Indian Navy cutting down on procurement due to Budget cuts

NEW DELHI: With forced budget cuts hitting hard, the Indian Navy is pulling back on procurement of combat systems, cutting down on the numbers planned to be acquired in some cases and foreclosing other projects that have hit a dead end.

The rationalisation process, which is likely to be approved by the defence ministry, has been initiated after consecutive budgets whereprojected demands of the Navy have not been met. In the current budget, for example, the Navy was allocated 41,259 crore against the projected amount of 64,307 crore, which officials say is not even adequate to continue annual payments for acquisition contracts already signed. Sources told ET the Navy is cutting down the number of Mine Counter Measure Vessels (MCMVs) it wanted to acquire from the original 12 warships to eight. The contract, given on nomination to the Goa Shipyard Limited, was originally pegged at 32,000 crore which will now be brought down.

Similarly, it is planning to cut down the acquisition of Kamov KA 31 early warning helicopters to six, from the original requirement of ten systems. These choppers are deployed from large combatants such as the aircraft carrier to significantly increase the detection range for incoming enemy units. The project was originally pegged at 3,600 crore. In November, the Navy had cut down the number of additional P8 I reconnaissance it requires from the US under a Foreign Military Sales (FMS) pact from ten to six. The original contract was pegged at 21,000 crore, which would be brought down after the rationalization process.

Sources said thatNavy is also foreclosing Make in India projects that have hit a dead end, such as the Cadet Training Ship programme.

A big contract that had all but collapsed – the Rs 20,000 crore plan to acquire four Landing Platform Docks that were to be made in India-is also set to be withdrawn.

The long running program – which was initiated in 2013 – was to result in the largest ever warship to be built in a private dockyard. However, the project got deadlocked in 2018 after the defence ministry halted the process for opening of commercial bids between shortlisted companies Larsen and Toubro and Reliance Naval and Engineering Limited (RNEL).

The cutting down on procurement does not come as a surprise as the Navy has already informed the parliamentary standing committee on defence that the paucity of funds will hit moderisation. The Navy has already projected a short fall in Aircraft Carriers, Mine Counter Measure Vessels (MCMVs), Landing Platform Docks (LPDs) and Fleet Support Ships (FSSs).

While the Navy had plans to be a 200 warship force by 2027, the budget cuts have changed this target to 175, with senior officers saying that the priority is on using available resources optimally.