Mains 2016: What is ailing India’s defense procurement?

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The process of procuring weapons and equipment for the military of a country plays a very crucial role in the defense preparedness of that country. Sadly, this crucial process has not been very efficient in India.

WHY?

1. Dependence on Imports – No country can become a super-power without being self-reliant in weapons manufacturing. This is because:

• Importing weapon system makes the importer hostage to the supplier country for the service and spare parts of the imported weapon system for its full life. For example, India has been recently facing a dire shortage of the spares for Sukhoi-30 which forms the back-bone of the IAF. These jets are imported from Russia.

• Constant evolution of technology always keeps us one step behind. Although we have Transfer of Technology (TOT) as part of some import agreements, it is but common sense that no foreign Original Equipment Manufacturer (OEM) will part with critical information about its weapon technology so that our dependency on them can be perpetuated.

• TOT supplies technology but does not really transfer it. A seller may give us the technology for a certain weapon system but he does not transfer the technology to upgrade it, thus, as and when upgradation is required, the OEM has to be involved again.

• India cannot afford to have a $20 billion import bill for defense equipment. Investing the same amount on domestic defense industry will lead to skill development, creation of jobs and self-reliability in weapons manufacture.

• Importing cannot supply armaments in a consistent way. It is more of a stop-gap arrangement that can only fill the need for certain weapon systems for the immediate future.

• In the event of a war-like situation with the supplier nation or its allies, they will have strategic and technical advantage over us. Like during Kargil war, US had denied India access to GPS. The supplier nation can also blackmail us or block our efforts using critical information about weapons supplied to us as leverage.

2. Severe lack of Indigenization – A country’s defense industry should be dynamic enough to meet the peacetime requirements of the armed forces while at the same time being capable to meet wartime needs or emergencies. This can be achieved only if we have a strong defense industry at home.

Given the current global regional climate, our long borders with hostile and not-so-friendly neighboring countries, and insurgency problems in JnK, operational readiness is highly required. That too can only be achieved if we are self-reliant in defense manufacturing.

We have the third largest Armed forces in the world. That provides a huge market for defense equipment. It can create millions of jobs and a huge domestic defense industry.

However, even a decade back, our defense industry consisted of 39 ordnance factories, 9 defense public sector undertakings (DPSU) and the Defense Research and Development Organization (DRDO).

It was only in 2001 that private sector was allowed to enter the industry. A cap of 26% was put on FDI which has been recently increased to 49%.

The success achieved by ISRO and BARC has not been replicated by DRDO which lags behind significantly in its research and development for cutting age technology and putting it to use for the end-user i.e. the armed forces.

Allocation of funds to DRDO is also very meager. While China spends close to 20% of its defense outlay on R&D, India spends only 5-6%. Separation of responsibility of manufacturing armaments (ordnance factories, DPSUs) and R&D (DRDO) could also be a cause for inefficiency and conflict.

3. Lack of participation of end-user i.e. Defense services in the decision making process of defense procurement. The involvement of the three armed forces in defense procurement is limited up to listing the operational requirements of the forces. The decision and implementation of procurement is carried out by Ministry of Defense particularly the Defense Acquisition Council (DAC).

4. Corruption and scandals

Bribes, kickbacks, faulty/inferior quality equipment and the like not only put the lives of our defense personnel at risk but could also compromise the sovereignty of our country in the event of a war.

In order to check such practices, equipment and weapons manufacturing companies, arms dealers, defense contractors, etc who were involved in any scandalous transaction or were under trial were blacklisted.

Although this was an essential step towards punishing and discouraging corruption, it has made defense acquisition very slow and ineffective.

HOW?

1. BOFORS Syndrome: Fear of getting involved in scams has led to hesitation in decision making which has led to huge delays and procrastination in defense procurement.

2. Lack of Modernization: As companies are blacklisted, any new technology or advanced weapon or equipment that the company comes up with cannot be accessed by us.

3. Probity vs Preparedness: When a weapon is tested and found apt and essential for defence sector however, the Company is subsequently blacklisted due to allegations of bribe, should the administration take decision ethically or give more importance to defense preparedness.

4. Frustrating for Vendors: Delay in decision making and impulsive bans based on allegations is not a conducive environment for investments and business. It has lead to a crisis situation in the spheres of modernization and indigenization of our defense procurement.

5. Role of Media: Defense purchases and deals involve huge money, time and various layers of decision making from all the stakeholders. But when media publishes a story of some alleged corruption against the entity involved in such a huge defense deal, it is immediately called off without waiting for proper trial and outcome. Such knee-jerk reaction puts the deal and everything involved in it into a state of limbo. This only makes matters worse for defense preparedness.

Overall, India’s defense procurement is full of bottlenecks. It has led to huge gaps in the acquisition of essential armaments and equipment. This can put our operational readiness and defense preparedness in a very precarious situation.

Besides, the procurement policy discourages indigenization and growth of state of the art weapons manufacture domestically which is the need of the hour given our huge dependability on imports.

The new Defense Procurement Policy based on the Dhirendra Singh Committee Report focuses on eliminating these bottlenecks. It is the 9^th Defense Procurement Policy which prioritizes:-

1. Make in India – creation of major domestic defense industry to cater to its own needs as well as exports.
2. Indian Designed Developed and Manufacture (IDDP) – focus on indigenous design and development.
3. Start Up India – endorsing contribution of Small and Medium Industry in defense sector.
4. L1-T1 procurement method – final bidder to be chosen not on the basis of lowest price but on the basis of price and superior technology by a qualified vendor.

The defense minister has mentioned that defense companies and contractors facing allegations of corruption will not be immediately blacklisted till there is an evidence of the same. Also, instead of a complete ban, the faulty companies/contractors will be heavily fined or partially banned.

Conclusion:

India has the third largest Armed forces in the world and the second largest Army in the world. It needs a consistent supply of weapons and defense equipment. That can only be achieved if we have a strong domestic industry that can develop advanced technology and manufacture armaments that can compete with the ones produced by Russia, US, France, or Israel. Defense preparedness must come second to none.