The report states that the IAI gained undue benefits of Rs 3.16 crore from the contract.
It says that the IAF concluded a contract in March 2010 with IAI for five 914 F (certified) UAV Rotax engines for Rs 87.45 lakh per engine even as Aeronautical Development Establishment (ADE), a DRDO laboratory, had procured the same variant of the engine at Rs 24.30 lakh per engine in April 2012.

The average price of the engine in the international market is between Rs 21-25 lakh, the report says.

“As a result, the vendor gained an undue benefit of Rs 3.16 crore as it supplied the five contracted UAV engines at more than three times the market price or the price offered to the DRDO unit,” reads the report.

The auditor also accused the vendor for mislabelling and supplying uncertified engines to the IAF which reportedly led to several accidents, including loss of one UAV in a crash.

The CAG report also noted that the upgradation of Medium Lift Mi-17 Helicopters, proposed in 2002 to overcome their “operational limitation”, could not be achieved even after 18 years.
“As a result, these helicopters were flying with limited capability, thus compromising operational preparedness during these years,” it said.

The CAG further said that due to poor planning by the Ministry of Defence and indecision at various stages of procurement, it took 15 years to enter into the upgradation contract of 90 Mi-17 helicopters with an Israeli company — in January 2017.

The audit also states that while the contracted delivery of these upgraded helicopters had to begin July 2018 and was to be completed by 2024, 56 of these helicopters, even after upgradation, would be left with less than two years of life and would be phased out by 2024.

The CAG report also came down heavily on the government’s offset policy for defence procurement. The national auditor cited the example of the 36 Rafale fighter jets bought from Dassault Aviation and said that the French manufacturer has not delivered on its promises regarding transfer of technology.

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“The work has been hastened to prepare the structure of the command under an Air Force officer. Efforts are being made to put everything together and announce the creation of the air defence command at Prayagraj around the Air Force Day on October 8 this year,” government sources said.

The air defence command is proposed to be set up alongside the Central Command Headquarters of the IAF which controls important air bases including Agra, Gwalior and Bareilly.

The aim of the command is to combine the resources of the three services under one command and activate it to protect the air space of the country.

A study in this regard was done by the IAF’s Vice-Chief Air Marshal HS Arora which also suggested the structure of the proposed command, comprising assets of all the three services.

The Department of Military Affairs under Chief of Defence Staff (CDS) General Bipin Rawat has been given the mandate to create joint military commands along with theatre commands.

The CDS is also working on the creation of the combined maritime command which would come up either at Kochi in Kerala or Karwar in Karnataka.

Each service has its individual air defence set-up. The air defence command would integrate the air defence assets of the Army, Air Force and Navy and jointly provide air defence cover to the country.

The CDS has also made it clear to the armed forces that he would not create any additional post at a three-star level for manning any of the new commands and the new formations would be raised from the existing resources only.
Meanwhile, for protecting the air space of the country, a proposal for the acquisition of two new PHALCON Airborne Early Warning ad Control Systems from Israel and Russia has reached the Cabinet Committee on Security and may be taken up for clearance soon.

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