On reforms in China

While the 19th Congress of the Communist Party of China (CPC)  that was held last October and the annual National People’s Congress  held last month garnered a great deal of international attention, little attention is being paid to the sweeping government restructuring going on in China.

Under this plan the CPC has enhanced its authority across the board, even while the government has been dramatically restructured. The end result is that  President Xi now has  more direct control over the levers of money and power and will push ahead with a series of reforms which will, first and foremost, moderate the risk that the  unreformed Chinese economy confronts, and then, if things work according to plan, take China to new heights of achievement. 

Actually in some areas China is mainly playing catch up, creating  new ministries and governing institutions to address the unmet needs of its huge economy. Many areas of regulation have been found wanting, people have taken advantage of regulatory loopholes and corruption has been rampant in many areas. Uncoordinated governance has also resulted in huge waste, while ineffectively supervised state owned companies piled on debt.

On March 21, the CPC released the Plan to Deepen Reform of Party and State Institutions. This forms the basis of the most drastic restructuring of the government and some Party organization in decades. The idea was to improve the control of the CPC, enhance, policy coordination, governance and efficiency. China has a parallel system where the Communist Party has its institutions which dominate those of the country, viz the People’s Republic of China (PRC). Famously, for example, the Chinese military is the armed wing of the CPC and not the PRC.

Earlier China worked on the assumption that over time, the Party will recede into the background and strong State institutions will be the norm just as they are in the rest of the developed world. But Xi clearly believes that this has encouraged unprecedented corruption and inefficiency and threatened the dominance of the CPC. So he has sought to clean up the CPC and make it central to the Chinese system again.

The thrust of the reorganization is two-fold. First, it seeks to moderate the risk the Chinese economy is facing because of its massive debt and deficits. And second, it seeks to equip China with instruments and institution s to manage its continuing rise.

As part of this, the new reforms Central Banking will become more central. The People’s Bank of China (PBOC ), their equivalent of our RBI,  now has gotten powers to write rules for much of the financial sector and its powers will pivot on the new Central Banking and Insurance Regulatory Commission.

Another key area that the new reforms will look at is that of the environment. The environment ministry is being  expanded, creating a new ministry of ecology and environment. By now it should be clear that the Chinese are serious about cleaning up their environment and this is evident from the huge  strides they have taken in Beijing.

The expansion of Chinese economic power globally will now be aided by a new foreign aid agency, the State International Development and Cooperation Agency (SIDCA), like the USAID or the Japanese JICA,  which will essentially formulate and execute China’s global outreach, including the Belt and Road Initiative. It will be headed byWang Xiaotao

 A new State Market Regulatory Administration  will be a powerful new regulator for companies operating in China. It will take over the work of the State Administration for Industry and Commerce, the China Food and Drug Administration and the General Administration of Quality Supervision. This is the first agency which will focus on anti-monopoly issues and also oversee the new State Intellectual Property Office. The SIPO will strengthen the creation, protection and application of IPR and give a push to Xi’s policy of promoting an innovation-based economy, and also provide a response to critics who charge China with large-scale Intellectual property theft.

As far as the Party is concerned, the reform has targeted Central Leading Groups which are high-powered groups of ministers, officials and Party members and who are the real decision-makers in China. Under the new plan, the CPC  abolished several Central Leading Groups and created new ones and promoted several from leading groups to central or commissions.

The central leading groups for deepening overall reform, cyberspace affairs, financial and economic affairs and foreign affairs are being given the rank of central commissions. It is no surprise since  Xi Jinping himself chairs these Central Leading Groups.

Among the new commissions coming up, the most significant is the National Supervisory Commission which will look into discipline and corruption cases. Unlike the Central Commission on Discipline and Inspection (CCDI) whose work is confined to the Party, the NSC will function at every level and in every part of life in China—universities, multi-national companies, banks, and so on.

One of the big losers is the National Development and Reforms Commission (NDRC) the Chinese equivalent of our Planning Commission.  It was known as the “little Cabinet” and wielded power in a range of areas from high-speed rail projects to electricity rates. It will remain as one of the 26 bodies of the State Council as the PRC government is known, but it will shed many of its functions to other agencies.

