Bribe row puts spotlight on BEML's Tatra

Why has the army bought 7000 of these vehicles from BEML, over a quarter of a century, without insisting on full customisation and indigenisation?

by Ajai Shukla

Business Standard, 28th Mar 12

The electrifying revelation by Chief of Army Staff General V K Singh that he was offered a bribe of Rs 14 crore — apparently to sanction the purchase of 600 Kolos Tatra high-mobility vehicles — has highlighted a crucial question: How has the defence public sector undertaking, Bharat Earth Movers Limited (BEML), been supplying the army with what it considers a largely imported vehicle at an exorbitant price for a quarter of a century?

Since 1987, when BEML supplied the army with the first Tatra high-mobility vehicles that had been procured from Czechoslovakia, today 7,000 Tatra vehicles feature on the army’s inventory. Successive army chiefs cleared the purchase of repeated tranches of Tatra vehicles. But, in 2010, General V K Singh turned down a fresh procurement request, ordering instead a multi-vendor procurement of a suitable Indian vehicle.

Singh’s objections to the Tatra were threefold, explains a top-ranking army officer who plays a key role in equipment procurement. First, BEML had not indigenised production adequately. Almost 70 per cent of the Tatra was sourced from abroad. Second, despite BEML’s so-called ‘manufacture’ of the Tatra for decades, it remained a left-hand-drive vehicle that was unsuitable for Indian conditions. Third, Gen Singh believed BEML was making windfall profits on the Tatra, selling it to the army for about a crore rupees a vehicle, when it could be bought in Eastern Europe for half that cost.

“The Tatra was horrendously expensive. BEML was focused on maximising profits without even substantial indigenisation,” says a top procurement official of that time.

BEML chairman V R S Natarajan rejects charges of insufficient indigenisation and points out the purchase contract with the Tatra did not include transfer of technology (ToT). “We didn’t buy the technology for the Tatra. They are helping us indigenise without India paying for it… Despite that, the Tatra today is 60 per cent indigenous,” says Natarajan.

But top army officials, who are seeking a replacement for the Tatra, call that laughable. “In 25 years, BEML has not even bothered to modify it into a right-hand-drive vehicle; what indigenisation have they done?” asks a senior serving general.

Natarajan has an answer. “If the army wants to make it right-handed, we can do it. But they are not asking for that… The army is used to (the Tatra); they are driving it; and we are supplying it,” says the BEML chief.

Asked to confirm how much of the Tatra is built in India, the MoD’s joint secretary (land systems), Rashmi Verma, puts the figure at 45 per cent. But Natarajan dismissed her assessment. “If you ask her a specific question, she will ask information from me and then tell you. On her own, she might not know. But I know 100 per cent.”

With General Singh exasperated at BEML, he pushed for an alternative. Army records show the MoD cleared the procurement in mid-2010; by end-2010, a tender was floated for an Indian replacement for the Tatra. Four companies — Tata Motors; Ashok Leyland; Ural (India) Ltd; and BEML — fielded their high-mobility vehicles in trials, conducted through 2011. A winner is likely to be declared this year, say army sources.

For BEML, this signals the end of a series of lucrative repeat orders for the Tatra. All these years, the Tatra was not governed by the strict safeguards the Defence Procurement Procedure imposes on fresh procurements. The safeguards do not govern repeat orders for an “in service” vehicle. For such orders, the Master General of Ordnance, a lieutenant general in army headquarters, New Delhi, has the power to initiate a fresh purchase without clearance from the MoD.

But there still existed the possibility of one last lucrative order for the Tatra, before other domestic alternatives ended its long-running monopoly. Sources close to Gen Singh allege that this was the proposition for which he was offered Rs 14 crore.

TATRA KNOW-HOW

Entered Indian Army service : 1983-84

Usage : Tank transporters, carriers for assault bridging, cross-country logistics vehicles, command posts, signals communications nodes

Country of origin : Czechoslovakia; Currently built in both Czech Republic and Slovakia

Ownership : Vectra Global, owned by NRI Ravi Rishi

SPECIFICATIONS

Wheel configuration : 8 x 8

Engine power : 347 horsepower

Climbing gradient : 60 per cent

Weight (empty) : 15 tonnes

Maximum road speed : 80 kmph

Trench crossing : 2 metres wide

Maximum load : 15 tonnes

Range : 650 km

Water fording : 1.4 m depth