When a sword arm is worth it

SOURCE BUSINESS STANDARD  Myth and reality in the cost of Tejas, the IAF and Navy’s under-development fighter. The spotlight is swinging on to the Tejas Light Combat Aircraft (LCA). It has been cleared for induction into the Indian Air Force, construction has begun on two squadrons (40 aircraft) and the IAF is picking 40 per cent of the tab for developing a more powerful Tejas Mark II. Now its designers are hitting out at critics who charge the programme has greatly overshot its budget. P S Subramanyam, head of the Aeronautical Development Agency (ADA), which spearheads the Tejas programme, has given Business Standard detailed financial figures to argue the development cost has remained within budget. ADA also notes the Tejas is significantly cheaper than any comparable fighter. ‘No overshoot’ Slamming some recent media reports that the Tejas was enormously over budget, Subramanyam reveals just Rs 6,051 crore has been spent so far on the fighter, that performed aerobatics at the Aero India show in Bangalore this month. Another Rs 746 crore (of the sanctioned Rs 3,650 crore) has been spent on the naval Tejas, which will fly from the Indian Navy’s future aircraft carriers. ADA has provided a detailed cost breakdown. The LCA project began in 1983 (the name Tejas only came later), with a preliminary allocation of Rs 560 crore for ‘feasibility studies and project definition’. Subramanyam complains that accusations of cost overruns stem from the misperception that Rs 560 crore was the entire budget for developing the Tejas. In fact, this was merely for defining the project and creating the infrastructure needed for designing, building, testing and certifying a fighter. Only after a decade of infrastructure building did the design work start, when the ministry of defence (MoD) sanctioned Rs 2,188 crore in 1993 (which included the initial Rs 560 crore). This allocation was to fund the building of two ‘technology demonstrator’ Tejas fighters. “Within this budget, we flew the Tejas in 2001, and even built two extra Tejas prototypes,” says Subramanyam. “And, that was without any adjustment for inflation or foreign exchange appreciation, though the dollar shot up from Rs 26 to Rs 47 during that period. Our forex component of Rs 873 crore should have been adjusted to Rs 1,642 crore.” Buoyed by the successful test flight in 2001, the MoD allocated ADA Rs 3,302 crore in November 2001, for Phase-II of the programme. This was to fund a production line and the building and flight-testing of 8 ‘limited series production’ fighters. Phase-II will run till 2012, when the Tejas obtains final operational clearance (FOC) for induction into the IAF as a frontline fighter. In 2009, with the Tejas flight-testing running slow, ADA obtained an additional Rs 2,475 crore from the government for Phase-II. Subramanyam argues this is not a cost overrun. “The MoD’s allocation of 2001 contained no protection from inflation. If you roll back our annual expenditure to the base year of 2001, we remained within budget,” says the ADA chief. The IAF is now confident that its Tejas Mk-I will obtain FOC in 2012, within the sanctioned Rs 7,965 crore (Rs 2,188 + Rs 3,302 + Rs 2,475) crore. What remains is to integrate a long-range missile; to enable mid-air refuelling; and to enable the Tejas to fly as slow as 200 kmph. What we got Subramanyam argues that this money has not just developed the Tejas, but also India’s ability to build serious fighters. “Consider the aerospace infrastructure that we have built across the country, in key DRDO laboratories, defence PSUs, private industry, academic institutions, and test facilities like the National Flight Testing Centre (NFTC). This has bridged a technology and infrastructure gap of two-three generations,” he says.   WHAT THE MoD WILL PAY Development Date of sanction Sanctioned cost Spent till  Jan 25, ‘11 1. Air Force (a) Phase-1 (Tejas prototype) Jun 23, ‘93 2,188* 2,188 (b) Phase-2 (Tejas Mark I) Nov 20, ‘01 5,777** 3,859 Sub-total (a & b) 7,965 6,047 (c)Phase-3 (Tejas Mark II) Nov 20, ‘09 2,432 4 Sub-total (a, b & c) 10,397 6,051 2. Navy (a) Pre-project design Jan 20, ‘99 14 14 (b) Phase-1 (Tejas Mark I) Mar 28, ‘03 1,715*** 732 Sub-total (a & b) 1,729 746 (c) Phase-2 (Tejas Mark 2) Dec 17, ‘09 1,921  Nil Total (a, b & c) 3,650 746 Grand Total (1 & 2) 14,047 6,797 * Includes Rs 560 crore sanctioned on Aug 22, 1983 ** Rs 3,302 crore + Rs 2,475 crore on Jan 20, 2001, and Nov 20, 2009, respectively *** Rs 949 crore + Rs 766 crore on Mar 28, 2003, and Dec 17, 2009, respectively Figures in Rs crore Meanwhile, the naval Tejas will fly within weeks. Significantly different from the IAF version, the naval Tejas must get airborne within 195 metres (the length of an aircraft carrier deck) and withstand the cruel impact of repeated deck landings, in which it must be slammed down precisely where the deck begins. Of the Rs 1,729 crore allocated for the naval Tejas, ADA has spent Rs 746 crore so far. Encouraged by the success of Tejas Mk-I, the MoD allocated Rs 2,432 crore in 2009 for making the IAF’s fighter even better: developing a Tejas Mk-II, with a newer, beefier, GE-414 engine. Simultaneously, Rs 1,921 crore was sanctioned for the Naval Tejas Mk-II. While the Navy funded 40 per cent of its fighter from the start, the IAF is a new convert, matching the Navy in funding the Tejas Mk-II. “By 2012, the total development cost for an IAF and a naval Tejas — including a single-seat fighter and a twin-seat trainer variant for each — will be Rs 9,690 crore. Another Rs 4,353 crore will be spent on the Tejas Mark-II, bringing the total cost to Rs 14,047 crore,” says Subramanyam. The Gripen, a comparable if somewhat more advanced fighter, which Sweden developed during this period, cost US $13.5 billion for 204 fighters, assuming complete tax exemption. A similar number of Tejas fighters entering IAF and Navy service would — provided that HAL holds the Tejas manufacturing price at its current estimate of Rs 180 crore per fighter — have cost India US $11.28 billion. Given that Sweden entered the Gripen programme with a mature aerospace industry (coming off the successful Viggen programme), India will have built the Tejas, as also an entire aerospace design and manufacturing eco-system, for 17 per cent less money than Sweden paid for the Gripen.