Travails Of India’s DPSUs: The BEL Experience

Soon after he took charge as Union home minister in 2008, P. Chidambaram cleared a long-awaited proposal to procure 32,766 telescopic night vision devices (NVDs) for the paramilitary forces. Bharat Electronics Limited (BEL), a prestigious public sector undertaking, bagged the contract. BEL started supplying the NVDs in September 2010. Till March 2011, it supplied 5,000 NVDs, of which 2,000 were tested. Ten per cent of the tested pieces were found to be faulty; the promised life of a piece was 10 years. The remaining 3,000 pieces are stored at defence depots, as the ministry is wary about deploying them in the field. Apparently, BEL charged the ministry twice the market price. And, there are fears about some of the components being sourced from the grey market. Regarding the NVDs in storage, a senior paramilitary officer said, “[As they were not tested], we will not be in a position to identify defective devices and seek replacement under the one-year warranty cover from BEL.” Following complaints, the home ministry has asked the defence ministry to investigate whether proper trial procedures have been followed and whether kickbacks have been paid. The story began in December 2006, when the home ministry put out a tender for NVDs. The tender stated that the devices were to be compatible with INSAS rifles and light machine guns (LMG) used by the paramilitary forces. For a long time, the ministry was unable to find a supplier. On November 19, 2008, during a target fixation meeting with the ministry, the Ordnance Factory Board said the Ordnance Factory Dehradun was developing an NVD for 5.56mm rifles and LMGs. It offered the device for trial. On February 23, 2009, Dinesh Batra, senior deputy general manager, BEL, wrote to R.S. Sharma, then director of procurement, home ministry, that it could supply the required device. BEL claimed that it had developed a state-of-the-art NVD based on XD-4 technology, in technical collaboration with Prizmatech, a subsidiary of Star Defence Systems, Israel. The company web site claims that “Prizmatech was established as Israel Defence Force’s biggest source for night vision devices.” In early 2009, a fresh ‘request for proposal’ was issued, leading to BEL winning the contract. On June 23, 2009, a trial was conducted at the Border Security Force range in Gurgaon. The trial team consisted of officers of the BSF, Indo-Tibetan Border Police, National Security Guard and Central Reserve Police Force. BEL provided two models for trial—PR-1614 F and BEANS-0802. Ordnance Factory Dehradun also supplied two models—PNS-3X for INSAS and PNS-5.5X for LMG. Both failed the trials. BEANS-0802 failed the trial and the other one scraped through. P.C. Joshi, joint manager, Ordnance Factory Dehradun, declined to talk to THE WEEK about the trial procedure and results. Allegedly, the trial team endorsed BEL’s claims without testing the device’s magnification, operating temperature, battery life (which should be 15 hours) and resolution. But the trial team insisted that the device should have cheek-rests. But, no cheek-rests have been provided till date. The trial team had also found that the NVDs were not fitting snugly on to the assault rifles as BEL had not integrated the sights with the guns. These issues created a lot of inconvenience to the shooters. So, the trial team strongly recommended that BEL submit the NVD for a retrial after fitting a cheek-rest and solving the slotting issues. Surprisingly, despite the shortcomings, no second trial or field trial was conducted. Normally, all equipment is trial-evaluated in varying locations and climatic conditions such as summer, winter, high altitude and desert. “That never happened,” revealed an officer who was on the board. Lt-Gen. (retd) P.C. Katoch, former director-general (information systems), Indian Army, said that a device being procured after a single trial was unheard of. “It should be tested in the places where it is going to be used,” said he. “It should be subjected to battlefield conditions.” Katoch said the four important performance parameters of an NVD are its signal-to-noise ratio (SNR), resolution, modular transfer function and lifetime (see box). “SNR is by far the most important parameter for an image intensifier tube [II tube],” said Katoch. An II tube is a vacuum tube device for increasing the intensity of available light in an optical system, and it constitutes 70 per cent of the cost of the device. THE WEEK learnt that BEL’s NVDs were not tested for SNR. In August 2009, the home ministry cleared the Rs:1,000 crore deal. On January 7, 2010, S. Chattopadhyaya, inspector-general, BSF, issued a proprietary article certificate in favour of BEL stating that no other Indian firm manufactured passive night vision telescopic sights. “A proprietary article is given if a company develops three parts—casing, optics and II tubes,” said an officer who was on the trial team. “BEL developed none of these three critical objects. I am surprised how they were awarded this certificate.” The proprietary article certificate was false because the Broadcast Engineering Consultants India Limited (BECIL) and the Ordnance Factory Dehradun have supplied NVDs to paramilitary forces. In 2010, Assam Rifles had procured 2,000 night vision devices from BECIL, of which only five have developed snags. BECIL developed the NVD in collaboration with a Russian firm. The Opto Electronics Factory, under the Ordnance Factory Board, also makes night vision devices. Ordnance Factory Dehradun has supplied night vision devices to the CRPF in 2000, to Assam Rifles in 2002 and to the ITBP in 2007. On April 25, 2007, the ITBP paid only Rs:1,74,300 per piece to Ordnance Factory Dehradun, while BEL charged the home ministry Rs:3,50,000 per piece. BEL told THE WEEK that it had been supplying large numbers of binocular and monocular devices to the paramilitary forces over the past five years and that only a few