A Call To (Domestic) Arms (Manufacturing)
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A Call To (Domestic) Arms (Manufacturing)

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Within this context, it may be useful to examine some of the roadblocks that may need to be overcome as India’s defence stakeholders, in particular MoD’s Karmayogis, lead the way, using defence acquisition reforms as a vehicle for India’s economic revivalby Sandeep VermaDomestic manufacturing of defence equipment has long been India’s key policy ambition; and her enigmatic Prime Minister, in no uncertain terms and in his own impeccable style of unpacking complex national issues using down-to-earth phraseology, has given a clarion call to India’s defence establishment to take forward his vision for ‘Atmanirbhar Bharat’ and to introduce much-needed procurement efficiency.

The first element of his mantra—Atmanirbharta—is about strengthening India’s defence industrial base; while the second element—infusing efficiency in procurement and shortening defence acquisition cycles to a two-year period at best—is fully harmonised with his overall decisive style of political leadership: getting tomorrow’s work done, today! Within this context, it may be useful to examine some of the roadblocks that may need to be overcome as India’s defence stakeholders, in particular MoD’s Karmayogis, lead the way, using defence acquisition reforms as a vehicle for India’s economic revival.

Civilian-Style Procurement Reforms In Defence

Under-experienced stakeholders worldwide can sometimes make mountains out of molehills in their examination of specific defence cases, forgetting in their enthusiasm that defence acquisition faces certain unique and inherent challenges not ordinarily seen in normal civilian spaces. For one, defence procurement needs to be undertaken in a manner that does not fully disclose a nation’s capabilities to its adversaries, making civilian-style transparency fundamentally impossible. Two, defence equipment and platforms need to fit in with not only domestic war strategies and legacy structures, but also regional defence cooperation networks, making civilian-style competition also virtually impractical to achieve.

Three, defence manufacturing worldwide is highly concentrated within a small set of sellers and systems integrators, requiring a constant focus on contract negotiation at all stages, giving an entirely new meaning to ‘arms-twisting’ in defence procurement—a practice that is traditionally frowned upon while making civil purchases. Four, defence acquisition is more about acquisition of long-term war-fighting capabilities, making it inherently more protracted and requiring far greater flexibility since some of what is eventually acquired is capability that is still under R&D at the time of the RfP: more akin to ‘prototype’ acquisition as compared to civilian procurement of commercial off-the-shelf (COTS) goods and services. As a result, defence contracts require constant fine-tuning and modifications after award of a contract: a practice that is otherwise severely discouraged in civilian procurement.

Fifthly, international attention because of high-value nature of defence contracts always requires some formal or informal guidance from India’s NSA as also foreign/trade policy-linked adjustments. And last but not the least, professionalising defence procurement requires maintaining an ‘arms-length’ between user requirements on one hand and user involvement in procurement decision-making on the other.

This last element is perhaps the most sensitive one of all, and therefore perhaps the most challenging one as well to navigate, but one that has seen immensely successful resolution country-after-country. Witness the professionalisation of defence acquisition in the US where contracting officers are reasonably insulated from military interventions while functioning in a decentralised manner; or the DGA’s institution in France with a hugely centralised, integrated and holistic approach to its defence acquisition, defence manufacturing and defence exports.

Unique Advantages For Government Procurement In Defence

Professionalising national defence procurement institutions and processes also comes bundled with a number of secondary consequential advantages, many of which can constructively contribute to the Atmanirbharta vision that India’s PM outlined recently. Defence R&D and manufacturing tend to have multiplier effects on the civilian economy—international experience shows that many high-end defence capabilities and technologies have been regularly turned into successful commercial, global enterprises: an eminently useful policy tool presently as all nations try to outgrow the adverse impacts of the Covid-19 pandemic. This ‘multiplier’ effect is aided by the ‘monopsonic’ nature of defence procurement—the government as the single buyer—implying that national governments can strongly influence technical standards by which goods and services get manufactured/provided, imported and exported, while continuing to act as ‘nudges’ and staying compliant with their GATT and GATS commitments.

The Defence Reforms Story So Far

Defence acquisition reform in India has been a continuous process, right from the time of MoD implementing recommendations made as part of various reports of the Kelkar Committee headed by the eminent Vijay Kelkar; but the present regime has seen a greater number of committees set up to rework India’s defence procurement institutions as one of the most major shakeups in defence acquisition ever attempted: the most notable work having been undertaken in 2016 by a committee headed by MoD’s ex-DG (Acquisition).

As reported in public domain, the Chairman had sound and serious concerns with the overly centralised nature of defence acquisition in India: the present system where policy-level issues and procurement case-level decisions have been inextricably mashed up together. To that extent, there indeed appear to be strong reasons to insulate the political leadership in India’s MoD from day-to-day rule-level changes, as well as from the nuts and bolts of contract pricing and modifications in individual procurement cases.

In addition, irrespective of the form India’s defence acquisition organisation may eventually take—decentralised decision-making under centralised policy or otherwise—there is a clear and present need to professionalising India’s defence acquisition workforce. The normal civilian rule imposed by the CVC—constant rotation of procurement officials every three years, leaving them virtually a year and a half at best to show any outcomes if at all—needs to be completely modified both in letter and in spirit for the defence sector by inducting and retraining of a professional cadre of procurement specialists drawn from various arms of the government and elsewhere; and then retaining them on specific projects on a much more permanent basis than at present for visible and sustainable results to be seen by one and all.

Resurrecting India’s Defence Acquisition Organisation

The PM is bang on when emphasising and reemphasising his priority for efficiency in procurement—be it the need for speedy rollout of infrastructure projects or aiming for short (typically two-year) timelines for defence acquisition processes on an end-to-end basis. He has already put into play an ambitious Karmayogi Yojana (more of a time-bound mission, like most of his policy decisions) for upskilling and transforming India’s civil servants into ‘experts’, moving from ‘rules’ to ‘roles’, refocusing from cloudy ‘file noting’ to much more real ‘outcomes’ and measurable performance. Within India’s defence ecosystem also, it is time all stakeholders refocus and realign themselves into creating transformational defence acquisition institutions that are effective, efficient and accountable all at once.

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