Events

Chairperson: Shri Vinod Misra
Discussants : Dr Selvamurthy and Shri Amit Cowshish

This paper attempts to estimate the self-reliance index of India’s defence production. While estimating the index, it also focuses on three important issues; the approach towards self-reliance (as understood in the Indian context), data problems in estimating the index and the methodology used to arrive at the index. The paper suggests that a separate budgetary classification be made in the Defence Services Estimates to facilitate computation of self-reliance in a more objective manner. This necessitates suitable changes in the classification handbook for defence that mandates the concerned officials of the Indian Defence Accounts Department to book a particular expenditure.

Mr. Behera argued that the concept “self-sufficiency” differs from “self-reliance”, though these have alternatively been used in the Indian context. Self-sufficiency means producing everything in-house that the armed forces need, whereas self-reliance refers to “equipping the armed forces with a whole range of equipments that may come from foreign and domestic sources”. However, he argues that ‘self-sufficiency’ is not an ideal path for a country like India since India’s industrial and Research and Development (R&D) base is not yet sufficiently developed.

Mr Behera describes three phases of India’s defence industrialisation process from the perspective of the aim of self-reliance; from independence to mid-1960s, from mid-1960s to mid-1980s, and from late 1980s till present. In the first phase, self-sufficiency was an overall economic principle behind its industrial development as the leadership at that time felt that the state-led intervention was the best way to overcome the de-industrialisation of economy that was caused by two centuries of the British rule. However, despite some successes, this model had faced considerable weaknesses because of the low level of defence allocation and defence R&D, in addition to the lack of a civil industrial base which had a major impact during this phase.

In the second phase, according to the author, the events of 1960s, particularly the 1962 border war with China and the 1965 Indo-Pak war, brought a major change in India’s defence policy, and the term self-reliance replaced self-sufficiency in defence production. Not only India’s defence budget as percentage of Gross Domestic Product (GDP) increased in the subsequent years but also the approach towards arms procurement policy and indigenous defence production. Moreover, unlike in the first stage of industrialisation, in the second stage of India’s defence industrialisation, more attention was paid to license-production rather then indigenous production, based on its own design and developmental efforts. However, this led to dependency on the license-based defence production, particularly on the Soviet Union. India’s aeronautics industry is such a case whose dependency continues till now. And, in the third phase, with increasingly aware of the pitfalls of the overdependence on Soviet Union, India began to change its approach to defence industrialisation, from license-based production to production based on indigenous design. In this regard, India and Russia signed in 1998 an intergovernmental agreement to jointly produce a supersonic cruise missile, BrahMos and in 2007 two more intergovernmental agreements were signed for co-development and co-production of a Multi Role Transport Aircraft and a Firth Generation Fighter Aircraft. Thus, there has been emphasis on self-reliance and co-production with higher importance on promoting the participation of Indian private sector defence production.

A 10-year self-reliance plan formulated in 1992, under the then Scientific Advisor to the Defence Minister, Dr A.P.J. Abdul Kalam, defined the self-reliance in the form of an index, reflecting the percentage share of indigenous content in total procurement expenditure. Mr Behera held that this definition serves as the only methodology for estimating the self-reliance index, primarily because of the difficulty of putting together a log of information about what is critical and what is not, and updating it regularly with technological development. However, this estimation is not straightforward, primarily because of lack of consistent data in the public domain.

Mr Behera pointed out that India’s heavy dependence on arms import for defence preparedness defies the very objective of self-reliance that it has set for itself. The 1992 Abdul Kalam committee indicated that the share of indigenous contribution to total procurement expenditure would progressively increase from 1992-93 estimation of 30 per cent to 70 per cent by 2005. Although India has developed a vast defence industrial base over the years, the objective of achieving 70 per cent self-reliance has not been achieved till now. He concluded by stating that the self-reliance index has barely improved from 1992-93 estimation of 30 per cent to 36.4 per cent in 2011-12 which indicates the failure of India’s defence industrialisation process and demands serious retrospection.

Major Points of Discussion and Suggestions:

• At present, India’s total defence R&D budget accounts for about six per cent of defence budget which in itself is less than two per cent of GDP. Compared to this, other countries, particularly the US and China spend a higher percentage of their defence budget on R&D.
• It would be significant to look into and assess where India now stands at the global scenario on self-reliance in defence production. As the Indian economy is growing, it is looking for the indigenisation of defence production. This is important not only to meet its own defence requirements for safeguarding its vital national security interests but also to play a larger role beyond its immediate neighbourhood.
• Although today India has reached 100 percent self-reliance in terms of deterrence, it needs to minimize the dependency on foreign countries for its defence needs by further enhancing and indigenisation of its defence production sectors.
• India has already developed a good platform for co-production and development of defence equipment with Russia, now it should look for such joint production with other countries.
• India’s private defence sector is very weak, and it cannot take big projects. However, it can contribute in the defence production sector by joining with public sectors. For this, capacity building of the private sector is very important if it is to undertake future defence projects.
• The author pointed out that Kalam Committee Report has weaknesses which needed to be addressed. In this regard it was suggested that the methodology adopted by Kalam Committee and others such as Dr. Balachandran’s can be analysed in order to find out their strengths and weaknesses, and then the author can refine and adopt his own methodology for this study.
• The conclusion part of the paper also needs to be moderated. As the kind of data required for estimating self-reliance index is not available in public domain, the author needs to state it as a limitation in the paper’s conclusion. The author also needs to mention what kind of data is required to estimate the self-reliance in India’s defence production.

