Defence Industry

India's Defence Procurement and Modernisation: Can a new Organisation fix the Persisting Problems?
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Issue Courtesy: South Asia Monitor | Date : 12 Mar , 2017

Blaze the way to far flung goals

A committee nominated by India’s Ministry of Defence has recently submitted its recommendations for integrating and streamlining the defence acquisition process by raising a Defence Procurement Organisation. As per information available, this new organisation, headed by a Secretary-level official, will function as a new ‘vertical’, directly under the Defence Minister, with the objective of optimising and integrating the procurement process, media reports suggest. 

No doubt, such a measure was long awaited and will remove some of the glitches in the existing system. However, keeping in view that many past changes, structural and procedural, to energise the defence acquisition process have fallen by the wayside, without providing discernible dividends for the military, it may be useful to analyse this new development critically to predict whether the outcome on account of this change will be any different.

Any measure of success of attempted improvements in the defence procurement system would be best determined by measuring the likely resultant outcomes, both qualitative and quantitative, in ‘capability development’ of the Armed Forces.

Will introduction of the new organisation help the three Services in acquiring long pending needs of artillery guns, fighter aircraft, assault rifles, air defence weapons, submarines, helicopters and drones in a timely manner — say, in the next three to five years? Will it ensure that the operational needs and war-wastage reserves of the three Services, in terms of requisite scales of ammunition, equipment spares, stores and vehicles, will be made up immediately? Or, will the bigger problems like inadequate budget and corruption charges continue to dog the procurement process and prevent capability building of the military?

It is common knowledge that capability development of the three Services is lagging far behind targets due to a combination of problems like inadequacy of defence capital budget, delays in decision-making, bureaucratic prevarication, monopoly by defence public sector undertakings (resulting in keeping out the private industry), frequent changes in qualitative requirements (QRs) by the Services, infirmities in the system of trials, and frequent charges of corruption, which result in ‘blanket’ blacklisting of vendors in a thoughtless of manner.

Unless all these deficiencies are addressed by the new system, it will be ‘business as usual’, with lack of improvement in predictable outcomes.

Let us take the more prominent of the existing infirmities one by one, to examine whether the new system will address these effectively.

Firstly, the problems of delays in decision-making, combined with the risk averseness of the bureaucracy.

The reasons for these delays and problems are on account of fear of wrongdoing by those involved in the process, especially due to the presence of unscrupulous middlemen, who exist on the sidelines to facilitate corrupt practices. Hopefully, the new system will provide better clarity, transparency and accountability, and concurrently, plug the existing loopholes which enable such wrongdoings. Otherwise, ‘big ticket’ proposals (which are critically needed for capability development) will continue to fall victim to risk-avoidance strategies of the bureaucracy.

Secondly, the infirmities in the system of formulating General Staff Qualitative Requirements (GSQRs) and for carrying out trials by the Services.

Blind adherence to the ‘L1’ principle (instead of ‘T1-L1’) leaves space for qualitative inadequacies. Will the new system ensure that GSQRs are correctly formulated and vetted to ensure that they are practicable, and yet, enable procurement of the best available equipment at the most competitive prices? Has it addressed the earlier infirmities in trial methodologies, which enable vendors to keep seeking additional time to correct faults in their equipment — resulting in inordinate delays and resultant scope for wrongdoing?

Thirdly, does the new system provide a level playing field to our private defence industry?

Unless the new system provides equal opportunity to the best of our private defence industry and entrepreneurs to compete fairly with the public sector units, defence procurement and the related ‘Make in India’ policy will continue to be just a pipe dream — as far as the more critical defence procurements like guns and aircraft are concerned.

Fourthly, will the new organisation ensure that complaints — malicious or justified — do not hold the system to ransom and scuttle the entire procurement process?

Have measures been instituted to ensure that a delay afflicted case like the ‘replacement helicopters’ proposal (where a complaint resulted in long-drawn investigations, leading to multi-fold cost penalty) do not occur in future? Our procurement system must learn to deal effectively with the flurry of complaints and corruption charges, which inevitably pursue every procurement proposal, and yet procure the desired item in time.

And finally, the problem of inadequacy of capital modernisation budget — which is the primary reason why the military is not able to put into effect their plans for acquisition of ‘big ticket items’ to achieve their modernisation plans.

Will the new organisation and system be able to ensure that adequate budget is allocated and that capital funds for capability-building, once allocated, cannot be withdrawn or re-appropriated (surrendered?) by the Ministry of Defence or Ministry of Finance for any other purpose? Obviously, if the new organisation does not result in better availability of capital budget, no amount of structural or procedural changes can bring about better results in terms of capability-building outcomes.

In sum, the actual reason that we are unable to procure critically needed weapons, equipment and ammunition are larger strategic questions like the ‘Guns vs Butter debate’, for which the country has yet not found satisfactory answers.

The Defence Minister’s continuing efforts at structural improvements are commendable and would make a positive effect on capability-building if adequate capital budget was allocated to the defence forces. But, unless we resolve the larger issues mentioned herein, that have prevented the existing system to come up with favourable outcomes in the past, the new Defence Procurement Organisation may end up only being described as ‘old wine in a new bottle’, with no major benefits accruing to the military.


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The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Lt Gen Philip Campose

is the Former Vice Chief of Army Staff.

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One thought on “India’s Defence Procurement and Modernisation: Can a new Organisation fix the Persisting Problems?

  1. Please open the link and Kindly read my comments.

    Problems of Costing in Defence Procurements

    Read more at:

    Stop the procurement in bulk. Create early demand for all the items. Purchased spares only from OEM. Do not try to procure spares directly from the Vendors developed by the OEM. The vendor may offer cheaper than the OEM. The Vendor will try to sell the rejected by the OEM while testing. This has happened in many cases.

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