Project 75 / Scorpene
Under the Project 75 program, the MoD approved construction of two types of new-generation submarines in 1997. And in 1999 negotiations for the Scorpene submarines began with Thomson-CSF, which later became Thales, and which by 2005 jointly owned Amaris with French shipyard DCN.
The Scorpene is a conventional submarine with classical diesel propulsion. It is 219 feet long and has a speed of over 20 knots for a displacement of 1,700 tonnes. With 31 men on board it can remain at sea for about 50 days and can dive to a depth of more than a thousand feet.
The Scorpene Submarine has been jointly developed by DCN of France and Navantia Spain and incorporates the very latest Naval technology. At the heart of the submarine is the SUBTICS integrated combat system, a highly computerised central management system, which oversees all of the submarine’s sensors and its seapons. Each Scorpene will have a total complement of just 31.
Submarines are, in fact, the ultimate stealth weapons. Despite advances in sonar technology over the decades, detecting, tracking and targeting submarines remains extremely difficult, particularly in the Indian Ocean where the salinity of the seas and the presence of thermal zones of variable water temperature, make submarine detection extremely difficult. Submarines like the Scorpene make this game of detection and counter-detection even tougher. Designed to be extremely silent, the Scorpene can loiter under water for days, scouring the seas through long-range passive sonar signals, which detect the presence of other submarines and warships in the vicinity.
Designated as Project-75 Scorpene, it will see the latest in French conventional submarine building technology being turned into reality by the expert and experienced technocrats of MDL. The project will be managed by ARMARIS, the prime contractor from the French side and executed in India by MDL. Transfer of Technology will involve training MDL engineers and technicians in France as well as training in Indian Navy personnel in operating and maintaining these sophisticated submarines. The Scorpene represents the state of the art craftsmanship in conventional submarine design and construction. Its combat management system and low acoustic signature give it an edge over contemporary submarines.
The Scorpene construction put the challenge of absorbing yet another different technology and East Yard rose to the occasion and accepted it with determination. Already the efforts have started bearing fruit and East Yard is well advanced in its path of constructing a trial section as required by the French technology supplier DCN. With new technology comes new tasks and East Yard has adequately geared itself up to accomplish them within the constraints of an exacting schedule, by upgrading the welding stations and other machinery in a time bound manner.
In November 2002 the Government approved a long term perspective plan for indigenous construction of submarines and acquisition of national competence in submarine building. Project 75 is part of this plan. Mazagon Docks Limited, Mumbai was identified as the yard to ultimately construct French designed Scorpene Submarines on successful completion of negotiations with the French Company. However, no final decision on the proposal had been taken.
In April 2003 French Defence Minister Michele Alliot Marie Monday pledged stronger military ties with India at the end of talks with Indian leaders focussed on the supply of submarines and fighter jets. The possible sale to India of six French designed Scorpene submarines as well as Mirage fighter planes came up in the talks. If the deal had been signed in 2003, the first Indian built Scorpene would have been ready in 2010 and the sixth in 2016. However India was pressing Paris to stop the sales of French weapons to Pakistan before clinching the Scorpene deal.
France’s naval construction company DCN was to sign a contract in September 2005 to supply India with six Scorpene type submarines. Defence electronics group Thales, prime contractor for the system, had signed an agreement with the Bombay-based naval shipyard Mazagon Dock for a transfer of technology so that the subs could be built there. The contract, estimated to cost $3.5 billion, was signed at the Defence Ministry by representatives of the Indian and French governments.
The Indian Ministry of Defence, under pressure from the Indian Navy and facing an ultimatum from the French government, agreed to buy the six Scorpene submarines for $4.6 billion — $1.4 billion more than the price tag negotiated in 2002. The increased cost was blamed on the prolonged negotiations that invalidated the $3.2 billion price tag agreed in 2002.