This could trigger a dramatic shift in the Chinese economy towards allowing the market play a decisive role in allocating resources, something that the Party wants, but which has been blocked by various vested interests. However, at the end of the day, the real proof of the pudding will be in its eating.

Greater Kashmir April 23, 2018

How Xi Jinping is playing the 'Trump' card in China

Whether US President Donald Trump is winning or North Korea's Supreme Leader, Kim Jong-un, is a matter of debate because the final deal has yet to be clinched. But one thing is sure, Donald’s way of doing things has got him much more of a payoff than his predecessors have managed.

So, the obvious follow-up question is: Are the Trump tactics working successfully on China as well? Has his strategy of hitting China with a massive dose of tariffs succeeded in bringing Beijing to heel?

Beijing now faces tariffs on $150 billion worth of products, though it has announced counter-duties, there are limits to what it can do for the simple reason that it imports far less from the US than it exports. US exports to China are just $130 billion while the US imports $506 billion worth of goods.

China needs US?

The answer there is more complicated. Many wonder whether China is playing the Americans, as it has done for the past four decades. But there are compelling reasons for China to meet the American demands of opening up its economy and these are actually overwhelmingly domestic.

China’s financial sector is in a bad shape. Earlier this year in January, the head of the China Banking Regulatory Commission Guo Shuqing pointed out that banking assets comprised 80 per cent of China’s total financial assets and so there was need to lower their risk.

In the past year, the regulators had focused on interbank business, wealth management products and off-balance sheet activity. To stave off the risks, the government has been taking stringent measures to regulate banking, securities and insurance industries, levying heavy fines on those charged with wrong-doing.

Guo, who is now the head of a combined Banking and Insurance Regulatory Commission, as well as the Secretary of the Communist Party within the People’s Bank of China, warned of the dangers, both obvious and hidden, in the coming period.

One of the big priorities of President Xi Jinping's government is the need to clean up the financial sector and ensure that it will not implode, taking the Chinese economy along with it.

But financial risks are just one aspect of the situation, China’s economy is also slowing down over the years, resulting in rising fiscal deficits and lower employment in the manufacturing industries. In 2017, China’s fiscal deficit — the difference between government revenue and expenditure — reached some $478 billion.

Jobs on a decline

Further, there has been a withdrawal of foreign investments, fed up with the manner in which the playing field is tilted against them in the country. Employment has been generally declining in the manufacturing sector, but the decline has been most marked in foreign investment industries.

In the recent period, China’s exports have been declining and it is actually becoming more dependent on exporting to the US. The bulk of its foreign trade surplus comes from the US and in the past decade, the US accounted for over 50 per cent of its exports.

Xi promised action

So, speaking at the Boao Forum earlier this month, Xi declared that China will not only ensure that its door will not close “but will only open wider.” He has promised action this year itself to open the financial sector, something that was hinted at last October around the time of Trump’s visit to China.

He has promised reform in the automotive sector which is the cause of considerable heartburn among foreign auto-makers. China will also boost its imports all around this year itself.

Following the Boao Forum, China announced that the entire island of Hainan, roughly the size of Kerala, would become a free trade zone and welcomed foreign multinationals to establish their regional and global headquarters there.

Aware of that some of these economic challenges could emerge as dangerous risks, Xi has been pushing for economic reforms. In 2013, the 3rd Plenum of the Communist Party had called for markets playing the decisive role in the country’s economy. Plans were made to set up free trade zones and provide greater market access to trade partners.

However, Xi faced headwinds that prevented the reforms from being followed through, corrupt officials and vested interests blocked change.

This was a major reason that he pushed through measures that provided him the option of having a third term as the president of the country last year. Four years down the line, it's clear now that Xi has consolidated his authority and China is now set to move on his reform agenda.

Ironically, in this, the American pressure actually comes to his aid as he can now rally the country to take measures to deal with the so-called American threats.

Mail Today April 23, 2018

Higher Defence Management with 'Indian Characteristics'

Are we now in the process of establishing a higher defence management system with ‘Indian characteristics’? This could well fit the description of the new Defence Planning Committee (DPC) headed by national security adviser Ajit Doval that was created recently.

