Defence Procurement in India: A Historical Perspective

Defence procurement in India has come a long way since Independence and today it stands at an inflection point from where the future depends on how correctly we gauge the future and identify the correct requirements and also whether we avoid repeating mistakes as learnt from past experiences. History allows us to learn lessons and use our experiences to move ahead in a better manner. History of defence procurement has shown more than once that piecemeal solutions in an isolated manner are not very effective in the long term and that “Solutions of today, may become problems of tomorrow”.1 Therefore, we need to introduce “Fixes which won’t fail” and nothing can be better than adopting a ‘Systems Approach’ to come up with a holistic solution which is enduring and progressive.

Indian defence industry at the time of independence consisted of small-scale factories and mills in and around military fortifications, which catered to the requirements of the British Indian Army.2 They focused on the production of so-called Quartermaster stores, as importing them from England was not considered economical.  It is worth mentioning here that major weapon systems’ production capabilities could not be developed because firstly, it was not considered essential to equip the army with them, and secondly, indigenous production in India proved to be costlier. As a result of this, indigenous capacities were lacking in the country at the time of independence. Even though the need was felt to increase the capacities post independence, it was clear that privatisation was not the way since it required capital and wherewithal which was lacking among the private players then, and also the national objective was to build a socialist form in which the government was responsible for such issues. The responsibility of developing the defence production base in India was taken over by the government through the Industrial Policy enunciated in 1956. Railways and Atomic Energy were other notable areas for which the government decided that the onus would be on the state.3 While other areas over a period of time met more than the envisaged requirement, defence industry somehow could never meet the desired standards. It could be attributed to the interaction amongst elements and sub-systems which formed part of defence procurement system. A detailed look at the cause-and-affect relationships through causal loops hint at the complexity of the problem and fallout of not being able to treat the defence procurement as a ‘System’.

The nascent Public Sector Units could not bridge the gap in capabilities of Armed Forces, not only due to poor management skills and lack of competition in public sector but also due to fast-changing geopolitical realities. Closeness of Pakistan to China and US made the policy-makers realise that the problem needs a ‘fix’ and that too at a faster pace. Indian defence procurement chose to align itself with Russia and major imports started coming in. Though the indigenous capacity development remained a point of concern and licensed production of Russian equipment was introduced so as to have adequate wherewithal to meet our requirements in future. Perhaps, it was not realised at that time that licensed production may increase the Public Sector Units’ output but in absence of ‘Know why’ of the equipment India as a nation would always remain behind the technological loop. The vicious cycle continued and we somehow could never manage to reach the desired state of equipping our armed forces, and men in uniform kept raising the ante for requirement of better equipment.

Then came the liberalisation and opening of the Indian economy. By this time the private industry had started showing some promise and slowly the defence sector started opening itself to private Indian industry. Also the dis-integration of USSR helped the procurement planners to look for alternatives in import and we started increasing our engagements with other defence equipment providers.4 This was a crucial stage for procurement system in India as they were to now move away from ‘single vendor’ procurements to ‘multi-vendor’ procurements. In absence of clear policies and guidelines, a lot of discretion was available with the decision-makers within the procurement system, which led to certain defence procurement scams and also delays due to inaction at times.

The first formal document to guide the present procurement procedures was published in the form of 187th report of Public Accounts Committee in 1989, which led to certain guidelines being issued in 1992.5 After the Group of Ministers’ recommendations post Kargil War, a formal publication called Defence Procurement Procedure (DPP) was introduced in 2002 which has gone on to become a guiding document ever since. The DPP has been revised a number of times to cater to various contingencies and to keep it abreast with present realities. The latest version is DAP-2020 and it was introduced in October 2020. Though there is still a feeling that DPP/DAP has over a period of time added more and more layers to defence procurement system and increased the complexity leading to delays in procurement.

Albert Einstein had once stated that the significant problems we face today cannot be solved at the same level of thinking at which they were created.6 Whether the Indian Defence Procurement system today is perfect or otherwise is for anybody to guess, but we need to continue to adapt to new realities and improve the system to make it more efficient. For that we need to think from a different level vis-à-vis the level from which the system was created as such, which will help us arrive at solutions or suggestions for achieving a better future. Systems approach will definitely be effective in reaching that higher level of thinking and will throw up simple and effective solutions to the perceived problems. It will also help us to define and identify the bottlenecks or inefficient practices as such and look at leverage points to get best output with minimal efforts. Till the time we don’t take a holistic approach we may end up taking decisions in a piecemeal manner and come back to fix the problem which may persist again after the first cycle is over.7

Defence procurement in India needs to adopt a mix of procurement avenues in which the indigenous solutions, foreign equipment and futuristic R&D continue together and a healthy balance is stuck between them. It is important to incentivise the indigenous procurement and encourage futuristic R&D while continuing to fill the critical voids with foreign equipment. While this is already happening, there is a need to start planning for the next cycle of procurement today which may start in the next 5 to 10 years. All global procurements being undertaken today should lead to initiation of in-house R&D to replace them with indigenous solutions in the next cycle. Models prepared through Systems Analysis tools, while identifying the present problems and their causes, will also be able to guide us to test future strategies so that they don’t fail in times to come.

Views expressed are of the author and do not necessarily reflect the views of the Manohar Parrikar IDSA or of the Government of India.

• 1. Peter Senge, The Fifth Discipline: The Art & Practice of The Learning Organization, Currency, 2006.
• 2. Dhirendra Singh, "Committee of Experts for Amendments to DPP-2013 Including Formulation of Policy Framework", Report of the Experts Committee, Ministry of Defence, Government of India, July 2015.
• 3. “Industrial Policy Resolution (30th April 1956)”, Department of Industrial Development, Ministry of Industry, Government of India.
• 4. No. 2.
• 5. No. 2.
• 6. “We cannot solve our problems with the same thinking we used when we created them: Albert Einstein”, articulous.com
• 7. D.H. Kim, Systems Archetype Basics, Pegasus Communications Inc.