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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 than 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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