Large orders can make Arjun tank cheaper - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Friday 25 November 2011

Large orders can make Arjun tank cheaper

The Arjun line at HVF Avadi, near idle, after delivering 110 of the order for 124 tanks

by Ajai Shukla
Avadi, Chennai
Business Standard, 26th Nov 11

The army could clear the indigenous Arjun Mark II main battle tank (MBT) for frontline service after trials next year, but a question mark hangs over the Arjun’s prohibitive cost. Heavy Vehicle Factory, Avadi (HVF) has already built 124 Arjun Mark I tanks for the army at Rs 18 crore per tank. But on 29th August, Defence Minister AK Antony sprung a bombshell when he announced in parliament that, “The likely estimated (sic) cost of each MBT Arjun Mark-II… will be approximately Rs 37 crore.”

This is twice the price of the Russian T-90 and not much cheaper than USA’s M1 Abrams, the world’s most advanced MBT. On 1st July 11, the US Congress was notified that Egypt would buy 125 Abrams tanks for $1.3 billion --- i.e. $10.4 million, or Rs 54 crore, per tank.

During a visit to HVF and to the Combat Vehicles R&D Establishment (CVRDE), which has developed the Arjun, Business Standard was explained that the cost of the Arjun is easily reduced. If the army places a larger order the price will drop by 30%.

P Sivakumar, Director of CVRDE, explains that 50% of the cost of the Arjun Mark I went on three imported components --- the gunner’s main sight (GMS) from OIP Systems, Belgium; the gun control equipment (GCE) from Bosch, Germany; and the power pack (engine and transmission) from Renk, Germany --- which together cost Rs 12 crore. Ordering just 124 pieces left little leeway to beat down that price.

“If you are talking just 124 tanks, there is a problem. Bring an order for 500 tanks. We will go for ToT (transfer of technology) for the foreign parts… The cost of labour in Germany is the highest in the world. We will build 70% cheaper in India. If we buy the power pack of the Arjun for Rs 7.5 crore today… I will produce it in India for just Rs 4-5 crore,” says Sivakumar.

For an army with more than 3,500 tanks, including 2,400 obsolescent T-72s that are crying out for replacement, ordering just 124 Arjun Mark IIs seems unduly cautious. But the army has little incentive to reduce cost. Though the generals are now willing to order more Arjuns, they are placing their orders piecemeal.

Since most of the Arjun’s 10,000 components are outsourced, the size of the order is a crucial determinant of what price they are supplied at. Says RK Jain, Additional DG of the Ordnance Factory Board (OFB) who oversees HVF: “If the army’s indent is for just 124 tanks, the vendors charge higher prices. Besides, the amortisation cost of jigs, tools and equipment is reduced over a larger order. HVF and CVRDE have been jointly requesting the army to confirm an order of at least 250 Arjun Mark IIs so that we can negotiate from a stronger position,” says Jain.

Another reason for the Arjun Mark II’s rising cost becomes obvious at the Arjun production line at HVF, where the army is collecting the last of 124 Arjuns that were cleared for production in 2008. Just as the Rs 50 crore Arjun line has hit its stride, it must shut down for at least two years since another order can come only after the Arjun Mark II trials next year.

I walk through the giant workshop, now almost empty, with the HVF manager who oversees Arjun production, HR Dixit. “Even if the army clears the Arjun Mark II next summer, and indents for 124 more tanks by October 2012 (an optimistic time-frame), we require at least 12 months for obtaining the items that go into the Arjun. So end-2013 is the earliest that the Arjun assembly line can restart,” says Dixit.

The skilled workers on the Arjun line, who have developed invaluable expertise while building 124 Arjun tanks, will be distributed to other parts of HVF, Dixit tells me.

“We can send our workers to HVF’s other lines. But what can we do about the dislocation of our sub-contractors, many of them small enterprises around Chennai, who supply thousands of Arjun components like fuel pipes and bearings. They will seek other work because they know they will get no orders until an indent is placed for the Arjun Mk II. And, when we need them again, they might not be available,” says Ashutosh Kumar, Works Manager.