According to reports, Doval’s new committee comprises the army, navy and air force chiefs, and the defence, expenditure and foreign secretaries. The chief of the Integrated Defence Staff would be its member secretary and the outfit its secretariat.

The DPC will author the country’s national security strategy, plans for building a defence manufacturing system and boosting defence exports, and prioritise capability development plans. These will be submitted to the defence minister who will presumably seek the approval of the Cabinet Committee on Security to authorise action on them.

The committee will have four sub-committees to look at four key areas – policy and strategy, plans and capability development, defence diplomacy and the defence manufacturing system.

The reports say that the committee will also prepare military doctrines and, in line with this, establish the strategic objectives of Indian military power. Future operational directives of the defence minister will emerge from the doctrine and strategy worked out by the committee.

Some have seen this as a revived version of the 1977 Committee on Defence Planning, but its roots lie in the Strategic Policy Group set up under the National Security Council in 1998. Formed to promote inter-ministerial coordination, the group comprised of the cabinet secretary, the three service chiefs, the key secretaries dealing with foreign, finance, defence and home affairs, as well as the heads of the intelligence services. For some reason, this body never really functioned effectively.

By creating a group with the NSA at its head, and a weak defence minister to take care of the legal issues relating to the cabinet, we have an institution that will not only  promote defence procurement, industry and exports, but provide higher strategic direction to the country. Its composition makes eminent sense since it is compact and national strategy requires effective use of all the instruments of national power. But it does beg a number of other questions.

Is it being seen as a substitute for the long-standing requirement for a chief of defence staff for the three services and the need for closer integration between civilians and uniformed personnel in the Ministry of Defence? The fact that the IDS headquarter is the anchor of the DPC would suggest that, indeed, that is what the government is thinking.

If  the DPC is just a band-aid to avoid deep restructuring and reform needed by the military system in the country, it could lead to trouble. Not in the least because of the fact that while they may hone the best national security strategy document, the military instrument they need to execute it may not function in the most optimal manner because it is in dire need of top-down reform.

For nearly 20 years, the system has been kicking two cans down the road. The first is called the “chief of defence staff” and the other “civil-military integration”. Two committees – the Group of Ministers in 2001 and the Naresh Chandra Committee in 2012 – felt that a CDS-like institution was vital to ensure the integrated functioning of the three armed forces. Further, they felt that for a more professional defining of the country’s security challenges and more effective ways of dealing with them, there was need for closer integration between the uniformed personnel and the civilians who ran the Ministry of Defence.

But the proposal has been resisted both by politicians and civilians in the government, primarily IAS bureaucrats. Their opposition has been subtle, since it is not based on any reasoned argument, but the belief that a CDS could diminish their power and pelf.

In his outstanding study on the Indian military and the state, Steven I. Wilkinson has shown that beginning with the 1950s, higher defence management in the country was deliberately structured “to minimise the risk of military intervention in politics”. Disappointingly, even by 2015 when his study was published, there had been no major change, even though such strategies were seen “as an increasing drag on the country’s military efficiency and antiterrorist strategies”. So India’s national security decision-making processes remain archaic, as indeed does its military organisation.

Could Doval’s new committee, then, be a creative answer to the gridlock that has prevented real reform in India’s higher defence management system? For the present we must keep an open mind – if only because there is no other alternative. The politicians and babus will never allow the CDS to come up, so, in lieu of it, we may as well as have Doval as the “CDS with Indian characteristics”, one who will not spook the system the way a military person seems to be able to do. But the proof of the pudding will be in its eating: The NSA will have to show that he can crack heads to push through needed changes in the system.

The country has lived with a higher defence management system with Indian characteristics for a while. Shaped by the experiences of the 1960s, this gave us a system where the military is kept out of the civilian decision-making system, while politicians steer clear of interfering in what are classed as purely operational or tactical affairs. Going by the experience of other countries, this is not the best way to manage the country’s higher defence management. Each country must follow its own path, provided it is able to achieve the ends it seeks.

