Indian Defence Review

As an emerging economic and military power, India must possess armed forces that can guarantee security of its interests in a dynamic international geo-political environment. However, slow and tardy modernisation of the Indian Armed Forces has been causing disquiet amongst all who are concerned with national security. Existing critical deficiencies are cited as a proof of India’s failure to keep abreast with newer technologies and weapon systems. The defence forces remain deprived of modern weaponry while the allocated funds lapse. Even the Prime Minister of India expressed his concern during the Combined Commanders Conference held in New Delhi in October 2004. Many attribute this state of affairs to poor planning, rigid mindsets and complex procedures.

India has failed to appreciate that procurement of new defence equipment for modernisation is a multifaceted process requiring highly specialised management.

Group of Ministers (GoM) on National Security had also taken a serious view of this inadequacy. It was of the opinion that the then prevailing procurement mechanism led to sluggish modernisation of the services due to lack of integrated planning and sluggish implementation. In its report of February 2001, it suggested creation of a separate and dedicated procurement structure to inject a higher degree of professionalism to reduce delays. The main focus of the GoM was on bringing about improvements in the structures and procedures through integration of civil and military components and by ensuring ‘jointness’ among the Armed Forces to the extent desirable.

Consequent to the acceptance of their report, a new set-up was established in MoD in October 2001 and an exhaustive procurement procedure has been put in place. However, there has been no discernible improvement and the services continue to wait indefinitely for new equipment to materialise.

Complex Facets of Modernisation of Defence Equipment

India has failed to appreciate that procurement of new defence equipment for modernisation is a multifaceted process requiring highly specialised management. It is not a routine governmental activity. Defence procurements are intrinsically linked to a nation’s foreign policy and diplomatic interests. Additionally, there are strong political and corporate lobbies at work to push their products.

Major weapon producers in the world are primarily systems integrators, as various sub-assemblies are produced in different countries having different export policies.

Funds involved are very large and the quality of equipment selected has a profound influence on national defence potential. There is no open tendering. Invitations are sent to a few selected vendors. A fine balance has to be maintained between need for generating competition and security imperatives.

Most of the sophisticated equipment has to be imported as the indigenous defence industry is still in a nascent stage. There are a limited number of producers in the world market and very few are ready to part with their ‘top of the line’ products. The problem gets compounded where technology transfer is sought as an essential part of the package.

Major weapon producers in the world are primarily systems integrators, as various sub-assemblies are produced in different countries having different export policies. Many governments impose riders on the usage of their products. There are some countries whose domestic laws preclude assured subsequent sustenance of the equipment bought. This complicates negotiation of life cycle support for the equipment.

As there is an element of secrecy in the procurement process, all decisions come under scrutiny subsequently. Therefore, it becomes essential to follow the laid down procedures diligently. Deviations, if any, have to be accounted for and duly justified for posterity.

Negotiating contracts is an arduous and time-consuming process, as a large number of aspects need to be unambiguously spelt out to avoid subsequent misunderstandings.

Also read: Steering India’s Military capability

All expert committees have so far concentrated only on reforms in structures and procedures. No dispassionate, objective and holistic exercise has ever been carried out to identify the underlying reasons for inordinate delays which continue to dog the system. Even the Kelkar Committee has overlooked intricate interplay of dynamics of domain interests and conflicting attitudes that defeat all attempts at reforming the system.

Some of the common and recurrent impediments are discussed below.

Sub-Optimal Quality of Acquisition Staff

Indifferent quality of acquisition staff is the single most important reason for delays in procurements. Officials who perform acquisition functions are drawn from the civil services, defence forces and the defence finance. No one is selected for any special flair for the job. For most of them it is just another routine assignment. Their approach continues to be entrenched in bureaucratic mediocrity and procedural quagmire.

No training in acquisition functions is ever provided to them. They are expected to identify, trial evaluate and negotiate import of defence equipment worth millions of dollars using their commonsense and basic intelligence. It is a very unfair and tall order.

The Services

The services are the biggest defaulters. They pay no attention to the selection of acquisition staff, although all procurement proposals are initiated by them and they are the most affected party. They have qualitative requirements spelt out for a host of other lesser appointments but none whatsoever for functionaries dealing with acquisitions that affect their war potential. Any officer can be posted to these appointments. Such an apathetic approach results in faulty preparation of qualitative requirements, tardy field trials and flawed staff evaluation.

Civil Officials

All expert committees have so far concentrated only on reforms in structures and procedures. No dispassionate, objective and holistic exercise has ever been carried out to identify the underlying reasons for inordinate delays which continue to dog the system.

