As the indigenous Airborne Early Warning and Control System (AEW&CS)—aircraft fitted with a radar system—flew over the Rajpath during the 2017 Republic Day parade, India joined an elite group of five countries that had this capability. But, before it could be formally inducted into the Air Force fleet, the ‘Eye in the Sky’ has flown into turbulence.

A report by the Comptroller and Auditor General, which was recently tabled in Parliament, has made startling observations about the programme, on which the Defence Research and Development Organisation has spent more than Rs 2,500 crore.

The CAG report showed irregularities in the selection of aircraft for the programme. The auditor slammed the DRDO for the cost overrun—the initial cost was Rs 1,800 crore—and its claims about indigenousness. Moreover, preferred vendors were selected to benefit certain companies, said the report. Though the Air Force had accepted the AEW&CS last year, it is yet to get the final operational clearance.

The AEW&CS is a moving surveillance platform, making it difficult for the enemy to locate the exact position of the aircraft. With its long range and detection capabilities, it gives a 360 degree view of the sky and can track many aircraft simultaneously.

China currently has 20 such airborne warning systems, while Pakistan has eight. The Indian Air Force has only three—Israeli Phalcon radar systems mounted on Russian IL-76 aircraft. India had bought the radar systems from Israel in 2004. According to experts, India currently does not have the capability to cover its entire airspace during a war.

A programme to develop an indigenous early warning system was taken up in 1994, but was shut down after a fatal crash. Subsequently, the defence ministry in 1999 approved the import of three airborne warning systems (the ones from Israel) and decided to meet further requirement through indigenous development.

In October 2004, the cabinet committee on security approved indigenous development of AEW&CS at a cost of Rs 1,800 crore. The deadline was April 2011. Under the project, two AEW&CS were to be supplied to the Air Force. DRDO’s Bengaluru-based laboratory, Centre for Air Borne Systems (CABS), was the nodal agency for design and development.

Considering the operational importance of this project, the CAG carried out an audit to know whether the system had everything that was promised. K. Subramaniam, principal director of audit, Air Force, recently sent the classified report to Dr S. Christopher, the then secretary of the Department of Defence Research and Development—which found serious irregularities in the programme.

The report has come down heavily on the programme over its claim of indigenousness. Despite the project being called home made, it was only 48 per cent indigenous. The DRDO had claimed it to be 81 per cent. And, the cost of foreign consultancy, about Rs 106 crore, was categorised as indigenous.

The CAG’s observations draw strength from the ongoing CBI investigation into alleged kickbacks in the process of selecting the aircraft. The Embraer EMB-145 aircraft from Brazil was shortlisted for the project in 2007. However, Brazilian media reported that Indian officials were bribed to swing the deal in Embraer’s favour. In 2016, the CBI registered a case against NRI arms dealer Vipin Khanna and two private companies based abroad. The case was about the alleged payment of more than $5.70 million as kickbacks to seal the deal for the aircraft.

The CAG report also pointed out inadequacies in management, which stretched the development period to 13 years. “And, the operational requirements, instead of being based on the functional needs of the Air Force, were being adjusted according to the aircraft that was ‘pre-selected’. It took seven years to finalise the operational requirements,” said the report.

During the design and development stage, some operational parameters were compromised because of the Embraer’s limitations. Also, there was no competitive bidding while selecting the aircraft. The Embraer was shortlisted through a nomination. Notably, several aircraft, such as the IL-76, and models from Gulfstream, Bombardier and Boeing were available at the time.

“The justification given for the selection of EMB-145 was not tenable,” the CAG observed. “No objective assessment of the merits and demerits of available options was done. The selection of EMB-145 was arbitrary and based on preconceived preference.”

Initial operational requirements stipulated that the system should be able to operate from high-altitude locations like Leh to have a much deeper view into the Chinese army’s activities. As the EMB-145 was incapable of doing so, claims the report, the Air Force had to drop this requirement in February 2006.

The report also said that the Air Force officials working with the DRDO reiterated that Embraer was not the suitable aircraft.

The CAG also criticised the project for the way the pilots were trained. “From the scrutiny of the expenditure on training, the audit found that the training commenced in June 2007. At this point, the procurement contract for EMB-145 was yet to be awarded and negotiations were underway between the CABS and M/s Embraer. Therefore, training of pilots on an aircraft even before finalising its purchase is highly unjustified,” CAG pointed out. Six pilots were trained abroad at a cost of Rs 23 crore.

Of the 18 requirements specified by the Air Force, AEW&CS could not fully achieve ten important ones. Despite this, the Air Force accepted the first system in February 2017.

“Since EMB-145 was selected, the weight of the mission system had to be adjusted to the optimum payload capacity of EMB-145, which was 3,000kg. The radar along with its associated systems, which was to be mounted on the fuselage, had to be limited to 1,500 kilos due to structural limitations,” the CAG said.

The probable date of completion was revised four times and the final date of completion was extended by over six years, said the report. The Air Force kept changing its requirements. In the middle of the programme, the Air Force demanded air-to-air refuelling and a de-icing system. It led to a delay of nearly two years.

Christopher, who was the head of CABS, said the repeated modifications in the operational requirement by the Air Force played a major role in the delay of the project. “It is all recorded in official documents and no one can find fault with me for it,” he said. “However, I believe that operational requirements is a prerogative of the user and you, as a developer of the equipment, cannot challenge it.”

Regarding the aircraft, he said, “Embraer was a well-proven aircraft. The decision to buy Embraer was taken in consultation with the then IAF chief S. Krishnaswamy. Four countries were using this platform as AWACS—the generic term for such a system. Moreover, the IAF decided that it has to be a turbo jet, not propellant. Turbo engine gives them the desired speed and efficiency.”

When contacted, Krishnaswamy said the selection of aircraft was purely DRDO’s decision. “The IAF was using Embraer for its VVIP fleet and thought of commonality if it is selected for AEW&CS. Since AEW&CS was DRDO’s project and budget was allocated to them, the final decision for selecting aircraft was DRDO’s only,” he said, adding that any modification in the operational requirements was a collective decision of the Air Force and the DRDO.