Just what this “Indian” system is can be seen by the way we handle our nuclear deterrent. In contrast to other nuclear weapons states, India’s nuclear weapons are in the custody of civilians – the Department of Atomic Energy and the Defence Research and Development Organisation (DRDO). It is only when it comes to delivery that the armed forces are involved through the Strategic Forces Command which are embedded within the military, but under the effective command of the NSA.

As Clausewitz put it, war is nothing but the continuation of politics with other means. The importance of close political supervision, if not leadership, in military affairs has always been important and has become even more salient in the contemporary era. Prime Minister Narendra Modi probably sees it instinctively, as evidenced by his use of the “surgical strikes” to corner Islamabad.

So if Modi wants to run the show through his NSA, it could actually have a positive outcome in certain areas by taming parochial interests in our governmental system. But they should not be under the illusion that the creation of the DPC will be a solution to all the ills that afflict our defence system. Reforming and restructuring our antiquated military and its command system is a problem in itself that would require several years, if not a decade, of work to overcome.

Then, having a national security strategy that is approved at the highest level would be a boon because it will get the whole system on to the same page in dealing with issues, but prioritising the challenges and, more importantly, reshaping the means with which to deal with them, require hard work and concentrated attention in the coming years.

Doval’s is an agile mind who has thought a great deal about some of the issues his new responsibilities will bring, especially defence research and industrial reform. But he is an extremely busy man. As of now, the NSA is not only the principal security adviser to the prime minister, but the effective supervisor of all three intelligence services. He has heavy foreign policy responsibilities, primarily those relating to Pakistan and China. He is also the head of the executive council of the National Nuclear Command Authority and in that sense, the custodian of the country’s nuclear deterrent.

So, the bottom line is: Will he be able to provide effective leadership for this new body, or only token authority ?

The Wire April 20, 2018

Bangladesh polls pose a challenge to regional stability

Elections are expected in Bangladesh soon, as by law they must take place between October 31 and December 31 this year. This is not an easy prospect either for Bangladesh or for its principal neighbor, India.

The previous general election in 2014 was marred by violence and was boycotted by the Bangladesh National Party (BNP). It saw a turnout of just 22%. The international community is hoping that the elections this time around are more credible and help stabilize the polity of this volatile country, which is witnessing the growth of Islamist radicalism.

This month, Indian National Security Adviser Ajit Doval traveled to Dhaka to attend the meeting of NSAs of the BIMSTEC (Bay of Bengal Initiative for Biodiversity and Economic Cooperation) countries. His visit was followed by that of Foreign Secretary Vijay Gokhale aimed at shoring up bilateral relations. India has old ties with the Awami League going back to the time the country fought its liberation war in 1971.

India suspicious of BNP

India’s perspectives on Bangladesh have been shaped by the experience of the governance of the BNP in the 1991-96 and 2001-06 periods, when Islamist militancy took root in the country and separatists and terrorists in India received covert Pakistani support as the Bangladesh authorities looked the other way.

Bangladesh is important for India for political, national-security and religious reasons considering that it borders no fewer than five Indian states. But it is no less important for the larger region and the world, given its large Muslim population that is being subjected to creeping radicalization.

Islamist groups such as Jamaat-e-Islami, Harkat-ul-Jihad al-Islami Bangladesh and Jamiat-ul-Mujahideen have been around for a while, and now Islamic State (ISIS) and al-Qaeda also claim a presence on its soil. And recent years have also seen suicide attacks.

For that reason, the prospect of any government other than one run by the Awami League and current Prime Minister Sheikh Hasina is viewed with some dismay by India. For the record, though, India insists it is neutral with regard to the two parties, and during her visit to the country last October, External Affairs Minister Sushma Swaraj also met with BNP chief Begun Khaleda Zia and held talks with party officials.

Some Indian officials say that their experience of working with the Awami League government on issues relating to terrorism, radicalization and curbing the activities of third-country intelligence services has been positive. They say that Sheikh Hasina has been proactive in curbing Islamist extremism in her country, while claiming that the BNP has tolerated, if not encouraged, some Islamist elements.

