The report, prepared by minister of state for defence Subhash Bhamre for presentation before the Prime Minister last year, said acquisition of weapons and key military platforms have been affected due to diffused structures, redundant layers and multiple decision-making heads, they said.
When asked for a reaction on the report, the defence ministry chose not to respond.
The report cited a range of "obstacles", including diffused structures and multiple decision-making heads, for long delays in procurement of arms and military platforms for the three services.
The long-pending modernisation plan for the Army, Navy and Air Force has been badly hit due to internal loopholes in the acquisition process, the report said.
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According to officials, a whopping Rs four lakh crore worth of military procurement involving 136 proposals were cleared by the government in the last three years as part of efforts to modernise the armed forces.
However, no real movement has been made to start the procurement process, they said.
The three services have been pressing for critical military hardware and platforms including fighter jets, submarines and attack helicopters as part of the modernisation plan.