The Way Forward

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After years of stagnation under A K Antony, military procurement is moving forward. Expectations are that the new DPP, apart from focusing on Make in India, will rationalize and simplify the current complex rules and regulations and set new norms and standards. By SURYA GANGADHARAN

Defence Minister Manohar Parrikar set tongues wagging after hinting, in a recent statement, about hanging up his boots once he turns 60 (which is next year). The Indian public is accustomed to politicians making such remarks only to backtrack later, and Parrikar did backtrack, which is odd for he is among those politicians with some standing, both on account of his IIT background and his political record in Goa.

But more than that, 2016 could be his watershed year, the year when India’s military procurement and organization embarks on a period of recovery after the paralysis and non-performance of the AK Antony years.

Parrikar says the prime minister’s signature Make in India campaign, intended to reverse the current 70:30 imbalance of import vs indigenous is all set to move forward. Of the Rs.90,000 crore contracted for during his tenure, around 70 per cent is for weapons and equipment to be procured indigenously.

In comments widely reported in the media, Parrikar said, “the ratio of 70:30 (imported to indigenous content) should change by at least 10 per cent. So the target is that annually you reduce the foreign component by 10 per cent so that in four to five years, you reverse the ratio – from 70 per cent foreign import you go to 70 per cent indigenous content.”

The cynics would say Parrikar is being unduly optimistic, and that the armed forces (especially army and air force) accustomed to importing their equipment, will not change track so easily. But the word in the Defence Ministry is that the armed forces have been told that indigenous is the only way forward, and technology issues will be taken into account if they find local suppliers are deficient in that respect.

DPP 2015

The Defence Procurement Procedure (DPP) 2015 is expected to spell out all the details underlying Make in India, Buy & Make Indian and so on.

Where it could be truly revolutionary is in clarifying the status of defence agents. It is expected to define what agent means since currently, there is no such definition. The word is any person “who provides technological expertise, management support for a fee which is reasonable and which does not depend on the value of the contract or outcome – positive or negative – of the contract will be allowed as agent.”

Defence Ministry source said agents are authorized representatives of the original equipment supplier. They are not middlemen trying to influence decisions in favour of the companies they represent. In that sense, agents are legitimate and the space for them must be ensured.

2016 could be his watershed year, the year when India’s military procurement and organization embarks on a period of recovery after the paralysis and non-performance of the AK Antony years

Related to the agent issue is that of blacklisting companies. In a sharp departure from current practice, if there are allegations against a firm’s operations in India, notice will be issued and it will be asked to clarify. If the explanation is unsatisfactory, the firm’s operations will be put on hold or suspended until a designated committee completes a probe. If the probe finds nothing, the firm carries on with its work. If minor infractions are noticed temporary measures can be invoked, but if it raises serious issues the integrity pact can be revoked or financial penalties applied. The firm can also be banned.

The new DPP eliminates the issues surrounding single vendor situation, opting for a practical approach. Similarly in the case of field trials of new equipment, the focus should be on operational efficiency, the point also being made that no equipment can meet all qualitative requirements.

Offsets are another area of reform. Earlier “regressive rules” about not changing the Indian Offset Partner has been removed because offsets are executed over a long period and sometimes the product becomes obsolete or the Indian partner shuts shop. The three services have also been brought into this debate. To boost private sector involvement in defence, the foreign exchange rate equalization given to PSUs is also being extended to the private sector.

DECISION-MAKING

Crucial to the DPP and the procurement process working efficiently is the need to eliminate delays in decision making, a point Parrikar made recently: “By mid-2016 we should have a very clear direction under Make in India for submarines, helicopters, guns and aircraft and missiles. When I set a timetable, this is the MoD timetable but there are other intangibles that may delay the programme a bit, but in 2016 we will have a very clear roadmap on these five important programmes such as fighter planes, submarines, helicopters and missiles.”

Parrikar ticked them off himself: Removing bottlenecks in decision-making and compressing timelines. The Ordnance Factory Board (OFB) has been given orders for the next three years so they can plan their production and source raw materials. The result has been visible in the OFB’s reported 15 per cent higher output this year, which will fulfill the military’s total ammunition requirement by 2017. Going one step further, the Defence Ministry is expected to issue production orders for periods longer than three years.

