Need for Defence and Aerospace Commission

Need for Defence and Aerospace Commission

(FORCE August 2012)

Major General Mrinal Suman, AVSM, VSM, PhD

Quite unabashedly, Indian leaders take pride in claiming that India is the largest buyer of weapons in the world, whereas it is a matter of national shame that even after 65 years of Independence, India continues to remain wholly dependent on imported defence systems. It was in 1995 that Abdul Kalam declared that the ratio of defence imports would be reduced from the then prevailing 70 percent to 30 percent by 2005. It was a laudable aim but was not accompanied by necessary structural and policy changes. Thus it was doomed to fail. 

India’s defence industry is in a pitiable state solely due to the gross inefficiency of the public sector. Instead of mastering imported technology and using it as a spring board to develop newer technologies, it has found the easiest way of making money by acting as pure traders – assemble imported subsystems and sell them to the captive military at unethically exorbitant profits. 

On the other hand, every effort is made to inhibit the entry of private companies in the defence sector, lest they provide competition to the sloppy public sector. Despite repeated assertions to the contrary, enormous potential of India’s vibrant private sector remains untapped. Resultantly, not a single state-of-the-art weapon system has been developed or produced indigenously so far.

Since the inception of the Defence Procurement Procedure (DPP) in 2002, India has been revising it biennially and the much touted reforms have been limited to rationalisation of its various policy provisions. Neither any holistic study of all facets of the defence procurement regime has been undertaken nor has any serious thought ever been given to providing an impetus to indigenous production.

All expert committees constituted to suggest reforms have also limited themselves to minor procedural changes. They have lacked courage to suggest radical overhaul of the system, fearing its outright rejection by the decision makers. They are also wary of earning the displeasure of various interest groups. In any case, most committee reports gather dust in the shelves of official apathy.

In the absence of a strong will to transform, India continues to flounder in the labyrinths of bureaucratic indecision while the country suffers – the armed forces are not getting the required equipment in time and the indigenous defence production is languishing. The current dispensation has been an unqualified failure. 

  

Need to Accept Failure

It is commonly said that a failure is not as bad as persisting with it. Failures should force introspection and drive reforms. Failures are opportunities to learn and improve.

The above is true for national policies and efforts as well. However, there are two key provisos. First, after mustering courage to accept the failure of the existing arrangement, the leadership should carry out an objective analysis of the reasons for failure to identify areas that need corrective treatment. Secondly, the leadership should possess the will and strength to resist well-entrenched status-quoists to usher in sweeping reforms. Half-hearted approach with compromises to accommodate different interest groups will always be a futile and self-defeating exercise.

Additionally, the following three basic realities must be understood and accepted before undertaking reforms:-

a)    Acquisition of defence systems is intrinsically interlinked with the development of indigenous defence industry. Therefore, there has to be a single agency to oversee the complete gamut of related activities. The present system of the Acquisition Wing and the Department of Defence Production (DDP) handling acquisition and production functions respectively can never deliver.

b)   India’s long-preferred route of ‘Buy and Make’ has been appallingly counterproductive and harmful. Under this route, a limited quantity is purchased in fully built up condition from a foreign vendor while the balance bulk quantity is manufactured in India under licence. India has not benefited in terms of technology infusion. On the contrary, such an arrangement has contributed directly to the perpetuation of India’s unhealthy dependence on foreign sub-assemblies.

c)       Management of defence acquisitions and promotion of indigenous defence industrial capability are highly specialised functions, well beyond the competence of generalist bureaucrats and service officers. 

Need for Restructuring

To start with, it must be appreciated that planning and implementation functions are distinctly different. They demand dissimilar but highly focused treatment. Therefore, they must be segregated.

Planning functions should primarily be performed by officials and military leaders who possess necessary understanding of the national security concerns. On the other hand, implementation functions must be entrusted to professionals who are fully conversant with modern technologies and are aware of the latest management techniques to administer multi-faceted and multi-agency programmes.  

