Major modernisation programmes of our armed forces,long delayed by the problems and cost of acquiring systems from abroad,lengthy procurement procedures (often scuttled by allegations of kickbacks),as well as hitches in establishing state-of-the-art indigenous defence capability,urgently need to be expedited. For example,the bulk of weapon systems of the armys air defence arm are of 70s and early 80s vintage. All three services are in a largely similar state. Obviously,from a national defence perspective,urgent action must be taken to ensure an adequate operational capability.
Contrary to official pronouncements from the Ministry of Defence (MOD),and optimistic reports claiming that our defence field was gradually opening up to Indian private industry in collaboration with DRDO,defence PSUs (DPSUs),and foreign technology partners; the actual development of major modern defence systems and platforms like tanks,artillery guns and air defence weapon systems has been a non-starter. So far,not a single case for the development of a High Technology Complex System,as defined in the procedure given for Make Category in the Defence Procurement Procedure (DPP),has been cleared by the Department of Defence (DOD) in the defence ministry.
The track record over the last five decades of indigenous development and production of defence systems by the various efforts of the DRDO,defence PSUs,and ordnance factories,with some outsourcing to private industry,under the control and regulation of the DOD and Department of Defence Production (DDP),has been very unsatisfactory. Most acquisitions have been outright buy from foreign vendors,with transfer of technology clauses in some cases. The 2005 Kelkar Committee report had recommended an integrated approach involving the users,the defence ministry and industry in the indigenous Make procedure. While strategic,complex and security sensitive projects would be undertaken by the DRDO,high technology complex systems,the major battle systems would be undertaken by Indian industry,defence PSUs and ordnance factories on a level playing field. The subsequent Ramarao Committee report on the review of the DRDO,submitted to the government in March 2008,had recommended a more positive,proactive and effective role for the DRDO,for which it is to be urgently restructured. MOD has still to start action.
Anticipating major business amounting to thousands of crores,with many foreign governments now prepared to share their defence technology,leading Indian industries and foreign defence companies are reported to have been negotiating for joint venture development and manufacture of advanced defence systems. In some cases,collaborative agreements have been finalised and infrastructure established for the manufacture of specific high technology defence systems. This flurry of activity is taking place despite of the fact that no sanction for the development of a prototype based on any specific Services requirement,or contract for any such system,has been accorded by the government. Even internal routine make cases proposed by the DRDO and DPSUs are understood to have been shuttling between the ministry and proposers for the last three years. Therefore,the proposal to raise FDI in defence from 26 per cent to 49 per cent,as presented by the finance minister in the recent Economic Survey,may be difficult to implement in such a situation.
The existing indigenous defence production in the country is almost entirely the governments domain; executed by DPSUs and ordnance factories,assisted in some cases by the DRDO. These organisations have contracts with private industry and foreign vendors for certain processes and components. The several wings of the MOD responsible in some way for this process tend to function in a compartmentalised manner,leading to delays and cost overheads. Since an increasing number of high technology systems would now be developed on the joint consortium model,with significant foreign participation,it is essential that a more pragmatic procedure be adopted for managing indigenous development and production of defence systems under one nodal agency in the MOD.
The entire policy and management of the acquisition and procurement process is controlled by the acquisition wing of the DOD based on the DPP, now its 2008 version. The offset provision,which was incorporated in the DPP three years ago,and stipulates that a minimum 30 per cent cost of the investment by any foreign partner within India,in the form of components,services or technology,is also controlled by the acquisition wing,even though the Defence Offset Facilitation Agency,(DOFA),has been set up under the DDP to facilitate this policy. A study of DPP 2008 will reveal that the procedures set for both the Buy and Make,and the Make categories of defence systems involve a very centralised,complicated,and time consuming process,requiring repeated sanctions from the acquisition wing for each stage. Moreover,this wing of the DOD is inadequately staffed and does not have the necessary expertise,thus necessitating numerous queries to the User Service,Finance,DDP,DRDO and Quality Assurance. It is,therefore,recommended that the acquisition wing of DOD handle all categories of acquisition and procurement cases up to the stage of categorisation and acceptance of necessity by the Defence Acquisition Committee,which is headed by the defence minister. Thereafter,it should only control the Buy and Buy and Make categories up to the Buy stage,and hand over the Make stage to the special nodal agency.
It is imperative that this nodal authority,with experts from among all stakeholders,and all wings of the MOD and services,is made functional in the defence ministry. For this purpose,the existing DDP of the MOD should be restructured on a corporate pattern,to incorporate more efficient procedures with necessary checks included. Each project should have an integrated project management team,given authority to take necessary decisions,including routine expenditure,and preferably headed by someone from the Service for which the system is intended. The selected private industry or partnership venture could be assisted by the government,where necessary,from the modernisation budget.
India is a fast-emerging regional and economic power. An effective defence capability,sustained by a vibrant,modern indigenous defence development and production infrastructure is vital. Major foreign investment and technology is all set to participate in our defence sphere. Changing some existing mindsets and procedures and adopting a fresh,radical approach is the need of the hour.
Lt Gen (Retd) C.S. Chima is a former DG,Army Air Defence and was a member of the Ramarao DRDO review committee.