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May 29 2014, 04:23 IST
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SummaryReform defence procurement in India to enhance indigenisation and integrity

Over the last decade, India emerged as the world’s leading importer of arms and ammunition, while China moved from being a net defence importer to being an exporter and developer of advanced defence platforms during the same period. Indigenisation, or the lack of it, can impact national defence preparedness in multiple ways: a country exceedingly reliant on foreign imports in defence is no longer able to control the duration, intensity or the cost of its wars, making it extremely vulnerable to arm-twisting and third-party mediation in advancing its own economic and trade interests.

Global experience suggests that enhanced indigenisation and a robust defence industrial base can also lead to better value-for-money in most cases: foreign contracts negotiated or arbitrated out of domestic oversight are more prone to integrity abuses. In this context, it may be useful to examine some features of India’s Defence Procurement Procedure (DPP) for streamlining of the capital acquisition process for defence procurement: the DPP may be the only procurement regulation in the world that discriminates against its own domestic bidders, as demonstrated by a quick comparison of differential domestic content obligations imposed on foreign and Indian vendors participating in “Buy (Global)” contracts under the DPP.

To begin with, the DPP does not contain provisions enabling transparency in defence procurement that are comparable to major international frameworks. More specifically, the DPP lacks provisions for, inter alia: (1) publishing redacted versions of RFPs after suitable editing for removal of national security-sensitive technical information; (2) publishing a monthly list of RFIs and RFPs issued alongwith categorisation of acquisition cases as “Buy (Indian)”, “Buy & Make (Indian, or with ToT)” or “Buy (Global)”; (3) publishing details of deviations from standard RFP clauses permitted by the Defence Procurement Board or the Defence Acquisition Council (DAC) either before the issue of an RFP, during finalisation of a contract, or after contract conclusion; and (4) publishing details of contractual disputes and decisions thereon by oversight bodies, either prior to contract award or thereafter.

This lack of transparency in the DPP contrasts sharply with one or more of the following practices: (1) the easy availability of India’s defence procurement-related information in commercial off-the-shelf publications; (2) the fact that white papers have been published in the recent past by the ministry itself, listing out case-specific deviations in acquisition cases that attracted public controversy; and (3) prevailing international best practices such as those in the US where oversight/dispute-handling bodies

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