A blueprint to revamp India’s defence acquisition

Distinguish between technologies to be developed independently, with allies, and by private players

The Defence Acquisition Council (DAC), chaired by defence minister Rajnath Singh, approved the acquisition of indigenously manufactured weapons and equipment worth ~3,300 crore in October. The projects which include third-generation anti-tank guided missiles, and auxiliary propulsion units for main battle tanks, will boost India’s quest for self-reliance in defence production.

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.

No country that is not substantially selfreliant in defence technology can aspire to become a dominant military power. India is hungry for state-of-the-art defence technology but has a low technology base. It can achieve self-reliance by acquiring defence technology through original research. The other option is to gain access to it through the transfer of technology (TOT). This is hard since defence technology is proprietary, guarded zealously by governments. But here is a possible blueprint. 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 technology. Defence Research Development Organisation (DRDO) must continue conducting original research and development (R&D) into strategic technologies.

The development of hi-tech weapons platforms like fighter-bomber aircraft and sophisticated defence equipment like overthe-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 multinationals. The role of the DRDO and the Servic e s HQ s hould be s upervision and facilitation. An excellent example is BrahMos missile, jointly developed with Russia.

The design and development of low-tech items should be outsourced to the Indian private sector, with the DRDO monitoring progress. Services headquarters should establish their own design bureaus to inculcate a technology development culture. They should initiate R&D projects in their training institutions, especially for 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 close down those whose work can be outsourced to the private sector. Some R&D projects should be outsourced to universities and IITS.

At the policy level, many contentious issues remain to be resolved, including the privatisation of most of the ordnance factories and several defence public sector units. Publicly owned manufacturing facilities are inefficient, seldom meet production targets, and develop a risk-averse professional culture.

Though Foreign Direct Investment in defence manufacture has been increased from 26 to 49%, this is still not attractive enough for multinationals. Given the time and effort that goes into locating a joint venture partner, and the risks, they prefer to have a controlling stake of 51% 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% offsets is 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. While the export of defence equipment has been permitted, the regulatory framework need to be streamlined.

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 delivery of the contracted item begins more than two to three years later. Even according to the current Defence Procurement Procedure, this is excessive and must be cut down to less than one-third.

Close supervision during manufacture would help 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, Chiefs of Staff Committee and, in the future, to the Chief of Defence Staff.

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.