Ministry's initiative to push indigenous development

The Defence Procurement Procedure of 2013 (DPP-2013), which the defence ministry (MoD) has almost finalised, aims to fundamentally change the approach to buying new military equipment. From mid-2013, when DPP-2013 is expected to take effect, the international arms bazaar will no longer be the first choice for buying weaponry and equipment. Instead, it will first have to be established that the required equipment cannot be built in India.

A senior MoD official involved in framing the procurement procedure tells Business Standard: "So far, the army, navy and air force have gotten away with the presumption that sophisticated weaponry must necessarily be bought overseas. Now, development in India will be the default option. Only after establishing that indigenous development was impossible will we explore the international market."

Lip service has long been paid to indigenisation but DPP-2013 would back Indian vendors with institutional procedures. After deciding to buy a particular piece of equipment, a process called "categorisation" determines whether it will be bought from Indian or from international vendors.

If the equipment can easily be built in India, or must be because it is so sensitive that no foreign vendor will part with it (e.g. electronic warfare equipment), the procurement is classified "Make (Indian)".

Alternatively, if an Indian company can partner a foreign vendor to build an existing system in India with at least 50 per cent indigenous content, it is classified "Buy & Make (Indian)". Next, if in-service equipment is to be bought overseas and then license-built in India with transfer of technology (ToT), the procurement is categorised "Buy & Make".

Finally, if neither indigenous design nor manufacture is feasible, and the equipment must be bought over-the-shelf, the procurement is categorised as "Buy (Global)".

MoD and DRDO officials complain that the military often cites "urgent operational requirement" to rush through multi-billion dollar arms purchases in the "Buy (Global)," or "Buy & Make" categories. The military has repeatedly argued that the urgency of a threat left no time for Indian developers like the Defence R&D Organisation (DRDO), or Indian public and private sector companies, to go through the time-consuming process of developing a complex weapons system.

This argument was made convincing by the decades the DRDO took to develop its first generation of successes like the Dhruv helicopter, the Arjun tank and the Light Combat Aircraft.

"When the DPP-2013 comes into effect, 'Make' and 'Buy & Make (Indian)' will be the default categories. If they are, for some reason impossible, the second priority will be 'Buy and Make'. The 'Buy Global' category will be the last option," says V K Saraswat, the DRDO chief.

MoD officials admit this indigenisation drive can succeed only if Indian industry is allowed the time to develop futuristic weaponry. Last year, the military's Long-Term Integrated Perspective Plan (LTIPP) detailed the armed forces' equipment requirement for the 15 years out to 2027. Translating these projections into actual development projects will give Indian industry the lead-time to design and develop the weaponry that has been projected.

Until recently, a declassified version of the LTIPP was proposed to be put up on the MoD website, so that Indian industry could begin technology development programmes. But this raised security concerns; and so no declassified LTIPP will be posted. Instead, Requests for Information (RFIs) will be sent to Indian vendors and consortiums, effectively inviting them to develop selected equipment.

The RFI will detail the performance parameters of the equipment that is required. So far, these parameters were listed in a formal document termed the General Staff Qualitative Requirement (or GSQR). The RFI will effectively be an abbreviated GSQR.

"If the military wants to buy weaponry abroad, it will be required to explain at the categorisation stage why it cannot be made in India. It will have to demonstrate the equipment was conceived well in time and that industry was given enough time to develop the equipment. Only if that was done, and industry still failed to develop the equipment, will a category other than 'Make' be considered, says the MoD official.

"Along with the LTIPP, the DPP-2013 will give domestic developers the time needed for developing defence equipment. We need to specify what we want to indigenise. Once the industry knows that, market forces will drive investment, development activity, collaboration, joint ventures and help this country to design and develop systems," says Saraswat.

It is evident this new indigenisation push has been accelerated by the succession of procurement scandals in the MoD, most recently that of the AgustaWestland VVIP helicopters. At a DRDO conference in New Delhi on March 23, defence minister A K Antony make a strong pitch for indigenisation.