Archive for the ‘Semco Group’ Category

Army marches on its stomach, but needs an uninterrupted supply of small arms and ammunition to fight. Besides the army, seven paramilitary organisations, and innumerable state police forces, as also military special forces and in the states, have to be equipped. Some two million pieces, ranging from 5.56mm to 12mm, and hundreds of thousands of tons of matching ammunition, are required every year by all armed forces in India. The Ordnance Factory Board (OFB) seems incapable of meeting this demand or satisfying its customers in terms of product quality (INSAS 5.56mm rifle) or quantity. Frustrated armed services, paramilitary units, and special forces have learned to buy weapons of their choice to supposedly meet time-critical needsby importing them in small enough tranches at high prices to avoid censure. It has multiplied hard currency expenditures and logistics headaches owing to the sheer diversity of weapons, and highlighted the absence of a reasonable national small arms policy.

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The defence public sector (DPS) is beyond repair. According to a Niti Aayog study, the value produced per worker in ordnance factories is a meagre ₹6 lakh versus the minimum of ₹40-50 lakh in value that is required to be produced per employee to make even a micro, small, and medium enterprise financially viable. A far-reaching solution has been bruited about within the Ministry of Defence (MoD) ever since the previous defence minister, Manohar Parrikar, was briefed about a unique ‘strategic partner’ model stressing economies of scale to drive the flagship Make in India programme and to generate millions of jobs. As per this model, the partner-company is selected on the basis of its versatile portfolio to manufacture not just one kind of weapon, hardware, or piece of military equipment but the entire family of weaponry and systems. Such schemes would cover the gamut of military use items, where India is deficient. The selected foreign company would be helped to secure land and the basics (power, water, etc), but would be free to choose its Indian collaborator — a private company or DPS unit — and to run its business as it sees fit without any government interference, and to export what it produces after meeting India’s requirements; in other words, to make India a global manufacturing hub.

In the small arms field, India’s estimated demand in the next five years will be for eight million assault rifles worth a billion dollars with the strategic partner expected to manufacture the full panoply of automatic and semi-automatic assault rifles, sniper rifles, pistols, carbines, submachine guns, and light machine guns. The 2016 arms Act now permits Indian private sector involvement. There are four principal non-US sources — the German company Heckler and Koch (HK), the Belgian corporation Fabrique Nationale Herstal (FN), the Israeli Weapons Industries (IWI) and Rosoboronexport representing the Russian Kalashnikov systems.

HK has decided not to sell its wares to corrupt, undemocratic, non-NATO countries, including India. FN is ruled out because it owns the American arms-making companies, Browning and the firm that once produced Winchester repeater rifles and, in the context of the 2018 Countering America’s Adversaries Through Sanctions Act, is susceptible to American pressure. IWI got a drop on the competition by first tying up with OFB to produce the Zittara assault rifle, which was rejected by the army.

But because the requirements for small arms and ammo are large and recurring, India should ensure competition by also selecting, if belatedly, the Kalashnikov Concern as a second strategic partner to produce its range of weapons based on the Avtomatni Kalashnikova (AK) series of weapons, famed for their ruggedness, ease of operation, and low cost of production, for local use and for exports.

This strategic partner model can be applied to the production of ammunition too. Commonality in arms and ammo should lead to shared armouries and logistics system for all forces.

This solution has not found traction because the government is keen on diversifying sources of arms supply. The real reason is that procurement is zealously protected turf for all organisations and ministries. More frequent tenders and acquisitions deals mean greater opportunity for more people in the decision loops to make money. Fully indigenising supply sources will end this nefarious business.

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India has expanded its search for hightech assault rifles, carbines and small arms for its frontline soldiers, but has excluded its traditional ally, Russia, from the list of five countries that the Army-led procurement team plans to visit mid-June.

The team is set to visit gun manufacturers in the US, Israel and South Korea, and even countries from where India has never bought military equipment, a defence ministry official said.

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The shortlisted manufacturers include Colt and Sig Sauer of the US and Israel Weapon Industries.

The manufacturers had expressed their willingness to tie up with India in their responses to the Request for Proposals (RFPs) for procuring 72,400 assault rifles, 93,895 carbines and other small arms for frontline troops based under the Fast Track Procedure (FTP). The RFP was given to 12 vendors.

