India’s Defence Procurement: The Indigenisation Challenge

19 Jan, 2015    ·   4811

Saumitra Mohan explains why transparency in defence procurement will go a long way in India

Pragmatism informed by the appreciation of national interests seems to have given way to a garbled policy of compromising national security in favour of playing safe to avoid the accusations of ‘kickbacks’ in defence purchases. One really fails to understand as to why it took so long to comprehend the emergent need for replenishing our defence hardware, more so when the same has serious implications for national security.

The best that could have been done under the circumstances by the then decision-makers was to evolve a consensual policy in consultation with all the stakeholders to shop for the required military equipment and hardware. A transparent defence purchase policy predicated on a well-thought out guideline would have long done the needful in this regard. It is good that the new dispensation in New Delhi has finally seen through the problem to effect the necessary changes to keep our war machine fighting fit as the same was slowly becoming rusted for want of due care and nurturing it needed. After all, they rightly say, ‘if you want peace, it is better to prepare for war’.

As per the decision taken by the government, the operations of ‘representatives’, another term for agents or brokers, will now be officially recognised and allowed in defence purchases, something that could have been done long back. The fact remains that these ‘brokers’ have always been there and working behind the scenes to facilitate defence deals for governments across the world. However, the same has often complicated defence acquisitions over the years to the chagrin and detriment of the armed forces in this country. Such priggish thinking has at times tarred every ‘agent’ with the same brush, vilifying each of them as a crook of the first order who must be shunned at any cost.

Defence purchases in this country have continued languishing in the wilderness for want of timely decision to the extent that our arsenals were said to have become dangerously depleted. The state-of-affairs only got worse as the list of black-listed defence suppliers grew longer with every inquiry instituted to probe into such accusations. There came a time when it became really difficult to find a single established producer with credentials from whom military hardware could be procured.

Reportedly, former Indian Defence Minister George Fernandes attempted to put in place a system of ‘registered agents’, but the initiative did not go very far for want of clarity and response from stakeholders. Against this background, it would be rather premature to give a verdict on the success of the newly-drafted Modi-Parrikar formula, but the silver lining is the framing of a well-delineated policy backed by a clear thinking on the issue that has eventually accepted that defence agents are important facilitators in defence procurement.

The presence of ‘agents’ or ‘brokers’ is a hard reality across the world. Few defence deals could move without their doing the necessary facilitation that is deemed to be a very mechanical and specialised task – though the method of their payment still remains ambiguous and woolly in this country. Terms like ‘commission’ or ‘brokerage’ have become dirty expressions in defence lexicon, something that is integral to business and commerce in a laissez-faire economy in a globalised world.

After all, what problem should be there with commissions in a commercial deal to purchase defence hardware if the same is buttressed by a well-laid out transparent policy. After all, commissions are nothing for ‘remuneration’ paid for the services provided and promote a healthy competition that could actually work to our advantage in securing the best available deal. Have not we allowed brokerage or commissions in many other sectors of our economy and day-to-day life? If yes, why should we have any objection with the same when it comes to defence procurements?

One feels that as long as the defence deals and the cognate ‘commission’ are transparent and known to all the stakeholders, there should be no problem. The authorised, registered, commissioned, or empanelled ‘representatives’, ‘agents’ or ‘brokers’, whatever we may call them, can rightfully claim their ‘commission’ or ‘brokerage’ as offered by the suppliers as per declared pre-laid and pre-declared norms. The problem arises only when the alleged ‘sweetener’ is offered to an office holder (read a Minister or a bureaucrat) for their legal or illegal facilitation of the process, thereby vitiating the process.

Be it noted that while kickbacks in major deals have become ‘hot’ political issues, corruption is deeply entrenched in all the purchase processes down the line – be it footwear, foodstuffs or clothing. A perusal of the government or independent probes into corrupt deals will confirm the same. Hence, if New Delhi sincerely intends to effect a clean-up, the entire defence purchase architecture needs to change across the spectrum; and the same should be extended to other sectors of government operations as well.

The views expressed in this article are the author’s own and do not necessarily reflect those of the Government of India.