De-fencing Procurement Policy

The Indian government is revising its Defense procurement policy yet again. The new policy is more complicated but more vendor-friendly. Earlier, vendors had to prove that 30 % of their order should come from India. The new rules would mean that if a contractor like Lockheed Martin has been sourcing parts for his civilian jets from India, then he can be waived off this 30 %. Similarly, if a contractor proves that in some other way, he has been doing technology transfer to India, he can be waived this requirement. On the face of it, this rule seems rational. But in reality, this is symbolic of the woes that have beset our procurement policy forever. We do not have sufficient transparency in defense procurement. Unless something turns up during a CAG audit, there is no way of finding what went on in a defence deal. The other extreme of such opaqueness is over-sensitivity to scrutiny.

For e.g. the Government is now relaunching the bid for artillery guns, since the contender who seemed ready to win on technical grounds, was the Swedish firm, Bofors. Unwilling to let itself be associated with the name, the government wants to relaunch the bid. This does not augur well for India. Defense procurements should be made on the basis of technical and to an extent financial considerations. (for e.g. with a 70-30 ration being given to technical and financial proposals). Politics should not be allowed to intervene. Though to the credit of our folks in Ministry of Defense, we have a comfortable hybrid of Russian, French, German, Czech, Israeli and now American weapons and our military capabilities are rated even par with the chinese by some experts, the procurement process is all too often doubted by any and every politician. for instance, some years ago, HD Devegowda who was in the opposition, raised a stink saying the T90S battle tanks from Russia were inferior in quality. Exactly how much does HDD know about battle tanks and who were his advisors. This kind of political mudslinging kills any room for bold and timely purchases. As a result, most of our hardware gets outdated before it is even procured.

Yet another problem is that due to the rules of the Indian civil services, no bureaucrat is allowed to spend more than 5 years with the Defence ministry. This is problematic in an area like defense procurement where it takes at least a few years to understand the dynamics of the international arms trade and the country’s requirements. Just when the bureaucrat gets a hang of the job, he is posted out. Since defense tender bidding processes can take up to 3 years, this means that often a bureaucrat in charge of a deal maybe posted out before the deal is signed thus killing continuity. Doesn’t altogether lend us a lot of confidence, right?

It’s time India’s defense ministry and the procurement policy underwent a major overhaul. What we need possibly is a separate service for the defense ministry, an IDS, and greater transparency through ombudsmen etc. Transparency without politicisation. A difficult balance but a necessary measure.

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