devices had developed faults, which were being attended to. “Regarding supply of weapon sights for INSAS and LMG for paramilitary forces, BEL received the first order and started deliveries from September 2010,” BEL said. “Till March 2011, we have supplied close to 5,000 numbers of these night sights. These are currently under deployment and we have not received any complaints from our customers regarding supplies made up to now.” Documents accessed by THE WEEK reveal that BEL did not manufacture the NVDs. It was only sourcing them from Prizmatech in “complete knocked down condition” and assembling them. Prizmatech, in turn, was procuring the II tubes from Photonics, a French company. THE WEEK has with it a letter of intent dated January 26, 2006, reference number CV/CB/150601, signed by Cor Boet, director, Photonics, addressed to Moti Solomon, reportedly a majority shareholder of Prizmatech. The letter proves the Prizmatech-Photonics deal. Interestingly, many of the II tubes do not have the mandatory identification number. Paramilitary officials told THE WEEK that some of the II tubes could have been bought off the grey market. “If a device does not have an identification number, that simply means that it has been taken from the grey market,” said Katoch. What created suspicion about the authenticity of the II tubes was its low figure of merit (FOM), which characterises the performance of the tube. The FOM of an II tube is arrived at by multiplying the number of line pairs per millimetre with the tube’s signal-to-noise ratio. The BEL equipment’s FOM should have been around 1,000, but a senior paramilitary officer said, in field trials, it was less than 750 (see box). The officer also told THE WEEK that when the issue of the unmarked II tubes was raised, BEL temporarily stopped supply. It had reportedly promised to deliver 22,200 devices by March 2011. About the delay in delivery schedule, BEL told THE WEEK that it had not received any request for 22,200 NVDs to be provided before March 2011. The available orders were being executed as per the agreed delivery schedules, BEL said. When THE WEEK inquired with BEL about the missing cheek-rests, its reply was that cheek-rests were not needed, and therefore were not provided. “We have received a complaint about BEL’s night vision devices,” Home Secretary G.K. Pillai told THE WEEK. “We have asked the defence ministry to inquire about it because BEL works under the defence ministry. We hope to get the report from the defence ministry soon.” According to reliable sources, high on the suspicion list is R.S. Sharma, former director (procurement), home ministry (see box on page 44). “We have registered a case against him for allegedly granting undue favours to certain private firms in the procurement of 59,000 bullet-proof jackets,” said CBI spokesman R.K. Gaur. “We are also investigating his role and involvement in other procurement deals.” Another surprising element of the NVD deal was that there was no commitment from BEL and Prizmatech to provide spare parts. By the end of the trials, it was clear the device, in its current form, was not fit for service. So, the board proposed three options to the ministry. First, if BEL overcomes the shortcomings, the procurement may be made from BEL on nomination basis. Second, the NVDs may be procured through limited tender from PSUs. Third, procurement through a global tender. “The best option was to go global so that we could have chosen the best device at the best cost,” said a senior paramilitary officer. Pillai agreed to this view: “Normally, we go for a global tender. It is always good to go for a global tender because you get to know what the competitive cost of equipment is. If we do not have different prize disclosures, then we would not know whether that cost is the best cost for the weapon system.” Then why was standard procedure not followed? “We will look into the case and see what went wrong,” said Pillai. The lack of NVDs was felt acutely after the Maoist attack in Dantewada on April 6, 2010, which claimed the lives of 76 CRPF personnel. An internal inquiry report on Dantewada pointed out that the inability to spot the enemy at dawn left the troops at the mercy of well-armed Maoists. “Night vision goggles and gunsights are absolute treasures,” said Vijay Raman, former special director-general, CRPF, who was in charge of anti-Maoist operations. “The view through a passive NVD may be 40,000 to 50,000 times brighter than what the unaided eye sees. With them, you own the night. But if the device fails or creates hindrance, then the consequences will be severe. It may take a soldier’s life.” With the Indian market for NVDs projected at $1 billion, companies like Prizmatech are bullish on India. A defence ministry official said that one of the easy routes for foreign companies to enter India’s defence and domestic security market is through ‘transfer of technology’ deals, where they share technology with India. In the NVD deal, transfer of technology was allegedly the cover to win the contract. BEL told THE WEEK that initially some NVDs were supplied in fully finished form from Israel. “In the second phase, items were supplied in completely knocked-down condition. Assembly and testing was done at BEL before supply,” BEL said. For the rest, BEL did what it calls an “in-depth manufacturing of mechanical and optical components”. But the question remains: how can Prizmatech transfer technology, when the II tubes were made by Photonics? In the end, the ultimate benefactor of the deal was Prizmatech, which used BEL as a cover to sell a device they did not even manufacture! The ball is now in the defence ministry’s court. If BEL is found guilty of flouting procurement rules and procedures, will the home ministry cancel the deal? In this investigation, the defence ministry may find itself in an awkward situation as the Army has recently signed another contract with BEL for 30,634 third-generation NVDs.

