Mr Parrikar, a message from Bihar…

By Ajai Shukla

Business Standard, 10th Nov 15

The Bihari voter has spoken and his message is being read as: “We want results, not divisive politics. Deliver reform, or you’re out!” Amongst those who heard this on Sunday would be Defence Minister Manohar Parrikar whose realm is simultaneously the country’s most complex and, when something goes wrong, the most emotive. In his one year on the job, Mr Parrikar has attempted ground-up reform of a badly broken planning and procurement system. The results have not been encouraging. Barring a few helicopters, Mr Parrikar has not succeeded in procuring the kit his military badly needs. His ministry’s announcements of big-ticket buys after every meeting of the apex Defence Acquisition Council are mere sophistry; they relate not to contracts signed, but to procedural milestones like “acceptance of necessity”, “categorisation”, or “financial sanction”. The defence procurement procedure (DPP) has many such milestones in each acquisition, but weaponry only reaches the soldiers after completing internal sanctions, trials, price negotiations and contracting. And since the Bharatiya Janata Party (BJP) formed the government, no new equipment has come in.

On the plus side, Parrikar has quickly grasped two issues central to long-term equipment policy. The first is that militaries obsess about building immediate operational capabilities and are, therefore, opponents of indigenisation, which yields capabilities in the long-term. That means indigenisation needs to be rammed through even against military advice, and Mr Parrikar has done precisely that in coercing the air force to induct more Tejas fighters. The other lacuna the defence minister has grasped is that our procurement procedures are unworkable since they seek to guard against every wrongdoing. One of the wisest things the defence minister has said is that lack of trust within the ministry is the biggest hurdle for quick procurement.

Yet, this wisdom has galvanized neither procurement, nor indigenisation. The cause is a deplorable lack of understanding of how a defence industry is built. On August 22, the Prime Minister’s Office (PMO) summoned a few captains of private defence industry, along with bureaucrats from the defence and commerce ministries. The PM’s principal secretary, Nripendra Misra, began by upbraiding private industrialists for slothfulness in defence production, even though the government had raised the cap on foreign direct investment (FDI) in defence to 49 per cent (from 26 per cent earlier), pruned the list of items needing defence manufacturing licences, and increased the validity of a defence licence from three years to 15 years. After an awkward silence, one private industry chief asked, “But where are the orders?” It had apparently not struck the PMO or the defence ministry that, since defence industry serves a single customer, government orders are essential for defence manufacture.

If Mr Parrikar wishes to perceptibly improve his ministry’s performance, here are five simple measures that different wings of his ministry must implement right away. Step One is for the Acquisitions Wing to identify at least 15-20 equipment projects to be tendered out in short order to domestic defence industry under the “Make” category of the DPP. With the defence ministry financing 80 per cent of the project cost, this would unleash a wave of development activity across the industry. So far, only two “Make” projects (the Tactical Communications System; and the Battlefield Management System) are under way; and a third, the Future Infantry Combat Vehicle, was recently tendered. Besides these large platforms, “Make” projects should target small and medium enterprises (SMEs), where the high-tech innovation occurs.

Step Two involves the fast-track clearance of pending acquisition programmes that could galvanise indigenous manufacture, and design and development (D&D). Ripe for the plucking are several indigenous shipbuilding projects, such as the one for building four landing platform docks (LPD) in private and public sector shipyards; and 16 shallow water anti-submarine vessels. So are contracts for land systems like various artillery guns; and for aircraft like the light combat helicopter and light utility helicopter (soon to fly), with clear instructions to Hindustan Aeronautics Ltd to develop and nurture Tier-1 and Tier-2 sub-vendors.

Step Three relates to policy reform in the department of defence production, where Parrikar faces unbending resistance from his ministry bureaucrats, who are resorting to the artifice of “death by committee” --- i.e. slowing down reform by channelizing it repeatedly through committees. Even so, the Dhirendra Singh Committee has submitted a reasonable report that moots identifying private sector “strategic partners” in each of six areas, including as aerospace, warship building, armoured vehicles, etc. With one or two strategic partners at hand for each field, the procurement cycle could be slashed dramatically. The “strategic partner” model must be quickly implemented, preventing monopolies, while creating 12-18 large defence players for an acceptable level of competition. Following the Dhirendra Singh Committee, the Aatrey Committee is finalising norms for selecting “strategic partners”. With this done, no time should be lost in selecting “strategic partners” and kicking off projects.

In Step Four, Mr Parrikar must instruct his moribund “department of ex-servicemen’s welfare” to consciously drain the swamp of disaffection within the large pool of ex-servicemen across the country, which has cost the BJP a traditional constituency: ex-servicemen. The defence minister must order his bureaucrats to weigh the consequences of appealing adverse judicial verdicts. Currently, the objective is to win the case at all costs, even by dragging to the Supreme Court a poor veteran who might have a perfectly valid plea, but no money to pursue it. Alongside this, Mr Parrikar needs to swiftly resolve the One Rank, One Pension agitation. The government has issued a notification, which ex-servicemen groups have rejected. The movement will inevitably gather momentum and further alienate the community.

Lastly, Mr Parrikar should go with his own conviction and take up the case for appointing a chief of defence staff. The CDS, a five-star rank officer, appointed for a three-year tenure, would oversee manpower and equipment planning of the army, navy and air force. Currently, the three services jostle for money and turf and, with no overall commander to prioritise between competing service demands, the tri-service 15-year equipment plan is a worthless wish list that is unrelated to the availability of funds. A CDS would also provide unified command in war, and the ministry with single-point advice in peace. Last year, at a public function, Mr Parrikar promised to send his proposal for a CDS to the National Security Council by June 2015. Like so many other promises, this remains unfulfilled.