for defence economic advisory functions. Most of them are unable to grasp intricacies of international trade including application of Discounted Cash Flow and Exchange Rate Variation techniques.
Preparation of faulty contract documents can be directly attributed to their inability to understand implications of various provisions, resulting in nearly all subsequent arbitrations going against India’s interests.
And finally, Defence Finance takes fiscal orders from Ministry of Finance (MoF). Many feel that no major proposal is cleared till they get a green signal from MoF. This is done primarily to keep Central Government’s overall expenditure under control and force MoD to surrender funds to reduce deficit. This amounts to withdrawing funds allocated to MoD for its capital procurements, thereby adversely affecting the planned modernisation schedule.
Procedural Glitches
Defence Research and Development Organisation and its Veto Power
All proposals initiated by the services for procuring new equipment for modernisation are first considered by the Defence Acquisition Council (DAC) which categorises them as ‘Buy’ or ‘Buy and Make’ or ‘Make’. In other words, a decision is taken whether the sought equipment is to be purchased outright or partial quantity purchased with import of technology or is to be developed indigenously.
No procurements from abroad can be carried out unless Defence Research and Development Organisation (DRDO), which is a member of all sanctioning boards, concurs that the product cannot be produced/ developed in the country in the required time frame. DRDO is generally wary of conceding this for two reasons. One, it reflects adversely on its research and development competence, and two, every import means loss of an opportunity to expand its own domain with associated budget. On numerous occasions, the services have been denied urgently required equipment because of DRDO’s claims of indigenous development. The recent case of Trishul, where the whole project had to be aborted after decades of promises and extended deadlines, proves it adequately.
Even if DRDO is able to make some progress in a few cases, it is always done with major compromises with respect to the stated qualitative requirements. The services are forced to accept sub-optimal equipment with the promise that subsequent deliveries would conform to the parameters. In any case, by the time equipment is developed and delivered, it becomes obsolete. Thus, the services are forced to live with outdated and useless equipment.
During the last 50 years, there has hardly been any equipment which DRDO has developed in the promised time-frame and conforming to the parameters. It has been a history of false claims, tall promises, unexplained delays and sub-optimal products. The services carry critical voids hoping that a war does not take place before the equipment materialises.
Over-Indulgence of the Public Sector
There are 39 Ordnance Factories and the Ordnance Factory Board is the largest departmentally run industrial undertaking in the country. In addition, MoD has 9 Defence Public Sector Undertakings (DPSU). Despite getting preferential treatment from MoD, they have singularly failed to keep pace with world-wide developments. They thrive on periodic infusion of transferred technology and have developed no indigenous competence.
In all ‘Buy and Make’ cases, recipient of imported technology is a DPSU (even if a private sector entity is more suited for it) entailing long delays, as the technology in question may be totally alien to it.
Interestingly, DPSU get to know military’s likely projections of equipment acquisitions in advance and promptly sign MOU with foreign vendors to preempt competition and present a fait accompli to the decision makers. With assured orders in hand, no urgency is shown to produce quality goods in the promised time frame.
Most unfortunately, the Indian military is a captive customer of the Indian public sector and is forced to buy what it produces. Very often the services are given only one option – ‘take whatever public sector offers or do without it’. In a way, the public sector has contributed directly to the current state of affairs where the armed forces are saddled with mediocre and outdated equipment.
Lack of Accountability
To date, no enquiry has ever been held to fix responsibility for causing delays in the procurement of any defence equipment. All functionaries are safe in the knowledge that they would never be called upon to justify their inaction. This has emboldened them to show no urgency whatsoever.
In late 1990s, India was on the verge of signing a contract for the import of Weapon Locating Radars (WLR) when DRDO intervened to stall it with claims that they were on the threshold of producing indigenous WLR. India went into the Kargil conflict without WLR and suffered considerable casualties. No one was held accountable for making misleading claims and making India lose precious lives.
Similarly, DPSU and Ordnance Factories generally fail to deliver quality goods as per the promised schedules, but have never been reproached or penalised for the same. On the other hand, stiff penalties are imposed on private sector vendors for delays in deliveries.
Fear of Subsequent Enquiries and Play Safe Syndrome
As every procurement decision gets questioned subsequently, many functionaries consider it prudent to defer decision making. It is a common saying in official circles that the price to be paid for not taking a decision is far less than that for