  1. All I gather from the morons is "ToT". What did our research scientists working with defense labs develop on their own? All the key technology components have been imported and the logic to reduce unit prices given is to 'buy in bulk' and ask for "ToT". This is the most shameful conduct. I again demand that such "so called" scientists be ostracized from scientific community and debarred from National defense labs. Such news makes my blood boil. While we work hard to perform our jobs in private industry, all that our "esteemed" scientists are doing is enjoying public sector life, wasting tax-payer resources, shaming nation, claiming awards for doing nothing, taking the easy way out "ToT. What a shame? I can easily say, no wonder we feel intimidated by China's bold confidence, which our sham democracy, with corrupt leaders can never ever deliver. What we need is efficient leaders like Narendra Modi or Anna Hazare. Col. Shukla, you are doing a fantastic job of bringing out the shame of our nation to the attention of its concerned citizens.

  2. there are two sides of every story and this article fails to show the army side of Arjun saga: If the makers of Arjun are confident that this tank is a world class system, make it cheaper by selling it overseas. A world class tank should notch up few orders in the world. If Pakistani al khaleeds can be put on arms shows for sale, why not Arjuns? Yes there is a need for army to invest more in this project but at the same time the manufacturers need to be able to sell them too! Complaining and having prohibitive costs would not help

  3. Why does not OFB try exporting it!

  4. @Ajai sir

    looking at what you are talking about in this and the previous 2 parts, i have few querries, hope i get answers

    Q1. Wont it be good to order 62 more of Arjun Mk1 to keep the production line open till 2013 end and then go for 248 Arjun Mk2 to further pull down cost?

    Q2. Will it be that difficult to upgrade the Arjun Mk1 to Arjun Mk2. Whats the timeframe for upgrading Arjun Mk1 to Arjun Mk2 and when can we expect that?

    Q3. We all are talking about heavier Arjun but doesnot that render it useful only against Pakistan in the tank country suratgarh, ganganagar and adjoining areas?

    Q4. Being a tankman do you really see Arjun in operation in J&K, Uttarakhand, NE especially Sikkim (Finger area)?

    Q5. What are Arjun's prospects in plains, remember in WW2 heavier German tanks were stuck in mud?

    Q6. What we know is that Arjun Mk3/FMBT will be around 50 tons, which ultimately will go up. Wont it be better to first try to keep its weight under 45 ton and then ultimately reach 50 tons?

    Q7. If the army is so impressed with Arjun why its ordering them in piecemeal, as you say?

    Q8. What are its chances of export?

    awaiting your answer


    Joydeep Ghosh

  5. Does our army brass know nothing about economies of scale??

  6. I dont want to get into what the value of 37 crores is , whether the product justifies it etc..but it is not "not much cheaper than USA’s M1 Abrams" ..54/37=1.45....the abrams is a full 45% more expensive (be it worth it or not..)...

  7. I wonder why there is no 20 or 30 year technology roadmap or something like that, by the army, to avoid such disorganized and unprofessional approach to indigenous modernization!

  8. Thank you again for getting news on Arjun MBT, Its sad to see bunch of T-72M1 all over Army..


    What i see in Arjun protection upgrade, Is they simply add ERA at front, Arjun Turret need redesigning so does the chassis if not atleast add dynamic protection to it?, Arjun have 3 major weak points in Armour, As far as MK2 goes only one is corrected at the chassis, Other two are still left open..

    Btw, Is that animated Pic is 100% true..