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Lt-Gen. (retd) P.C. Katoch is confident that technology will form the backbone of all future wars and conflicts, and that the man on the ground needs to be empowered with the best equipment available. Excerpts from an interview:
How important are night vision devices (NVDs) in modern warfare?

Today, most of the fighting happens at night. Whether it is war or fighting insurgency or terrorism, the soldier wants to fight at night. It enables you to surprise your enemy. Therefore, NVDs are critical for operational success. You should be able to see your enemy before he sees you and you should be able to fire at him and fire effectively. Every soldier must have an NVD.
How is the trial of an NVD done?

There should be a comprehensive trial directive. The trial for NVDs must be done in different locations under different weather conditions. It should be exposed to battlefield conditions. In the BEL case, they should have approached the Army for technical support to conduct the trials. The Army has been using NVD-fitted weapons for years.
What are the common problems with NVDs?

A common damage factor is exposure to bright light, rain, fog or even extreme humidity. These may damage NVDs. The battery is another issue. Every day, in Kashmir or in the northeast, troops are out on patrolling or search operations. At times it is not easy to recharge the battery. Then the question is whether we have sufficient batteries for the devices. When the handheld thermal imagers (HHTIs) were first imported from Israel and France, only one charger for four HHTIs was procured. That forced the infantry to improvise chargers, which may have caused damage to the equipment. The problem is that our public sector undertakings are way behind in developing NVDs. The NVDs of DRDO and BEL are not good; they are bulky and heavy.

How can we distinguish between real and fake NVDs?

Every part of the device should have an identification number. It is like a passport, it verifies your birthplace. A night vision scope has a set of optics, batteries, transformer, regulators and capacitors and an image intensifier tube. All these must have separate identification numbers. If an II tube does not have a number, it simply means it was purchased from the grey market.

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In 2010, the Central Bureau of Investigation arrested R.S. Sharma, former director (procurement), home ministry, on charges of corruption. A 1984-batch officer of the Indian Railways Service of Mechanical Engineers, he was on deputation to the ministry. The CBI nabbed him for a scam in the procurement of 59,000 bullet-proof vests. Now, his name is at the centre of the night vision device scam, too. He is currently out on bail. The ministry had floated the tender for the vests in 2009. But as the deal ran into murky waters, it was put on hold for a year and Sharma was arrested. The immediate victims of the scam are the paramilitary forces, as they have to fight Maoists and armed insurgents without body armour. The case was a serious blow to the home ministry, as Sharma was involved in the modernisation of central police forces and in procuring and allocating weapons for them. The CBI had arrested Sharma’s alleged accomplices, too,—R.K. Gupta and wife Lavina Gupta, owners of Anjani Technoplast, an armouring firm. The charge was that Sharma favoured Anjani Technoplast’s bid for the vests, despite its product failing the trials. He is accused of leaking confidential data about the tenders and the trial process to Anjani Technoplast. The CBI has registered a case under the Prevention of Corruption Act, 1988. The night vision device scam has also come under the radar of the agency. Allegedly, Sharma and other government officials took bribes for providing inside information that gave BEL and Prizmatech, Israel, an unfair advantage while bidding for contracts. Home Secretary G.K. Pillai told THE WEEK that Sharma had been shifted from the ministry and that the ministry was fully cooperating with the CBI investigation. Said Pillai: “We have given the matter to the CBI. They are investigating not only this [bullet-proof vest scam] deal but other deals, too, which may come up during their investigation. As of now, Sharma stands suspended and charge-sheeted.”

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