A blueprint to revamp India’s defence acquisition

The Defence Acquisition Council (DAC) chaired by Defence Minister Rajnath Singh approved the acquisition of indigenously manufactured weapons and equipment worth Rs 3,300 crore in the third week of October 2019. The projects which include third-generation anti-tank guided missiles and auxiliary propulsion units for main battle tanks will give a much needed boost to India’s quest for self-reliance in defence production. As the controversy over the acquisition of the Rafale fighter aircraft illustrates, the defence procurement and acquisition process continues to be plagued by procedural delays and is still dominated by imports.

The aim of indigenisation of defence manufacture should be to make India a design, development, manufacture, export and servicing hub for weapons and defence equipment by 2025-30. Periodic reviews must be undertaken to learn from the experience gained in the implementation of the Defence Procurement Procedure (DPP) that was first formulated in 2006.

No country that is not substantially self-reliant in defence technology can aspire to become a dominant military power in its region. India is hungry for state-of-the-art defence technology but has a low technology base. The essence of all efforts to achieve self-reliance lies in acquiring defence technology through original research. The other option is to gain access to it through the transfer of technology (ToT). Defence technology is proprietary and is guarded zealously by governments.

No country will give India strategic weapons technologies, such as nuclear warhead and ballistic missile technologies, know-how on building nuclear-powered submarines and ballistic missile defence (BMD) technology. It is the responsibility of the DRDO to conduct original R&D into strategic technologies and this must continue.

The development of hi-tech weapons platforms like fighter-bomber aircraft and sophisticated defence equipment like over-the-horizon (OTH) radars should be undertaken jointly in conjunction with India’s strategic partners. The route adopted should be to form joint venture (JV) companies between Indian private sector companies and international defence MNCs. In these cases, the role of the DRDO and the Services HQ should be mainly supervisory and to act as facilitators. An excellent example is that of BrahMos supersonic cruise missile, a joint development with Russia.

The design and development of low-tech items should be outsourced completely to the Indian private sector, with the DRDO monitoring progress of the projects. Services HQ should establish their own Design Bureaus to inculcate a technology development culture. They should initiate R&D projects in their training institutions, especially for the purpose of product improvement during the life-cycle of weapons systems and defence equipment.

At present there are far too many DRDO laboratories. There is a need to rationalise the justification for these and close down those whose work can be outsourced to the private sector. Some R&D projects should be outsourced to universities and IITs to involve the institutions of higher learning in this important national endeavour.

At the policy level, many contentious issues remain to be resolved, including the privatisation of most of the ordnance factories and several defence PSUs. Publicly owned manufacturing facilities are always inefficient and seldom meet the laid down production targets. They also lack dynamism and normally develop a risk-averse professional culture. As it often said, it is not the business of the government to be in business.

Though FDI in defence manufacture has been increased from 26 to 49 per cent, this is still not attractive enough for the MNCs to invest in India. Given the time and effort that goes into locating a joint venture partner and the risks involved, they prefer to have a controlling stake, which is 51 per cent or more.

The present offsets policy has not worked to India’s advantage. The defence industry’s ability to absorb hi-tech offsets is still limited. Absorbing 50 or even 30 per cent offsets is extremely difficult at present. It may be more prudent to consider offsets only in cases where the benefits expected to accrue will outweigh the additional costs and Indian JV partners can absorb the technology that is brought in. While exports of defence equipment have been permitted, the procedures for according the approvals that are necessary and the regulatory framework need to be streamlined.

At present, the time frame for the acquisition of defence equipment is excessive. From the submission of a Statement of Case for a new acquisition to according approval in principle (Acceptance of Necessity – AON) takes six months to one year. Then the case goes into RFI (request for information) and RFP (request for proposals) stages and prolonged negotiations with the selected bidder.

The actual conclusion of the contract takes up to three years. The prolonged negotiations for the acquisition of the Rafale fighter aircraft are an example. The delivery of the contracted item begins more than two to three years later. Even according to the current DPP, this is excessive and must be cut down to less than one-third.

Close supervision during manufacture would help to avoid time and cost overruns. As the Services are the main stakeholders, armed forces officers should be positioned in manufacturing facilities for supervision. At present, the services find quality control to be grossly unsatisfactory. The Directorate of Quality Assurance (DGQA), the organisation responsible, comes under the Defence Secretary.  The DGQA must be transferred to HQ Integrated Defence Staff so that it is directly answerable to the Chairman, CoSC and, if future, to the CDS.

The government has begun the process of establishing Defence Economic Zones (DEZs) to provide incentives for indigenous defence manufacture. There is an inescapable need to establish an Institute of Defence Acquisition under the CoSC where all officers nominated for posts dealing with defence procurement can be trained. In fact, an exchange programme should be instituted with defence acquisition universities and institutions in countries from which India acquires the bulk of its defence equipment.

The Defence Technology Board should undertake a holistic review of the entire gamut of defence procurement, including the DPP, the production process, R&D, the offsets policy, timely conclusion of contracts, quality control and accountability. The procurement of defence equipment is an extremely important facet of preparedness for future conflict and must not be allowed to fester as a permanent sore.

The writer is former Director, Centre for Land Warfare Studies (CLAWS), New Delhi.