World May Have Changed But India's Defence Procurement Regime Is Still a Bureaucratic Behemoth

Most defence equipment companies operating in India are agonised by complex procurement procedures, but what keeps them going is the size of the Indian market and the hope of high profits.

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Chandigarh: All overseas and domestic defence vendors eager to register sales in India remain figurative victims of what Ajit, Bollywood’s memorable villain from the 1960s, had once subjected an adversary to endure in one of his hit films.

The archetypal baddie had ordered his antagonist to be submerged in a vat full of ‘liquid oxygen’ to undergo everlasting misery: the liquid would not let the antagonist live, while the oxygen would not let him die.

Most defence equipment companies operating in India privately conceded that, for decades, they too had faced the fate of Ajit’s adversary in their endeavours to hawk their wares to one of the world’s largest consumers of military equipment.

Many of their executives admitted to The Wire of running the gauntlet of complex procurement procedures, hidebound Ministry of Defence (MoD) officials and an ill-informed military, which often formulated exaggerated specs for equipment that, in many instances, was simply non-existent.

But the prospect of eventual profits they stood to record – much like the vitalising oxygen for Ajit’s unfortunate quarry – compelled them to persevere in their undertakings despite the multiple years it took to eventually fructify.

“There are a few markets for military equipment in the world that are as large or as difficult to operate as India,” said a European original equipment manufacturer (OEM) who has been dealing with the MoD for decades.

Continuing further, however, he said it was one of the harshest and most difficult markets to navigate, due to its complicated acquisition practices, the MoD’s unreceptive and vacillating bureaucracy, and a military that was largely ill-informed about globally available weapon systems. He declined to be named for the fear of “losing favour” with South Block.

Also read: Instead of Celebrating Trivialities, India Needs Sober Pragmatism to Plan its Defence Exports

Abrupt suspension of DefExpo 2022

A cross-section of over 1,000 domestic and foreign defence companies point to the MoD’s arbitrary postponement of DefExpo 2022, just six days before its March 10 inauguration by Prime Minister Narendra Modi at Gandhinagar, as an instance of being “jerked around” and being taken “totally for granted” by the ministry, yet again.

Just as they were in the final stages of erecting their display stalls and readying their varied platform exhibits at the Mahatma Mandir Convention and Exhibition Centre in Gandhinagar, the MoD cited undefined “logistic problems” and abruptly deferred the Expo.

This compelled participants, including 121 from overseas, to simply write off large amounts of money they had expended in readying for the armaments show. These expenses included the expo’s sizeable attendance fee, the cost of shipping voluminous goods to Gandhinagar and paying astronomical, un-refundable hotel advances, amongst numerous other sundry outgoings.

A scene from DefExpo 2020 in Lucknow. Photo: Reuters/File

Although most exhibitors denied facing any logistic challenges, they, however, privately complained of not being provided with any credible reason by the MoD for the expo’s deferral. But to an exhibitor, they meekly accepted this ‘postponement’, albeit with muted, under-the-breath murmurings that were rarely vocalised beyond in-house gatherings, fearful that these would reach the pitiless MoD’s ears.

Also read: New Sanctions on Russia Spell Trouble for India’s Defence Procurement

And, much like Bollywood Ajit’s aforementioned adversary, a large number solaced themselves with the prospective ‘oxygen’ of yet another expo sometime later, which they unanimously hoped would prove commercially fortuitous.

The expo’s suspension had also occurred at a critical juncture when the Russian-equipment dependant Indian military’s vulnerabilities were mounting, following US-led sanctions on Moscow for invading Ukraine.

“These sanctions threaten to impinge adversely on India’s ability to source Russian platforms and spares and ancillaries from Moscow for over 60% of its in-service equipment,” said Brigadier Rahul Bhonsle (retired) of the New Delhi-based Security Risks consultancy group.

“Such an impediment will compel India to diversify its military equipment needs, for which non-Russian vendors would become critical to its requirements,” he declared. “Robbing them of an opportunity to exhibit their merchandise at DefExpo was inexplicable and undervalued their role.”

A test of patience for merchants  

A cursory examination of India’s vast defence buys explains the tolerance threshold of these armament merchants.

During 2016-20, India was the world’s second-largest defence equipment importer, after Saudi Arabia, accounting for 9.5% of the world’s overall arms trade, according to the Stockholm International Peace Research Institute. Alongside, an analysis of successive reports by the Parliamentary Standing Committee on Defence revealed that in the decade between Financial Years 2010-21, the MoD had annually imported an average of 41.24% of its materiel requirements worth Rs 3,25,942.53 crore ($42.73 billion).

Correspondingly, India’s indigenous purchases for the same period totalled Rs 4,64,383.01 crore ($60.88 billion) but included an assortment of imports by Indian manufacturers like engines for aircraft, tanks, and warships, gearboxes and transmission systems, missiles, radars, specialised ammunition, rockets and diverse sub-assemblies and components.

