Concept Note

With the successive increase in India’s defence budget, the Capital Acquisition budget has also grown phenomenally over the years. During the last decade (1999-00 to 2008-09), the defence capital acquisition budget has grown by nearly four-fold to little less than Rs. 37,500 crores, thus indicating the nation’s collective effort and commitment to modernise its armed forces.

The increase in defence capital budget notwithstanding, acquisition of capabilities required by the defence forces within a stipulated time and at an optimal cost poses a major challenge before the defence establishment. Despite several reviews of Defence Procurement Procedure (Capital Procurement), undertaken in quick succession in recent past by the MoD, it is yet to fully ensure expeditious procurement within allocated budgetary resources. One indication of lack of expeditious procurement is the recurring underutilisation of resources earmarked under capital expenditure. As the new budget for 2009-10 reveals, nearly 15 per cent of previous year’s capital budget remained underutilised at the stage of revised estimate. This together with an upward moving trend in surrender of funds, observed in past few years, reveals inadequacies in the capital acquisition system which needs to be addressed to ensure that the armed forces are fully prepared.

The Comptroller and Auditor General of India in a 2007 report noticed a number of deficiencies plaguing our capital acquisition structure/procedure. It observed inter alia deficiencies in acquisition planning and formulation of GSQRs (general staff qualitative requirements); inadequacies in vendor identification; lack of objectivity and fair play in technical evaluation; weaknesses in trial evaluation; lack of effective cost computation mechanism; and multiple agencies with dispersed centres of accountability. To overcome these inadequacies, the supreme auditor in turn recommended a number of measures which deserves serious consideration.

One of the recommendations of the supreme auditor was to set up an integrated acquisition body encompassing “all the functional elements and specialisation involved under one head”. The Kelkar Committee Report of 2005 (Part-I) has also recommended in similar fashion and even gone to the extent of saying that a “body like DGA [of France] seems suitable in the Indian set up.” A DGA-like body in India however requires a major restructuring of the present set up. It is worth noting that besides France, other major developed countries, including UK, Australia among others have moved towards an integrated approach for defence acquisition. The idea behind such integrated approach is to ensure accountability under one head, provide “through life capability” while ensuring best value for money.

The proposed run up seminar on defence acquisition is the second in the series of such seminars, aimed at examining the inadequacies in the Indian acquisition system. It will bring together practitioners, personnel from Armed Forces, R&D and Industry, and experts on the subject, on a common platform to discuss and debate in regard to streamlining India’s acquisition system. The run up seminars will conclude with an international seminar involving, besides the Indian stakeholders, the key functionaries from the MoD and armed forces of major developed counties and experts on the subject, to discuss the international best practices in defence acquisition. The major issues that will be discussed in the second run up seminar are: promotion of domestic defence industry; efficiency in logistics management; building an acquisition system that is efficient and proactive; and responsibility and accountability of acquisition organisation/staff.

Tentative Programme

DAY – ONE (April 26, 2010)

Inauguration: 09.30-10.00 hrs
Opening Remarks: Director General, IDSA
Keynote Address by Admiral Nirmal Verma, PVSM, AVSM, ADC, Chief of the Naval Staff
Vote of Thanks

Tea: 10.00-10.30 hrs

Session I: 10.30-12.00 hrs
Empowering the Defence Industrial Base

Chair: Shri Raj Kumar Singh, Secretary (Defence Production), MoD
Speakers:

• Dr K G Narayanan, Former Chief Advisor, DRDO
• Brigadier Khutub Hai, Chief Executive, Mahindra Defence Systems
• Rep. of BEL

Session II: 12.00-13.30hrs
Comprehensive Logistics Management including PBL, Outsourcing, Life Cycle Cost Concerns

Chair: Air Marshal S. C. Mukul, PVSM, AVSM, VM, VSM
Speakers:

• Prof Dinesh Kumar, IIM, Bangalore
• Air Marshal (Retd.) A.K.Nagalia , PVSM,AVSM,VM,VSM
• Vice Admiral Ganesh Mahadevan, AVSM, VSM

Lunch: 13.30-14.30hrs

Session III: 14.30-16.00 hrs
Potential Reforms in Acquisition Organisation & Procedural Framework Based on Global Best Practices

Chair: Shri Shashi Kant Sharma, Director General (Acquisition), MoD
Speakers:

• Dr Vivek Lall, India Country Head, Boeing Integrated Defense Systems
• Mr. ICA Herve Maniere, Deputy Defence Attache (Armament), French Embassy in India
• Lt Col. Peter Garretson, Visiting International Fellow, IDSA

DAY – TWO (April 27, 2010)

Session IV: 9.30-11.00 hrs
Striking Optimum Balance among Diverse Oversight Concerns in Defence Acquisition

Chair: Ms. Rekha Gupta, Dy.CAG
Speakers:

• Shri. Ravinder Pal Singh, Defence Analyst and Former Project Leader on Arms Procurement, SIPRI
• Shri S Chandrasekaran, Financial Adviser (Acquisition) & Addl. Secretary, MoD
• Shri K.Subramaniam , OSD to CVC

Tea: 11.00-11.30 hrs

Session V: 11.30-13.00
Key Aspects of Defence Offsets

Chair: Shri Vinod Misra, Former Secretary (Defence Finance), MoD
Speakers:

• Dr. Thomas Mathew, DDG, IDSA
• Rep of HAL
• Mr Roger Rose, Chief Executive, Lockheed Martin India

Lunch: 13.00-14.00 hrs