India's defence procurement problematique
This week, in national defence and security, India has attracted global attention for all the wrong reasons. Consider: India has been dubbed as the world's largest spender on military equipment and thus a lucrative paradise for weapons merchants; a controversy related to the Chief of Army Staff General VK Singh's date of birth which was dragged to the Supreme Court; General Singh's interview to a national news daily, which sparked a nationwide debate on the issue of corruption in defence deals; and very recently the story of a military drill published in another prominent national daily, which has sparked a heated debate on the issue of national security.
While issues related to military spending have largely escaped debates on larger dynamics of military efforts by states, other controversies or developments have led to a nationwide debate on two important issues: corruption in defence deals and deteriorating civil-military relations in India.
Barring the age controversy, all other developments are intricately linked to the issue of arms procurement — corruption, delays in procurement, non-transparency and non-accountability, over-lapping institutional mechanisms, civil-military relations and ill-planned spending leading to lopsided military modernisation. The subject of arms procurement is considered esoteric and thus it is no surprise that the national debate is dominated by the so-called members of the Indian strategic community who have been debating the issue day in and day out. What is actually missing in the debate is much needed 'focus' as well as 'direction'.
I advance six arguments for consideration on the issue of arms procurement. First, there is a distinction between procurement budget and arms imports. India's procurement budget is about $17 bn in FY2012-13, of which about $12 billion is to be spent on arms purchases from abroad, including committed liabilities (about 70 per cent) and fresh purchases (about 30 per cent). The capital expenditure of major countries like the US ($220 bn), China ($60 billion), UK ($31 billion), France ($34 billion), Germany ($27 billion), Saudi Arabia ($21 billion) and Japan ($ 26 billion) spend much more than India. What most analysts ignore is the fact that except for India and Saudi Arabia, all other countries' arms procurement is largely met through domestic sources.
Second, India has a fairly comprehensive procedure for arms procurement, known as the Defence Procurement Procedure (DPP). This document has been revised eight times in recent years. What is important to understand is that the DPP lays the guidelines for procurement related to only the armed forces. The DRDO, defence public sector units and ordnance factories follow their respective procurement guidelines. Many of the arms deals which are signed as part of inter-government agreements or through 'fast track' procedure, are exempt from following DPP. As the MoD does not publish details of arms purchases, it is difficult to establish whether a particular deal has gone through DPP or not. Allegations of corruption in defence deals would be less if most of the arms purchases go through tendering process.
Third, despite best efforts, the MoD has not been able to address the issue of time delays in arms procurement. Though the situation has improved marginally over the past five years, the problem still remains. A large contract normally takes 36 to 52 months for fructification and at every step of eleven phases — from request for proposal (RFP) to post-contract administration — timelines have been provided in the DPP. The MoD does not clarify in which stage a particular procurement gets delayed. The reasons for delay in contract should actually be explained by the MoD at least to the Parliamentary Standing Committee on Defence from time to time. The absence of punitive clauses for non-adherence to timelines by vendors is also a major problem that needs to be rectified by the MoD.
Fourth, the problems in arms procurement largely emanate from non-transparency and non-accountability. The DPP, unfortunately, has not been able to address this issue. Over-lapping procurement related institutional mechanisms within the MoD have only perpetuated non-accountability. Superficial attempts like bringing all the services headquarters within the administrative control of the MoD have certainly not addressed the issue. A glaring example of institutional complexity related to accountability is the meeting of offsets conditions. The issue of accountability related to offsets is sandwiched between the office of the Director General (Acquisitions) and the Department of Defence Production and neither of them is willing to take responsibility. Similarly, no single authority is accountable for any procedural lapse at any stage of procurement.
Fifth, the Indian Army's modernisation programme has been severely hit due to a series of cancellation of contracts in artillery, helicopters, etc. largely due to allegations of corruption. This would lead to a serious imbalance in the comprehensive military modernisation programme that has been underway since 2007. A look at the revised and actual expenditures incurred by the MoD would suggest that Air Force and Navy have largely met their procurement targets from their allocated resources while the Army has lagged behind. Despite many Army contracts earmarked into the planning process from the headquarters, most of the items have not only unearthed the 'Bofors' syndrome, thus making the babus uncomfortable to take decisions, but also ended up in single vendor situation, all the more reason for the babus to not to take any decision on such procurement or at best defer the tender / contract. Major land-based vendors like Denel, Israeli Military Industry, Singapore Kinetic Technologies, RheinmetallDefence have been blacklisted, thus leaving only a few players in such sectors.
Last but not least, while investigations into corrupt practices in defence contracts would certainly be carried out by relevant agencies, it makes much sense to strengthen the vigilance department of the MoD and its coordinating mechanisms with other central investigative agencies. Reportedly, the Defence Minister's office receives an average of ten complaints per week. A rational assumption would suggest that the in-house vigilance department would not be able to investigate all the allegations, which calls for more human resources as well as twin investigative as well as prosecuting authorities.
The issue of national defence and security is certainly not esoteric and hence should not be discussed in isolation. A country that spends 15 per cent of its national (Central Government) expenditure on national defence (armed forces and DRDO) and 23 per cent on national security (armed forces and all other security forces like para-military, police) must explain to its citizens as to whether its spending on security is justifiably utilised or not. Unfortunately, netas do not debate these issues in Parliament, the babus in the MoD do not care, the strategic community prefers to keep their knowledge to themselves and often tend to trivialise the issues, the media sensationalises the issues but does not care to amplify causes, aam admi is kept in the dark while the sena (soldier) suffers in silence.
