Defence Reforms: A Case of Waiting for Godot?

Editor’s Note

Under the present Raksha Mantri, the MoD has shed the image of being a slothful organization to one that has seemingly sharper reflexes when it comes to decision making. However, so far the change in pace has not yet been reflected adequately in terms of tangible results on ground. Time is also running out for the RM, with less than three years to go before the next general elections, the private sector and the strategic community are apprehensive. Brig Sunil Gokhale, analyses the progress made so far and also brings to fore certain areas like the DRDO, DPSUs, OFs and force restructuring where there are barely any signs of going forward.

DEFENCE REFORMS: A CASE OF WAITING FOR GODOT? 

As the pronouncements in the media on the two years of performance of the NDA government abated, the general consensus opinion reflected in media ratings of the Ministry of Defence (MoD), headed by the Raksha Mantri (RM) Mr Manohar Parikar was, ‘plenty of credible intention and action in hand; no concrete results visible, though’.

To be fair, the RM was handed over the reins of the MoD in November 2014. Under his predecessor from the UPA government, the MoD had acquired a reputation of being slothful in performance. Leave aside achieving any progress on defence reforms and modernisation, even the basic requirements of defence preparedness had deteriorated to an alarming level. Depleted war wastage reserves and grave shortages of ammunition and spares being just a few examples of the seriousness of the situation.

This decade of drift and inaction had created a huge list of critical and long pending issues. These issues need urgent attention to bring defence preparedness back on track, only thereafter would it be possible to work towards any substantive modernisation of the armed forces. Under the prevailing circumstances the challenges facing the RM could be briefly summed up as follows:-

• Make up the critical deficiencies in the armory of our defence forces, in order to enable them to ward of any immediate security threat to the nation.
• Achieve self-reliance in the in the field of defence research, development and production, by implementing suitable policy measures which lead to the development of a robust and vibrant indigenous defence manufacturing industry.
• Reform the Higher Defence Organisation in the true spirit of the recommendations of the Kargil Review Committee.
• Enunciate a National Security Doctrine, the absence of which severely stymies formulation of coherent long term defence policies.
• Right size, modernise and reorganise the defence forces, with respect to the organisational structures of combat formations, logistic support echelons, financial management systems and replacing outdated weapon systems with modern systems, in context to the futuristic battlefield environment.
• Review the relevance of civilian organisations being budgeted through the MoD. Take measures to prune human resource employment in such organisations where they remain a necessity.
• Address the genuine grievances of the armed forces and set right the imbalance which has crept into the civil military equation.

Ever since the present RM took charge, various actions in the last twenty months are indicative of attempts to address some if not all the above mentioned challenges. A great deal of thought and consultation with other ministries, ex chiefs of the three services, think tanks, retired service officers, acclaimed bureaucrats and leaders of industry have taken place.

Problems which needed nothing more than overcoming bureaucratic inertia are on the mend; e.g., the stock position of ammunition has improved considerably through placement of orders on the OFB. Similarly, serviceability of the SU 30 MKI has risen to 60 percent.

Orders for a large number of big ticket defence acquisitions have been placed by the government. Out of these, some major imports being M777 Ultra Light Howitzers, CH 47 Chinook Heavy Lift Helicopters and AH 64 Attack helicopters from the USA.

Some of the major indigenous acquisitions are follow on orders for Pinaka MBRL system, initial supply orders for the Dhanush 155 mm Howitzer and Akash SAM system from the OFB and orders for Minesweepers and the LCA Tejas from DPSUs, i.e., Goa Shipyard and HAL, respectively.

As far as the private sector is concerned, only one weapon system, i.e., the K9 Thunder 155mm Self Propelled Howitzer from L&T could be deemed as cleared by the MoD. It has gone past the price negotiation stage, and has been sent for the final approval of the Cabinet Committee on Security.

The Defence Procurement Procedure (DPP) 2016 was released on 28 March 2016. What makes it different from earlier versions is that besides being focused on the aim of promoting the indigenous defence industry, it is no longer a standalone document, other government policies and programs such as the FDI Policy, Industrial Licensing Policy, Customs and Excise Duty Regulations and the Make in India initiative, have also been aligned by way of necessary amendments where necessary. Thus synergisation for encouraging indigenous defence manufacturing by the private sector has been set on course. However, the DPP is not yet complete, it is yet to include a chapter on Strategic Partnerships with private sector defence manufacturers.