Remarks by the Chairperson

Outlining the present status of self-reliance in India’s defence production, Mr Vinod Kumar Misra said that the extent of India’s arms imports hamper indigenisation of its Defence Public Sector Undertakings (DPSUs). Imports of defence raw-materials and technologies have also been a problem. In addition, it needs to sustain those imported technologies for a long time. However, self-reliance in defence production is a log term process and it will gradually take place in India. In this context, India’s new offset policy can be a significant game changer. However, for its success, it needs to identify the kind of defence technologies that it wants to manufacture and then should focus on creating capacity on those core items. Mr Misra pointed out that India’s defence production sector and R&D also suffer capability gap and the Joint Ventures with Russia and Israel for co-production and development of defence equipment can be one way of meeting this capability gap. There is also a strong case for increasing Foreign Direct Investment (FDI) in the defence production sector but India has to find out the ways to give a push to it. So far as policy announcement is concerned, Indian government has recently issued policy guidelines for engaging the private sector. Some progress has been made in this regard but still time will take in involving private enterprises in big projects.

Report prepared by Dr Saroj Bishoyi, Research Assistant, IDSA

Venue: China Institute of Contemporary International Relations (CICIR), Beijing, China

Venue: IDSA Auditorium

Book release by National Security Advisor, Mr Shivshankar Menon

Programme

10:15-10:30 Registration/ Tea

10:30- 10:40 Welcome Remarks Director General, IDSA

10:40-10:50 Introductory Remarks Mr. Nitin Desai, Chairman, Cyber Security Taskforce

10:50-11:30 Report Release and Mr. Shivshankar Menon, NSA’s Address

11:25-11:30 Vote of Thanks Dr. Cherian Samuel

11:30-11:45 Tea

11:45-13:15 - Panel Discussion on “India’s Cyber Security Challenge: Way Ahead”

Chair: Ms. Vijaya Latha Reddy, Deputy NSA & Secretary, NSCS

• Dr. Gulshan Rai, DG, CERT-IN
• Harsh K. Jain, Director (E & IT), MEA
• Lt. Gen. Aditya Singh (Retd.)
• Maj. Gen. HJS Sachdev, ADGM (IW), DGMO
• Mr. Felix Mohan, CISO, Airtel

13:15 Lunch at IDSA

Transcript of lecture & discussion [Read | Listen]

Chairperson: S Kalyanraman
Discussants: Manoj Shrivastava and VS Raghuvanshi

Mahendra Prasad began his presentation by focusing on his ongoing research project which attempts to unfurl various aspects of quality assurance (QA) in army procurements, an area understudied so far. He mentioned that “Quality Assurance (QA) in Army Procurements,” was the first paper in a series of papers encompassing the Project Work entitled “Synergising QA for Speedy Defence Procurement and Ensuring Quality.” In the next paper, effectiveness of the QA in Army procurements plan to be critically analysed using the failure data which would be collected from the defects reported on newly acquired equipment during their warranty period. In the third paper, case studies of few selected procurement cases would be carried out. The final paper will explore the best QA practices and how these can be applied in our context to evolve a better QA system.

Introducing the paper, the author said that defence procurements are done primarily under two heads – capital and revenue. The former is guided by DPP, and include: fifteen years Long Term Integrated Perspective Plan (LTIPP), five years Services Acquisition Plan (SCAP), and Annual Acquisition Plan (AAP), which is a subset of SCAP and is a two year Roll On plan. The latter is guided by DPM and includes mainly replacement equipment and assemblies, spares, components for maintenance and operation of already sanctioned assets. QA checks of all the hardware procured by Army are carried out by DGQA. Further, he elaborated upon the various stages of the evolution of DGQA. In its course of evolution, in 1968, Directorate of R&D (General) was bifurcated into Directorate of Inspection (General Stores) and Directorate of R&D (General Stores). Directorate General of Inspection was re-designated as Directorate General of Quality Assurance (DGQA) on 04 Jul 1987. At present, DGQA Organisation is under the overall control of Department of Defence Production and Supplies in the Ministry of Defence. Further, Lt Col Prasad delved on the functions of DGQA which provides QA cover to the entire range of Arms, Ammunitions, Equipments and Stores on procurement. He then talked about functions which are specific to procurement, like, vetting of response of vendors to Request for Information (RFI), assist in formulation of General staff Qualitative Requirements (GSQRs), assist in preparation of Requests For Proposals (RFPs) etc.

