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Monday, 10 September 2018

An L&T-Russian partnership

The St Petersburg, lead boat of Russia's Project 677, and being offered to be built in India under Project 75-I

By Ajai Shukla
Business Standard, 11th Sept 18

Embattled by the controversy over the procurement of 36 Rafale fighters from France, the defence ministry is initiating a slew of defence acquisitions, worth almost Rs 400,000 crore (Rs 4 trillion). These would take years to fructify, but would allow the Bharatiya Janata Party to claim while campaigning for elections that it was safeguarding India’s defence. These include the procurement of 110 fighter aircraft worth about 125,000 crore (Rs 1.25 trillion), 57 naval fighters worth 75,000 crore (Rs 750 billion), S-400 air defence systems worth Rs 40,000 crore (Rs 400 billion), artillery guns worth Rs 15,000 crore (Rs 150 billion), rifles worth Rs 10,000 crore (Rs 100 billion), warships worth Rs 35,000 crore (Rs 350 billion) and two naval helicopter purchases for an estimated 25,000 crore (Rs 250 billion). All these are, while urgently needed, potentially controversial. But there is low-hanging fruit: Project 75-I -- a Rs 40,000 crore (Rs 400 billion) purchase that is operationally vital, relatively non-controversial and which includes a sizeable component of “Make in India”. This involves building six submarines in the country, with an Indian vendor taking essential technology from a foreign original equipment manufacturer (OEM).

The tendering process has already begun. Global submarine OEMs were issued a “request for information” (RFI) in June 2017 and responses received in October. The navy chief has revealed that four global vendors had responded: Rosoboronexport from Russia, ThyssenKrupp Marine Systems (TKMS) from Germany, Kockums from Sweden, and Naval Group from France – which is already partnering Mazagon Dock Ltd, Mumbai (MDL) in building six Scorpene submarines in India. Japan’s Mitsubishi Heavy Industries was asked whether it would offer its vaunted Soryu-class submarine but, surprisingly, given Tokyo was willing to supply submarines to the Australian navy, declined to participate.To partner the four OEMs in the fray, the Navy has launched the process to select an Indian “strategic partner” (SP), which would, under the new SP model of procurement, receive technology from the OEMs to build the submarine in India. The procurement process involves selecting the right combination of OEM and SP, evaluating technical capability, technology on offer and the price quoted.

While Admiral Lanba breezily stated he was hopeful “we’ll be able to make progress on this case by the end of 2018”, he did not define “progress” and the complexity of this procurement seems likely to delay it interminably. Given India’s need to counter China’s growing presence in the Indian Ocean, many more submarines are urgently needed. China will soon operate 60 submarines and, with the Indian Navy down to barely 15 submarines, even the neglected Pakistan Navy poses a daunting submarine threat. India’s 30-year plan, made out in 1999, to build 24 submarines has so far yielded just one boat (submariners quaintly refer to their lethal vessels as “boats”) with five more in the pipeline. It is essential, therefore, to kick-start Project 75-I.

Instead of wasting another five years toing-and-froing on the procurement (a conservative time-frame, given the defence ministry’s contracting record), Indian interests demand that Project 75-I must be awarded immediately on “nomination” basis. The winners select themselves: Larsen & Toubro with Russia’s Rosoboronexport as the technology partner. The two must work together to build six Amur-class boats, driven by air independent propulsion (AIP) developed recently by the Defence R&D Organisation (DRDO). The defence ministry must mandate indigenous content of 50 per cent for the first boat and 60 per cent for subsequent vessels. Tight timelines must be laid down, with financial penalties for infringements.

It is essential to spell out the logic for this bold recommendation. First, the selection of a Russian partner would conform to India’s 30-year submarine plan, in which the Union cabinet has mandated that if the first six boats are of western origin, the second six be of eastern origin, with the last 12 of Indian design, incorporating the best of east and west. The Navy has had a positive experience with its Foxtrot-class and Kilo-class Russian submarines, and with the two nuclear-powered boats taken on lease. The Amur class, a vast improvement on the Kilo-class vessels the Navy currently uses, promises to continue the Russian tradition of sturdy, economical, relatively silent boats. Continuing with the Kilo-based logistics infrastructure would save money. Fitting the BrahMos cruise missile, which the Navy wants on Project 75-I submarines, would be far easier on a Russian boat. The Russian Navy is buying four Amur-class vessels under the Russian Armament State Programme for 2018-2025, with the builder, Admiralty Shipyard, having already built two prototypes as the Lada-class. 

