A call to (domestic) arms (manufacturing)

By Financial express

Domestic manufacturing of defence equipment has long been India’s key policy ambition; and her enigmatic Prime Minister, in no uncertain terms and in his own impeccable style of unpacking complex national issues using down-to-earth phraseology, has given a clarion call to India’s defence establishment to take forward his vision for ‘Atmanirbhar Bharat’ and to introduce much-needed procurement efficiency.

The first element of his mantra—atmanirbharta—is about strengthening India’s defence industrial base; while the second element—infusing efficiency in procurement and shortening defence acquisition cycles to a two-year period at best—is fully harmonised with his overall decisive style of political leadership: getting tomorrow’s work done, today!

Within this context, it may be useful to examine some of the roadblocks that may need to be overcome as India’s defence stakeholders, in particular MoD’s karmayogis, lead the way, using defence acquisition reforms as a vehicle for India’s economic revival.

Civilian-style procurement reforms in defence

Under-experienced stakeholders worldwide can sometimes make mountains out of molehills in their examination of specific defence cases, forgetting in their enthusiasm that defence acquisition faces certain unique and inherent challenges not ordinarily seen in normal civilian spaces.

For one, defence procurement needs to be undertaken in a manner that does not fully disclose a nation’s capabilities to its adversaries, making civilian-style transparency fundamentally impossible. Two, defence equipment and platforms need to fit in with not only domestic war strategies and legacy structures, but also regional defence cooperation networks, making civilian-style competition also virtually impractical to achieve.

Three, defence manufacturing worldwide is highly concentrated within a small set of sellers and systems integrators, requiring a constant focus on contract negotiation at all stages, giving an entirely new meaning to ‘arms-twisting’ in defence procurement—a practice that is traditionally frowned upon while making civil purchases.

Four, defence acquisition is more about acquisition of long-term war-fighting capabilities, making it inherently more protracted and requiring far greater flexibility since some of what is eventually acquired is capability that is still under R&D at the time of the RfP: more akin to ‘prototype’ acquisition as compared to civilian procurement of commercial off-the-shelf (COTS) goods and services.

As a result, defence contracts require constant fine-tuning and modifications after award of a contract: a practice that is otherwise severely discouraged in civilian procurement.

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