In torpedo delay lies opportunity to build domestic industry

The Indian Navy's first Scorpene submarine, INS Kalveri, at Mazagon Dock on Monday

By Ajai Shukla

Business Standard, 9th Apr 15

The ceremony on Monday marking the “undocking” --- or completion of work --- on India’s first Scorpene submarine should have occasioned relief. Yet, naval headquarters faces the lingering question: how will the navy’s six Scorpenes fight, when their primary weapon --- the Black Shark torpedo --- is blocked by a ministry of defence (MoD) ban on the company chosen to supply them: Whitehead Alenia Sistemi Subacquel (WASS) of Italy.

WASS is a subsidiary of defence giant, Finmeccanica, which the MoD proscribed after another subsidiary, AgustaWestland, came under investigation for bribing Indian officials in securing a Euro 556 million (Rs 3,760 crore) contract in 2010, to sell the Indian Air Force (IAF) twelve AW-101 helicopters for VVIP travel.

Although the MoD has formally banned only AgustaWestland, all Finmeccanica companies effectively came under a shadow. Amongst the procurements stalled was the purchase from WASS of 98 Black Shark heavyweight torpedoes for six Scorpenes, for about Euro 300 million.

The torpedo is a submarine’s primary weapon against enemy submarines and warships. When a torpedo is fired, typically at a target 50-100 kilometres away, a battery driven propeller impels it through the water while a sensor homes in on the target. A submarine also carries anti-surface missiles, but those can be shot down; and they inflict less damage. Torpedoes blast holes below the waterline that quickly flood their targets, sinking them.

The de facto ban on WASS was formalised on August 26, 2014 in a MoD directive on dealing with Finmeccanica group companies. This ruled that procurements where a vendor has been declared L-1 (cheapest bidder), but the contract has not been signed, “shall be put on hold until further orders.”

This requires the navy to make do with 64 old SUT torpedoes that were bought a quarter century ago for its four German Shishumar-class submarines.

In July 2013 German company, Atlas Elektronik, was contracted to upgrade the SUT torpedoes and to extend their service life by 15 years. Even so, the SUT would retain their old copper wire-guidance systems that are inferior to modern torpedoes, such as those carried by Pakistan’s new Khalid-class submarines.

Yet, defence economists say this gloomy scenario provides a heaven-sent opportunity to revisit the navy’s torpedo purchase plan, which has been handled without strategic vision and economic foresight.

Underwater systems experts, including serving Indian Navy admirals, say WASS’ Black Shark torpedo --- now banned --- was always a poor choice. They say the better solution, both tactically and strategically, was the Seahake torpedo that Atlas Elektronik offered, but was controversially pushed down to second place.

Seahake advocates argue that even the Italian Navy rejected the Black Shark, instead choosing Atlas Elektronik torpedoes. As its next-generation choice, Italy has plumped for the F-21 Future Heavyweight Torpedo, that Atlas Elektronik is co-developing with French company, Thales. France too rejected the Black Shark.

With the Italian, French and German navies having rejected the Black Shark, this torpedo is fielded by only five small navies --- those of Chile, Ecuador, Malaysia, Portugal and Singapore. In contrast, Atlas Elektronik is the largest international supplier, having supplied torpedoes to 18 navies worldwide.

The MoD’s department of defence production knows that this large customer base allows Atlas Elektronik to maintain cutting-edge capability in all seven torpedo systems --- the homing head; explosive warhead; battery; electronic systems; propulsion system; wire guidance system and propellers.

In contrast, WASS outsources entire torpedo systems: Atlas Elektronik supplied the Black Shark’s wire-guidance system; a French company supplied the battery.

Therefore, a question mark hangs over WASS ability to transfer technology for manufacturing torpedoes in India. In contrast, Atlas Elektronik, which owns 99 per cent of the intellectual property (IP) in its torpedoes, is in a position to transfer technology to India for building torpedo sub-systems and integrating them into complete torpedoes.

Given the German company’s expertise across the full spectrum of torpedo technologies, and its worldwide customer base --- neither of which WASS enjoys --- the MoD and Atlas share a common interest in building in India.

India is poised to be the world’s biggest torpedo buyer, requiring an estimated 400-600 torpedoes for six Scorpenes being rolled out, six Project 75I submarines on the anvil, and 4-6 nuclear-powered submarines planned.

Instead of issuing piecemeal tenders for small batches of torpedoes, such as the 98 currently being bought for the Scorpene, the MoD can deploy an irresistible strategic offer to induce a full-spectrum vendor like Atlas to “Make in India”, in partnership with domestic high-technology companies.

“In the automotive sector, India’s massive demand for cars induced international vendors to establish manufacturing facilities here, which then became global hubs. Similarly, our torpedo requirements would surely induce Atlas Elektronik to establish major facilities in India for its global supply chain”, says an Indian defence company CEO.

Such a strategic approach would greatly benefit the Defence R&D Organisation (DRDO), which is developing an indigenous heavyweight torpedo, named the Varunastra. A strategic relationship with Atlas Elektronik would help resolve technological roadblocks in the Varunastra.

While senior MoD officials accept this logic, they say the Indian Navy remains heavily invested in the Black Shark, despite the ban on WASS. Apparently, the navy fears that restarting procurement afresh would cause unacceptable delay.

The first Scorpene would only be commissioned by mid-2016. It will now be fitted out with batteries, all its systems tested, and then put through harbour and sea trials. The next five Scorpenes will join the fleet at nine-month intervals, says the navy. An order for torpedoes would require 2-3 years to materialise.

While WASS is an Italian company, Atlas Elektronik is Franco-German. It is 51 per cent owned by ThyssenKrupp Marine Systems, with the remaining 49 per cent owned by Airbus.

The United States does not supply torpedoes, while the navy is apprehensive about Russian torpedoes, especially after the sinking of a submarine, INS Sindhurakshak, on August 14, 2013, which sources say was caused when its torpedoes exploded after a battery fire.