Civil officials of the Ministry of Defence (MoD) accord approval to procurement proposals, issue Requests for Proposals (RFP), accept technical evaluation to shortlist vendors to be called for field trials, approve staff evaluation, open commercial bids and negotiate contracts with the lowest bidder. As can be seen, their span encompasses almost all procurement activities. Their role is of utmost importance and has a direct bearing on the success of any procurement programme.

They need to handle functions which involve intimate knowledge of military’s functioning, defence equipment, technologies involved and commercial negotiations. However, their selection is done in a routine manner without consideration of any demonstrated flair or proficiency. No training is imparted to them. Additionally, their short tenures preclude acquisition of on-the-job expertise.

Defence Finance

No procurement proposal can fructify unless Defence Finance functionaries concur with it at all stages from acceptance of necessity to closing the deal. Most importantly, they actively participate in all facets of commercial evaluation and negotiation of contract.

Despite the fact that they are mandated to ensure financial propriety, they are ill equipped for the task. They are neither qualified nor trained for defence economic advisory functions. Most of them are unable to grasp intricacies of international trade including application of Discounted Cash Flow and Exchange Rate Variation techniques.

Preparation of faulty contract documents can be directly attributed to their inability to understand implications of various provisions, resulting in nearly all subsequent arbitrations going against India’s interests.

And finally, Defence Finance takes fiscal orders from Ministry of Finance (MoF). Many feel that no major proposal is cleared till they get a green signal from MoF. This is done primarily to keep Central Government’s overall expenditure under control and force MoD to surrender funds to reduce deficit. This amounts to withdrawing funds allocated to MoD for its capital procurements, thereby adversely affecting the planned modernisation schedule.

Procedural Glitches

Indifferent quality of acquisition staff is the single most important reason for delays in procurements. Officials who perform acquisition functions are drawn from the civil services, defence forces and the defence finance. No one is selected for any special flair for the job.

Defence Research and Development Organisation and its Veto Power

All proposals initiated by the services for procuring new equipment for modernisation are first considered by the Defence Acquisition Council (DAC) which categorises them as ‘Buy’ or ‘Buy and Make’ or ‘Make’. In other words, a decision is taken whether the sought equipment is to be purchased outright or partial quantity purchased with import of technology or is to be developed indigenously.

Determination of the lowest bidder is a highly unscientific and long drawn process as there is no standard matrix against which the commercial proposals can be evaluated.

No procurements from abroad can be carried out unless Defence Research and Development Organisation (DRDO), which is a member of all sanctioning boards, concurs that the product cannot be produced/developed in the country in the required timeframe. DRDO is generally wary of conceding this for two reasons. One, it reflects adversely on its research and development competence, and two, every import means loss of an opportunity to expand its own domain with associated budget. On numerous occasions, the services have been denied urgently required equipment because of DRDO’s claims of indigenous development. The recent case of Trishul, where the whole project had to be aborted after decades of promises and extended deadlines, proves it adequately.

Even if DRDO is able to make some progress in a few cases, it is always done with major compromises with respect to the stated qualitative requirements. The services are forced to accept sub-optimal equipment with the promise that subsequent deliveries would conform to the parameters. In any case, by the time equipment is developed and delivered, it becomes obsolete. Thus, the services are forced to live with outdated and useless equipment.

During the last 50 years, there has hardly been any equipment which DRDO has developed in the promised timeframe and conforming to the parameters. It has been a history of false claims, tall promises, unexplained delays and sub-optimal products. The services carry critical voids hoping that a war does not take place before the equipment materialises.

Over-Indulgence of the Public Sector

There are 39 Ordnance Factories and the Ordnance Factory Board is the largest departmentally run industrial undertaking in the country. In addition, MoD has nine Defence Public Sector Undertakings (DPSU). Despite getting preferential treatment from MoD, they have singularly failed to keep pace with worldwide developments. They thrive on periodic infusion of transferred technology and have developed no indigenous competence.

Even the boldest and the most conscientious officers fear subsequent enquiries. Decisions taken in good faith can always be questioned in retrospect.

In all ‘Buy and Make’ cases, recipient of imported technology is a DPSU (even if a private sector entity is more suited for it) entailing long delays, as the technology in question may be totally alien to it.

Interestingly, DPSU get to know military’s likely projections of equipment acquisitions in advance and promptly sign MOU with foreign vendors to preempt competition and present a fait accompli to the decision-makers. With assured orders in hand, no urgency is shown to produce quality goods in the promised timeframe.

Most unfortunately, the Indian military is a captive customer of the Indian public sector and is forced to buy what it produces. Very often the services are given only one option – ‘take whatever public sector offers or do without it’. In a way, the public sector has contributed directly to the current state of affairs where the armed forces are saddled with mediocre and outdated equipment.

