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'Indian defence procurement system still not perfect'

Delhi,Business/Economy,Defence/Security, Wed, 02 May 2012 IANS

New Delhi, May 2 (IANS) With time and cost escalations plaguing military acquisitions, Financial Advisor (Defence Services) A.K. Chopra admitted Wednesday that the procurement systems are still far from being perfect and are still evolving.


"If anybody says the Indian defence procurement system is perfect, I think it is still far from being one. It is still evolving," Chopra, who inaugurated a daylong workshop on 'Streamlining the Indian Defence Procurement System' organised by the Observer Research Foundation (ORF) here, said.


Noting that India had a joint secretary handling the procurements of the respective services till 1992, when the first defence acquisitions rules were prepared, Chopra said the Kargil war in 1999 and the resultant review by a committee and a group of ministers led to the system, as it exists today, being evolved.


He said the 1992 "rules of the game" were an internal document and was not known to those outside the ministry.


But the first Defence Procurement Procedure (DPP), brought out in 2002, was a public document. "Since then, the DPP has been going through numerous revisions and has expanded substantially."


The reason for the expansion of the DPP provisions was the constant "useful" feedback received by the ministry from the industry and think-tanks and went on to include provisions such as the integrity pact to uphold probity and offsets clause to energise the Indian industry.


"The way the defence procurement system is structured, it tries to find a fine equilibrium among three stated objectives that are competing with each other - expeditious fulfilment of requirements of the services, development of Indian industry, and the procedures conforming to high standards of transparency and probity," he said.


Chopra noted that the different stake-holders in the defence procurement cycle have conflicting interests.


"The services want the entire procurement done yesterday; for the Indian industry, the emphasis is on giving them greater share and greater role in the whole procurement; and the watchdog agencies keep a watch on transparency and probity," he said.


"It is a fine balance, where the equilibrium keeps on shifting," he added.


Highlighting the problems with the procurement system, Chopra said on many occasions, the acquisition proposals go back and forth between the services headquarters and the defence ministry for years, as at each stage of procurement, clarifications are sought.


Another issue is the "errors" that creep into the proposals at the qualitative requirement preparation stage and these are, at times, noticed after two or three years of the process, resulting in the proposals returning back to square one.


"Even good proposals reach a dead end after two or three years," he said.


Chopra also questioned the manner in which "benchmarking" of the cost of an acquisition proposal is done by the ministry prior to opening of commercial bids from vendors. "When the bids are opened, we find that the benchmarking cost is either far higher than the proposals from vendors or is far too low."


India currently follows the DPP issued in 2011. It is also estimated to buy weapons and equipment for its army, navy and air force worth over $100 billion in this decade, including combat planes, helicopters, specialist equipment for its commandos, radars, tanks, infantry combat vehicles, unmanned aerial vehicles, air defence systems and artillery guns.


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