The Kelkar Committee in its report had recommended that the government should restructure the acquisition wing of the MoD along the lines of the Direction Générale de l’armement (DGA), the French defence procurement organisation. The DGA is a highly professional and integrated body, with staff strength of about 12,000 consisting mainly of civil and military engineers, and technicians. With a procurement budget of • 7.9 billion, and 80 on-going weapons programmes for 2011, the DGA is responsible for the entire cycle of project management, including the tasks of design, procurement, and the test-evaluation of systems. It is also responsible for executing export orders (estimated at •6.5 billion in 2011), on behalf of the French industry.5
While recommending a DGA-like structure for India, the Kelkar Committee was also of view that such a professional organisation would go a long way in creating a synergy among the various stakeholders (armed forces, the civilian bureaucracy in the MoD, R&D agencies, and industry). The committee was also of the view that such
3 ‘Committee to identify Raksha Udyog Ratnas submits report’, Press Information Bureau, Government of India, June 6, 2007
4 This section is largely based on an inter view with N.S. Sisodia, Chairman of the Committee on Impr oving Defence Acquisition Structures in MoD.
5 Direction générale de l’armement (DGA), Activity Report 2011, p. 3
a synergy is necessary for providing an optimum ‘material solution’
once the capability requirements of the armed forces are finalised.
From the industry point of view, the synergy among the stakeholders enables them to be participants in solutions from the time a capability gap is identified. This, in turn, gives them adequate lead time for long- range developmental and production planning, wherever feasible. In view of these immense benefits, the Kelkar Committee was confident that such an organisation would eventually be set up in India, and went to the extent of suggesting that it be termed Indian Defence Acquisition Organisation (IDAO).
Following these recommendations, the MoD set up a Committee chaired by the Director General, Institute for Defence Studies and Analyses (IDSA), N.S. Sisodia who, in his previous stint in the MoD, was in charge of public sector defence enterprises (DPSUs and OFs).
Although the Sisodia Committee’s report focused more on the structure and procedures of defence acquisition, it also made vital recommendations, including some innovative suggestions on enhancing the domestic defence industry’s participation in the procurement process. The Sisodia Committee firmly believed that a truly integrated acquisition system was the foremost requirement for stimulating the domestic industry. Some domestic industry-centric recommendations are discussed in the following paragraphs.
Involvement of Industry in the Defence Acquisition Process The Sisodia Committee was of the firm view that the involvement of domestic industry in the acquisition process from its earliest stage was a necessary condition for greater self-reliance. The entry point for industry should be at the finalisation stage of the long-term defence capability plan (covering a 15-year period) when it can be invited to suggest a range of options to meet a capability gap. The committee argued that prior consultation with industry will sensitise planners regarding what could be made available domestically, and what needs to be bought from outside to thwart a likely threat in the future.
Informed decisions, including regarding life cycle costs, can also be taken based on a broad-based cost-benefit analysis of various options.
If an indigenous solution is found feasible and cost-effective, the capability plan can accordingly be prepared to give an opportunity to domestic industry, which will lead to greater self-reliance.
In addition to involving industry players in the consultation process, the Sisodia committee also recommended that a public version of the capability plan be shared with the wider industry as also with the defence and scientific communities. The committee argued that sharing of long- tem plans with industry will enable the concerned players to plan and invest in the required infrastructure.
Involvement of Industry in Formulation of Qualitative Requirements
To give a further fillip to domestic industry in the acquisition process, the Sisodia committee made a strong pitch for industry’s involvement during the preparation of Qualitative Requirements (QR),6 which has been a matter of concern in India.7 It has been pointed out that QRs—
which constitute the starting point of India’s defence procurement process—are often formulated by aggregating the best features of several weapon systems available in the global market. Consequently, the requirements are often projected beyond minimum capability requirements of the armed forces, and even beyond the industrial capability of global players. The domestic industry hardly gets a chance to participate in the process of the acquisition of weapons with such ambitious QRs, even though they have the capability to meet the minimum requirements.
The committee argued that efficiency in QR formulation would not only lead to faster and better procurement but would also promote greater self-reliance by projecting the realistic requirements, in keeping with the potential of the domestic industry. As in the capability plan, the industry could be invited to make suggestions based on domestic industrial capabilities to meet the minimum inescapable requirements of the armed forces. Informed decisions can thus be taken, based on the interaction with domestic industry, in order to give it a chance.
6 QRs are a set of technical/operational specifications that a weapons system is required to have/achieve.
7 For a detailed overview of the QR-related problems, see Laxman Kumar Behera,
‘India’s Def ence Acquisition System: Need for Fur ther Ref orms’, The Korean Jour nal of Defense Analysis; and Comptroller and Auditor General of India, ‘Defence Services, Army and Ordnance Factories’, Performance Audit Report No. 4 of 2007, pp. 10-12.
Re-designation of Department of Defence Production
The acquisition committee headed by Sisodia felt that the existing Allocation of Business Rules of the Department of Defence Production (DDP) were not consistent with its responsibilities which have been expanded with the entry of private sector since 2001. The committee argued that since the private sector has an important role to play in defence production, its interests should also be protected by the DDP which is often found to favour state-owned enterprises over the private sector. To create a level-playing field, the committee recommended that the DDP should be re-designated as the department of defence industry. The re-designation should, however, be accompanied by concrete measures to reflect its expanded role. One of the measures suggested by the committee was to assign the present additional secretary in the revamped DDP, the task of looking after the interests of the private sector. At the same time, the committee also suggested that the designations of the joint secretary (JS) level officials in the DDP who are in charge of the concerned DPSUs should also be changed to reflect their wider role. For instance, JS (Shipyard), who looks after the four MoD-owned shipyards, should be redesignated as JS (Warship Production) to extend his purview to private shipyards also. Similarly, JS (HAL) could be re-designated as JS (Aircraft) Production.
Defence Industrial Policy Statement
Drawing upon the experience of advanced counties such as the UK and Australia, which periodically issue defence industrial policy statements, the Sisodia Committee had also recommended that a similar exercise be undertaken by the MoD. The committee believed that a high level policy statement would go a long way in clarifying the government’s intentions of nurturing the domestic industry in view of the changing environment. The UK MoD, for instance, brought out a revised industrial strategy statement, the Defence Industrial Strategy (DIS), in 2005, to reflect the global security environment post Cold War, and the evolving transnational nature of the defence industry.8 In this context, the DIS emphasises two aspects: the need to retain sovereign capability in certain key areas, and sourcing the rest from a wider global market.
8 UK Ministry of Defence, Defence Industrial Strategy, Defence White Paper, July 2005, p. 2.
Thus, the DIS offers the industry early policy clarity, which enables it to make informed decisions to meet the government’s objectives.
Strategy for Defence Exports
Like the previous committees, the Sisodia Committee also emphasised the importance of exports for expanding the domestic industrial base.
It has recommended that the MoD should articulate a long term export strategy in consultation with the Indian private sector to safeguard its business in view of the uncertainty in domestic demand. The committee also recommended that, as in the advanced counties, the Indian armed forces could also play a greater role in furthering defence exports. It also recommended that the government should clearly indicate to the industry the items which can be exported, and the countries to which such exports can be made. Such policy clarity would enable the industry to plan for exports.
Despite the above innovative recommendations, the Sisodia Committee report has not received the attention it deserves. Moreover, in contrast to the recommendations of other committees, which have partly been implemented or accepted for implementation, this report has been kept out of public domain.