India’s military procurement process blamed for Rafale bungle

By Anjali Ojha,

New Delhi : A cumbersome process for military procurements has been blamed by a parliamentary panel for India missing out on “the mother of all deals” for purchasing 126 combat jets, instead of which only 36 will be bought from the same French manufacturer.

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“It is observed that the deal for 126 aircraft with the France-based Rafale company could not be finalized. The committee feels this is attributable to the long gestation period of the Defence Procurement Procedure (DPP),” Parliament’s Standing Committee on Defence said in its report tabled earlier this week.

The committee, headed by Maj. Gen. B.C. Khanduri (retd) of the BJP, hoped that the changes in the DPP that are due this year will remove such shortcomings.

The deal for purchasing 36 Rafale combat jets in fly-away condition was inked during Prime Minister Narendra Modi’s visit to France last month. The Rafale had in 2012 received the Indian Air Force (IAF) nod for 126 jets in a $12 billion deal in the face of stiff competition from five other manufacturers. Sixteen were to be bought off the shelf and the remaining manufactured in India by Hindustan Aeronautics Limited (HAL) under a transfer of technology agreement. However, differences over the price and the “ownership” of the HAL-manufactured planes had prevented the closure of the deal.

The IAF had expressed an urgent need for the 126 medium multi-role combat jets to primarily replace its agening fleet of Soviet-era MiG-21 planes and to plug the gap caused by the delay in the development of the indigenous Tejas light combat aircraft (LCA). The IAF currently has 33 combat squadrons against a sanctioned strength of 39.5, which is sought to be raised to 42.

(The committee, in a separate report, had said that by 2022, the IAF will have just 25 squadrons, losing “even the slight edge over a rival neighbouring nation” – read Pakistan.)

“The committee hopes that the new Defence Procurement Procedure shall plug the loopholes in the existing policy and make it more productive without time and cost overrun,” the panel said.

According to defence ministry officials, changes are due in the DPP, which was last revised in 2013. Defence Minister Manohar Parrikar has also stated that “major changes” are expected in the DPP.

Ministry officials said the changes will focus on four broad areas, one of them being the way to address complaints, as even anonymous and unsigned complaints often delay the procurement procedure.

“We keep on getting a large number of complaints signed, unsigned, pseudonymous, anonymous and so on. Frequently, the practice has been that the minute you get a complaint, you freeze and stop moving on that procurement,” a ministry official said, adding this will be addressed in the revised document.

The other issues include redefining the procedure for blacklisting a company and making it more nuanced and changes in the offsets’ policy.

“We are working on the offsets’ policy, which we have found is not effective, and in most cases we are being forced to make dispensations or give concessions to the foreign vendor because of flaws in the policy,” a ministry official said.

Another major change would be to modify the “Make procedure” in the DPP which is “not yielding results”, an official said.

Under this, 80 percent of the research funding for a project would be provided by the Indian government to a foreign government or private vendor to develop a particular product in return for an assured order over a certain period so that it becomes commercially viable for the developer.

(Anjali Ojha can be contacted at [email protected])