Part II: Army’s delayed orders halts T-90 tank

Views of the T-90S production line at the Heavy Vehicle Factory (HVF), Avadi. The HVF is looking for an army order for 700 more T-90S tanks.

By Ajai Shukla
Avadi, Chennai
Business Standard, 29th Nov 11

If India has a capital for battle tanks, it is the Heavy Vehicle Factory (HVF) at Avadi, outside Chennai. This flagship factory of the Ordnance Factory Board (OFB) produces all of India’s main battle tanks: the Arjun; the T-90S; and before that the T-72 and the Vijayanta. Of the OFB’s total turnover last year of Rs 11,300 crore, HVF alone generated Rs 2,500 crore.

But when Business Standard visited HVF last week, the buzz of production work on the shop floors that build the Indian Army’s T-90S tank was drawing to a close. Of the one thousand T-90S tanks that the army plans to build in HVF --- and has already paid Russia licence fees for --- HVF has received an indent for just 300 tanks. With that order likely to be completed by mid-2013, and with no follow-on order in sight, the T-90 line will grind to a halt.

As this newspaper reported yesterday (“Technology transfer, supply of assemblies hit Russian stonewall”) Russia’s non-compliance with the contract for technology transfer ensured that indigenous production of the T-90S was delayed for 6 years after the contract was signed in January 2001. Now, 11 years after the contract was signed, production is hitting its stride. HVF says 24 tanks were delivered in 2009-10; 51 in 2010-11; it will be 50 this year; and annual production will hit 100 next year (i.e. 2012-13). But there are no army orders beyond that.

Despite that, the MoD has sanctioned expanding the capacity of the T-90S line to 140 tanks per year, says the OFB.

“We are in touch with Army HQ and MoD for the follow-on order of T-90S tanks. The lead-time for positioning of materials and components is about 30 months… that’s how long it takes for ordering, getting the material, manufacturing and assembly and delivery. We are progressing the case with the Vice Chief of Army Staff… and have requested the MoD to pursue the matter,” says RK Jain, Addition DG of the OFB, who oversees HVF.

The army has apparently held back its indent until it is sure that the T-90S tanks already built by HVF are free of production glitches.

“The army wants indigenous T-90s to be observed and user confidence built up [before placing a fresh indent]. So far, the users have run only the first batch of 24 tanks, delivered in 2009-10, to the extent where they can properly evaluate their performance. The 51 tanks that we delivered in 2010-11 have yet to be adequately exploited,” explains Jain.

It is evident that piecemeal ordering is blocking potential economies of scale. MoS for Defence, Rao Inderjit Singh, told the Lok Sabha on 30th Nov 06 that the T-90S tanks that came ready-built from Russia cost Rs 11 crore each; and the knocked down tanks from Russia that were assembled in Avadi cost Rs 12 crore each. But the tanks built in Avadi now cost Rs 18.1 crore, says the OFB.

Asked how much this price could be whittled down through timely bulk orders from the army, HVF officials estimate a potential cost saving of 25-30%. Spurning this opportunity would result in the army paying Rs 3,800 crore more than is necessary for the remaining 700 T-90Ss that HVF will build.

The MoD has not responded to an emailed query from Business Standard, asking why a supplementary indent for more T-90S tanks had not yet been placed on HVF.

A range of facilities feed into HVF’s T-90S production line. Two OFB factories in Kanpur build the gun and breach block. Another in Jabalpur builds the recoil system, while another one in Tiruchiralapplli fabricates the 12.7 millimetre air defence gun. The sophisticated thermal imaging sights and gunner’s sights come from OFB’s Opto-Electronics Factory in Dehradun. The gun stabilizer, which allows the tank to fire accurately while moving, comes from Bharat Electronics Ltd.

Within Avadi, HVF builds major components of the T-90S: the hull, turret, transmission, gearbox and the running gear. Another OFB facility next door, Engine Factory, Avadi, builds the tank’s 1000 HP engine. Thousands of minor parts are outsourced to local industry: electrical items, cables, starter generator, instrument panel, hardware and rubber components. According to OFB’s Jain, the T-90S has been 70% indigenised; this will increase to 80% next year.

Bringing together all this parts takes 30 months. Then HVF assembles them into a tank.

Piecemeal indenting by the military routinely causes production breaks in India’s defence industrial complex, including its defence shipyards and public sector behemoths like Hindustan Aeronautics Ltd (HAL) and Bharat Electronics Ltd (BEL). Senior officials in these defence companies that that jerky indenting hinders the smooth planning of production cycles, economic utilization of skilled manpower, and the provision of lead times needed for out-sourcing materials and assemblies from external vendors.