, the minister said, “…There is a necessity to support them (DPSUs) to some extent. And the role of the [MoD] joint secretaries, when they are on the boards of DPSUs, it is to exercise the control of the government and to drive them to greater efficiency and to ensure that they survive well. They (the bureaucrats) should be on the boards; there are no two ways about that.”

Denying any conflict of interest for the board members, Pallam Raju explained, “When it comes to [deciding on procurements], it is… not the same JS [who is on the board of the DPSU]; The procurement official would be looking for the best price and delivery. There is no conflict of interest… it is a different individual.”

The Sarvatra Bridge allows Indian mechanised forces, including the 60-tonne Arjun tank, a quick crossing over canals and rivers that come in their path. Capable of bridging a 75-metre canal or river in less then two hours, this would leave the enemy with little time to side-step forces to block the Indian advance. The Sarvatra will replace the East European PMS Bridges, which require 57 Tatra vehicles to bridge 100 metres. In contrast, the Sarvatra, with just five Tatras, bridges 75 metres. At Rs 60 crores per set, the PMS costs almost thrice as much as a Sarvatra.

(The three-article series stands concluded)


  1. Ajai,

    This has been a wonderful series of articles. These are big contracts and a lot is at stake but there have been a number of instances when DPSU's have had small companies develop technologies for them and then after the initial prototypes have taken the design and either sourced them locally or through a different vendor. It is ironical that Corporations such as HAL have done this in the past and continue to do so and yet have big events where they call for Private Industry to step in. I have had numerous experiences with these DPSU's and being a small scale enterprise I find our efforts lost in the maze that is our Defense procurement establishment.

    I wonder what change such bold and yet eye-opening accounts such as your article will have.

  2. and we call him mr clean

    daal mein kuch kala nahi

    puri dal hi kaali lagti hai

  3. I would like to remind you that PMS is a floating bridge and Sarvatra is a trestle bridge. Their uses are for different scenarios. A trestle bridge is not a good bridging solution for fast flowing rivers, few of which can be bridged with 75 mtrs of Sarvatra. It is best suited for dry gaps/canals. The PMS is ideal for the large rivers of the subcontinent as they can provide rafting capability also. Hence it is not appropriate to compare bridge costs between the two.

  4. excellent series. In a profession that is rife with wannabes and idiots, you stand out with these extremely informative and well researched articles. Thanks.

  5. Who says that PSU's don't give ghoos to the ruling party fund or the concerned minister?

    PSU postings are gained after giving ghoos to the concerned minister. Then the PSU boss has to generate that revenue for the minister.

    In this case, the likes of L&T, Tata, Mahindra and Mahindra perhaps don't oil the sarkari machinery. Thus these orders will go the PSUs.

    Indeed dal kaali hai.

  6. Defense procurement for all these years has been a goose laying its golden eggs and every party that has been in power has used it for its own betterment.
    Now with Indian private companies in play and with competition for every contract. the companies would not be willing to pay large amount of bribes as foreign companies used to pay earlier to the party in power. So in order to keep the money flowing, the MoD wants to give more orders to DPSU's which get more of their material from outside the country and in which the ruling party can make money.

    For example to make a pair of socks in 1996 the DPSU's used to charge Rs 80.00, which if brought in bulk from Indian private companies would not be more than 5-6Rs.

  7. Oh ajay, its not dadagiri.
    You are sick and so are a few of your mindless followers, what do u know of the DPSUs, i bet no private company can match up to any DPSU, forget their cliams, TATA cannot manufacture quality cars and u expect them to make state of the art weapons for the armed forces, stop the crap, i know u would not allow this post to appear here, but wanted to vent out my fury and one more request, stop dishing out bullshit on ur blog and spoil sane people's minds.

  8. Anon..18.03,

    No government run industry in any corner of the world can compete with private companies. Private industries will always win. Do you know who makes the defense stuff in the US which is the best in the world hint it is not the US government.

  9. Ajai,

    Can India, not the military, but can the nation fight a war? Not a 2 week engagement, but a battle for survival like the wars of Europe in the past.

    What if China goes for a war of attrition and keeps fighting for over 6 months or maybe a year?

    Will we have arty rounds for that long?

  10. India has been killed by a vile combination of socialism and corruption. While one of these two can be tolerated, this combination will result in downfall of this nation.

    Indian government needs to exit manufacturing including defence production. The government is NOT meant to run manufacturing units. I can understand the government running research labs, but manufacturing is absolutely beyond its pale.


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