Defence deals: Ministers should stay out of defence acquisition procedures, says panel

NEW DELHI: Ministers should stay out of defence deals — generals should be allowed to take the call. This radical proposal has come from a ministry of defence (MoD) panel tasked to review India’s defence acquisition procedures.

The panel, led by former home secretary Dhirender Singh, also recommends Indian private sector leadership in high-value and key defence areas like manufacturing warships, aircraft and armoured fighting vehicles.

On its proposal to keep the political class out of defence purchases, including the biggest deals, the panel says: "Whereas primacy is accorded to the political executive in all decision-making and especially on strategic national security issues, in matters of defence systems and equipment based on user preference and tactical and operational doctrines, the Armed Forces must have a decisive role."

ET has reviewed the full draft report of the panel.

MoD will take these suggestions into consideration while finalising a new procurement policy that’s expected within three months. Currently, the armed service HQs have a financial power to decide purchases of up to Rs 100 crore.
Deals above this ceiling need the clearance of either MoD or the cabinet committee of security. The panel also recommends, again radically, that a specialised external procurement agency staffed by specialists with long tenures be set up for defence purchases.

"We are strongly of the opinion that steps should be initiated without further ado, to set up a specialised structure outside the formal structure of the ministry of defence… a major objective would also be to operate it in a manner so as to serve the purpose of ‘self reliance’ in defence industry," the panel says.

The report makes a number of suggestions on incentivising private sector participation in defence manufacturing. These include tax breaks for companies, a common testing facility for projects under development, a cap on the liability of private entities for defence products and export permissions for those holding industrial licences.

The panel also suggests strategic partnerships with the private sector for complex weapons systems like missiles in the categories of anti-ship, air defence, air to air; air to surface, anti-submarine and land attack. It also says Indian companies should be allowed to form partnerships with foreign defence manufacturers for projects that are strategically vital and high value – over Rs 10,000 crore.

ET View

Keep Netas In Panel

The MoD panel is wrong. Politicians must have a say in the biggest arms purchase deals because in a democracy, elected governments must be accountable for spending tens of thousands of crores of public money.

Military seniors in any case will have a say on the technical aspects of a major purchase, say, fighter aircraft. But the final call also requires political judgment – relations with potential suppliers, larger foreign policy calls. A big defence deal is too complicated a thing to be left to generals alone.