Credibility at stake

Clearly, any fresh elections will have to meet the challenge of credibility. As of now the BNP has said it is willing to contest the next election, but preferably with a non-partisan election commission that would take charge of the government during the elections period. In fact, in recent months it has stepped up its campaign demanding that a caretaker government conduct the polls.

The BNP is banking on the anti-incumbency factor. By itself, it is not in particularly good shape to fight elections. Begum Khaleda Zia is embroiled in some 37 different cases relating to corruption and abuse of power relating to her two terms as prime minister, and the party is being led indirectly from London by her son Tarique Rahman.

In February, Begum Khaleda and her son were convicted in a corruption case involving embezzlement from a trust. Khaleda was sentenced to five years in jail. Though her party claims that the charges were a political vendetta, endemic corruption has been a factor in the poor performance of Bangladesh’s governments.

Her principal ally of the past, Jamaat-e-Islami, has been decimated by trials relating to its role in the Bangladesh war of independence in 1971. In any case, as of 2013, the Jamaat has been deregistered and cannot contest elections, though it still retains considerable street power through its youth wing, the Bangladesh Islami Chhatra Shibir.

Sheikh Hasina’s problems are, of course, the problems of incumbency, but also that her erstwhile ally, the Jatiya Party of former dictator Hussain Muhammad Ershad, has said it will seek to contest the election on its own. The Bangladeshi economy has done well under her watch, averaging 6.7% annual growth in the last four years and growing even faster than India in 2017. Yet there are persistent weaknesses in the government system that cannot be easily overcome.

In the current situation, the Bangladesh Army has so far remained non- political, but it did step in in 2006 to prop up a caretaker government for a period of two years before elections were held bringing Sheikh Hasina to power. The corruption charges against Begum Khaleda were actually filed by the caretaker government.

If there are serious questions about the fairness of the elections under the auspices of an Awami League government, there are chances that the Bangladesh Army will once again be brought in to provide the process credibility. But Sheikh Hasina has kept the army close to herself, doubling its size and providing a generous budget with which to equip itself and build new bases.

Geopolitical hot spot

The one-sided 2014 election, which some Western countries frowned on, provided Beijing with an opportunity to reach out to Dhaka. China has a growing interest in Bangladesh both as a means of containing India and for its strategic location at the head of the Bay of Bengal, proximate to Rakhine state in Myanmar, where it has significant investment and from where it has an important pipeline that avoids the Malacca Strait and transports oil directly to its landlocked Yunnan province.

While India has been Bangladesh’s longtime trade and aid partner, China has emerged as a serious rival. China, which has invested US$3 billion in the country since 2007, has been involved in building bridges, roads and power plants in the country. It is also Dhaka’s biggest supplier of military hardware.

In his October 2016 visit, Chinese President Xi Jinping promised $20 billion worth of investments in infrastructure. One analysis says that this could rise to $31 billion and that if the commitments are actually implemented, China could emerge as the largest investor by far in Bangladesh. India cannot match China, but it has upped its credit line to $4.5 billion, the highest it has offered anywhere.

The Rohingya issue has the potential to poison both Indian and Chinese relations with Bangladesh. On one hand, China has not permitted any condemnation for the Myanmar government’s role in triggering the exodus of Rohingya Muslims, and on the other, some in India remain concerned that the Rohingya will infiltrate into India in larger numbers and pose a threat.

The question for the rest of the world and, more important, neighbor India, is what does the future look like in Bangladesh?

The worst-case scenario is that the weakening of the parliamentary parties and the growing power of such groups as Hefazat Islam (Defenders of Islam), a network of madrassa leaders who oppose the establishment of a secular polity and want sharia rule in the country. As it is, Islamist ideologues have already succeeded in shifting the national narrative by rewriting textbooks to exclude non-Muslim writers and ideas.

In 2015-16, there were attacks on bloggers, academics and Hindus by Islamists. The Awami League government only began to crack down after the massacre in the Holey Artisan Bakery in July 2016. The other alternative is a military government, which the country has experienced several times in the past.

Bangladesh is in a relatively sweet spot, but with a big “if.” It has had an old history of Islamist radicalism, but the newer and more virulent forms of Islamism could tear the country apart.

