Indian Defence Review

Prime Minister Narendra Modi’s visit to France has resulted in several important agreements being signed. Two agreements stand out as the most important of these: the first is the inter-governmental agreement to buy 36 Rafale fighters off the shelf; the second is to expedite a techno-commercial agreement for the Jaitapur nuclear power plant project.

While the second was simply to ease the hindrances to an already concluded agreement, it is the first one that is of great relevance. The Rafale deal announced by the prime minister is indeed a very smart strategic decision taken by him. It is indicative of a deft and far-sighted handling of the issue by him. It, in all probability, brings down the curtains on the painfully long-drawn defence acquisition case.

The MMRCA (Medium Multi-Role Combat Aircraft) case has become a classic demonstration of the painful process of India’s defence acquisition system. The Defence Minister Manohar Parikkar described it accurately when he stated that “We kept going in circles”, with no end in sight.  The requirement for replacements for ageing fleets of the Indian Air Force (IAF) began to be projected in the early 1990s. While the Light Combat Aircraft (LCA) was meant to replace the Ajeets and MiG-21s, the MMRCA was to plug the voids being created by the other ageing fleets like Mig-23s and 27s.

True to our style, two decades later both haven’t materialised. The result is the alarming reduction in force levels of the IAF. The revised MMRCA acquisition process began in 2004, with the stated intention to induct the first squadron by 2008-09. Touted as the biggest fighter acquisition tender, the procurement got stuck in the intricate cobwebs of the acquisition process that we created. What stands out glaringly now is the question on the effectiveness of our acquisition process. It appears that we were more interested in demonstrating to the world the fairness and professionalism of our acquisition system rather than demand compliance to national interests explicitly and boldly.

Quite naturally, a huge procurement case like the MMRCA has considerable strategic implications that deal with technology acquisition (not just licence production), joint ventures, exports as part of global supply chain, collaboration in R & D, and enabling of the defence industrial ecosystem. Users’ requirement of operational performance and life-cycle costs is just the first step. Unfortunately, as it often happens, users’ requirements take centre-stage and national strategic requirements take backstage. As a result the tender process of the MMRCA has got stuck because of the conflict between the narrow tactical focus of the users’ requirement and the larger interest of the nation in terms of strategic value of the huge costs involved.

So what is the impact of the prime minister’s announcement to procure 36 Rafale aircraft through an inter-governmental agreement? The most important result is the liberating impact on the two governments. It frees the Indian government from the prison of its own making – the long-delayed acquisition process that has outlived its cost control, operational, and strategic utility. The decision has enabled the government to support the IAF to rebuild its strength in a rapid manner. This agreement will enable the IAF to have two fully operational Rafale squadrons in less than three years from now.

Besides, the possibility of increasing this strength by another squadron is a distinct possibility at a later date, much like the Mirage 2000 procurement in the past. It soothes the French government’s sensitivities by putting our strategic partnership on an even keel, as there are bigger economic cooperation programmes to deal with. Having addressed the immediate issues through the inter-governmental procurement, the government now has the time on its side to address larger strategic issues through a more carefully thought out strategy.

What happens to the ongoing MMRCA negotiations? The joint statement has made it clear that it will continue as a separate issue and that the 36 aircraft deal is not linked to it. To understand this one needs to read between the lines. By delaying it endlessly, the 126 aircraft deal has become a question mark on its financial viability. Besides, there have been serious questions on Dassault’s willingness to comply with technology requirements and cost control. In the current context of ‘Make in India’ strategy, it may need to be dealt with outside the limits imposed by the RFP (Request for proposal). In effect, this will mean scrapping of the MMRCA RFP process so that the government is free to make a decision meeting the larger national interests. Effectively, the inter-governmental agreement has sealed the fate of the RFP process.

Is there a case for MMRCA manufacture? Certainly! And this needs to be addressed in a manner so as to meet the larger strategic interests of the country. By selecting an aircraft through an inter-governmental decision the country could achieve its larger objectives of ‘Make in India’ by ensuring requisite technology acquisition, develop the aerospace industrial eco-system to become part of the global supply chain, create collaborative joint ventures for future developmental projects, and build a strong defence export industry.  This could be Rafale or any other aircraft as long as the government is able to address the core issues of technology transfer, joint production, and design collaboration in future projects.

That raises an important question on our acquisition system. Is it wise to go for a competitive RFP process for high-value defence procurements? The MMRCA experience clearly indicates a big “NO”. It would be better that such procurements are done through inter-governmental process where strategic interests are unambiguously stated, negotiated without compromise, and rapidly set into motion without the threat of the Damocles’s swords of Central Vigilance Commission and Comptroller and Auditor General. It is important that in such a decision-making, professionals and technocrats rather than a generalist bureaucracy aid the political leadership.

Courtesy: http://southasiamonitor.org/detail.php?type=sl&nid=11339