India spends a significant amount of resources on its national defence. Hence, efficiency in utilisation of resources is not only an economic imperative but vital for defence preparedness. Also, a successful foreign policy is predicated to a large measure on a country’s defence posturing. A robust defence posturing in turn is not possible without motivated men complemented by requisite arms and equipment.
- In the last decade or so, India’s defence preparedness suffered not only on account of lack of material wherewithal but subversion of the military leadership from external and internal vested interests. However, things changed with the new government at the centre.
- The government accepted many of the suggestions of the Dhirendra Singh Committee set up to make recommendations to revamp the Defence Procurement Procedure (DPP). The introduction of a new category of Buy Indian (or IDDM, Indigenous Design Development and Manufacture), the graded acceptance of better quality through the introduction of an “enhanced” performance parameter clause, and the sudden energisation of private players in defence manufacturing are some cause for cheer.
- Many of the rules that hitherto put the private industry at a disadvantage vis-à-vis the Defence Public Sector Undertakings (DPSU) have been modified or removed. Thus, nomination of a DPSU for absorbing transfer of technology has been done away with and the tax exemptions withdrawn, which effectively makes pricing more competitive.
- There is also visible incentivisation of Micro, Small and Medium Enterprises (MSME) in many spheres. Their energetic response to the government’s initiatives is seen in their setting up of a Defence Innovators and Industry Association to interact with Government decision-makers to ensure a policy that encourages design and development of defence equipment with IP [Intellectual Property] ownership in Indian companies. This bodes well for the future since MSMEs, which are the Tier-II and -III suppliers, are the crucibles of innovation and the true determinants of indigenisation.
- There has also been a surge in the number of defence licences being issued by the MoD.
What else needs to be done?
- Creation of a Procurement Executive (PE) outside the government:
As per the recommendation made by the Dhirendra Singh committee, Steps should be initiated without further ado to set up a specialised structure outside the formal structure of the Ministry of Defence. PE should be made autonomous.
- Choose strategic partners from the private sector:
Select private sector companies as strategic partners in six technology areas: aircraft/helicopters, warships/submarines, armoured vehicles, missiles, command & control systems, and critical materials. This is good but this idea would require diligent implementation. Government’s role should be limited in this and private players who have the capability and capacity to deliver should be selected. The overall selection process has to be transparent.
- Empower the private sector:
The private sector should be empowered by letting them lead in large ‘Make in India’ projects, with support from the DRDO. Here, weightage must be given to quality by following the L1T1 concept (selecting better technology, not necessarily at the lowest price) in the techno-commercial bid evaluation. This would also result in true R&D generation.
- Set up a dedicated professional procurement team:
It is necessary to set up a dedicated professional procurement team with relevant experience.
- Make procurement election proof:
The procurement process should be election-proof as national security cannot be held hostage to ineffective functioning of personnel who constitute the MoD and the political system. The state of preparedness of the defence forces has to be an activity in continuum, with or without bipartisan support.
Procurement for defence can be as cruel as it gets, as there is no place for sentiment, just the brute successes in R&D and finished products. The energies generated following DefExpo and the new DPP-2016, if converted to actual, professional R&D, would be true indicators of the government being on the right track in enabling defence indigenisation and regaining its strategic autonomy. India, with its huge talent pool of engineers, scientists and competitive manpower, should harness this resource lucratively to make it a R&D hub and emerge as a largest exporter rather than being the largest importer of defence equipment in the world.