by Dan Darling, International Military Markets Analyst, Forecast International.
The Indian Navy’s long-standing quest for a new-build, modern class of mine countermeasures vessels (MCMVs) continues to flounder amid government demands regarding technology transfer and indigenization. A $5 billion project to build 12 MCMVs through state-owned Goa Shipyard Ltd is currently stalled as South Korea’s Kangnam Corporation balks at the Indian Ministry of Defence requirement for transfer of complete intellectual property rights of the ships.
With India’s naval sector lacking the technology to build a specialized MCMV, a foreign partner is a necessity.
Following MoD approval in January 2016, Kangnam secured the global tender floated by Goa Shipyard in September 2015 after the latter was nominated by the Defence Ministry to build the MCMVs. The South Korean firm emerged as the sole foreign bidder for the tender, as global vendors Intermarine of Italy, Navantia of Spain, Lockheed Martin of the U.S., ThyssenKrupp Marine of Germany, and two other Russian shipyards declined to bid for the ship design and technology transfer contract.
The earlier 2008 tender had also been won by Kangnam, which beat out Italy’s Intermarine in the process. However, a later investigation into the tender by the Indian Ministry of Defence discovered irregularities involving middlemen in the negotiations, a no-no in Indian defense deals.
This resulted in the entire tender being scrapped in 2014, only to be renewed a year later under the “Buy and Make (India)” procurement category. This category allows local vendors to tie up with foreign suppliers regarding a select procurement item provided production is fully conducted with the domestic Indian company.
The longer-term Defence Ministry vision is for the 12-ship MCMV order to eventually double to 24 vessels. In return, the Indian MoD seeks full intellectual property rights as a means of growing a local capability to produce the niche-mission warship. With Kangnam unwilling to bend to the MoD demand, the negotiations are currently at a stalemate.
The Navy’s pressing need for a newer-generation model to succeed its limited inventory of outdated, Soviet-legacy Pondicherry (ex-Natya I, Project 266M) class MCMVs therefore continues to get pushed back further and further.
The MCMV procurement project is merely the latest case of an Indian effort to self-produce weaponry (often via tie-ups with foreign vendors who then transfer sensitive technologies) in order to wean the country off the export market, which currently provides roughly 70 percent of the Indian armed forces’ hardware. The quest for “Indianization” of defense hardware sourced domestically has been a constant since 1995, when the initial government endeavor was announced with a goal of locally producing 70 percent of all of the Indian armed forces’ weapons content within 10 years.
The end results have remained the complete opposite of that intention, however, a matter the current National Democratic Alliance (NDA) government of Prime Minister Narendra Modi hopes to fix through greater private sector involvement in defense and revamped Defence Procurement Procedures (DPPs) emphasizing the new indigenous design, development and manufacturing (IDDM) category.
Yet once again the ideal is substituting for reality. The Indian Navy has an immediate need for both quality and capacity where its mine-countermeasures operational capability is concerned. Instead, its operational preparedness is at risk of slipping further while the MoD haggles over the $1-billion-plus design and technology transfer agreement with Kangnam.
Industrial indigenization and defense modernization thus remain dueling foes in Indian defense procurement, instead of complementary aims. Until the MoD is able to walk away from the negotiating table satisfied with the contract parameters, or opts to scrap the tender altogether and start over, the Indian Navy will have to hope its 1970s-vintage, ex-Soviet minesweepers suffice.
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