A Defence Perspective Planning Council (DPPC) should be constituted as the highest policy making body to handle all planning functions. As national defence is a multi-disciplinary issue, DPPC should be a broad-based body by including representatives of the Foreign Ministry, the Home Ministry and the National Security Advisor. Its role should include identification of capability gaps, approval of 15-years Long Term Integrated Perspective Plan and 5-years Services Capital Acquisition Plan. It should be empowered to approve changes in acquisition procedures, grant deviations from the laid down policies and accord approval to invoke the Fast Track Procedure. See Illustration 1.

Illustration 1: Segregation of Planning and Implementation Functions

India’s experience with the successes achieved by the Atomic Energy Commission and the Space Commission has been highly encouraging. It is time a similar setup is adopted for the defence sector as well.

 

A Defence and Aerospace Commission (referred to as the Commission hereafter) should be established to carry out all execution functions to implement perspective plans approved by DPPC. It should be the nodal agency to oversee the complete defence acquisition process and the development of the indigenous defence industry.

The primary responsibility of the Commission should be to ensure that all approved equipment proposals are implemented within the specified timelines, satisfying all performance parameters and obtaining best value-for-money for the country. At the same time, it should promote development of the indigenous defence industry and facilitate export of defence goods. In other words, it should handle all activities pertaining to armament production, acquisition and export. However, technical evaluation and field trials should continue to be held under the aegis of respective SHQ as hitherto fore.

It should be for the Commission to analyse, debate and determine the route that should be followed for each procurement proposal – outright import or indigenous development or a combination of the both. Factors like quantity, economic viability, urgency, criticality, indigenous capability and acceptable timelines will be the key deciding factors.

Suggested Structure of the Defence and Aerospace Commission

DAC must be headed by a distinguished person who is known to possess competence to synergise, harmonise and administer complex programmes involving multiple agencies. In France, the head of General Directorate for Armament (Direction générale de l’armement) is hand-picked by the Minister of Defence and reports directly to him. He is not answerable to any bureaucrat or service chief. This autonomy allows him to function without any extraneous pressures. India should follow the French example. Chairman of the Commission should be given the rank of Minister of State to authenticate his status.

Suggested structure of the proposed Commission is shown at Illustration 2. It will be seen that the span of responsibility of the Commission straddles across many areas, albeit in mutually related disciplines. Suggested constituents of the Commission are given hereunder.

a)   Acquisition Wing

Being the main acquisition arm of the Commission, it should undertake all functions relating to outright purchases and finalisation of cases wherein indigenous manufacture under licence is planned. Like the current set-up, it should continue to be an integrated set-up to include officials from the Department of Defence, the Finance Division and the Service HQ.

b)   Land Systems Industry Wing

Its primary responsibility should be to oversee indigenous production of land systems, both under licence and through local development. For focused supervision, it should adopt the practice of constituting Integrated Project Management Teams for each project. Another important function of the Wing should be to act as an interface between the government and the industry (both public and private sectors). The Wing should maintain a data bank of proficient Indian producers with their respective domain competence. It should maintain regular liaison with industrial associations and provide guidance to promising entrepreneurs.   

c)   Aerospace Industry Wing

Its role will be akin to that of the Land Systems Industry Wing, as stated above. As aerospace is a niche segment, it requires specialised treatment. Additionally, with the burgeoning array of airborne platforms, both manned and unmanned, aerospace industry merits highly committed attention.   

d)   Maritime Industry Wing

India’s Navy and the Coast Guard are in urgent need of a large number of naval crafts. All the four public sector shipyards are overloaded with orders. Of late, a number of modern shipyards have been established by the private sector as well. Therefore, it is necessary to have a central authority to coordinate the complete gamut of shipbuilding activities to make certain that the available potential is optimally harnessed.  

   

e)   SME Wing

It is a well recognised fact that Small and Medium Enterprises (SMEs) are the engines that spearhead technological advancement. Their importance in the defence sector gets further enhanced due to the fact that defence industry is highly technology-intensive. As they operate in niche segments, they acquire exceptional expertise; gain specialised knowledge; and master manufacturing processes. However, they lack resources to be able to compete with bigger players. They need hand-holding to thrive and deliver. For example, formation of dedicated clusters can help them to venture into defence market without incurring unaffordable expenses. SME Wing should act as an umbrella agency to interact with SMEs and provide support to them so that they retain their technological lead through continuous innovations.