In September 2005 President Jacques Chirac confirmed an order from India for six Franco-Spanish Scorpene submarines as he received visiting Indian Prime Minister Manmohan Singh at the Elysee palace. The Scorpene order is valued at 2.4 bln eur. The deal had been in the works for several years. The Scorpene submarines are built by France's DCN shipyards and Spain's Izar.
It will add to fleet strength which was projected to rise to 24 from the current 16.
Allegations of Impropriety
On 21 March 2006 Raksha Mantri Shri. Pranab Mukherjee made a suo-motto statement in Lok Sabha regarding the Scorpene Submarine Project. “A section of the Press had published certain reports inter alia alleging the involvement of middlemen and payment of commission in the Scorpene Contract stating that a Rs. 16,000 crores contract was signed with France and that an extra amount of Rs. 4,500 crores was paid to the French firms than what was earlier negotiated. Appropriate rejoinders were sent to the magazine on 14 Feb. 2006. An unstarred question no. 1689 was replied to in Rajya Sabha on 8 March 2006 on the subject of "Purchase of Submarines". The allegations have been repeated on 20th March 2006 by the leaders of opposition in Lok Sabha and Rajya Sabha and a former Defence Minister.
Shri. Pranab Mukherjee stated that the facts of the case are contrary to these allegations. No contract or contracts were signed with French firms for Rs. 16,000 crore for the Scorpene project. The total cost of the two contracts signed with the two French firms, M/s ARMARIS and MBDA, for the project is Rs. 7,197 crores. The Government did not pay an extra amount of Rs. 4,500 crore than what was negotiated earlier. On the contrary, after the present Government came to power, it re-examined the project even though all negotiations had been completed in 2002 and the Ministry of Finance had accorded approval to the project in 2003. The present Government held negotiations and was able to achieve a reduction of Rs. 313 crore in the contracts with the two French firms from the negotiated position in 2002. In addition, the signing of Integrity Pacts with the French firms was made mandatory and the first two Integrity Pacts ever to be signed by the Ministry of Defence were signed along with the contracts.
As a result of the negotiations, the Government was also able to achieve several long-term concessions. These included the revision of the escalation formulae to the advantage of the Indian side by adjusting the fixed element in the ARMARIS contract and placing a cap on escalation in the MBDA contract. A cap was also placed on the Exchange Rate Variation (ERV) for calculation of profit for the Public Sector Undertaking, Mazagon Docks Limited (MDL).
Besides the contract with the two French firms, the only other contract that was signed was with the Defence Public Sector undertaking, Mazagon Docks Limited (MDL), for Rs. 5,888 crores for the indigenous construction of the submarines. Therefore, even taking into account the value of contract signed with MDL, the total value of all contracts signed for the Scorpene project is Rs. 13,085 crores out of the sanction accorded for Rs. 18,798 crores towards the project. Out of the balance amount of Rs. 5,713 crores, Rs. 3,553 crores is for payments towards taxes and Rs. 2,160 crores towards other items to be acquired during the project period for which only preliminary steps have been taken. No contract or contracts have been signed for the items under this head. A Technical Agreement was also signed between India and France to ensure the continued support of the French Government to the "project.
The Integrity Pacts signed to ensure transparency of the project, contain severe penalties in case of breach of any of its provisions. The safeguards include cancellation of the contract, recovery of all advances with interest at a rate of 2% higher than the European Inter Bank Offered Rate or EURIBOR, non-payment by the buyer of any dues on any other contract to make such recoveries, imposition of Liquidated Damages and the recovery of all sums paid to any middleman or agent. In addition, the French Government has also informed that it is a signatory to Organization for Economic Cooperation and Development (OECD) convention on Combating Bribery of Foreign Public Officials in International Business Transactions and that the French laws have been made more stringent to combat corruption.
The French company that has been accused of committing to pay commission to the alleged middleman denied all the allegations and has stated that all the e-mails published in the articles in a journal that carried this story are fake and fabricated. The French Embassy in India has also, in a Press communiqué, termed these articles as slanderous and noted that the French company is filing a complaint against the journal. The French company has since been reported to have filed a case in the Delhi High Court on 24th February 2006 against the journal which first made the allegations. The Court, when it heard the matter on 27th February 2006, is also reported to have given 30 days to the journal to respond to the submissions made by the company.