Asia Times April 17, 2018

China's Coming of Age as a Maritime Power

After addressing the Boao Forum, the Asian Davos, and delivering the message of how China sought to promote inclusive and open economies, Xi Jinping shed his suit and donned combat fatigues to board a destroyer in the South China on Thursday to participate in a huge naval review. 

There was a clear message in his act – China would deal with the world from a position of strength, in both economic and military fields, and that it was prepared for any eventuality.

For the biggest maritime parade held in China since 1949, the People’s Liberation Army Navy (PLAN) deployed 48 warships, 76 aircraft and 10,000 sailors and marines. The demonstration, in its own way, marks the coming of age of China as a maritime power.

The parade was a culmination of a series of live fire exercises involving the aircraft carrier Liaoning in the vicinity of Hainan island, near the venue of the Boao Forum. The Chinese authorities had said that these were routine annual events to enhance training and professional skills. But now the Chinese say that they will hold live fire drills in the Taiwan Straits next week, in a message to Taipei. These will be the first naval manoeuvres off Taiwan since 2015.

The Chinese action comes in response to a stepped-up US presence in the region. In the past two months, two powerful US carrier groups have operated in the region. Britain and France have also declared that they will send naval vessels to the region to contest China’s extravagant claims in the region.

According to Global Times, “all combat systems of the PLA Navy and 10 air echelons joined the parade.” China’s sole aircraft carrier Liaoning was the centrepiece of the exercise, where on board the destroyer Changsha, Xi watched the take-off of the J-15 aircraft from its deck. Besides this, the parade featured 052C destroyers, Type 071 amphibious transport dock and Type 093 submarines.

Holding the parade in the South China Sea, off Hainan island, is significant for a variety of reasons. First, it is a region which is vital for the PLAN because it hosts its principal submarine base, where its second strike deterrent is based. Second, it is an area which is disputed by the neighbouring countries and where China lost an arbitration case in 2015, bringing into question its claim over the territorial waters of the area. China has reclaimed what an arbitration court said were several low-tide elevation features and built military facilities on them.

Third, the US has been flexing its muscles in the region recently and on April 10, it sent the USS Theodore Roosevelt aircraft carrier group into the region as a show of strength. Earlier, in February, the USS Carl Vinson group had patrolled the disputed region.

Four, it is proximate to Taiwan, a region where tension has been building up between the US and China with the former’s outreach, which includes the passage of a law that encourages high-level visits to the island and the decision to license a submarine manufacturing project there.

Though US President Donald Trump undercut the economic leg of the US response to China in the region by walking out of the Trans-Pacific Partnership, his administration has been more active in pushing military patrols in the region as compared to the Barack Obama administration. US manoeuvres are taking place more frequently and are, no doubt, encouraging China to step up its own military activity.

In January, US secretary of defence Jim Mattis visited Vietnam and in early March, the Carl Vinson docked in Da Nang port. Vietnam has been the most outspoken critic of China’s claims, especially since it has lost the Paracel Islands to the Chinese, who have now been encroaching on the Spratly group and challenging Vietnam in its own EEZ.

At one level, the naval parade was a demonstration of the success of military reforms undertaken by the PLA. Over the past five years, the Chinese have changed the mission of the PLAN from being involved in coastal defence to plans relating to the high seas. The 2015 China Military Strategy document had declared that “China is a major maritime as well as a land country”. Given the assemblage of vessels, the PLAN also signalled that it would now operate as a mission-oriented fleet rather than being separated into its eastern, northern and southern orientation.

Navy personnel of Chinese People’s Liberation Army (PLA) Navy take part in a military display in the South China Sea April 12, 2018. Credit: Reuters/Stringer

Of all of Xi’s reform efforts, the most successful have been those relating to the PLA. In 2015-2016, the force was reduced in numbers and restructured into geographic theatre commands. The higher command system constituting of the Central Military Commission was flattened and a new system, involving 15 departments, institutions and commissions, created, called the “CMC Chairman Responsibility System”. Xi, of course, is the chairman of the CMC. Later, he also assumed the designation of the head of the “Joint Operations Command Centre”.