“Russia had also responded positively to the assault rifle RFP, but it didn’t have the calibre we are looking for, so there’s no point going there,” explained the official.

The team will be led by a major-general rank officer and will have representatives from the Directorate General of Quality Assurance, defence ministry, Army’s EME (Electronics and Mechanical Engineers) and infantry corps.
These manufacturers will come to India between July and August for further tests, and the trial team will try to ensure that demonstrations are done on a fast-track basis.

An advantage of the FTP is that there are no lengthy user trials. The FTP also allows procuring equipment which are in service. After the demonstrations, the lowest bidder (L1) will be selected for supplying the weapons to the army.

Confronted with crippling operational shortages in ammunition stocks that would not last even 10 days of “intense fighting”, the defence ministry and Armyare now finalizing a Rs 15,000 crore long-term plan to get the domestic private sector to manufacture seven different types of ammunition.

The aim is to develop capability in the private sector companies, which can set up joint ventures with foreign manufacturers, to bridge the gaps in the production capacity of the 41 factories of the Ordnance Factory Board. “This indigenization of ammunition production over a 10-year time-frame will gradually reduce our heavy import dependence,” said a senior official.

 

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The government was rudely jolted out of its slumber after the terror attack at Uri in September 2016 when it found that the 13-lakh strong Army simply did not have certain categories of ammunition to undertake a full-blown war with “intense fighting” for 10 days.

Similar was the case with the IAF and Navy. This when the conventional norm is that the force should have adequate the war wastage reserves (WWR) to last 40 days of “intense fighting”.

Since then, contracts worth around Rs 24,000 crore for ammunition, spares, engines and other reserves have been inked or are in the process of being finalized, mainly with Russia and Israel, under the revenue financial powers delegated to the three Services as well as capital acquisitions to build up adequate stocks for at least 10 days of war.

Under the 19 contracts worth Rs 11,740 crore finalized for the Army, for instance, the force will get Smerch rockets, Konkurs anti-tank guided missiles, 125mm APFSDS (armour-piercing fin-stabilized discarding sabot) ammunition for its T-90S and T-72 tanks and other ammunition in the 2019-2020 timeframe, as earlier reported by TOI.

This has come as a big relief for the armed forces, which continue to maintain high operational readiness all along the 778-km Line of Control with Pakistan as well as the 4,057-km Line of Actual Control with China.

The new Rs 15,000 crore plan aims to get the Indian industry to manufacture ammunition for infantry weapons like UBGLs (under-barrel grenade launchers) and AGLs (automatic grenade launchers), 122mm Grad rockets, electronic fuzes and bi-modular charge systems for the artillery, and 30mm high-explosive incendiary ammunition for BMP-II infantry combat vehicles.

“The bids of 11 Indian private companies for these contracts to produce some initial quantities of ammunition were opened last month. The technical evaluation is now underway,” said the official.

Once the selected companies develop the capability to produce the required ammunition, contracts worth around Rs 15,000 crore over the next 10 years will be progressively awarded to them, said officials.

Earlier this year, Army vice-chief Lt-General Sarath Chand had told the parliamentary standing committee on defence that the Rs 21,338 crore allocated for modernization of his force in the 2018-2019 budget had “dashed our hopes” since it did not cater for even “committed payments” of Rs 29,033 crore for ongoing schemes and emergency procurements.

 He said the Army was grappling with an alarming mix of 8% (state-of-the-art), 24% (current) and 68% (vintage) weaponry in its arsenal while engaged in daily cross-border firing duels with Pakistan as well as heightened tensions with China since the Doklam stand-off last year.

Even a CAG report tabled in Parliament last year had held the Army’s stocks of 121 (80%) of the 152 types of ammunition were below the authorization level required for 40 days of “intensive fighting” as per WWR norms.

“Further, availability of 83 (55%) types of ammunition was below the MARL (minimum acceptable risk level of ammunition stocks for 20 days) and 61 (40%) types were at a critical level (less than 10 days). Availability of high-calibre ammunition for tanks and artillery are in a more alarming state. Moreover, in the absence of fuses, 83% of the high-calibre ammunition currently held by Army is not in a state to be used operationally,” it had added.

