Pitfalls of Quickfix Purchases

The pursuit of rapid emergency procurement by the Indian Army raises questions about the overall efficacy and strategic wisdom of such an approach. The recent allocation of a significant Rs 7,300 crore for weaponry acquisition from domestic sources, utilising emergency powers, raises concerns about whether these measures bring about desired outcomes vis-à-vis long-term military preparedness and comprehensive capability development

By Vaibhav Agrawal

Opinion

In a strategic response to the evolving challenges posed by China, the Indian Army has swiftly taken measures to bolster its capabilities. A report from The Economic Times (ET) reveal an allocation on of Rs 7,300 crore for the acquisition of essential weaponry from domestic manufacturers, utilising its emergency powers. The authorisation of emergency powers has been invoked twice by the Indian armed forces, marking significant junctures. Firstly, during the aftermath of the Galwan crisis in 2020, and secondly, following the pivotal Balakot air strikes. Yet, amidst this strategic acceleration in defence capabilities, a thought-provoking question emerges: Do such rapid emergency procurement actions in the defence sector ultimately bring about favourable outcomes or unintended consequences?

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First, Getting the Basics Cleared!

In September 2001, the Ministry of Defence (MoD) introduced the Fast Track Procurement (FTP) process, an instrumental mechanism designed to promptly fulfil the pressing operational needs of the armed forces. This expeditious procedure was conceived with the pivotal goal of ensuring swift acquisitions to cater to urgent requirements of the Armed Forces, encompassing both anticipated exigencies during war and unforeseen crises arising during peacetime. The scope of the FTP procedure extends to situations where timelines might adversely affect the readiness and effectiveness of the armed forces. The procedure encompasses acquisitions conducted by the MoD and Defence Services within the ‘Buy category,’ entailing direct purchases.

These acquisitions, irrespective of their inclusion in LTIPP/SCAP/AAP, are pertinent to both domestic and international sources, encompassing indigenous production and imports alike. Categorised within the ambit of FTP acquisitions are:

  • Procurement of equipment already integrated into active service.
  • Acquisition of novel equipment to augment capabilities.
  • Procurement of weapon systems or platforms currently operational in allied foreign nations and accessible for transfer, lease, or sale.

Decision-Making and Authority

Notably, to facilitate the seamless exercise of these powers by the Competent Financial Authorities (CFAs) in routine cases, the requirement for seeking the AoN, which serves as an initial endorsement to commence the procurement process, has been waived

Notably, the armed forces have the prerogative to engage in this procedure while adhering to their delegated financial authority, subsequent to obtaining the Approval of Necessity (AoN) from the Defence Acquisition Committee (DAC). The DAC, under the guidance of the Defence Minister and comprised of members including the Chief of Defence Staff, the trio of Service chiefs, Secretaries, and other esteemed officials, stands as the apex body within the MoD vested with the authority to deliberate and decide upon all matters related to acquisitions.

Emergency Procurement Authority

In August, 2022, the DAC bestowed the armed forces with emergency procurement authority, empowering them to promptly secure essential weapon platforms and munitions from ‘Indian vendors’. As per media accounts, this financial prerogative is valid for the span of six months, permitting transactions of up to INR 300 crore per instance for a specific item. Foremost in the forefront of India’s response to the Chinese transgression, the Indian Army stands to gain significant advantages through this provision. Reports from media sources further suggest that these expedited acquisitions can be executed through a streamlined and concise procedure, resembling an adapted iteration of the FTP. The overarching goal is to ensure that the necessary equipment is integrated into service within a timeline spanning from three to twelve months post-contract signing.

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Addressing Deficiencies and Prolonged Process

During the inaugural phase of such acquisitions, the armed services successfully procured urgently required hardware, promptly addressing critical deficiencies. Nevertheless, the decision to extend this process on two separate occasions appears perplexing and warrants scrutiny.

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It’s remarkable that even after two years since the Galwan incident, the armed services, particularly the Army, are still in the process of acquiring the equipment deemed “urgent.” However, this isn’t the most surprising aspect of the DAC’s decision. A curious aspect lies in the delegation of financial authority for capital acquisitions, a practice initiated back in 2007. This authority was initially set at INR 10 crore and was subsequently elevated to INR 300 crore in February 2019. Notably, to facilitate the seamless exercise of these powers by the Competent Financial Authorities (CFAs) in routine cases, the requirement for seeking the AoN, which serves as an initial endorsement to commence the procurement process, has been waived.

It’s abundantly clear that the employment of FTP or Emergency Procurement (FTP with import restrictions) in the current context aims to bridge specific operational gaps rather than focusing on broader capability and capacity development, which is the true imperative for India’s military requirements

Previously, such AoNs were granted by the Services Capital Acquisition Plan Categorisation Higher Committee (SCAPCHC), a function that has now been taken over by the Services Procurement Board (SPB), positioned within the Headquarters of Integrated Defence Staff (HQ IDS). Thus, it becomes somewhat perplexing to discern the distinctive nature of the financial empowerment bestowed by the DAC upon the armed forces on August 22. Notably, this empowerment aligns closely with the pre-existing authority. One plausible interpretation is that this delegation of power aims to streamline the procurement hierarchy further, minimising delays arising from the complexities and bureaucratic uncertainties that sometimes permeate the DAP. In essence, it could be seen as an indirect acknowledgment of the need to expedite processes.