Decision on Strategic Partnerships has been delayed. The five study sub groups comprising representatives of the private sector, convened by the MoD in consultation with CII,

South Block

and ASSOCHAM to recommend guidelines for nominating strategic partners have submitted conflicting recommendations. The MoD is in the process of resolving the issue through an internal committee. Though the MoD may be appearing to be delaying issue of a completed DPP, yet in the long run, to tread slowly with due diligence in unchartered territory may be wise. Building consensus on new path breaking provisions before implementation will avoid complications in future, ultimately leading to the buildup of a robust indigenous defence manufacturing base.

The MoD has also come out with a set of ‘Out of Box Ideas’ and proposals to solve some of the problems facing the growth of defence industries, such as funding entrepreneurs for start ups  and R&D in defence sector,  implementing offsets in a focused manner and acquiring critical technologies from leading foreign defence manufacturing entities.  Some such ideas are as follows:-

• An MoD concept note has proposed, foreign companies can invest up to 25 percent of their offset obligations of defence contracts in Venture Capital Funds (VCFs). Such VCFs should be registered with the SEBI, cleared by the MoD and aimed towards funding defence  manufacturing industries. The investment cannot be repatriated, however only dividends can be. This idea of the VCF is to enable medium, small & micro enterprises undertaking defence research to access funds, in order to acquire or develop technology and contribute to the growth of Indian defence manufacturing and exports.
• The MoD is considering a proposal to use offset credits that could come from the planned Rafale fighter jet deal to revive the indigenous Kaveri jet engine. French company Safran, which developed the M88 engine that powers the Rafale would take on the investment and commitment to make the Kaveri flight-worthy within 18 months. If successful, it may turn out to be the biggest technological coup. Besides providing an engine to power the Tejas LCA, it would pave the way for India joining the select club of five nations who manufacture indigenous jet engines for combat aircraft.
• In addition to the ongoing Tejas, and the futuristic FGFA and AMCA projects, another unexpected out of box proposal is to set up a production line, under the ‘Make in India’ policy, for a contemporary twin engine jet fighter in the private sector, in collaboration with an established foreign manufacturer. It will enable quick build up of the depleted Fighter Squadron strength of the IAF, as also provide an export opportunity in the future. The proposal throws the field open for a tough competition amongst foreign manufacturers, providing an opportunity for India to leverage and get a better deal. It may also positively influence the negotiations of the seemingly deadlocked Rafale deal.

While considerable progress is visible in the field of defence procurement and developing the defence industrial sector, the MoD has avoided implementing any meaningful reforms in the DRDO, DPSUs and OFs as envisioned by the Kelkar Committee. The private sector is also getting impatient with not a single order in the role of integrator of major systems having been awarded to them, so far.

There have been positive statements made by the RM on the appointment of a CDS, however there is no clarity on when, or to what extent it would be implemented. Meanwhile, the following committees have been appointed by the MoD to recommend implementation of various other reforms:-

• A committee to study the setting up of a Defence Procurement Organisation. The committee is required to suggest the functional mandate of the proposed procurement body, its organisation and staffing, and to suggest how autonomously it could function.
• An internal MoD committee, to finalise the Strategic Partnership model. The committee, headed by DG (Acquisition), has been tasked to submit its report by 31 July 2016.
• A committee of experts, to recommend measures to enhance the combat capabilities of the over 13 lakh strong armed forces and “re-balance” the overall defence expenditure, in view of the escalating salary and pension bills.

The nation and the armed forces have been waiting for reforms for far too long. The RM has barely thirty months before the next general elections to carry out long awaited defence reforms. Delay is cause for grave concern, lest reforms become a case like the quote from a famous Sunny Deol Starrer from Bollywood, ‘Tarikh pe Tarikh’, i.e. the English equivalent of ‘Waiting for Godot’.

Brig Sunil G Gokhale (Retd) 

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of BharatShakti.in)