The Government has significantly declared that it would go by the choice of the Armed Forces in acquiring new weapons without any political interference.
Defence Minister A K Antony made this policy statement at the three-day International Seminar on Defence Acquisition he inaugurated July 12 at the country’s premier think tank, the Institute for Defence Studies and Analyses (IDSA). The choice, he said, would be dictated by first, success in technical trials by the concerned Service – Army, Navy or Air Force – and then by competitive lowest price.
“There would be no political decision” to influence the selection process, and all the vendors, Indian or foreign, would get “a level playing field,” he told a large gathering of Indian and foreign delegates, including from the global defence industry.
IDSA Director General N S Sisodia said that India was spending around $ 35 billion on defence every year, nearly half of that on equipment, while Mr V K Misra, former Secretary Defence Finance and seminar coordinator, pointed out that “India is likely to spend an aggregate of over $235 billion on acquisitions over the next 10 years till 2020-2021.”
(It may be recalled that an in-house survey published by India Strategic in 2010 had calculated an expenditure of about $ 300 billion between 2007 to 2025).
The Defence Minister’s statement came virtually on the eve of major defence acquisition announcements, particularly for the selection of combat jets, combat helicopters, heavy lift helicopters and basic trainers, for which the Indian Air Force (IAF) has already submitted its technical evaluation reports to the Ministry of Defence (MoD). The field trial process has been rather fast, and the MoD, which has the responsibility of examining the commercial bids of the vendors in all these cases, is likely to announce the winners within the next few days, weeks or months, but most likely all of them by the end of 2011 or latest March 2012 when the current fiscal year ends.
IAF Chief of Staff Air Chief Marshal P V Naik told India Strategic that IAF had also completed its part in the evaluation of the utility helicopters it is buying along with the Army, and the latter was expected to submit that to the MoD shortly. With a larger number of aircraft, the Army is the lead buyer in this case.
Overall, these deals could range between $ 15 to 25 billion, depending upon the numbers, particularly of the combat aircraft, in which the French Rafale and the European consortium’s Eurofighter Typhoon are now the finalists. The tender is for 126 Medium Multi Role Combat Aircraft (MMRCA) with an option for 63 more.
Mr Antony said that the Government was determined to modernize the Indian Armed Forces as most of their equipment was old, and because of the required replacement, the budget for acquisition was increasing every year. It is not that India had any aggressive designs but one had to replace the old equipment and be ready "to face any eventuality."
But the choice of the new equipment would be that of the respective Service, Army, Navy or Air Force. And the criteria would be 1. Success in technical evaluation, and then, 2. Competitive lowest price called L-1. The key would indeed be “to cut down the costs without compromising on capability.”
“Up to the trial stage, technical soundness of a product will determine whether it will remain in race and after that it is the price which will determine its ultimate selection for procurement.”
Mr Antony observed: Today the nature of warfare has shifted and challenges range from asymmetric threats, terrorism, internal disturbances as well as conventional warfare in a nuclear backdrop. On our part we need to develop the latest strategic and conventional capabilities. However, in our enthusiasm to modernize and upgrade our security infrastructure, we must not allow our defence acquisition procedures to be manipulated or corrupted. Our primary objective must be to stay competitive and yet remain cost efficient, as well as technologically and strategically reliable. For this to happen, defence industrialization will have to be accelerated.”
Warning that attempts to corrupt the process with inducements to those involved in the selection would be counter-productive, he pointed out: “It is the trial stage, purely professional, and then the price” that would factor in the Ministry of Defence’s decision making process.
The Government has actually followed this practice generally in the past but this is perhaps the first time that a Defence Minister has announced this as the official policy. Till the days of the Soviet Union though, Indian Armed Forces could only buy Soviet origin equipment, available at cheap prices. Whatever was available was acquired, and some of those systems did perform well also.
Western equipment was not available except from France but notably, no country ever transferred critical technologies to India. And in several cases, vital components were kept in short supplies or delayed.
In any case, India did not have much foreign exchange to dictate terms, although both the late Prime Ministers Indira Gandhi and Rajiv Gandhi turned to hi tech weapons after the US supplied F 16 warjets, P3C Orion maritime aircraft, Harpoon missiles and C3I computers to Pakistan from 1982 onwards. They laid emphasis on building intelligence organizations too.
From 1990 onwards, there were no major acquisitions in routine, except that of the SU 30 aircraft from Russia till Pakistan helped kick-start the process by intruding into Indian borders leading to the 1999 Kargil War.
The economy is much better now, and apparently reflecting this, the Defence Minister observed that “gone are the days of capital shortage” but he did say, and rightly, that India needed to buy more from within the country and outside.
The Defence Procurement Policy (DPP) is being revised and reformed every year to ensure Transfer of Technology (ToT), and the private Indian sector is being encouraged to come forward. This in fact was also the suggestion from most of the participants.
At present, India imports nearly 70 per cent of its defence equipment. Ideally, India should import only 30 per cent and meet 70 per cent of its requirements indigenously, Mr Antony said.
Pointing to the importance of the acquisition process, the theme of the seminar, the minister said that it was central to both the Armed Forces and the MoD, but ToT and indigenous manufacture would also strengthen the industrial base in India, both in the public and private sectors, and help boost the economy and create jobs.
Defence industry would contribute to engineering and manufacturing capabilities of the country.
Said the Minister: “Defence could also provide enormous scope for Indian business and industry in spheres such as infrastructure development, exports and for becoming an important constituent of the global defence supply chain. Joint ventures and technical collaborations would help the Indian defence industry to strive for greater excellence in Defence R&D, design, engineering and manufacturing.”
India’s defence acquisition process has often been described as flawed and slow. The International Seminar discussed the best practices – and some worst instances – in various countries. There were invitees from Germany, France, US, UK, Russia, Brazil, Malaysia and from companies like Boeing, Eurofighter, Lockheed Martin, Reliance India, Dassault, Honeywell, Rosoboronexport and so on.
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