The evolution of defence procurement is an ongoing process, and the anticipation is that the forthcoming iteration of the DAP will address hindrances that impede timely and smooth acquisition of military equipment. Unnecessary delays in these processes erode operational readiness, disrupt financial projections, thwart industry endeavours, and lead to regrettable pronouncements such as ‘We shall fight with what we have,’ signalling a sense of discouragement from the outset of potential conflicts.

It’s abundantly clear that the employment of FTP or Emergency Procurement (FTP with import restrictions) in the current context aims to bridge specific operational gaps rather than focusing on broader capability and capacity development, which is the true imperative for India’s military requirements. Given the finite availability of both financial resources and time, the modernization and maintenance of military hardware demand a meticulous approach. The swift evolution of technologies underscores the necessity for deliberate strategising and methodical acquisition of precise capabilities. In managing the resources at our disposal, each expenditure must be judiciously allocated, avoiding impulsive purchases that may squander valuable resources.

The utilisation of fast track procurements was prompted by the Chinese incursion along the Line of Actual Control (LAC) in the summer of 2020. The objective was unmistakable: to expeditiously address critical gaps, precisely the rationale behind incorporating such a provision within the procurement framework. However, over the span of more than two years, the substantial volume of items being ordered through the emergency procedure underscores two distinct challenges:

  1. Evident Shortcomings in Inventory
  2. Incongruence between the Defence Acquisition Procedure (DAP) and the requisites of the Armed Services.
Emergency Procurement (EP) empowers service HQs to swiftly address operational gaps through a streamlined approach. However, this triggers an internal race within service directorates to rectify shortfalls urgently. While well-intentioned, this competitive dynamic erodes the capital budget, with limited resources left for substantial acquisitions

Emergency Procurement (EP) empowers service HQs to swiftly address operational gaps through a streamlined approach. However, this triggers an internal race within service directorates to rectify shortfalls urgently. While well-intentioned, this competitive dynamic erodes the capital budget, with limited resources left for substantial acquisitions. The EP’s budget cap (around INR 240 crore on average after factoring in duties and taxes) further tightens these financial constraints.

While the ‘Buy Indian’ approach is suitable for items under the Indigenous Design, Development, and Manufacture (IDDM) category, it complicates matters for foreign-origin platforms. This stipulation could attract opportunistic entities aiming to ‘Indianise’ foreign items, potentially leading to long-term detriments. The insistence on incorporating a minimum 50% Indian content into weapons and munitions from foreign original equipment manufacturers (FOEMs) adds complexity. Moreover, the narrow delivery window of 3 to 12 months renders it impractical to import and assimilate technologies requiring extended development. A foreign company CEO aptly sums it up as an unsolvable equation. The outcome could be creating vulnerabilities instead of filling voids, with a potential delay of around 18 months.

Budget Limitations and Acquisition Challenges

The ‘Buy Indian’ stipulation could attract opportunistic entities aiming to ‘Indianise’ foreign items, potentially leading to long-term detriments. The insistence on incorporating a minimum 50% Indian content into weapons and munitions from foreign original equipment manufacturers (FOEMs) adds complexity

The financial limitations imposed by the FTP/EP cap restrict the acquisition of significant budget items. The Indian army’s pressing need for extensive assets like light tanks, artillery systems, and air defence resources comes at considerable cost. These requirements extend beyond the purchase price, encompassing training, spares, repairs, and recovery mechanisms, all of which are integral for optimal utilisation. With the effective budget reduced to around INR 240 crore, the INR 300 crore cap proves grossly inadequate for planning such acquisitions. A recent case from Germany’s KMW illustrates that even urgent procurements entail extended delivery times, underscoring the challenge.

Balancing Self-Reliance and Budget Constraints

Aatmanirbharta in defence implies building a self-reliant ecosystem for R&D and manufacturing of needed military equipment. Yet, utilising Foreign Military Sales (FMS) and EP chips away at budget resources, hampering capacity for larger investments. Such processes run counter to the Integrated Capability Development System Though well-intentioned, excessive reliance on FTP/EP risks hindering the vision of Aatmanirbhar Bharat and disrupting the armed forces’ integrated capability development initiatives. Prioritising these processes for critical voids is vital to align with overarching goals proposed by the Department of Military Affairs (DMA) for synchronised acquisitions.

-The writer is an independent journalist covering defence and aerospace. He can be reached out at vaibhavmag1@gmail.com. Views expressed are personal and do not necessarily reflect the views of Raksha Anirveda