VIF Book launch: “Decoding India’s Defence procurement: An Analysis of Defence Procurement Procedure 2013”

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On 12 September 2014, General Shankar Roychowdhury, PVSM, ADC (Retd), former Chief of the Army Staff and Member of Parliament released the book ‘Decoding India’s Defence procurement: An Analysis of Defence Procurement Procedure 2013’ edited by Gen NC Vij. The edited volume is based on the proceedings of a seminar organized by the VIF wherein renowned military and civilian experts expressed their views on a wide variety of issues connected with defence procurement. The preface of the book has been written by Mr. Ajit Doval, the erstwhile Director of VIF and now the national security Advisor. In the final chapter a number of critical recommendations have been listed which are relevant for the policy makers and practitioners. The book release ceremony was attended by a large number of both serving and retired military officers representing all the services as also other stakeholders who are concerned with defence procurement and acquisitions including research and development.

Before the launch of the book Gen NC Vij welcomed the Chief Guest and introduced the subject. The book covers all aspects of Defence Procurement Procedure 2013 (DPP), the opportunities and challenges, operationalising of DPP, the questions of Offsets and price negotiations, need for establishing a robust defence industrial base, the roles of Private and Public Sector Enterprises, need for indigenization and the way ahead. Release of the book was followed by short presentations by the book chapter contributors

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Lt. Gen. JP Singh, former Chief of Integrated Defence Staff and also Deputy Army Chief (Policy and Systems) presented his analysis of the current state of ‘Offsets’ and the functioning of Defence Offset Management Wing. He brought aspects of revised offset guidelines and problems and prospects related to same. He stressed on what needs to be done further to operationalise offsets that would help us reinvigorate our defence industrial base. He gave examples of how other countries have managed offsets successfully. And he approved of the current policy of asking for 30 to 50 percent of contract as offsets. Vice Admiral Anup Singh, former Chief of Western Naval Command and Deputy Chief of IDS gave out his views on establishing a Defence Industrial Base through full participation by public and private enterprises. He was of the view that a huge potential of the private sector still remains untapped. Capability of Defence Public Sector Units (DPSU) and Ordnance Factories has remained insufficient to meet the growing demands of technology. He welcomed the announcement by the government in enhancing the Foreign Direct Investment from 26 to 49 percent in India’s defence industry.

Mr. Satish Kaura, Chairman and Managing Director of the Samtel Group, felt encouraged by the DPP 2013 and was of the view that it will go long way in building a strong foundation for indigenization. He spoke of PM Modi’s drive for ‘Make in India’. However, the objectives of indigenization can only be achieved if conducive environment is provided. The private industry was looking for a level play ground vis-à-vis multinational companies and DPSUs. He also made a number of other recommendations that could enhance the participation of the private sector in building defence systems including weapons and munitions. There is a requirement of building and nurturing private companies especially in some niche areas e.g. in electronic warfare or other high technology areas. He stressed on manufactures to develop technologies as any imported technology would continue to be controlled by the foreign owner. He also said that there is a need for a continuous dialogue with the decision makers; as DPP 2014 is being prepared no such dialogue has taken place between decision makers and manufacturers.

Gen. NC Vij gave out some of the critical recommendations that have been made. He dwelt on criticality of defence preparedness, need for appropriate defence budget to ensure availability of wherewithal for the same and establishing timelines for acquisitions and ensuring accountability. He was of the view that our modernisation plans must also cater for timely and constant upgradation of equipment. Indigenization has to be stressed upon with the government amplifying some of the definitions of ‘Buy’, ‘Buy and Make’. Forthcoming revision of DPP is expected to go into some of these issues. Level playing field for the private manufacturers in terms of equal tax treatment and minimizing the technical and financial risks would encourage the private sector to build up defence industrial base. There is also a need to incentivize defence exports where the government has had some inhibitions. Many other additional details regarding the improvements that should be brought about in DPP have been given in the book.

Towards the end Gen Shankar Roychowdhury spoke on his experiences during his Army tenure and difficulties regarding defence acquisitions. He emphasized on the need for putting into place appropriate procedures for defence procurement and development of an indigenous defence industrial base. Finally, Mr. Shobit Arya, publisher of the book gave a vote of thanks and mentioned that the book has already attracted buyers from as far away places as North America.