Some press reports also sought to establish a link between the Scorpene project and the breach of security that had occurred in the Directorate of Naval Operations in the Naval Head Quarters. On the issue of breach of security, during the course of a Court of Inquiry held in May 2005 by the Air HQrs, it was established that a pen drive recovered from Lt (Retd) Kulbhushan Parashar, a former Indian Navy Officer, contained classified information pertaining to the Directorate of Naval Operations. A Board of Inquiry was convened to hold a full investigation into the matter. The Board established that there had been a leakage of information, primarily of commercial value, to unauthorized persons. However, the leaked information did not pertain to the Scorpene project.
The Board severely indicted three Naval Officers namely Captain Kashyap Kumar, Commander Vinod Kumar Jha and Commander Vijyendra Rana. It also showed the involvement of some retired officers and civilians. The three Naval Officers severely indicted by the Naval Board of Enquiry were dismissed from the Navy on 26th October 2005, in exercise of the powers conferred under Section 15 of the Navy Act, 1957 read in conjunction with Regulation 216 of the Regulations of the Navy Part II (Statutory). One of the dismissed officers, Capt. Kashyap Kumar has filed a writ petition in the Delhi High Court in Nov. 2005 challenging his dismissal from Service.
On 18th February 2006, the Ministry of Defence referred the matter relating to the leakage of information from the Directorate of Naval Operations in the Naval Headquarters to the Central Bureau of Investigation for further investigation and filing of criminal proceedings against the dismissed officers as well as the civilians and retired officers involved in the leak of information”.
On 14 November 2008 14 the NGO Centre for Public Interest Litigation, seeking CBI investigation into the Rs 1,600 crore Scorpene submarine deal, contended before the Delhi High Court that the Centre was trying to protect the middlemen involved in the deal. "Investigation of the CBI clearly points in the direction of the involvement of middlemen and payment of commissions in the Scorpene deal, the Government is still maintaining that no investigation is required," said NGO's counsel Prashant Bhushan. The petitioner alleged that 4 percent kickbacks were paid to middlemen in the the Rs 16,000 crore deal with French company Thales. The government informed the court that the investigating agency found no evidence of involvement of kickbacks in the deal. But on 19 December 2008 the CBI expressed its willingness to reconduct the preliminary inquiry into allegations of kickbacks in the Scorpene submarine deal after it failed to convince the Delhi High Court that it had made an honest effort to investigate the matter earlier.
Program Schedule
DCNS, the French firm that developed the Scorpene, assured the Indian Navy in early 2008 that issues surrounding technology transfer had been taken care of and the first of the six Scorpene submarines would roll out by 2012. The remaining five were scheduled to follow at a rate of one per year. But by May 2008 the Rs 18,798-crore Scorpene submarine project had run into rough weather due to delay in technology transfer. The navy may not be able to induct the first submarine by the 2012 deadline, with the French yet to part with crucial details of technological know-how, including design and drawing documentation. A senior navy official confirmed to HT that the project had been delayed by a year due to “teething problems”.
Complexity of the construction can be judged from the fact that the first submarine of the series will be delivered in year 2012 and the rest in the following five years one annually. By late 2007 there had been slippages in the gigantic Rs 18,798 crore project to construct six Scorpene submarines at MDL, slated for delivery between 2012 and 2017.
On 26 March 2009 French naval defence system contractor DCNS said there had been initial “teething trouble” in the transfer of technology for the Indian Navy’s Scorpene submarine project but they had been resolved. Three of the six Scorpene submarines are being built at the Mazagaon Dock Limited (MDL) as part of the Indian Navy’s P75 project. By one estimate the project is worth Rs 13,000 crore and all the submarines would be delivered by 2017 end, Patrick Boissier, Chairman and CEO of DCNS Group said.