Lack of Accountability

To date, no enquiry has ever been held to fix responsibility for causing delays in the procurement of any defence equipment. All functionaries are safe in the knowledge that they would never be called upon to justify their inaction. This has emboldened them to show no urgency whatsoever.

Most unfortunately, the Indian military is a captive customer of the Indian public sector and is forced to buy what it produces.

In late 1990s, India was on the verge of signing a contract for the import of Weapon Locating Radars (WLR) when DRDO intervened to stall it with claims that they were on the threshold of producing indigenous WLR. India went into the Kargil conflict without WLR and suffered considerable casualties. No one was held accountable for making misleading claims and making India lose precious lives.

Similarly, DPSU and Ordnance Factories generally fail to deliver quality goods as per the promised schedules, but have never been reproached or penalised for the same. On the other hand, stiff penalties are imposed on private sector vendors for delays in deliveries.

Fear of Subsequent Enquiries and Play Safe Syndrome

As every procurement decision gets questioned subsequently, many functionaries consider it prudent to defer decision-making. It is a common saying in official circles that the price to be paid for not taking a decision is far less than that for taking a decision. So why not play safe?

Even the boldest and the most conscientious officers fear subsequent enquiries. Decisions taken in good faith can always be questioned in retrospect. Therefore, even the empowered officers consider it prudent to keep seeking repeated approval of ‘higher ups’ at all steps to shield themselves. Another common practice is to mark all cases to superiors by endorsing ‘for information please’. It is a highly prevalent stratagem to keep seniors ‘in the loop’, so that they can also be roped in later on (see box).

Media

A totally independent media is the bedrock of true democracy. Media in India is doing an excellent job to highlight national security concerns. However, at times their coverage of defence deals is based on unverified facts.

Some segments of media carry stories which may have been planted by the vendors who fail to get orders.

Some segments of media carry stories which may have been planted by the vendors who fail to get orders. The aim of such vendors is to get the deal aborted and have the whole process started afresh. It is a highly widespread ploy in the world arms market, used effectively to sow seeds of doubts regarding the quality of selected equipment. It also raises suspicions regarding the earnestness of the entire evaluation process and hints at underhand dealings.

Media has to be objective in its coverage and support officials who are above board and are doing a difficult task with conscientiousness. It should not let itself be used by competing vendors to settle scores. Adverse coverage carried by them, wittingly or unwittingly, deters decision-making and delays procurements. No functionary wants his honesty and diligence questioned.

The Road Ahead

The basic problem lies in segmented approach towards the modernisation of the armed forces. Instead of adopting an integrated mission oriented approach, various organs of the Government tend to guard their own turf for narrow parochial interests. Due to a total lack of accountability, modernisation proposals suffer from gross neglect and bureaucratic delays. As seen above, blame for tardy pace of modernisation can be apportioned to all participating entities (including the services), albeit in varying degrees.

No one assigns any importance to speedy conclusion of a deal except the service concerned and the user directorate. It is sad to see senior service officers pleading with and humouring MoD officials to get their cases progressed.

No one assigns any importance to speedy conclusion of a deal except the service concerned and the user directorate. It is sad to see senior service officers pleading with and humouring MoD officials to get their cases progressed. They do rounds of offices carrying loads of files to answer queries, howsoever irrelevant and infructuous they may be. It is a very frustrating experience for many. Some service officers openly state that fighting bureaucratic quagmire is by far the most demanding activity they are required to undertake in the interest of their service.

One can have the best of organisations and ideal procedures in place but ultimately any organisation or procedure is as good as the people who work it. Therefore, the foremost requirement is to select acquisition staff diligently. No reforms can yield the desired results unless and until the implementing functionaries are equipped to translate good intentions into tangible actions on ground. Their lack of competence manifests itself in their reluctance to take decisions and for a propensity to involve maximum number of people.

It has generally been accepted the world over that an efficient acquisition work force can not only expedite procurements but also affect a saving of up to 15 percent of the capital expenditure in initial purchase price and associated life-cycle costs.

A system should be put in place to obviate requirement of repeated approvals at different stages of acquisition. Sanction of the designated approving authorities should be taken for the comprehensive proposal to preclude the necessity of repeated reference to them. Once approval of DAC is accorded, ‘acceptance of necessity’, ‘quantity vetting’ and finalisation of RFP should be carried out simultaneously to compress timeframe.

The new defence procurement procedure is well intended and addresses most of the critical issues, but its implementation needs streamlining. A number of steps can be taken within the existing structures and procedures to reduce delays considerably. Old mindsets and narrow prejudices must be replaced by collegiate functioning with individual accountability duly spelt out. Finally, evolution of well-analysed long-term plans and their diligent adherence are absolutely essential for continuity.