L&T selects itself even more forcefully. Amongst Indian private sector shipyards, it is the only one with both infrastructure and credentials to build a line of submarines. Its new Kathupalli Shipyard, near Chennai, compliments its Hazira facility in Gujarat. While building hulls and machinery for the Arihant-class nuclear submarines, L&T has accumulated extensive experience of working to Russian designs and with Russian metallurgy, both of which find a prominent place in our indigenous warship design and construction traditions. The DRDO-developed AIP system that is required to be integrated into Project 75-I submarines, has L&T as its principle integrator. A senior L&T engineer says the company already has 85 per cent of the technology needed for fabricating a Russian-designed boat for Project 75-I. Besides L&T, only the Pipavav Shipyard, belonging to Anil Ambani’s Reliance Naval and Engineering Ltd, has the infrastructure to build submarines, but its abysmal record of delivery – it is years late in delivering five naval offshore patrol vessels, a far more simple warship than a submarine – makes it a dubious choice. Further, the continuing political uproar over offset-related orders placed on Reliance Defence by Dassault after the Rafale deal would give the government pause.

The other contender is MDL, which is pitching strongly for Project 75-I, arguing that its experience gained while building six Scorpene submarines under Project 75 should not be wasted and a follow-up submarine construction order be urgently placed. Even if the public sector MDL were to be allowed to bid as an SP (the model is actually intended to bring the private sector into defence manufacture), it would be hard pressed to match L&T on price. MDL has the infrastructure, but would need to pay more for technology transfer. MDL has absorbed French manufacturing practices in the Scorpene programme, but building Russian is another game. 

Further, MDL has submarine work aplenty even after delivering all six Scorpenes. The Navy’s four German-origin Shishumar-class submarines – which were commissioned between 1986-1994 and have completed 24-32 years of service – are overdue for their life cycle extension overhauls, which would take until 2030 to complete. At the same time, the Scorpene submarines are already becoming due for mid-life upgrades and for retrofitting the AIP system during the upgrade. The first boat, INS Kalvari, commissioned last year, will fall due for an upgrade in 2023, followed by the other five. With MDL having built both the Shishumar-class and the Kalvari-class, it would be logical to entrust it with their upgrades.

That leaves only the question: What would Washington, already riled over India’s purchase of the S-400 from Russia, have to say about an equally strategic submarine purchase from Moscow. Here the US has a weak case, given that it has steadfastly refused to share submarine technology with India. If threatened with sanctions under the Countering America’s Adversaries Through Sanctions Act, New Delhi has only to reply: Let us co-manufacture the Virginia class nuclear attack submarine instead, and we will drop the Amur immediately. After all, that is what defence partners do!



10 comments:

  1. sir France has won australia contract http://fortune.com/2016/05/02/france-japan-australia-submarine-deal/

    ReplyDelete
  2. @Unknown

    You're right, of course. I meant that Tokyo was willing to supply Australia; so why not India. Have amended accordingly. Thanks for pointing it out.

    Ajai

    ReplyDelete
  3. I really liked the last sentence of this article , Dare must I add "F-35 at cost of material's" and "none of this sanction business"

    ReplyDelete
  4. We have to follow DPP and CCS and all other process and be sure this deal is L1.
    Otherwise a lot of people (most are career nationalists ) will scream corruption or crony capitalism !