The writer is Senior Fellow on strategic issues, Observer Research Foundation
This week, in national defence and security, India has attracted global attention for all the wrong reasons. Consider: India has been dubbed as the world's largest spender on military equipment and thus a lucrative paradise for weapons merchants; a controversy related to the Chief of Army Staff General VK Singh's date of birth which was dragged to the Supreme Court; General Singh's interview to a national news daily, which sparked a nationwide debate on the issue of corruption in defence deals; and very recently the story of a military drill published in another prominent national daily, which has sparked a heated debate on the issue of national security.
While issues related to military spending have largely escaped debates on larger dynamics of military efforts by states, other controversies or developments have led to a nationwide debate on two important issues: corruption in defence deals and deteriorating civil-military relations in India.
Barring the age controversy, all other developments are intricately linked to the issue of arms procurement — corruption, delays in procurement, non-transparency and non-accountability, over-lapping institutional mechanisms, civil-military relations and ill-planned spending leading to lopsided military modernisation. The subject of arms procurement is considered esoteric and thus it is no surprise that the national debate is dominated by the so-called members of the Indian strategic community who have been debating the issue day in and day out. What is actually missing in the debate is much needed 'focus' as well as 'direction'.
I advance six arguments for consideration on the issue of arms procurement. First, there is a distinction between procurement budget and arms imports. India's procurement budget is about $17 bn in FY2012-13, of which about $12 billion is to be spent on arms purchases from abroad, including committed liabilities (about 70 per cent) and fresh purchases (about 30 per cent). The capital expenditure of major countries like the US ($220 bn), China ($60 billion), UK ($31 billion), France ($34 billion), Germany ($27 billion), Saudi Arabia ($21 billion) and Japan ($ 26 billion) spend much more than India. What most analysts ignore is the fact that except for India and Saudi Arabia, all other countries' arms procurement is largely met through domestic sources.
Second, India has a fairly comprehensive procedure for arms procurement, known as the Defence Procurement Procedure (DPP). This document has been revised eight times in recent years. What is important to understand is that the DPP lays the guidelines for procurement related to only the armed forces. The DRDO, defence public sector units and ordnance factories follow their respective procurement guidelines. Many of the arms deals which are signed as part of inter-government agreements or through 'fast track' procedure, are exempt from following DPP. As the MoD does not publish details of arms purchases, it is difficult to establish whether a particular deal has gone through DPP or not. Allegations of corruption in defence deals would be less if most of the arms purchases go through tendering process.
Third, despite best efforts, the MoD has not been able to address the issue of time delays in arms procurement. Though the situation has improved marginally over the past five years, the problem still remains. A large contract normally takes 36 to 52 months for fructification and at every step of eleven phases — from request for proposal (RFP) to post-contract administration — timelines have been provided in the DPP. The MoD does not clarify in which stage a particular procurement gets delayed. The reasons for delay in contract should actually be explained by the MoD at least to the Parliamentary Standing Committee on Defence from time to time. The absence of punitive clauses for non-adherence to timelines by vendors is also a major problem that needs to be rectified by the MoD.
Fourth, the problems in arms procurement largely emanate from non-transparency and non-accountability. The DPP, unfortunately, has not been able to address this issue. Over-lapping procurement related institutional mechanisms within the MoD have only perpetuated non-accountability. Superficial attempts like bringing all the services headquarters within the administrative control of the MoD have certainly not addressed the issue. A glaring example of institutional complexity related to accountability is the meeting of offsets conditions. The issue of accountability related to offsets is sandwiched between the office of the Director General (Acquisitions) and the Department of Defence Production and neither of them is willing to take responsibility. Similarly, no single authority is accountable for any procedural lapse at any stage of procurement.
Fifth, the Indian Army's modernisation programme has been severely hit due to a series of cancellation of contracts in artillery, helicopters, etc. largely due to allegations of corruption. This would lead to a serious imbalance in the comprehensive military modernisation programme that has been underway since 2007. A look at the revised and actual expenditures incurred by the MoD would suggest that Air Force and Navy have largely met their procurement targets from their allocated resources while the Army has lagged behind. Despite many Army contracts earmarked into the planning process from the headquarters, most of the items have not only unearthed the 'Bofors' syndrome, thus making the babus uncomfortable to take decisions, but also ended up in single vendor situation, all the more reason for the babus to not to take any decision on such procurement or at best defer the tender / contract. Major land-based vendors like Denel, Israeli Military Industry, Singapore Kinetic Technologies, RheinmetallDefence have been blacklisted, thus leaving only a few players in such sectors.
Last but not least, while investigations into corrupt practices in defence contracts would certainly be carried out by relevant agencies, it makes much sense to strengthen the vigilance department of the MoD and its coordinating mechanisms with other central investigative agencies. Reportedly, the Defence Minister's office receives an average of ten complaints per week. A rational assumption would suggest that the in-house vigilance department would not be able to investigate all the allegations, which calls for more human resources as well as twin investigative as well as prosecuting authorities.
The issue of national defence and security is certainly not esoteric and hence should not be discussed in isolation. A country that spends 15 per cent of its national (Central Government) expenditure on national defence (armed forces and DRDO) and 23 per cent on national security (armed forces and all other security forces like para-military, police) must explain to its citizens as to whether its spending on security is justifiably utilised or not. Unfortunately, netas do not debate these issues in Parliament, the babus in the MoD do not care, the strategic community prefers to keep their knowledge to themselves and often tend to trivialise the issues, the media sensationalises the issues but does not care to amplify causes, aam admi is kept in the dark while the sena (soldier) suffers in silence.
The writer is Senior Fellow on strategic issues, Observer Research Foundation