The Indian army quest to equip its soldiers with modern rifle and carbines suffered a setback this week when two major weapons manufacturers, US gunmaker Colt and Italy’s Beretta, pulled out of the contest. Both Colt and Beretta were offering weapons for the 7.62×51 mm battle rifle and the 5.56×45 mm carbine requirements. The two companies were not among the dozen-odd firms which had responded to the Indian armys Request for Proposals (RFP) by May 7.

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While the exact reasons for the pullout are not known, at least one of the manufacturers is believed to have written a letter to the army citing unrealistic timeframes and stiff financial clauses.

The army plans to import 72,000 assault rifles and 94,000 carbines on a fast track basis for over Rs 3,500 crore. It had issued RFPs on 17 global arms manufacturers in February this year citing urgent operational requirements for its troops. These small arms are meant to replace the armys stock of INSAS rifles and vintage Sterling 9 mm carbines. A fast track procedure bypasses the lengthy trial process associated with regular purchases. The army hopes to complete the acquistion of all the weapons in 12 months, a time frame stipulated by the Defence Procurement Procedure (DPP) 2016.

The bids from the other firms in the assault rifle and carbien tenders are believed to have been opened on May 8 and the Technical Evaluation Committee (TEC) that convened on May 10 and is to submit its report in 10 days.

Global arms makers have been largely lukewarm to the armys small arms procurement. Two of the largest gunmakersFN Herstal of Belgium and Germanys Heckler & Koch did not even participate in the small arms tender.

Some clauses in the contract which have made it unappealing to foreign vendors include parking nearly 15 per cent of the value of the contract as a performance bank guarantee, the removal of the force majeur clause which allows a manufacturer to suspend a contract due to unforseen consequences like war or a natural disaster.

The foreign vendors too have to secure export licenses from their own governments in the limited time available. Other clauses which make the contract unappealing are clauses for the winning firm to deliver the first batch of 25,000 weapons (assault rifle and carbines) in the first nine months and the remainder within three months. This deadline can be extended only by another three months after which financial penalties kick in.

It doesnt make commercial sense for us to participate in the tender, said the representative of a leading small arms firm said at the biennial Defexpo India 2018 inaugurated in Chennai on April 12. The army is also looking to buy 5,719 sniper rifles and 17,000 light machine guns. Israel Weapons Industries (IWI) is the only small arms firm in the reckoning for all three infantry weapon types battle rifles, carbines and light machine guns.

The new RFPs for rifles and carbines is the armys third attempt to buy new small arms since it decided to replace its indigenous but glitch-prone INSAS rifles in 2007. The process has been delayed by the armys own changing requirements. Between 2011 and 2017 the army issued three requirements for small arms, or roughly one every two years.

The first tender in 2011, for a dual-caliber rifle chambered for two types of ammunition (7.62×39 mm and 5.56x 45 mm) was withdrawn in 2015. A second attempt, in 2015, to buy modified INSAS 1C rifles was scrapped after the army opted for a battle rifle chambered for the heavier 7.62×51 mm round.

The Army has initiated a process to close four of its ordnance echelons, reducing a layer from the supply chain that it expects will help quicken the delivery of equipment and other provisions to troops at forward locations.

A roadmap is being made for this and it is likely to be implemented by the end of 2019, top defence ministry sources said. A high-level meeting of the army was held last month to prepare the time table.

Closure of the four depots — the Ordnance Depot at Shakurbasti and the Central Vehicle Depot in Delhi, the Ordnance Depot at Cheoki in Allahabad and the Vehicle Depot at Panagarh in West Bengal — was among a series of reforms for the armed forces recommended by retired Lt Gen DB Shekatkar committee to enhance combat capability and rebalance defence expenditure.

Based on the recommendations, the private sector is being involved to run eight army base workshops, which do repairs and supply spare parts for the army’s main equipment. The army plans to hire a consultant to prepare a detailed project report on a government-owned contractor-operated model for the workshops.
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The College of Defence Management at Secunderabad is also conducting a study on implementing the model. Currently, the Army’s five Central Ordnance Depots supply general stores, while the vehicle depots handle vehicles.

From these depots, the items are sent to the regional ordnance depots to supply to the different army commands. Then, they are transported to the division ordnance depots for supplying to the units.