  9. anonymous@8:47, do you even know the cost for developing those systems in india? clearly not. it would break the arjun project allocation. instead, you rave and rant like a poltroon against the very people, who managed to work within those constraints and build such a world class tank. those defense lab scientists are doing a great job, whereas you in your so called private sector job, obviously have no clue of how hard the technology acquisition and development process is. and no, we don't need to admire china's "bold confidence"- i for one see no merit in a nation which brutalizes its own citizens via forced abortions in the 21st century, conducts mass reprisals, uses prison labour to construct private buildings, the list of such dubious activities is endless. and no, all the key technologies in arjun have not been imported, only 3, and because of the high cost of labour in europe, which makes them expensive and add upto 50% of value of the tank.

    all said and done, you seem to think ranting is the solution to everyone's problems.

  10. sir,

    i was wondering if you have any info on future infantry combat vehicle project.....please do share
    if you have anything with you.....thank you

  11. Thanks for these updates. It seems that the Arjun program is finally getting a move on, hope the CVRDE through its innovations manages to reduce the cost of the tank. This aside,please can you also update us regarding the upgrading of India's night fighting capabilities, an issue that was highlighted post 26/11 and when there were talks of "surgical strikes"? How much has the situation regarding night fighting capabilities really improved since then?

    Thanks & Best Regards,

  12. Mr.Shukla
    again you made a mistake. Its a COMBAT(VRDE) not CENTRAL(VRDE).

  13. yes..try exporting it...
    would you buy something from the US that US Army wont use no matter whatever the reason that US Army has refused to use it!!

  14. @ Joydeep

    If you read the article(s) before posting your questions, you might find that the article(s) contain all or most of the answers to your questions.

    @ DJ, and Anonymous 17:48

    Try selling it abroad? Who knows, there might well be some buyers like India out there who are willing to buy a tank that one's own military is far from enthusiastic about.

    I refer, of course, to India's purchase of the T-90... even though the Russian Army does not use that tank as an MBT.

  15. @ Bhisma

    Thanks. Error corrected.

  16. Can this line be utilized for something else ? T72 modernization is up as well as bmp2 modernization plan is now rolling. I think we are purchasing huge numbers of t90 we can't we produce some of them here also?

  17. Between the Arjun Mk1 and Mk2, an optimum production and modification friendly model as Arjun Mk1A should be invented and ordered for full 500 numbers to reduce the cost, save the time and improve the production. It should be such that it can be later modified easily to Mk2 standards in workshops or in batches at earliest.

  18. Colonel, is this you?

  19. Any progress in DRDO developed engine for Arjun?

  20. Sir,
    Will there be a report on our FMBT in your 5 part series?

  21. Manufacturing infrastructure for production of indigenously developed Main Battle Tank, Arjun can generate lot of economic value for the nation. Keeping such manufacturing unit without work is a corrupt and criminal act against the nation. In view of the regular Chinese intrusions across the LOC and warnings by so many defense experts about Chinese sinister intentions, we should go for massive production of this tank.

    We must adopt again the policy of ‘Self Reliance’. Can we ever fight a sustained war with either China or even Pakistan with imported tanks, each shell of which costs few thousand dollars. Recently, the outgoing Chairman of HAL also complained about the low number of orders for the indigenously developed Light Combat Aircraft, Tejas; making per unit cost of the aircraft very high. He further added that he is confident that ultimately HAL will build 200 LCAs. Is there some sort of conspiracy against indigenously developed products? Commercial success of all indigenously developed products is very important.

    The nation must deliberate the issue of principle of defense procurements.



  23. The trouble is we all know Arjun project was not without issues.
    However it didn't look like the Army wanted to contribute because it thought it was just a project that they should not be intrested.
    So leading to time and cost over runs.

    Then they never tested it seriously, making sure they did not have strategy to induct nce again the blame was on our own lab's.

    Now they don't want to induct it in large numbers , where as a matter of fact they should be knowing this tank more than any other tank they have.

    So lack of interest and strategy.Don't see any reason why 500 tanks order is not a good number. Specially when they were so uncautious ( just springing the term) about the T 90 and waht they wanted from it. Not that it's bad, that they were ready to get it corrected over time.

    Invest on more comparative trails , don't publish the report but make sure we have a better strategy on both the tanks and they are in good numbers with us.

    Wish they are doing it and the numbers will go up for the Arjun and in time.

