The Hindu Business Line : New Defence Procurement Policy

Although the new Defence procurement policy is welcome, it could have done more. Involving private sector in Defence production sounds hollow, and the bureaucracy does not inspire confidence. Yet, it is a wake up call for the Services in the light of the changing Defence acquisition scenario, post the emergence of Western countries as strong players, says R. SUNDARAM.

Although the country's polity changed drastically with the explosive Swedish radio broadcast in April 1987 hinting at kickbacks in the Bofors Howitzer deal, it has taken well over 20 years for the Defence Ministry to formulate a pre-contract integrity pact in Defence deals with international arms suppliers. It may be recalled that even in 2000 when the President, Mr A. P. J. Abdul Kalam, was a hands-on executive in the government, he was asked to chalk up guidelines to prevent middlemen. Although it has taken another good six years, it is good news all right.

It is worth remembering, that even as far back as 1977 Jimmy Carter, the US President, following the Lockheed aircraft scandal involving politicians in Japan, got a legislation passed to punish the American firms that give bribes, with a fine of $2 million for each occasion, and individuals a fine of $10,000 and a five-year jail term. This may not have chastened every arms dealer in the US, but surely it has deterred many.

No deterrent fines

One is constrained, however, to observe that in the proposed Indian Integrity Pact while threats of cancellation, debarring, etc., are provided for, there are no deterrent fines either for the bribe giver or the taker. Obviously the latter, on the Indian side in international deals, will be dealt with under the Indian criminal judicial system which is not known for speed.

The announcement of the new Defence procurement policy itself appears to be a late realisation that there is no longer the comfort of Indo-Soviet Joint working groups to make purchase decisions. In the past, the military top brass would visit the Eastern Block, collect specification details, draft a General Staff Quality Requirements, which paper will wind its way until it culminates in `buy' or `buy and make' decision.

The recent experience in the purchase of T-90 tanks from Russia following that outmoded practice has shown that the country can no longer rely on such systems. The bitter pill is being swallowed now as it is found that even exhaustive trials in desert and mountain, spanning over two years of a few pieces need not necessarily guarantee quality supplies when the tanks arrive in squadron strengths. It is reported that the thermal imagers have very low life, the engines are heating up and the ammunition too is not up to the mark resulting in the first hundred tanks being allotted to training units.

In fact, the new policy is a wake up call for the Services in the light of changing scenario of Defence acquisition forced upon them by the emergence of Western countries as strong players. Table 1 shows how since 2001 or so, there has been a shift away from the East for big-ticket acquisitions although the SIPRI (Stockholm International Peace Research Institute) report of 2006 says that in the $50-billion global arms trade Russia leads the pack with the US, France, Germany and the UK trailing it.

Another recent instance which, perhaps, compelled the Government to doing something rather than debating endlessly this process of acquisition is that the old procedure failed us while acquiring the Anti Material Rifle from South Africa. There was an idee fixe among the Service personnel that it was imperative to acquire this rifle from Denel, South Africa, without deciding upon the `generic requirement'. When the whole contract came to a crying halt as soon as someone blew the whistle alleging corruption, the operating personnel were left high and dry particularly for long-range accuracy, since acquiring a replacement will take a few more years. Although examples are from the land Services, it is certain that the experience in the other two arms will be no different.

Trial delays

Another area of concern addressed rightly in the new policy is the inordinate delays in trials. However, sticking to the old practice of trials on "no cost, no commitment" basis may not be such a good idea. There is no stake for quickening the process on our side. Had we invested in the equipment we would be held accountable for not completing the trials and coming to a conclusion.

There have been occasions when one contractor has been asked during trials to modify his equipment, say, his hydro-electric drive, to `all electric' to match the other equipment. In order not to be left out the first contractor would agree to modify and submit another piece after a year for trails on "no cost no commitment" basis. Theoretically, this process can go on endlessly. This fate befalls, sadly, on trials of equipment developed by the Defence Research and Development Organisation (DRDO) too. Obviously, the new policy woefully lacks guidelines for holistic consideration during trials.

Shrinking pie

The Defence Budget (Table 2) has been increasing annually at the rate of about 15 per cent in the past four years and it is bound to cross Rs 100,000 crore next year, the bulk of which is for pay and allowances. Therefore, it goes without saying that delays in acquisitions mean squeezing the already shrinking pie. Therefore, any procedure to shorten the cycle is welcome.

Also, the responsibility being vested in a single `collegiate' body should hopefully stop the buck-passing habit. However, there is the danger of duplicating the staff who are now in, say, the Weapons Directorate, within the DAC (Defence Acquisitions Council) to process the proposals, sitting on judgment of their own colleagues.

Further, it is not clear how far the `top down approach' can be reconciled with the need to listen to the real soldiers who have to use the weapons, as top decision-makers sometime may ride hobby-horses.

Not convincing

The promise of involving Indian industry in Defence production rings hollow since it has been talked about for over five years now only in CII workshops and seminars. Already, there are the Ordnance Factories, a leviathan establishment, as also the Defence PSUs that are in this business. But with the Left parties looking over its shoulders the Government lacks the will to openly synergise the shop-floor strengths of the former with the enterprise of well-respected companies such as Tatas or L&T to bid for Defence purchases. The DRDO, too, is unlikely to loosen its stranglehold on ploughing a lonely furrow promising to match the GSQR at some future date.

All in all, policies can be evaluated only on sound practices followed here onwards. That requires extensive selling of the policy within the establishment which our men in executive suites rarely address. Otherwise, we may be treated to another announcement of filling the old wine in new bottle. Moreover, the experience with the bureaucracy, civil or military, has been that with the introduction of Integrated Staff in the Ministry of Defence, without the Chief of Defence Staff, there are more file pushers than decision takers.

(The author is a former Member, Ordnance Factories.)