Over the past three months there has been considerable buzz around the defence sector in India - a result of the expectations raised by the new government, supportive statements by the defence minister and delivering on the promise to increase foreign direct investment (to 49 per cent as a start). The prime minister, too, has shown that he can find the time to visit various defence establishments and has been quick to understand some of the problems that plague our defence industry. He has emphasised on numerous occasions that he would like a major portion of our defence requirement to be designed and manufactured in India.
All this is the easy part and not new. The challenge lies in the implementation and that is why it is surprising and worrisome that there is nothing to suggest that any informed thought has gone into this crucial aspect of defence acquisition. It may be early days, but how do you justify a lack of focus arising out of the dual responsibility of one person handling two ultra-important portfolios, finance and defence?
If we think one minister - however sharp and intelligent - can handle both jobs, then either managing India's economy and public finance is child's play or no one understands the nature of a defence minister's job. Operational issues such as recruitment, organisation, training and deployment of our armed forces are important and require review and monitoring at the ministry level, but the defence minister can make a major impact in defining a clear acquisition policy supported by a responsive procurement system, so that intent is translated into deliverables.
Although the United Progressive Alliance over a 10-year period did come out with a Defence Production Policy and a Defence Procurement Procedure (DPP) updated every two or three years with cosmetic changes, it was clear that the formulation of these policies were an end in themselves and were to be slavishly followed with no concern for the effect such policies may have on the country's security.
If implementation is the key, then the defence acquisition policy must be seen as a means to an end and procurement goals must be derived by taking both public and private sector capabilities into account, so that our armed forces get the right quality equipment at the right time in the desired quantity at the best possible price. No single factor should be allowed to dictate the procurement process unless they involve sensitive issues that impinge on national security.
Although the overall concept of the current DPP is workable, it has numerous lacunae. It is not my intention to review the complete DPP (an exercise that must be conducted sooner than later) but it will serve the purpose to take one example of the lack of thought on implementation.
The example concerns the well-intentioned "Make" category of procurement in the DPP procedure, under which selected Indian private and/or public sector companies are funded by the government on an 80:20 basis (80 per cent funding from government and 20 per cent from the company called Development Agency or DA) to design and develop sophisticated weapon systems. The DAs are free to bring in technology from outside as long as there is a transfer of technology to ensure that critical technologies in the development process reside with the Indian DA.
Two such important programmes under the "Make" procedure are the "Future Infantry Combat Vehicle" (FICV) and the Tactical Communication System (TCS). The responsibility to select the DA that has the best technologies and capacity to design and develop complex defence programmes centres on an Integrated Project Management Team (IPMT) nominated by the defence ministry. This is where the problem lies.
The prospective DAs have been investing in technology and engineering systems to acquire the capability of a large-scale systems integrator through joint ventures and technology tie-ups with major defence companies in the world. By contrast, the IPMT comprises ex officio appointees that get turned around every few months and, in most cases, are generalists. The Defence Research and Development Organisation (DRDO) members on the IPMT, too, are, with exceptions, dated in their knowledge of new technologies and engineering systems. This results in a mismatch between the skill levels of the DAs and the IPMT .
There is also the question of the lack of continuity. The evaluation of the response to the Expression of Interest and the subsequent understanding of the Detailed Project Report for a "Make" category programme could take two to three years. But the IPMT chairman could be changed thrice during this period and members are frequently rotated, so that even the benefit of the learning curve is lost. This results in long delays and the programme ultimately being scrapped and re-issued despite considerable investment by DAs.
This is precisely what has happened in the case of the FICV. After a two-year evaluation process, the Expression of Interest for the programme was withdrawn (it may be re-issued later this year). Though the TCS programme has moved somewhat faster, it is still way behind schedule with constant hold-ups owing to lack of clarity on procedural issues. Where else in the world would a country be willing to spend approximately Rs 6,000 crore on developing a major defence system crucial to national security and leave the selection, evaluation and monitoring of the project to a part-time IPMT with questionable knowledge of the subject and no permanency or accountability?
Something must be terribly wrong with our system if the people in uniform who desperately require the equipment being developed and the bureaucrats who have direct responsibility to oversee acquisition or procurement do not realise this. All that is required is to have a permanent IPMT for each project set up through a government notification that will be responsible and accountable for the project from the development phase to trial evaluation, manufacturing and through life support. The IPMT could include suitable retired defence and DRDO officers, industry experts in engineering and manufacturing from the private and public sectors in required technical disciplines and service officers for customer interaction. Surely, a Rs 6,000-crore development project with potential sales of Rs 60,000 crore deserves this level of monitoring and responsibility to deliver?
Without a professional and permanent IPMT, "Make" category programmes are doomed to cost and time over-runs and possible failure. Private sector defence companies will have no incentive to continue to invest in R&D to support such programmes and India will continue to import over 80 per cent of our defence requirement.
This is just one example of how the defence minister urgently needs to think through complex development issues. The "Make" category procedure must be made to work since it is most suited to developing a defence industrial base in India. Three to four professionally managed "Make" category programmes for major weapon systems by selected Indian private and public sector companies will change the face of defence manufacturing in five years. Defence acquisition and procurement is a full-time job and if the defence minister is to do full justice to this important aspect of national security, then it is obvious that he will have no time to devote to the country's financial and economic health. Let's have a permanent defence minister. It's time to get serious.
The writer is former chief executive of Mahindra Defence Systems, a major defence company in the private sector
These views are personal
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