Effects of New Procurement policy on Defense preparedness in India

 India’s defense sector is the most talked about Government department when it comes to cash flows and volumes in tender amounts. There has been a long list of allegations and controversies across different political rules post-independence times. India has witnessed political turbulence and fall of stable Governments over different defense procurement from time to time. Due to large fund outflows these transactions garner huge media attention and become targets of political animosities. Though democracy authorizes the right to challenge and express a contrarian point-of-view there are instances when disputes were blown out of proportion and judiciary was pressed into action to settle the issues. We have also seen politics taking center stage and defense requirements being put on the back burner quite an often due to this.

Instances of political slug-fest on defense deals:

 One of the most hyped cases was the Bofors Howitzer Gun deal from Sweden where questions were raised on the then incumbent Government and eventually led to its fall. These Guns proved Game changers for Indian Army later during the Kargil War in 1999. Moreover, under the Transfer of Technology Agreement (ToT) India also received the design blueprint of Bofors howitzers that created the basis for the development of Indigenous Artillery Howitzer system – "The Dhanush" by Defense Research and Development Organization (DRDO).

 

In Pics: The Bofors Gun:

Photo Credit: https://www.financialexpress.com

The most recent case is the procurement of 36 Dassault Rafale Jets from France where an entire election campaign was designed centering the malpractices and corruption charges involved in the total buying process. The allegations were later dismissed by the Honorable Supreme Court of India. According to Indian Airforce the Rafale has the capability and the edge over its rivals in almost every situation. The Rafale deal is not only about the Airframe but also about the weapon package and the comprehensive service package along with higher aircraft availability rate. The deal also comes with a decent offset clause that makes Dassault invest back and produce defense equipment in India with a local vendor aimed at developing local infrastructure.

There were also charges raised on the procurement of India’s first Aircraft Carrier – INS Vikrant. Though it was not purchased new bit it proved its mettle during the 1971 war with Pakistan and liberation and creation of Bangladesh. Indian Navy became the first operator of Aircraft carrier in this region and it continued to give us an edge over any country in the South Asian Region till late 90s when it was finally decommissioned from the Indian Navy.

What makes Defense deals so murkier and contentious ?

The entire defense procurement process in any country is not about a simple shopping process where Military visits the shops and Government pays the bill. It rather involves a much lengthy formal channel to make it appear more transparent and save it from political attacks from oppositions.

Existing Procurement System:

i.            The Defense Acquisition Council (DAC): It is a decision body headed by the Defense Minister of India and constituting Major Generals from Army, Air Force and Navy along with the Chief of Defense Staff (CDS). Here the need evaluation is done based on the inputs from the stake holders and an initial nod for purchasing is given. This council has no financial powers and they need approvals from CCS for final approval

ii.            The Cabinet Committee for Security (CCS): This committee comes under purview of the Prime Minister of India with delegates from Ministry of Defense, the Ministry of Finance and the Ministry of External Affairs apart for Secretaries from the concerned ministries.

 

It is generally observed that CCS takes much longer time and sometimes keeps the deal waiting for long before approval because of the large cost of procurement and burden on country’s finance. Also, it evaluates whether the deal is in any way detrimental to relationships with other supplier countries or not. A big-ticket purchase from a US firm is definitely going to impact the relationship with the Russians and vice versa 

Role of Lobbyist and Agents:

Each defense firm globally uses defense lobbyists and influencers to make a case in their favor.  India is a large market and it ranks second globally when it comes to defense purchases according to data released by Stockholm based Stockholm International Peace Research Institute (SIPRI).  India presents a great case for firms to push their product and create an ecosystem for further business like after sales servicing and spares supply. Often Lobbyist use improper means like bribes and kickbacks to make the deal in their favor.  

Geo political compulsions:

India’s vicinity towards Russia post Non-Aligned Movement (NAM) forced India to buy Russian arms in large numbers. India didn’t bother to try out western weapons due to their obligations and allegiance towards Russia as an ally and sanctions imposed on India from US and western countries on many counts. This led to poor evaluation of arms due to limited choices. India has always struggled to procure spares for its fighter jets as vendors didn’t care to provide proper services taking advantages of their monopoly in India’s arms market. Things have changed thoroughly though post 2000 but legacy issues still continue to haunt India. As of 2019, 113 MiG-21s are known to be in operation in the IAF. However, the plane has been plagued by safety problems due to shortage of spare parts. Since 1970 more than 170 Indian pilots and 40 civilians have been killed in MiG-21 accidents.

Sabotages and Security Issues:

It is also feared that countries indulge in creating disturbance using oppositions and NGOs in the Purchasing countries to force them settle deals with the vendors.

In Pics: MiG 21 Crash. Picture Source: The Indian Express / Associated Press (AP)

Overall, it is not guaranteed that the best product will win the tender as there are a lot many things that come to play a major role in the selection process.

What NEW in the new policy:

Apart from everything else this policy talks about leasing of non-strategic defense equipment. Though leasing was not new to India as INS Chakra Nuclear Submarine was leased from Russia for 10 years the new policy highlights the importance of leasing against buying. India has suffered a lot due to the painstakingly long procurement policies of the past and lapses were found quite an often when the forces got engaged in confrontations with adversaries. In Nation’s security rivals are not going to give us time to get prepared. We need to get prepared for the worst and at the shortest possible notice.

How can it help us in short term?

i.           Leasing of Surveillance equipment:  India can procure surveillance Drones, Satellites, encrypted communication devices, safety gears on lease from companies across globe for few years to tackle border incursions without actually buying them to avoid blocking unnecessary funds.

ii.            Leasing of Aircraft, Aerial oil tankers: India has a shortage of aerial tankers and that makes the air force vulnerable to deep strike capabilities when it comes to mid-air refueling. Similarly, India can induct aircraft on lease on deck for its soon to be launched aircraft carrier INS Vikrant or INS Vishal in the future.

iii.          Breather for Make in India plans: As India is moving towards in-house procurement of defense equipment this lease mechanism can give DRDO a breather for some more time to develop the necessary bits and infrastructure for indigenous equipment.

iv.            Get latest technology and world class equipment at fast-tracked pace: India can get a flavor and hands-on on the latest technologies around and fine tune their own products. A worthy product may get featured in the future buying list while the non-deserving ones may get their lease cancelled.

v.            Getting Annual Maintenance on the leased products: Vendors are bound to replace or repair the products during the lease term and a hassle-free experience is possible.

 Though Lease doesn’t mean owning but still it makes a lot of sense at times when the country requires cutting edge technology equipment in a hurry and that too without spending a lot from pocket and pay yearly lease renewal charges like EMI. This can also keep the lobbyist at bay mostly due to the reduced transaction amount and will also invite less political challenges for any incumbent government.

With Make in India initiative and Leasing we can escape the Geo political challenges to a great extent and avoid coercion.