    ReplyDelete
  5. If threatened with sanctions under the Countering America’s Adversaries Through Sanctions Act, New Delhi has only to reply: Let us co-manufacture the Virginia class nuclear attack submarine instead, and we will drop the Amur immediately. After all, that is what defence partners do!
    Love the idea! Maybe a flavour of it is already in play with the S-400 purchase; which India purportedly agreed to buy on the sidelines of BRICS summit in Oct2016. No sign of a contract till date! The arguments against India purchasing S-400 have been building up long before CATSAA came into play. Russia has made a clear strategic choice of China over India. China already fields the system, making it fully conversant long before India can familiarise itself with the same. S-400 purchase by India would allow Russia to play favourites in the event of an India-China conflict or worse, even an Indo-Pak conflict. Pretty much, every future purchase from Russia must be done very very reluctantly and with considerable skepticism. And that makes Ajai's overall recommendation on submarines......deeply flawed!!!

    ReplyDelete
  6. NSR says ---

    India must do the following immediately...

    1. Make some design changes in Scorpene class submarines to alleviate the data leak …
    Design with changes and then build 6 more of them with Indian AIP to keep the submarine building skills and new submarines coming into the stream...


    2. Perform mid-life upgrades with urgency on all required ones with the cooperation of OEM in India to get more skills..


    3. Grant P-75I project to Russia to balance out and to show gratitude for providing nuclear submarines on lease and helping out with nuclear submarine building program...

    Russia is a great submarine building country... It is willing to design together so it is a golden opportunity for India...Jump on it and ask for further assistance on SSBN and SSN design & development and manufacturing in lieu of awarding P-75I award...

    It is not worthwhile to go through MMRCA type bidding at all...

    Also,, India must build one more IAC-1 copy so it will have 3 carriers...
    1. one for East coast
    2. One for west coast
    3. One in drydock for repairs, refits, remanufacturing...
    Nuclear aircraft carrier is very difficult and it must not build one until they build 6 SSBN and 6 SSN to gain experience..Of course, Russia would be happy to help in this effort too just to hang on to their friends...

    ReplyDelete
  7. Regardless of which sub is chosen, it is critical that we diversify internally in terms of sub manufacturing and bring pvt sector in. L&T have proven themselves several times over (Arihant, OPV, 155mm 52 cal howitzer, pinaka etc) and are the front runners in many ways - not just from mfg perspective but also design and technology absorption.

    We need to treat subs as a National Effort (under current circumstances) and move quickly.

    - Manne

    ReplyDelete
  8. MDL took 13 years to build first Scorpene. It takes more time than you think/claim to build a submarine in a different country. Look at Australian order for French Naval/DCNS- it’s a 30 year plan to build 12 submarines with around 50-60% indigenous content. (DCNS claimed 90% Aussie sourcing but after winning the contract backpedaled). Starting a new line of submarine after only building 6 from previous line is total waste of MDL paying for ToT. It’s also a missed opportunity to capitalize on knowledge gained from building high end submarines for over a decade. The only logical choice here is to order more Scorpene from MDL with AIP. L&T can get more orders for indigenous content for both French and Indian submarines. As far as Russians are concerned, they should make 2 advance Kilo class at their shipyards for India to buy- that’s the only way to get them before 2025.

    ReplyDelete
  9. NSR says ---

    Some negative points against L&T getting contract...
    1. Russians do not want to deal with a private firm
    2. Critical TOT transfer is only transferred to a government entity


    Also USA CATSAA is a huge problem hanging on all the defense projects...
    Looks like they got a lightning rod to use against Russia...


    Afghanistan got hundreds of thousands of wheat for free through Chabhar port...poor fellows now they have to suffer more...even for food too...

    ReplyDelete
  10. there is no way this project will see major progress till 2020 or beyond. As the SP clauses are not clear and L&T being the only private player capable of delivering such a vessel, it will lead to the same single vendor and crony capitalism debate. add to that nobody will ally with RDEL. that leaves only MDL as the other proven option. In my opinion all conv boats must be built by MDL and all SSN/SSBN must be given to L&T and SBC equally. they are higher in value but lower in numbers and are much more complex as well as time critical. The other option could be to give 3 follow on boats to MDL and eliminate them from P75i tender. but in an election year all this can never happen.
    realistically only 1 large project will go through and that is S400...all others will take some time to move ahead...

    ReplyDelete

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