The Southern Theatre Command of the PLA which was earlier the Guangzhou Military Region is currently headed by a PLAN officer, Vice Admiral Yuan Yubai, the first non-army officer to head a regional command.

The PLA has declared that it aims to fight and win “informationised local wars”, though an increasing number of analysts say that the term should be “intelligentised local wars”, with reference to the role of integrated Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4IASR) systems.

The exercise featuring the Liaoning, an unfinished vessel formerly called Varyag that China bought from Ukraine, only marks the beginning of the PLAN as an aircraft carrier-operating naval power seeking to rival the US. The 60,000-tonne vessel is seen as a training ship which will give way to two new carriers that the Chinese are building in Shanghai and Dalian. These will be bigger and more capable ships. China, according to reports, plans to have four aircraft carrier groups by 2030.

The Wire April 16, 2018

Leapfrog? Just A Chimera Chase

A reworked bid gifts India the prospect of owning 110 medium-role combat aircraft. Nevertheless, the IAF may be down to 15 squadrons by 2032.

So, two decades after the Indian Air Force (IAF) projected a requirement for 126 medium-role combat aircraft (MRCA), we are back to the starting point. That journey had ended abruptly in 2012 when the government, after a laboured process, selected the Dassault Rafale and began negotiations for the purchase—only to have the succeeding Nar­endra Modi administration scrap the deal and dec­ide in 2014 to purchase only 36 Rafales off the shelf.

Last week, the IAF issued a request for information (RFI) for the purchase of 110 MRCA. Three-fourth of these will be single-­seaters and the balance twin-seat aircraft. Eighteen or so of the aircraft would be bought off the shelf. The rest would be ‘Made in India’ through a partnership between the manufacturer and a strategic partner. The fighters would add six squadrons to the IAF; the order could be worth between $9 billion and 15 billion.

It is no secret that the IAF is in dire straits, both because of its declining numbers and the government’s refusal to raise the defence budget. The numbers are telling. The IAF has 31 squadrons today as against a desired 42. It will lose nine in the next five years when the remaining 7 MiG-21 and 2 MiG-27 squadrons retire. And presuming it gets the two Rafale, two LCA and one more Su-30MKI squadrons, it will be at an unco­mfortable 27 by 2022. If it repeats the fiasco of the first MRCA deal, taking more than a decade to select an aircraft, it could well end up in a disaster where it is down to just 15 squadrons in 2032, when its rem­aining six Jaguar, three MiG-29 and as many Mirage 2000 squadrons also retire.

The budgetary part is vital because the IAF, at the insistence of the government, wants the bulk of the aircraft to be “Made in India”. Setting up an assembly line for just 80 or so fighters will actually require the exchequer to pay double or even triple the sum that would be needed if you simply imported the aircraft off the shelf. When India purchased the Su-30MKI from Russia directly, its average cost was Rs 270.28 crore, but some years later when its manufacture from raw material was begun by the Hindustan Aeronautics Ltd it cost Rs 417.85 crore.

But the Air Force is to blame as well. In crafting an RFI that mixes single- and twin-engine aircraft, it makes selection that much more difficult. Actually, the IAF knows what it wants—it has been saying so loudly for decades—a light fighter, cheap to run, that would be the work-horse of its fighter fleet. After the forced rejigging of the Rafale purchase in 2014, the IAF had iss­ued another RFI for buying and building 100-200 single eng­ine fighters in 2016. This had had boiled down to a competition between Lockheed Martin’s F-16 and the Saab’s Gripen.

The problem is that by the time RFIs and RFPs (request for proposals) are sent, lobbies enter the picture and muddy issues. That is what happened the last time around, and that is what is happening now. With the inclusion of twin-engine fighters, the competition is back to the future. In other words, it is a repeat of the old MRCA competition. So, Rafale can re-enter it and conceivably win it again. Because in a competition against the single-engine fighters, the heavier twin-engine fighter will end up superior—in range, endurance and capability. If budgetary issues are taken into account, as they most certainly should, it is 40 per cent or more expensive to run a twin-engine machine. Incidentally, an analysis of the accidents in the IAF has shown that twin-engine aircraft like Jaguars have had more crashes than the single-engine Mirage.