  24. Ya this is not even funny any more. Our tube arty procurement saga is very well known.

    Even god doesn't know in which panch varshiya yojna will we ever get new arty guns and yet the babus at army's procurement directorate don't go for bulk Arjun orders to beef up at least one side of the armor. Too happy with chai -biskoot trials till eternity while the chinks come calling at the gate. And then boldly say "we won't let 1962 repeat" or even worse " we'll fight with what we have" with what STONES ?
    Pretty pathetic to say the least.


    Your comment has not been posted because of a racist reference to the Chinese people.

    You might like to repost it, describing our friendly neighbours as "Chinese" rather than "C____", a word that is better used to describe a gap.

  26. Col. Shukla -

    Thank you for the moderation, and the absolutely tongue-in-cheek "..word that better describes a gap" !! We can do with some decency and less jingoism and display of utter lack of knowledge by some of our wiki-warriors..

    Not being an armour person myself, please excuse me if my doubt is silly:

    Why is there not initiative to get the transmission and turret stabilization done at home, maybe through ToT?

  27. @ Heberian

    There is very much an initiative to get the gun control and transmission indigenously developed... not through ToT but by developing Indian versions.

    Stand by for more in my forthcoming piece on the FMBT.

  28. it is heartening to see the development at tank front after col. shukla's "save arjun campaign."i urge Col. shukla please start a striking campaign for "1500 hp Indian tank engine and transmission system".
    although it is very important to have good tanks for desert war,but for Indian point of view artillery is equally important,as we will have to deal with china in mountain warfare mode.on this front we are quite vulnerable for artillery program no procurement since 90's. please start a dazzling and striking campaign to pressurize for needful.
    i am hopeful about the success of col. shukla's campaign as col. is the best defense journalist of India. plz.....................

  29. Thank you, Col. Shukla. Looking forward to reading about the FMBT!

  30. "On 1st July 11, the US Congress was notified that Egypt would buy 125 Abrams tanks for $1.3 billion --- i.e. $10.4 million, or Rs 54 crore, per tank."

    You are comparing apples to oranges. The package does not include the tank, but spares and support maintenance.

  31. The Army's damn right in being cautious, if not downright circumspect & tentative, in asking HVF to produce more than 124 tank at a time. HVF produced a defect-prone, defunct-reliability 'world-class' Vijayanta, its T-72 Ajeys / Combat Improved Ajeys were no better and the desi T-90s are a chip off the old block. Not surprising. I wonder what Broadsword has to say about the work culture & quality-assurance practices at HVF & CVRDE ?

    I wonder why did the Army (or CVRDE) not look at merely cooling the thermal camera module of the ESSA sight instead of the entire turret volume ? A T-90 with an auxiliary power pack & a strapped-on AC pack would be a grotesque sight ! Anyone seen one ? Can't miss the huge turret-size target ! What about using uncooled thermal detector arrays ? Marginally lower acquisition ranges & inferior thermal discrimination seem acceptable trade-off, subject to validation by trials. The problem is at the user-end as well as at the HVF-end. Has anyone been prosecuted till date for loss to the Exchequer on account of persistently poor quality assurance (we can get an ISO certification there) ? A 70-ton ARJUN.....pah ! I have always maintained that the ARJUN is an over-engineered tank ! The internal volume is grossly enlarged due to very poor internal layout & configuration. The Merkava weighs 65 tons and is 7.60m long (less gun), 3.7m wide, 2.66m high. The equivalent Arjun dimensions are 7.5m hull length, 3.85m wide & 2.32m high & it weighs nearly seven tonnes less than the Merkava IV. Any guesses ????

    An upgraded suspension ? The old one was 'bow-legged' with the axle arms wilting under the weight. Check out the wear pattern on the older road wheels !

    Why can't we pick up a new turret design with a non-Russian gun (Ukrainian / Israel), maybe 120 mm smooth bore. Its time we called the Russian bluff !!! More later....


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