   

  Illustration 2: Suggested Structure of Defence and Aerospace Commission

f)    Defence R&D Wing

It should be headed by a military-technologist and its primary responsibility should be to keep a watch over the performance of DRDO, thereby making them accountable to an oversight authority. Additionally, the Wing should help identify technologies for import. Their selection should be need-based and not availability-based. Such technologies must fill critical gaps in indigenous knowledge and help accelerate the process of achieving self reliance. Further, technologies should be of the latest genre with multiple applications. The Wing should also help in the selection of the technology provider and the nomination of the Indian recipient. To ensure proper technology absorption, it should seek periodic reports.

g)   Defence Offset Authority

It should be an independent and empowered authority with decision making powers for efficient management of the complete gamut of offset related activities in a predictable, efficient and transparent manner. In other words, it should act as a single window for approving, validating, discharging and measuring offset programmes. In addition to approving draft offset contracts, it should provide guidance to all offset players in an open, fair and transparent manner. Furthermore, it should oversee successful implementation of all offset programmes through timely intervention to resolve contentious issues that impede progress.

h)   Exports and Cooperation Wing

Promotion of exports and international armament cooperation will be the primary responsibility of this Wing. Export of defence systems is considered to be a potent tool of a nation’s foreign policy. It also brings in financial gains and reduces production costs due economies of scale. Further, due to the prohibitive costs involved in the development of new weapon systems, the Wing should encourage formation of multi-national consortia for the purpose.

i)     Defence Technology Advisory Board

It should be headed by an eminent scientist. Members should be drawn from MoD, the services, DRDO, the academia and the private sector. It should formulate policies and oversee their implementation to promote development of Indian defence industry in well-delineated phases. After identifying niche technologies that need focused attention, it should formulate research, design and development roadmaps, with duly spelt out key milestones. The Board should also be responsible for providing guidance for the promotion of research, development and exploitation of mastered technologies. 

j)    Policy Review and Training Committee

Regular appraisal of policies, processes and procedures is essential to identify infirmities and to initiate reforms for corrective action. The Committee should act an internal watchdog and maintain a databank of all successful and unsuccessful programmes to draw necessary lessons from them. The Committee should also be assigned responsibility to organise training programmes for all functionaries involved with acquisition and developmental assignments.

  

The Way Forward

In addition to the above restructuring, MoD should carry out some other long overdue reforms as well. One, the Department of Defence Production must be abolished. It has been the biggest impediment to the growth of the Indian defence industry.

Two, it is incongruous for MoD to be involved in industrial production activities. At present, there are 9 defence public sector companies and 39 ordnance factories under the control of MoD. Despite decades of preferential treatment through assured flow of orders, they have failed the nation. They are responsible for saddling the armed forces with mediocre weaponry. Therefore, MoD must shed control of all industrial enterprises to other ministries.

All major powers consider close cooperation between various stake holders – the government, the armed forces and industry – to be of critical importance. According to them, defence acquisitions should act as a catalyst for the growth of defence industry. Acknowledging the importance of the defence industry as an invaluable asset, it is co-opted at all stages from planning, design, and development to manufacture of equipment.

MoD will do well to get rid of its perverse attitude of treating the industrialists as outcasts. Instead, they should be accorded due recognition for their contribution to national economic growth. Regular interaction should be held with them at laid down periodicity.

Working with an open mind, MoD should explore all viable approaches such as formation of consortia, joint ventures and public-private partnerships for optimum results. Similarly, the potential of academia; research and development institutions; and reputed technical and scientific organisations should will also be made use of.  

Most importantly, MoD must rise above parochial turf biases. No appointment should be reserved for any cadre. Functionaries must be selected with due care for their suitability for the task, technical/professional competence, demonstrated flair and impeccable integrity. In other words, merit and suitability should be the criteria. Once appointed, they should be trained for the task and given extended tenures.

MoD should adopt ‘centralised policies and decentralised execution’ model. It entails unambiguous enunciation of guidelines and delegation of decision-making powers with corresponding accountability.

Finally, true test of national leadership is not routine governance but ability to take bold and radical decisions to put a derailed and inefficient system back on track. Requirement of inventive policy initiatives and concrete action plans can never be fulfilled by resorting to semantics and rhetoric.*****