Coming down heavily on the government for choosing to acquire a second-hand carrier, the CAG report says due to the inordinate delays in delivery, the ‘objective of induction’ of the warship ‘to bridge the gap in Indian Navy capabilities has been defeated’. “Government is now likely to pay US$ 1.82 billion for the carrier against the original contract amount of US$ 875 million,” the report says. The major part of the escalation, the report says, is on account of sea trials which have been escalated almost 20 times to US$ 500 million against the earlier agreed amount of US$ 27 million.

On the Scorpene deal, the report says undue favour was given to award the mega Rs 18,000 crore contract to French firms DCNS for the submarine and MBDA for the Exocet missile systems onboard the vessel. Raising serious questions on the propriety of awarding the contract to DCNS, the report says the “Ministry/Naval HQ scaled down the original technical specifications and extended undue financial benefit to the vendor’. The report says a clause that prohibits commissions paid to agencies was not included in the contract even though it has been included in the Defence Procurement Procedure manuals of the ministry. Besides, there was an 11.06 per cent price escalation of the submarines due to a questionable formula for escalation worked out in the negotiations, the report says.

While delays and price escalations in the Gorshkov carrier have been reported in the past, the audit report brings out that failure to plan the acquisition will result in the warship having no defence against missiles and air attacks after it has been inducted into the Navy. The warship will be retrofitted with a Close-In Weapon System (CIWS) in India only in 2017, five years after its planned induction, leaving India’s flagship carrier vulnerable to air attacks.

The report says the crucial arresting gear system — that is needed when the aircraft lands on the carrier — has not been finalised due to development problems. Saying that alternatives are being worked out, the report fears that this could further ‘increase the risk of further delay in the delivery of the ship’.