By scrapping its 2016 aim of getting a single-engine fighter, and including twin-engine fighters, the IAF has muddied the competition once again. Instead of narrowing down their choice, the IAF has broadened it to the point of incomprehension.

Given the detailed questions relating to the ToT (transfer of technology) component in the RFI, perhaps this time around, the key element in the decision-making matrix will not be the fighter’s performance alone, but the willingness of the partner to transfer technology. According to the RFI, the transferred technology would have to be state-of-the-art and boost India’s indigenous design and development, production and maintenance capabilities as well. Also, the transfer should also aid the country’s indigenous programmes.

Actually we have been doing ‘Made in India’ kind of license production of fighters since the mid-1960s, beginning with the MiG-21. Subsequently, the MiG units gave way to the Su-30MKI production line in the 1990s. Yet, we learnt little in the design and development of fighter aircraft.

The Sukhoi is now allegedly manufactured from “raw material”. But this is deceptive. For example, the raw material that goes into the fighter such as titanium and steel must be sourced from Russia, along with nuts, bolts and rivets. Likewise, while most of the engine is made with Indian-made components, key high-end composites and special alloys—some 47 per cent by value of the engine­—are imported.Countries could well be willing to offer some design and development technology but those that are being phased out by them. But they will certainly not offer their crown jewels, say, technology related to engines. This is one area where the West retains its edge and even the Russians are not quite there. The Chinese have spent an arm and a leg and only slowly moving towards developing a viable fighter engine, but not one that can be compared to what powers the western fig­hters. In any case, why would anyone offer cutting-edge technology for a deal involving 110 aircraft and $15 billion?

If India thinks the acquisition will help it leapfrog its way to acquiring world-class fighter aircraft design and development capability, it is chasing a chimera. Such capabilities, as the Chinese story suggests, take place over decades and are directed by those in authority. They involve not simply ToT, but espionage and, as the Americans now charge, forced technology transfer.

An advanced capability to design and manufacture aircraft involves thousands of engineers and technicians and takes decades to build. So, it requires a systematic build-up of design, development and manufacturing capacities, accompanied by a symbiotic effort to develop engineering and technical institutes to support the effort. Most importantly, it needs sustained higher strategic direction, much in the way that the Space Commission has provided in building up the capabilities of the Indian Space Research Organisation. The members of the Space Commission include Nripendra Misra, principal secretary to the PM, and National Security Advisor Ajit Doval, besides the Cabinet, Finance and Foreign secretaries.

The RFI suggests that the IAF wants a heavy fighter capable of everything: air defence, deep strike, reconnaissance, maritime strike, electronic warfare, buddy-refuelling capability and so on. The RFI is loaded with all sorts of possible requirements. One asking whether the fighter on offer will “allow crew members to relieve themselves and take provisions in flight”. Now, existing fighters do have provision for urine collection, but for defecation, things are more complicated. The Russian Su-34 would seem to be the only one to fit this bill since it has a small toilet and kitchen behind the tandem cockpit crew cabin. Then, the RFI wants an aircraft that “can fly in excess of 10 hours with air-to-air refuelling”. Now ten hours of flying in a fighter is way beyond human endurance. US Navy pilots, for example, are not expected to be in the air more than 6 hours at a time.

In all this, everyone seems to have forgotten that there was another important deal the IAF was looking for. That was for a fifth-generation fighter to be built jointly with the Russians—a deal that also incorporated sharing a great deal of design and development know-how. But that seems to have receded into the background, and no one knows why.

The threats we confront by 2025 will most certainly include fifth-generation fighters like the Chinese J-20 and possibly the J-31, which could even be exported to Pakistan. Speed and man­oeuvrability may matter less than sensors and weapons, and the manner in which they are fused. Beyond this is the possibility that threats will mutate to include autonomous unmanned aerial combat vehicles and drone swarms guided by artificial intelligence. In the meantime, we’ll be trying to play catch-up in a game where the rules have changed beyond comprehension.

Outlook April 23, 2018