Ministry of Defence strikes blow for private sector in defence

A vehicle-based Electronic Warfare (EW) system, developed by the DRDO. Now, the private sector will compete on level terms with DPSUs like Bharat Electronics Ltd to develop an EW system for the strike corps

Ajai Shukla

Business Standard

8th July 2011

In a victory for India's private sector defence manufacturers, the Ministry of Defence's (MoD's) apex decision making body, the Defence Acquisition Council (DAC), will today issue a ruling that recognises the right of our private companies to compete against the public sector in bidding for top-secret defence projects.

At the DAC meeting here today, a vital Electronic Warfare (EW) system for the army's mechanised corps will be categorised as ‘Buy Indian', instead of being handed over on a platter to government-owned Bharat Electronics Ltd (BEL, also termed a defence public sector unit), as the MoD had earlier planned.

The ‘Buy Indan' category (described in the currently valid Defence Procurement Policy of 2011, or DPP-2011) implies a range of Indian companies would be invited to bid for the estimated Rs 1,800-crore contract to develop a ‘Track and wheel-based EW system' (TWBEWS).

EW is modern warfare's increasingly crucial fourth dimension, fought over the electromagnetic spectrum using sophisticated detection and jamming equipment. The winner of the physical battle on land, sea and air is being increasingly decided through this unseen battle, where both sides scan each other's radio, radar and data emissions. This helps them gather intelligence and, at a key moment in battle, cripple the enemy's electronics with powerful electromagnetic surges, leaving him directionless and blind.

With electronics now ubiquitous in military systems — fighter aircraft, tanks, guns and missiles — a potent EW system degrades the enemy's capability, breaking his force into isolated, incoherent units. For obvious reasons of security, the military wants EW systems to be designed and built entirely in India.

Initially, several Indian companies were offered the opportunity to develop a TWBEWS (MoD letter No B/50529/TWBEWS/ SURAJ dated June 12, 2008). Then, as Business Standard reported on February 12, 2010, (‘MoD breaks its own rules to favour its PSU'), the MoD discarded competitive bidding and handed the contract to BEL, categorising the procurement as ‘BUY INDIAN, BEL' No such category exists in the MoD's Defence Procurement Procedures of 2006 and 2008 (DPP-2006; and DPP-2008).

‘PSUs are special'

At that time, the minister of state for defence production, M M Pallam Raju, had justified BEL's preferential treatment, saying, "I think that we have a responsibility to the DPSUs, since [their] ownership rests with the Government of India.&"

The MoD has been forced to abandon that paternalistic approach under pressure from the Indian Army. After BEL made little headway in integrating EW systems into armoured vehicles, senior generals began to worry if their mechanised formations — which have the crucial wartime task of striking deep into Pakistan — might be left without EW support. The army then demanded the TWBEWS be awarded by competitive tender.

BEL and other companies that now hope to compete in the massive Rs 1,800-crore tender for the TWBEWS see it as a cash cow that would cross-subsidise several other EW projects being tendered. These include the Integrated EW system for cross-country and desert terrain; the Heliborne EW system; and the ‘Integrated electronic warfare system (IEWS) for mountain terrain&".

This reverse for BEL has not seriously dented MoD's support to it. Though the giant DPSU was eliminated from the global tender for the IEWS for mountain terrain (BEL's product was judged technically unsuitable, leaving Tata Power and Israeli company ELTA in the fray), the MoD has awarded a follow-on tranche of the project (called Him Shakti) to BEL without competitive bidding. MoD had also awarded BEL earlier contracts for low power jammers and a low intensity conflict EW system.

Each corps of the Indian Army will be allocated an EW system. While the basic electronic components in each remain the same, the packaging and inbuilt mobility caters for the operational role of the corps. For instance, the IEWS for mountain terrain is mounted on smaller, lighter vehicles and has a manpack component. In contrast, TWBEWS is mounted on armoured, tracked vehicles and will be allocated to each of the three strike corps.