Insighteon Consulting
Key Insights
Future Dynamics Influencing Submarine Acquisition
By India
11-12 November 2021

Genesis

  • As a major initiative towards ‘Make in India’, the Ministry of Defence (MoD) has issued a Request of For Proposal (RFP) for the first acquisition programme under the Strategic Partnership Model for the construction of six Air Independent Propulsion (AIP) fitted Conventional Submarines named Project 75(India) [P-75(I)] for the Indian Navy, on July 20, 2021. The RFP was issued to shortlisted Strategic Partners (SPs) or Indian Applicant Companies for the project viz, M/s Mazagon Dock Shipbuilders Limited (MDL) and M/s Larsen & Toubro (L&T). The project cost is budgeted to be over INR 40,000 crore.
  • The reality in the Indo-Pacific today has changed substantially with the Chinese Navy visiting new international ports and increasing its bases in the Indian Ocean region. As the centre of gravity of strategic thinking shifts towards the Indo Pacific, India too needs to prepare by getting its naval acquisition plan in order, so as to be recognised as a sea power which can preserve peace and stability in the region. Thus, an enhanced naval profile in South East Asia is required to strengthen India's “Act East” policy.
  • The Insighteon war-game aimed to better anticipate the future dynamics influencing India’s submarine acquisition initiatives, by playing out stalemate situations and strategic risks/opportunities.
  • The participants included retired senior defence officers, diplomats, bureaucrats and industry leaders from the Public Sector and Private sector. The participants were given war-game appointments to represent all stakeholders.
The aim of the wargame was to anticipate future dynamics influencing the submarine acquisition initiatives of India.

Methodology

  1. The participants were given appointments to represent:-
    • Ministry of Defence
    • Ministry of Finance
    • Ministry of External Affairs
    • Naval HQ
    • L&T
    • Mazagon Dock Shipbuilders Limited
    • Foreign Technology providers namely Naval Group France, Navantia Spain, TKMS Germany, Rubin Design Bureau (Amur) Russia and Daewoo Shipbuilding Korea.
  2. The first day, Phase 1, covered scenarios concerning schedule and cost estimations, P 75(I) tender compliances, and options for constructing P 76 submarines.
  3. The second day, Phase 2, covered scenarios of G2G offers, implications of a P 75(I) win by a SP, creation of an eco system, ToT usage and evaluation of the present SP model.

The Start Point

  • The Project-75(I) is one of the most important and strategically significant defence programmes being undertaken by the Ministry of Defence (MoD) in the present decade. It is also showing the way for the Strategic Partnership (SP) model which is a key part of the flagship“Make in India” initiative of the government. The government will be keen to see that the program reaches a conclusion in order to demonstrate the success of the Atmanirbhar Bharat policy of GoI. Australia’s announcement that it would acquire nuclear-powered submarines under the tripartite arrangement with the U.K. and the U.S. (AUKUS) puts the spotlight on India’s own submarine efforts and has raised awareness amongst the government agencies.
  • For foreign OEMs, the program raised concerns about the SP model, as it makes them liable for any malfunction and they cannot guarantee quality products and also abide by the timelines as sought by the government. They felt it was a tremendous amount of responsibility to ensure such a high level of technology sophistication for the local industry to execute within the short time frame. However, the stakes remain high and winning is vital.
  • For the Indian Navy, the P 75 (I) and the P 76 programs are of the highest priority despite being continuously hit by procedural delays. It is witnessing the Indo-Pacific increasingly becoming a centre for a growing geopolitical contest, with China already making several moves from strategic military bases to predatory economics to advance its own interests in the region.
  • From MEAs perspective, the existing asymmetries in India’s capabilities could further put us at a disadvantage. Hence it is an imperative that our sub surface capabilities and naval warfare techniques and equipment, in accordance with our Maritime Doctrine and SAGAR and IORA initiatives, are top of the line, technologically superior and relevant. They should also be able to meet our extended timelines in procurement, execution and actual implementation since technology becomes outdated at a much faster pace, as the recent Chinese hypersonic air to sea capability indicated.
  • For DRDO, the program offers an opportunity to cross important milestones regarding indigenous Air Independent Propulsion (AIP) systems and combat systems. Its role in the ATV program has met with success.
  • For the defence industry, one of the major concerns on the SP Model is the bureaucracy and procedures inhibiting its speedy implementation along with the interplay between sharing of responsibilities and liabilities raising multiple issues. What started with the aim of primarily involving the private sector for the long term has turned out to be a competitive Buy and Make one contract model.
Key Insights

Budget & Schedule Risks

  • The budget cost of GoI for the P 75 (I) program should be INR 65,000 Crores
  • The first submarine for the P 75(I) program is likely to be handed over to the Navy in the Year 2037

P 75 I Tender issues

  • The SPs are likely to have a choice of multiple OEMs to make their selection
  • The AIP issues will not be a factor to restrict choice of OEMs
  • It is likely that the DRDO Fuel Call AIP will be installed in P 75 (I) submarines
  • The SPs will give priority to their share holders interests to protect their risks & liabilities, rather than negotiation of price.
  • The tender will not meet its stated aim of price discovery

Issues With Present SP Model

  • Lack of assured orders disincentivizes the SP as well as the OEM and is against the principle of submarine construction of ”make more in same class”
  • The present SP model bases its result on competition. A competitive model runs the risk of suspending a running submarine production line, which may not be an acceptable option to stakeholders
  • For the SP model to achieve its aims, both shipyards need to be given a chance to specialise in submarine build programs by getting adequate load
  • Competence of a shipyard to evaluate ToT/PBL/Life cycle costs is suspect
  • The user should be part of the selection process of the OEMs with the SPs
  • The SPs are likely to face external pressures when making a choice of selection of ToT partner

Options to Address Capability Gaps

  • Resultant “capability gap”, if any, is likely to be taken care by the ongoing Medium Refit and Life Certification (MRLC) of a certain class of submarines
  • Additional Scorpenes will remain an option to maintain force levels but only when talks on P 75(I) stagnate/breakdown.

P 76 Program

  • The manufacture of SSNs are likely to follow the ATV - DMDE model by nomination
  • Leasing will remain an option in an emergency caused by a potential delay of the P 76 program.
Team Members
Representing MOD
Mr Alok Perti Former Secretary GOI
Mr Saurabh Kumar Former Chairman OFB
Cmde Mukesh Bhargava Former SVP & Member of Board, L&T
Representing MEA
Amb Anil Trigunayat VIF
Ms Prerna Gandhi VIF
Representing NHQ
R Adm Sarat Babu Former CMD HSL
Cdr Raghvendra Chaturvedi Former MOD
Cdr Pankaj Srivastava Former TMMS/MOD
Representing DRDO
Cmde S Nandula Former Scientist G, DRDO
Representing Foreign OEMs
Cmde Sunil Jetley Former Submariner
Cdr Ajay Panwar Former MOD
Representing SP / L&T
V Adm B Kannan Former COM
Mr Upi Kamal Former CEO Fincantieri, USA
Representing SP / MDL
Cmde K Subramanian Former CMD CSL
Cmde Anil Jai Singh VP Indian Maritime Foundation
Insighteon Team (Control)
Col Rajiv Chib
Maj Gen Praveen Dixit
Col Puneet Tewari

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