The plan is to reduce the complexity of this chain that will improve operational preparedness at a time when China is becoming more belligerent along the Line of Actual Control and Pakistan continues to sponsor cross border terror actions.
“The army doesn’t require the four ordnance depots and is preparing to close them down. This means that a supply chain is removed and the items will be given faster to the formations. For instance, vehicles from the manufacturers will be directly sent to the units. This will also help in cost saving,” said a source

Under the current plan, soldiers posted at the depots will be deployed at logistical elements located along the borders, helping the army improve the optimisation of its manpower. Civilians working at the depots will be posted elsewhere.

However, the civilian unions are unhappy with the move and have approached defence minister Nirmala Sitharaman, sources said. A committee at the Ministry of Defence is looking into their demands.

Indian troops manning the borders will get new assault rifles, sniper rifles and light machine guns as the defence ministry on Tuesday approved a major proposal worth Rs 15,935 crore to buy military hardware.

At the meeting of the Defence Acquisition Council (DAC) — the ministry’s apex body on procurement — the proposal to purchase 7.40 lakh assault rifles, 5,719 sniper rifles and light machine guns got the clearance.

Defence minister Nirmala Sitharaman speaks to the media in Jammu on February 12, 2018.

The approval for the guns — to be procured under ‘Buy and Make (Indian)’ category comes, ironically, amid increasing hostilities by Pakistan along the Line of Control in Jammu and Kashmir as well as China’s aggressive posturing in several sectors along the nearly 4,000-km-long Sino-India border.

The DAC meeting was chaired by defence minister Nirmala Sitharaman. A release from the government said that the DAC accorded approval for procurement of 7.4 lakh assault rifles for the three services at an estimated cost of Rs 12,280 crore.

The rifles will be produced in India under by both state-run Ordnance Factory Board and private sector. In a statement, the ministry said “essential quantity” of light machine guns (LMGs) will be through the “fast track” route at an estimated cost of Rs 1,819 crore, primarily to meet the operational requirement of the border troops.

“A concurrent proposal is being processed for the balance quantity to be procured under the ‘Buy and Make (Indian)’ categorisation,” the ministry said.

Another proposal to enhance the anti-submarine warfare capabilities of Indian Navy got approval in the DAC. New Delhi will procure Advanced Torpedo Decoy Systems (ATDS) for the navy at a cost of Rs 850 crore.

The DAC also approved procurement of 5,719 sniper rifles for the Indian Army and Indian Air Force at an estimated cost of Rs 982 crore, the ministry said.

Govt Speeds Up ₹3,547cr Buy For Frontline Troops

Thirteen years after the Army first asked for new-generation assault rifles and close-quarter battle (CQB) carbines, there is finally some hope for humble infantry soldiers. At least for the ones deployed on the borders with China and Pakistan.

The Nirmala Sitharamanled defence acquisitions council (DAC) cleared the fast-track procurement (FTP) of 72,400 assault rifles and 93,895 carbines for Rs 3,547 crore from the global market on Tuesday.

These limited emergency purchases, which come after repeated scrapping of projects due to graft allegations or unrealistic technical parameters as well as a woeful lack of indigenous options for well over a decade, are to be subsequently followed by separate, larger ‘Make in India’ projects.

The DAC also simplified guidelines to encourage participation of the private sector in design and production of weapon systems to bolster the floundering domestic defence-industrial base.

No major ‘Make in India’ project has actually kicked off in the last three-four years, with at least six mega projects worth over Rs 3.5 lakh crore stuck without actual contracts being inked, as was earlier reported by TOI.Picture

“The MoD will now accept suo motu proposals from the industry, while allowing startups to develop military equipment. The minimum qualifications to participate in defence projects have also been relaxed by removing conditions related to credit rating and reducing the financial net worth required,” an official said.

All vendors meeting the relaxed criteria will be allowed to participate in the prototype development process instead of the earlier restriction on only two shortlisted companies.

Army chief General Bipin Rawat also acknowledges his entire force cannot be equipped with top-notch weapons. “The hi-tech rifles, for instance, will be only for infantry battalions deployed on the front. The bulk will have to come through the indigenous route, ordnance factories or private industry,” he said.

