In November 2014, when you came to Delhi as defence minister and saw things from the inside, what surprised you the most about arms dealers?
First of all, I didn’t come to Delhi, I was invited to Delhi from Goa. What I knew about the defence and what you call bicholiya.
No. The word ‘middleman’ may be misunderstood. I would say commission agent, people who make deals for money. These people, through money or through other methods, try to influence decisions. I had heard a lot about them before coming here. Defence was new to me… It took months to gather information on how things are done here. Due to infamous arms deals and scams, the ministry had withdrawn into a cocoon. There was no openness, there were always fears and suspicion. I told everyone clearly, and through directions, to open up the ministry so that decisions could be clean, transparent and fast.
What was shocking or new for you?
Everything was new.
Give an example of what surprised you.
The system surprises me, even now. I have never seen such a complicated system of procurement. If you ask me, procurement in defence is a different kind of issue in itself. Ultimately you want to buy a weapon that may not exist or may not be available in the market. At the same time, you go through all tests and trials. It’s a strange type of procurement. It’s not like open-market procurement where any product can be determined easily. Here each system has a different function. No two companies manufacture similar types of products, and you have to be careful in ensuring that more than one manufacturer comes into the picture. But AgustaWestland was the only one in the picture that wanted to supply what you wanted. The challenge is how you ascertain that there is an alternative available.
When you were assigned this job, did the PM give you any framework?
Yes, general discussions did take place. Definitely, one was that defence deals mein kafi garbadi hoti hai [a lot of corruption takes place in defence deals], so work out a team and develop preparedness, and other issues.
Your predecessor A K Antony had a reputation, as you do, that he was honest. Why didn’t this work to the advantage of the ministry in 10 years? His honesty is part of your ministry’s legacy, is it not?
I will put it like this. Honesty without output is of no use…
For 10 years we saw a frustratingly complex and slow-moving weapons buying system. We haven’t seen much of a difference in the last two years. How can you say that Antony was honest but an output was absent?
You are talking like this because you don’t know figures of acquisition. For example, the CAG 2013 report says most of the ammunition stock in India has gone down below critical level. Now, out of 170 only 38 items are insufficient, but in the coming months only 21 items will be below critical level… The output of the ordnance factory has improved for the first time by 17 per cent. It was stagnant for four to five years and hovering around Rs 10,000 to Rs 11,000 crore… Ammunition expenses were around Rs 4,500 crore in 2013-14 but have now reached Rs 6,800 crore, increased by 50 per cent. What I am trying to point out is that if you go case by case, things are moving up. Two, all PSUs and ordnance factories have shown a increase in turnover from around Rs 43,000 crore to Rs 51,000 crore, around a 20-per-cent growth. Three, in aviation Tejas has been inducted, a second Tejas delivered, the third will be delivered in June, and in July or August the first squadron will be formed. After 32 years, Indian-made light combat fighters have been inducted and a formation worked out. The Air Force chief (Arup Raha) himself flew the plane. From a situation where no plane was coming up to a situation that the first squadron will be formed now is a great achievement.
But, then, ADA and HAL [Aeronautical Development Agency and Hindustan Aeronautics Limited ] weren’t delivering the final version of Tejas.
That is what leadership is all about. I ensured that ADA delivers what the Air Force wanted. I had 18 meetings with them, we sorted it out. Finally, the Air Force says it will buy 120 Tejas aircraft… We are offering to friendly countries and we may start exporting also. Tejas aircraft were made and dumped, I made it operational. Basically, what I want to say is that there was a mess created over a period of 10 years due to no decisions. Now decisions are being made and its impact will be felt as the days pass. Whether it’s intelligence or counter-insurgency, whether decisions are about equipment supplies to armed forces, we are taking decisions. In the last two years we have finalised contracts for almost Rs 1.15 lakh crore. But, what is more important is that contracts for another Rs 1.15 lakh crore are in the pipeline. We have brought it near a conclusion. In another one or two years, we will sign those contracts. What is needed is to look at the total impact of ten years of the UPA government. They could mainly procure government-to-government sales from the US. For 36 years there was no gun prepared for India. I am pleased to tell you that the Dhanush trial has been successfully done in the desert. There will be one more final desert trial and even a cold weather trial. By the year-end we will start manufacturing the gun, which will be better than Bofors. The original technology was transferred from Bofors but we have indigenously developed it and the Ordnance Factory Board, Kanpur and Jabalpur, will manufacture it. By August or September we will finalise an order for Vajra (self-propelled Howitzer gun) to the private sector. First time in 36 years, decisions on guns, tanks and aircrafts are being taken in the ministry.
When George Fernandes was defence minister, he had said that immediately after the attack on Parliament the chiefs of the armed forces were not prepared to move to the border in eight days. How’s the position now? Are they better prepared?
You gave me a hint in your question. They are much better prepared than in 2001. I will put it like this. If I am satisfied with the improvement, then I will not be able to introduce more and more swiftness, more decision-making and improvement and more capacity in defence. We are improving. It will be in a much shorter time that we will be moving our troops. We are battle-ready, always. We will improve on the current level, too.
A Defence Procurement Procedure was released but it’s incomplete. Some chapters are not yet released.
