A Tale of Two-and-a-Half Defence Ministers

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Arackaparambil Kurien Antony has the unique distinction of being India’s longest serving Raksha Mantri (defence minister). He took over on 24 October 2006 and held the post till the BJP, riding on a Modi wave, bested the Grand Old Party and came to power on 26 May 2014. Also, he has the reputation of being scrupulously clean — to a fault, some might say.

But for the unseemly controversies surrounding former Chief of Army Staff Gen VK Singh’s age and his allegations of being offered a bribe; the allegations levelled against former Air Chief Marshal SP Tyagi in connection with the purchase of VVIP helicopters; or the resignation of former Admiral DK Joshi following a spate of accidents involving Naval vessels, Antony’s tenure was as spotlessly clean as his trademark white shirt and white mundu. Yet, the more he studiously avoided controversies, the more they seemed to chase him.

As a retired officer tells Tehelka, Antony’s strength became a handicap for the defence forces as military acquisitions were affected: Antony would recoil at the faintest whiff of a scam, with the result that bureaucrats in the defence ministry started revelling in procrastination. Perhaps he feared the ghost of Bofors. (Here, it must be said in Antony’s defence that George Fernandes, who headed the ministry on two occasions between 1998 and 2004 when the NDA was in power, had himself acknowledged the Bofors syndrome and spoken about how it had affected the defence acquisitions during his time.)

It was on Antony’s watch that the former UPA government issued a request for proposal (RFP) for the purchase of 126 medium multi-role combat aircraft (MMRCA) along with transfer of technology and offset obligations. In April 2011, the Rafale, manufactured by Dassault of France, and the Eurofighter Typhoon built by a European consortium that includes the UK, Germany, Spain and Italy were shortlisted for what was billed as the mother of all deals. And in January 2012, the Rafale was picked as the winner based on its low life-cycle cost, among others. The revised Defence Procurement Procedure adopted in 2013 emphasised on giving a boost to the defence industry, both in the public and the private sector, by according a “higher preference to ‘Buy (Indian)’, ‘Buy and Make (Indian)’ and ‘Make’ [categories], bringing further clarity in the definition of the ‘Indian Content’ and simplifying the ‘Buy and Make (Indian)’ procedure (sic).”

Antony was succeeded by Arun Jaitley, who held the defence portfolio for five-and-a-half months, while also serving as the finance minister; on 9 November 2014 he handed over the baton to Manohar Parrikar, who was hand-picked by PM Narendra Modi for the job. Parrikar was serving as the chief minister of Goa until then. However short his stint in South Block was, Jaitley is credited with injecting a sense of urgency in procurements. It helped that the defence minister was also the finance minister.

One of Jaitley’s earliest decisions as defence minister was to encourage private sector participation in the Indian aerospace industry. That was followed by a slew of procurement clearances over the next few months. In December 2014, the Parliamentary Standing Committee on Defence tabled a report (see graphic) in Parliament in which it said that the “ministry should come out of its indolence and start looking towards IAF problems with an open mind where acceptance of shortfalls, envisaged acquisitions, proposed timelines and achieved targets get synchronised so that national interest is
given utmost importance.”

Dwelling on the MMRCA project and the series production of Light Combat Aircraft (LCA) by Hindustan Aeronautics Limited (HAL), the report observed that an early induction of additional aircraft is crucial to check the downward trend in the strength of fighter squadrons. “The panel finds the situation to be very grim and it is quintessential for the ministry to ensure smooth and adequate flow of funds and providing easier induction procedure for attaining the requisite squadron strength,” it read.

Parrikar, who succeeded Jaitley, sought to hit the ground running by promising to fast-track defence procurements without compromising on transparency. He made bold to clear the acquisition of artillery guns worth 15,000-odd crore; the decision assumes significance when one considers that successive
governments developed cold feet after the Bofors scam hit the corridors of power in New Delhi in the year 1986.

Crossing the rubicon

It is in this context that one should locate the surprise sprung on an unsuspecting nation by Modi when he spoke at Paris on 10 April about the decision to purchase 36 Rafale aircraft in a fly-away condition from France in a government-to-government agreement (as opposed to signing a contract directly with Dassault a la Bofors of Sweden circa 1986). Incidentally, the announcement came barely a few weeks before he travels to China, which, along with Pakistan, is spoken about in strategic circles as posing the threat of a two-front war with India.

If the government’s spin doctors are to be believed, Modi was motivated in part by a desire to break the logjam over the protracted MMRCA negotiations over price, transfer of technology, guarantees of performance and quality, setting up of production lines in collaboration with HAL and to arrest the depleting strength of the IAF. Seen from that perspective, the Indian political class appears to have crossed the rubicon by wresting the initiative from an inertia-laden bureaucracy; in the process, the Modi government signalled its intention to opt for strategic purchases as opposed to the traditional policy of competitive bidding at the end of which, the lowest bidder (or L1 in government parlance) is selected.

Built into this radical departure from the norm is the tantalising prospect of roping the private sector into the aerospace industry, which has so far only seen the HAL and the Defence Research and Development Organisation (DRDO) among a handful of others.

It is estimated the $ 6 billion deal for 36 Rafales can be expected to have a 30 per cent offset clause worth around $ 2 billion, which the Indian private sector can leverage. The exact details would be known only after the government-to-government pact is negotiated. Under the offset policy, a foreign manufacturer has to plough back a certain amount of money into India to help the indigenous defence industry to develop.

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