Another case in point are submarines. Mazagaon Docks has been directed to speed up the delivery of the Scorpene submarines (one delivered five more to go @ one every year). A decision is also expected soon on three more Scorpenes to make up for attrition.

That should give the navy some breathing room as it works to identify a strategic partner to build six more stealth diesel electric subs at home. This is a 10 year long Rs 60,000 crore project. Also on the cards, six nuclear powered SSNs to be built in India at a cost of Rs 50,000 crore. Incidentally, two nuclear powered submarines are being built at Vizag, which will add to the Arihant already built and expected to be commissioned next year.

For the air force, the current gap in air defence weapons should be addressed in about three years. While the Indian effort to develop a ballistic missile defence system is still going on, a decision has been taken to buy unspecified numbers of Russia’s S400 Triumf anti-ballistic missile system with a range 400 km. Existing air defence systems are also being upgraded.

Crucial here is how the money given for procurement is used. Parrikar has directed the forces to prioritize their 300-odd requirements as very urgent and urgent. This would enable judicious use of the limited resources available.

SUMMARY

  • India’s defence procurement is slowly moving into top gear after a period of stagnation in the UPA years
  • The new DPP is expected to clear the decks for more rational defence planning and procurement including role of agents
  • The Defence Ministry under Manohar Parrikar appears confident of reversing the current high equipment import levels
  • But given limited resources the services have been advised to prioritize their equipment requirements with focus on indigenous
  • The Defence Acquisition Council (DAC) has cleared the proposal to buy five units of the Rs. 40,000 crore S400 Triumf air defence missile system. The Triumf can detect and destroy hostile enemy aircraft, drones and ballistic missiles at 400 km range

    CHIEF OF DEFENCE STAFF

    There is renewed buzz about the chief of defence staff (CDS). The prime minister’s office is reported to be taking considerable interest in the issue, reason for the Defence Ministry to push the case forward. As of now, it’s in the final stage of consultations and the details as to what role the CDS will perform should be out in the next few months.

    However, it’s important to note that the original purpose of the CDS, as serving “single point of advice” to the political leadership on all military/strategic matters appears to have been given the go by. Rather, the CDS would be the fourth “four star” officer (in addition to the three service chiefs), who will head the joint procurement effort of the three services (which is needed to save time and avoid duplication). The CDS would in that sense, “promote jointness in planning, operations and modernization.”

    The CDS will also oversee the Cyber and Space Commands that the government sees as high priority and which require some degree of cohesion if they are to deliver results. As for which service officer could be the CDS, the bets are it could be from the army, the largest of the three services.

    IN THE PIPELINE

    Russia, which lost out on major defence deals in recent years, is back with a bang!

    Ahead of the prime minister’s visit to Moscow, part of an annual exchange between the two countries, the Defence Acquisition Council (DAC) has cleared the proposal to buy five units of the Rs. 40,000 crore S400 Triumf air defence missile system. The Triumf can detect and destroy hostile enemy aircraft, drones and ballistic missiles at 400 km range. Reports say three units will be deployed on the western border (Pakistan) and two on the eastern border (China).

    Reports from Moscow also say it has agreed to set up a production line in India for assembly and later manufacture of as many as 140 Kamov-226 twin engine light utility helicopters to replace the Chetaks and Cheetahs. The Indian government has to first identify the joint venture partner, likely to be decided between Hindustan Aeronautics and Anil Ambani’s Reliance Defence.

    A sum of Rs 1,200 crore has been sanctioned for upgrading 24 ageing Russian origin Pechora air defence systems of the air force; another Rs. 450 crore has been set aside for buying 120 trawl systems for installation on T90 and T72 tanks. The trawls are used for mine clearing operations.

    Not mentioned here is the likely decision to lease another Akula class nuclear attack submarine from Russia, to add to the INS Chakra. There could also be some movement forward on plans to buy the fifth generation fighter from Russia.

    Other deals cleared by the DAC are the Rs.14,600 crore army plan to buy six more regiments of the indigenous Pinaka multi-barrel rocket system. The Pinaka is an “area weapon” and can destroy ground targets 40 km away. A Mark-II version of longer range is now undergoing trials. Another indigenous product is an electronic early warning system. The army’s proposal to buy 571 bullet proof light vehicles for use in counter insurgency operations at a cost of Rs 310 crore has also been cleared.

    However, it needs to be clarified that some of the imported equipment will take quite some years before the Indian military gets their hands on them.

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