SIPRI DATA Russia accounted for 68% of India’s arms import during 2012-16 as compared to 14% from the US & 7.2% from Israel

Russia and India are taking steps to address the perceived drift in their relations. High level visits are continuing. Russian foreign minister Sergei Lavrov visited Delhi earlier this month for Russia-India-China trilateral meeting. Russia’s deputy prime minister Dmitry Rogozin is visiting India on Saturday for a high level comprehensive review of Indo-Russian relations. While both sides have taken steps to diversify bilateral relations, the most substantive part of the strategic partnership still remains the military-technical cooperation.

The Indo-Russian Governmental Commission on Military Technical Cooperation (IRGCMTC) is the apex institution for reviewing and guiding the military technical cooperation between the two countries in entirety. Jointly headed by the deputy prime minister on the Russian side and the defence minister on the Indian side, it is supported by two working groups and seven sub groups. In the recent past, the two sides have concluded agreements on the supply of S-400 air defence system, construction of frigates and the manufacture of KA-226T helicopters. An Inter-Governmental Agreement (IGA) on the manufacturing of Russian KA-226T helicopters through the joint venture route under ‘Make in India’ programme has also been signed. As per the IGA, 60 helicopters will be manufactured in Russia and 140 in India.

Despite the diversification in India’s defence procurements, Russia remains and will remain a critical supplier of defence equipment to India for a long time. According to SIPRI, Russia accounted for 68% of India’s arms import during 2012-16 as compared to 14% from the US and 7.2% from Israel. While these figure are based on estimates by SIPRI, they capture the trend reasonably well.

The nature of bilateral defence cooperation between the two countries has undergone positive change in the recent years. There is now a greater emphasis on joint design, development and production of high-technology military equipment. The production of Brahmos cruise missile by an Indo-Russian joint venture (JV) company Brahmos Pvt Ltd is an example of successful Indo-Russian joint R&D and production. The JV has an authorized capital of $250 million with Indian equity share of 50.5% and Russian share of 49.5%. The highly potent cruise missile can be fired from ships, submarines, aircraft and land. On November 22, the air version of Brahmos was tested from SU-30 MKI fighter aircraft.

The Indo-Russian defence cooperation is not without problems. The Russians are anxiously watching India’s diversification efforts. The 2007 Inter-Governmental Agreement on joint development and co-production of the Fifth Generation Fighter Aircraft (FGFA) has made little progress. There appear to be some misgivings about the project on the Indian side. According to media reports, the Indo-Russian joint venture to manufacture a medium airlift military transport aircraft has not made progress. The delays in the procurement of spare parts from Russian manufactures and the high prices is a perennially sore issue for Indian consumers.

Yet, there is considerable untapped potential in Indo-Russian defence cooperation. New ideas should be tried out. Can, for instance, Russia help in the further improvement of India’s indigenously developed light combat aircraft, Tejas? Can the two sides cooperate on manufacturing submarines? Despite setbacks in some areas, fresh avenues for cooperation are worth exploring.

Time is ripe to involve Indian private sector companies into Indo-Russian defence joint ventures. The ‘Make in India’ programme can be leveraged to do so. Two major military-industrial conferences of Indian companies and Russian OEMs have been held in Delhi and Moscow in 2017. The conferences discussed life cycle support to Russian platforms and how the buyer-seller relationship can be transformed into a partnership for the joint production of advanced defence systems. The Russian side showed interest in forming joint ventures to localize manufacturing spare parts in India.

India and Russia are strategic partners of long standing. The defence relationship should not be limited to the narrow technical aspects only. Fortunately, the scope of Indo-Russian defence cooperation has been widened to include high level military exchanges and joint exercises between the armed forces of two countries. Joint naval exercise were held in Russia’s Far-East in 2016 and between the ground forces of the two countries in Rajasthan in 2015. For the first time, joint tri-service INDRA exercises were held in Vladivostok in October 2017. Though belated, these are welcome developments. The Indian navy with Russian help can also gain some experience in operating in the Arctic Sea. Deeper defence and security cooperation with Russia is good for India as it enhances India’s strategic choices. The scepticism about Russia, prevalent in a section of Indian strategic circles, is unwarranted.

BOOST TO DEFENCE By joining Wassenaar, India has joined a global regime of nations that produce advanced capabilities

The 23rd Wassenaar Plenary session held in Vienna on December 6-7, chaired by Permanent Representative of France to the UN Jean-Louis Falconi, concluded with the admission of India into the club of Participating States (PSs). This important decision confirmed India’s progress in meeting membership criteria.

