Over pricing of Tejas is not the first such case (English Version) Rakshak News 18 Jul 18
Nirmala Sitharaman, the defence minister announced over the weekend, in a press conference, the setting up of a commercial negotiations committee to inquire into the high price quoted by HAL for the manufacture of Tejas 1A fighter aircraft. The HAL is seeking Rs 463 Crores for each fighter aircraft, which is almost 100 Crore over the cost of the present Tejas 1 aircraft. It is even costlier than the Sukhoi aircraft, assembled in Nashik, for which it charges 415 Crores, which if imported from Russia would cost 330 Crores.
The internationally acclaimed Swedish SAAB Grippen aircraft costs 465 Crores and the F-16, 380 Crore when produced in India. In addition to the pricing is also the low rate of supply of the aircraft. In the last three years the HAL has only been able to supply nine Tejas 1 aircraft against an order of 20. The original plan was for the HAL to produce 18 aircraft per year.
Most government run ordnance factories too have been following the same model. Overpricing for products manufactured by them, without concern for quality of output. An example is the Vehicle Factory Jabalpur, which was earlier producing the Shaktiman carrier vehicle and the Jonga. Once these two were discarded, the factory became redundant. Ideally the government should have either considered its closure or sale to the private sector. However, the impact of the unions prevented the government from moving ahead.
Thus, the vehicle factory became an assembly line for the Ashok Leyland vehicles being inducted into the armed forces. The vehicles would be manufactured in the Ashok Leyland plant in Hossur Bangalore, packed in containers, shipped to Jabalpur and put through the assembly line of the vehicle factory. These vehicles would then carry an insignia stating assembled in Vehicle Factory Jabalpur. The costs were definitely exorbitant as the vehicle was manufactured in Bangalore and assembled in Jabalpur.
The decision of the army to permit its soldiers to buy their uniforms from the open market and cancelling of its orders from ordnance factories is due to two reasons, unreasonable cost and low quality. For defence manufacturing Public Sector Undertakings (PSUs), there is a fixed customer, who has no option but to procure. The PSUs are also keen to indicate profit. The easiest manner is to charge as per their own calculations, as all payments are book transfer. The impact remains on the armed forces budget.
There have also been reports of prolonged delays in the conduct of regular servicing of helicopters at HAL. The normal time for servicing in the civil is a few days while in HAL the helicopter is kept for months on end. It is even worse with the Heavy Vehicle Factory, Avadhi. Armoured fighting vehicles and tanks which are meant to be upgraded and serviced remain for months. It is always years behind its schedule. The reasons are lack of availability of imported parts. Such delays only increase cost and reduce efficiency of the fighting force.
Enhanced costs with detailed worksheets are acceptable with dockyards as ship manufacture is a lengthy process and is labour intensive. In all other cases, high costs should be unacceptable. The maintenance of the armed forces is from contribution of the tax payer. Hence, in every case the aim should be to obtain ‘bang for the buck’. The MoD should check all cost working from PSUs, prior to signing any contract. In addition, the tax payer should seek data on RTI, forcing the MoD to carefully monitor the costing pattern of defence PSUs.
About the Author
Maj Gen Harsha Kakkar
Retired Major General Indian Army