Those who deal with the defence sector do see a difference now. One chapter of DPP will be released later, it was about “strategic partnership”. It’s a totally new concept. This requires much more consultation because it’s a completely out-of-the-box issue. If we do it in a wrong fashion and if someone starts complaining of favouritism, then? Here is a concept where you select a private partner on the basis of his capacity and pay him according to cost, not as per profit-loss. It has never been tried earlier in Indian industry… The rest of the chapters have been loaded, except the attachments. The new acquisition policy has come into force from April 1. It will take at least six months for anything to come to the defence acquisition council under the new policy. We will complete legal vetting in a week. I have participated in the drafting of the DPP to remove bottlenecks. People now know that fresh acquisition cases will start with Indigenously Designed and Developed and Manufacture. The rule is very clear. Only new cases will come under IDDM. Old cases will come under the old procedure. To come under the new procedure they will have to start again.
Remember the way the PM presented Rafale as an off-the-shelf deal in Paris. Now, there is such a long delay. How do you explain it?
You have to get the right deal for yourself. The UPA spent about nine years in coming to the contract negotiation committee level with Rafale. They didn’t buy it. Antony said you complete your negotiation and come back and tell me how are they above all. This was never done. This was a safety network for himself. There was so much confusion in the deal that it would have never gone through because the procedures were not properly followed. From there we have gone for 36 Rafale aircraft to fill in the minimum gap after discussing the requirement… Probably we are close to a final position, which may happen anytime soon.
Do you regret inviting Finmeccanica to Make in India?
Finmeccanica is banned from participating in defence procurement. I cannot ban it from doing something else if it wants to. In defence we don’t buy equipment from some countries for security reasons but I don’t stop that country from selling smart-phones in India.
Maybe it’s difficult to ban it because, some argue, India has Scorpene submarines that need torpedoes, which come from WASS, a subsidiary of Finmeccanica.
We have refused it [WASS].
How then will you make Scorpenes functional?
I will make it functional, don’t worry about it.
There are other companies who can supply it… Can’t tell you for security reasons where we will get it from.
You must have read the authenticated copy of the Italian judgment [on the Agusta Westland deal].
Why should I read the Italian judgment?
Has the government found any evidence to link Sonia Gandhi, Pranab Mukherjee, Manmohan Singh or other Congress leaders named in [alleged middleman] James Christian Michel’s letter?
Why should I go by him? I can tell you one thing. It is for sure that the procedure was tilted, was modified wherever required, in such a way that AgustaWestland was selected. How did only one company remain in the picture? I explained it in Parliament also. Second, my own judgement and my information, as well as information in Air Force files based on assessment, indicates that the cost should have been Rs 160 to 170 crore whereas we were paying Rs 300 crore for it. My assessment may be Rs 10 to 20 crore plus/minus. The Air Force knew the market price and quoted Rs 100 crore for AgustaWestland and Rs 60 crore for Sikorsky and Rs 35 crore for Russian choppers… The total expenses came to Rs 793 crore. When a single-vendor situation comes, benchmarking is very important. How come benchmarking wasn’t taken into consideration when the Air Force took the basic cost at 15 million euros, which is around Rs 100 crore, while the benchmarking cost stood at Rs 380 to 400 crore? When you know that you are benchmarking at almost six times the original cost, then a question mark comes. I would have understood if it was double the original cost, even 2½ times is understandable. There is a definite angle of paying a much higher cost than it deserves. The rest is for the investigator to investigate. I am not the investigator.
Political personalities have been drawn into the debate, Sonia Gandhi and Manmohan Singh.
That is what the Italian court says.
But their names are not in the main judgment.
You can read the judgment. Why should I speak on it?
You yourself said…
I will not go into that. I refuse to indulge in name-taking. I didn’t do it in Parliament. One minute! You take a conclusion from this — I am very clear on it. Number one, the process has been manipulated to ensure that AgustaWestland was selected. Second, my very clear conclusion is that the price is much higher than the genuine cost we should have paid.
On your table, what is more important: issues with China, or with Pakistan?
Both are important. You can’t neglect either of them. We are handling each differently. My only contact with Pakistan is on the borders when our DG or his men talk to Pakistan and keep each other informed. When our sorties fly near the borders, we inform each other. With China we have improved our relations. Instead of three we now have five points with China to talk to each other… CBMs are in place and there is a general decrease in cross-border tension.
Is China the bigger security threat or Pakistan?
I won’t say. For me, my nation’s security is the most important. Based on my security requirement, I form my views.
Why do you never wear formal dress?
Why do you need it? If a man’s work were dependent on shirts or dresses, then anybody who has money would put on smart dresses and show off performance. I believe in performance and not in dressing up. I can assure you they are not shabby.
Do you expect to retain this portfolio in the coming cabinet reshuffle?
That you will have to ask the Prime Minister.
How is Delhi treating you?
Reasonably well. Except the temperature, which I am not accustomed to. Otherwise, I have no problem here.
Why then did you say in a press conference in Goa that “I am coming back soon”?
Were you there?
Then, don’t ask me that question. What I said there was, “I refuse to tell you what my action plans are.” Which I still refuse to tell you. Why should I tell everyone what my plans are?