Subsequently, Prasad talked about Procedure of Acceptance of Capital and Revenue Procurements which is similar if not the same for both capital and revenue procurements. The first and foremost step here is that after placement of supply order an Acceptance Test Procedure (ATP) incorporating all the tests and certification for acceptance of the product ordered is prepared. In his analysis Prasad observed that the conditions laid down for acceptance are extremely stringent and capital intensive for vendors participating in the bidding process. The stakes are very high as finally only one vendor is likely to get the contract. Expenditure incurred by all other vendors not winning the bid therefore becomes wasteful expenditure and discourages them from fielding their equipment. It has been observed that many vendors withdraw at this stage. Moreover, lack of multi-skilled engineering staff with DGQA is invariably evident from the fact that the number of DGQA staff attending a meeting (especially pre-bid meetings with vendors and technical evaluation committee meetings) exceeds those from other departments/ branches/ directorates. On the draft ATP he said that it is prepared by the vendor on whom the supply order is placed. Since a vendor has a vested interest, it may not mention some very important tests for which he does not have the facility and/or certifications,. To improve QA in Army procurements, Mahendra Prasad made following important recommendations:

• In order to cut costs and time required for technical and environmental evaluation it was recommended that only those tests should be undertaken by DGQA, which are not possible to be carried out anywhere else at various laboratories accredited by National Accreditation Board for Testing and Calibration Laboratories (NABL) in the country.
• Reputed vendors may be permitted self-certification on case to case basis taking into account their past performance.
• To address the interaction problems of user and WE directorate with DGQA, it is felt that a single window system for interaction with DGQA will go a long way to obviate this long-standing sore point.
• For creation of a pool of staff possessing multiple skills, bifurcation of staff into broad streams as mechanical, electronics and computer science and inter directorate postings may help.
• Regarding ATP it is felt that a well-researched and stringent ATP can minimise occurrence of a number of defects due to material and manufacturing inadequacies, after the equipment is put into service.
• The selection process of the officer cadre needs a complete revamp.

Lt Col Prasad concluded by saying that for the success of any military mission, right equipment, at the right time, in the hands of soldiers is as important a factor as the training and physical fitness of soldier himself. Thus, factors causing delay in procurement of Army hardware need to be identified, analysed and eliminated. Two most important features that equipment in the hands of soldiers must possess are high reliability and military ruggedisation.

Discussion Points

• Since the DGQA is overburdened, the agency should divest itself of the task of promoting small scale industries.
• Many discussants shared Prasad’s point that the expenditure incurred by all other vendors not winning the bid becomes wasteful expenditure and discourages them from fielding their equipment. It was suggested that those vendors whose bid were rejected must be compensated in a suitable manner. For this suitable provisions in DPP need to be included.
• It was argued that authorising regulatories of foreign governments to certify their countries’ product is a tricky proposition, since in these days of cut-throat competition, many countries would not mind promoting their own companies, even if it compromises the quality. Moreover, the advanced countries may give the certification with the belief that India does not have the requisite testing facilities to check the veracity of the foreign certification.
• It was pointed out that Customer Service Directorate for single window interaction is in the anvil. It will reduce the time lag considerably.
• Since many agencies are involved in the process of procurement, an empowered central authority is desirable. Increasing the autonomy of the DGQA would be a welcome step.
• It was suggested that the DPP should be elaborately dealt with in the paper to see how different agencies’ roles have been incorporated in it.
• Significantly, one discussant argued that quality assurance done by DGQA merely involves checking specifications and parameters given in GSQR. It would be better to grade the product in some order of quality level to enable selection of best product within budgetary allocation.
• It was argued by one participant that QA is an unending process and specific to particular environment. What is quality for US may not find acceptance in the Indian conditions.
• Many participants agreed with the author’s observation that the two most important benchmarks of QA are high reliability and military ruggedisation. Soviet equipments were very good on these criteria and were widely regarded as soldier-friendly.
• Consumer-interface, which is very strong in many countries, lacks attention in India. It remains to be seen whether the DGQA is evolving towards TQM (total quality management) or not, since in TQM consumer is the focal point.
• Assurance level is a standard statistical tool across the world for quality analysis, but DGQA does not have its assurance level defined.
• Regarding the lack of qualified technical officers to oversee the process of procurement, it was pointed out that mere recruitment of technically qualified persons for QA job will not yield much, unless periodic training aiming at updating their technical knowledge is ensured, since technology is fast changing. Moreover, while selecting officers for the QA job more emphasis should be on aptitude than knowledge; the later can be imparted at the time of training. High integrity and passion for the job should be the benchmark for selection of officers.
• It was argued that Ordnance Factory’s services can be better utilized in production of defence materials, since they have very good infrastructure facilities at their disposal.
• It was pointed out that a product failed to meet specifications at the trial stage is accepted later subject to “rectification” without any further trial.

Chairperson’s Remarks
Dr. S. Kalyanaraman complimented Lt Col Prasad for a very comprehensive and detailed presentation on a topical issue concerning the Indian Army. He suggested a slight tinkering with the title to bring it in sync with the content of the paper and his research design.

(Report prepared by Amit Kumar, Research Assistant IDSA)