The Wassenaar Arrangement has been established in 1996 to contribute to regional and international security and stability, by promoting transparency and greater responsibility in transfers of conventional arms and dual-use goods and technologies. The PSs are the world’s leading producers of advanced military capability, most of whom are industrial and technology partners with the US and its defence industries.

The PSs have agreed to maintain national export controls on items included in the Wassanaar Arrangement control lists (wassenaar.org/). These controls are implemented via national legislation and are guided by agreed-to best practices and guidelines.

All PSs have agreed to report on transfers and denials of specified controlled items to destinations outside the Arrangement, and to exchange information on sensitive dual-use goods and technologies. The Wassenaar Arrangement organisation seeks to complement other multilateral control regimes such as the Missile Technology Control Regime (MTCR) and the Nuclear Suppliers Group (NSG). Accordingly, it pursues regular technical-level dialogue with these regimes to optimise national expertise and avoid duplication.

By joining Wassenaar, India has joined a global regime of nations that produce advanced capabilities and agree to prevent the transfer of military equipment that they develop and produce to terrorist groups and organisations, as well as to individual terrorists. Most PSs and their domestic industries contribute to the US military-industrial complex as partners with US industries. These partnerships are critical in advancing our development and production of cutting edge capabilities.

Having in place government policies and procedures, such as those agreed to within this regime, enable industrial relationships. India will soon see the benefit of its membership in relation to enhancing its indigenous defence research and manufacturing efforts.

Notably, as a member of the PSs, further progress on the levels of US technology that can be shared with India, and India’s ability to be a significant defence exporter, will be seen. The Government of India should be commended on this transformational development, which can be seen as a crucial building block for to the enhancement of India’s indigenous defence manufacturing goals.US industry looks forward to advancing industrial partnerships with India’s defence sector.

‘Despite Threats From China & Pak, Hardly Any Funds Given’

New Delhi: A parliamentary committee has slammed the government for simply not doing enough to ensure military modernisation despite India being confronted with a clear and present “collusive threat” from China and Pakistan.

The Indian armed forces continue to grapple with critical operational deficiencies on several fronts, ranging from submarines, fighter jets, howitzers and helicopters, to even basic gear like new-generation assault rifles, machine guns, bulletproof jackets and helmets.

But the Army, Navy and IAF hardly got any funds to undertake concrete modernisation in the 2017-18 Budget, with the Rs 2.74 lakh crore defence outlay working out to just 1.56% of the projected GDP, the lowest such figure since the 1962 war with China.

The parliamentary standing committee on defence chaired by Major General B C Khanduri (Retd), in two reports tabled in Parliament on Tuesday, criticised the government for neither providing adequate funds for proper military modernisation, nor fast-tracking defence procurements to plug operational gaps.

Overall, the Army, Navy and IAF just got 60%, 67% and 54% of the funds they had sought for modernisation this fiscal. The committee expressed concern over the “adverse and cascading effect that the deficiency of funds” would have on their operational preparedness.

To make matters worse, the defence ministry (MoD) continues to flounder to properly plan and spend even the allocated funds. “Underutilisation of funds highlights the loopholes in the planning and budgetary exercise undertaken by the MoD. Also, persistent failure to utilise the allocated funds has contributed to reduction in the MoD’s budget allocations by the finance ministry,” said the panel.

The persisting critical operational gaps have adversely affected the country’s defence preparedness. At least 45 fighter squadrons (18-21 jets in each), for instance, are required by the IAF to tackle the two-front scenario. But it’s making do with just 33, which will go down to 19 by 2027, and 16 by 2032 due to retirement of older jets.

The Rs 59,000 crore contract inked for 36 French Rafale fighters in September 2016 in itself will do little to arrest this alarming drawdown. “The issue of depletion in squadron strength has been taken up repeatedly by the committee over the years. However, no concrete measures seem to have been taken (till now),” said the panel.

The Navy, in turn, has just 13 conventional dieselelectric submarines, only half of them operational at any given time since they are 17 to 32 years old, apart, of course, from the newly-commissioned INS Kalvari.

Moreover, the force has a shortage of 61multi-role copters needed on warships to detect, track and destroy enemy submarines, as well as at least a dozen minesweepers. “It is disheartening to find out that repeated delays have become an inherent part and parcel of ship-building projects,” it said.