The MoD, however, had disingenuously neglected to catalogue these as imported, to further its ‘atmanirbhar’ or self-reliance initiative in sourcing defence equipment locally. Defence analysts claimed that if these were logged fittingly, India’s overall military imports would be exponentially higher.

Also read: With Focus on ‘Self-Reliance’ in Defence, Budget Provides 68% Allocation To Domestic Industry

One US-based OEM executive drolly stated that India’s weapons market presented potential sellers with a “delicious irony” reminiscent of Ajit’s hapless quarry. Each one of them, he stated, was well aware of the “excruciating procedural and bureaucratic minefield” they needed to tackle to market their kit.

Nonetheless, the sizeable volumes of equipment, including platforms, missile systems, ammunition and ordnance, which India eventually acquired directly or via a transfer of technology, was too alluring for vendors to pass up.

Representational image. Photo: Reuters.

“A positive commercial ending to all defence deals in India eventually compensates for all the years of agony, frustration and exasperation endured,” he stoically stated, also declining to be named. This latter outcome he likened to the oxygen in Ajit’s target’s fateful barrel.

Former Army Chief of Staff General V.K. Singh – now a federal minister – corroborated this syndrome using a more seminal and gentler analogy.

During his tenure as army chief that ended in May 2012, General Singh appositely compared all domestic materiel procurements to a game of Snakes and Ladders, known originally as Moksha Patnam. He asserted that all files dealing with military purchases slipped back to the start from the top, just as the end appeared imminent, much like the counters slid sharply down in Snakes and Ladders.

Little has changed in the intervening decade since General Singh retired.

Changing times and rigid norms

Former MoD acquisitions advisor Amit Cowshish went a step further by declaring that unlike other “compact and self-contained” ministries like the railways, and commerce and industry, the MoD’s capacity to conceive defence policy plans and procurements and to ably execute them was a “mystery”.

Also read: It’s Not Enough to Criticise India’s Defence Procurements. We Need Viable Alternatives.

Writing in The Wire in early 2021 on ‘Who thinks for the MoD‘, he declared that a few, including ministry insiders, could provide a convincing answer. At best, he went on to damningly state the MoD could be defined as a “siphonophore” or an assembly of zooids, similar to myriads of marine species that clone themselves thousands of times in different forms and shapes, defying accurate definition.

All capital or equipment procurements and upgrades are presently executed via the Defence Acquisition Procedure 2020 (DAP 2020), the eighth such edition since 2002. This dense 657-page document which, at times defies comprehension even for MoD and military officials, details a complex 12-stage procedure for procurements many of which, often for nebulous reasons, fall prey to Snakes and Ladders.

These processes included the issuance of a global or domestic request for information (RfI) for the concerned platform or equipment by the respective services, followed by detailed qualitative requirements (QRs) or specs for it, once responses to the former had been received. In most instances, an acceptance of necessity (AoN) by the MoD’s Defence Acquisition Council ensued, after which a request for proposal (RfP) or tender for the kit was dispatched to potential overseas or local suppliers.

Technical evaluation, field trials, staff assessment, and an oversight committee to endorse the preceding procedures came next. Once approved, a contract negotiation committee or CNC was instituted to negotiate the equipment cost which, in turn, was subjected is further to multi-tiered endorsements, depending on the amounts involved, before the contract was eventually inked.

All service vice-chiefs, for instance, were authorised to approve equipment buys of up to Rs 300 crore, the defence secretary’s upward limit was Rs 500 crore while that of the defence minister was pegged at Rs 2,000 crore. The finance minister was authorised to clear military purchases up to Rs 3,000 crore and any acquisition topping that amount needed authorisation by the Cabinet Committee on Security headed by the prime minister.

And though the DAP-2020 stipulated a time frame of 74-106 weeks within which to complete procurements, these deadlines were rarely, if all, adhered to, said senior MoD and military source.

Some previous acquisitions to name a handful like that of 66 BAE Systems Hawk 132 advanced jet trainer inked in 2003 took nearly two decades to finalise, while the deal with Airbus Defence and Space to supply 56 C295 MW medium transport aircraft to the Indian Air Force took over a decade to fructify before it was clinched late last year.

In the meantime, one major drawback hobbling procurements remained QR overreach by the services in stipulating their needs.

The late defence minister Manohar Parrikar had jokingly but accurately described this adverse penchant succinctly, at a public function in New Delhi in 2015.

With the then Army Chief General Bikram Singh by his side, the minister had declared that at times the Indian military’s QRs for equipment appeared to be straight out of “Marvel comic books”. The technologies demanded were “absurd, unrealistic” and simply non-existent, he had said. But, it seems, years later little has changed as this trend still continues.

But that, as they say, is yet another sorry saga that is impeding the military’s modernisation as it confronts new challenges.