India is currently embarking on a major programme of military modernisation, which could result in over 120 billion dollars in defence contracts between 2012 and 2017. This programme has several objectives: commissioning new weapons systems, breaking down the barriers to private sector involvement, increasing the content of locally resourced hardware and improving the effectiveness of the procurement system. However, its success depends on reform of the political context in which military planning is undertaken.
- Absent a rebalancing in military and civil relations, gains in the effectiveness of its fighting forces will remain out of India's reach.
- In the near term, India will lag many smaller countries such as South Africa, South Korea, Israel and Turkey in its military preparedness.
- Unlike in most liberal economies, small and medium-sized industries are set to remain peripheral to India's defence production.
Without an overhaul of decision-making procedures, and the wider relationship between civilian and military authorities, the programme is likely to be marked by unpredictability, dysfunctionalities and the lack of transparency.
With the exception of the 1971 India-Pakistan war, India has faced repeated difficulties in fielding effective military forces since independence in 1947:
- The 1962 war with China exposed India's military as unprepared and ill-equipped, after years of Congress prioritisation of economic growth ahead of military expenditure.
- Between 1987 and 1990, the Indian Peacekeeping Force (IPKF) was in effect defeated by the Liberation Tigers of Tamil Eelam and forced to withdraw from Sri Lanka.
- Most seriously, India has failed over many decades to gain the upper hand in military relations with Pakistan, a country less than a fifth its size. Most recently, the 1999 Kargil conflict and the 2011 Operation Parakram saw command failures, confusion over objectives and delays in mobilisation.
- Nearly 2,000 Indian soldiers were killed in accidents and equipment malfunctions in Operation Parakram, in which formal hostilities never actually broke out.
- India's internal counterinsurgencies have typically lasted some 20 years, twice the global average.
India's difficulties arise in part out of its history:
- The political culture shows a long-term preference for negotiation and diplomacy rather than force as an instrument of politics.
- Fear of coups has driven civilian governments to limit the political influence that the military might develop.
- The history of non-alignment has accentuated this heritage of anti-militarism, which minimises importance of the military.
- Until very recently, successive administrations prioritised economic growth and social spending over military modernisation. Between 1988 and 2009, military spending fell from 3.8% to 2.7% of GDP.
The wide separation between the civilian and the military arms, and the denial of political influence to the military, has resulted in ill-defined strategic objectives at key moments of conflict and poor long-term planning. Particularly damaging is the refusal to appoint a chief of defence staff. Without this leadership, the coordination capacity of different military wings to ensure overall domestic security is hampered:
- To develop its capabilities in conventional and high-altitude warfare on India's northern frontiers, the Army seeks support from the Indian Air Force (IAF). However, IAF's spending priorities lie in the development of India's nuclear arsenal and the maintenance of superiority in Indian air space.
- The Navy, on the other hand, is looking to develop a blue water capability and a wider regional role in protecting India's trade and communication routes. The Navy's largest -- and currently much troubled -- procurement order is the retrofitted Russian aircraft carrier, the Admiral Gorschkov.
Other opportunities for improving coordination are also missing. Serving officers have very little presence in the ministries. Some 55,000 army officers retire each year, but there are few paths whereby they can make their experience available in helping to improve military planning and procurement.
Public sector dominance
Against this background, the announcement of an enormous procurement programme does not instil confidence. Already, questions have been raised about the allocation of contracts for diplomatic, as much as strategic reasons -- for example, regarding the splitting of different aircraft contracts between Russian, European and US suppliers.
Also, there are longstanding problems with the large indigenous weapons industry. There are 39 ordnance factories, eight defence public sector undertakings (PSUs) and 50 defence research labs overseen by the Defence Research and Development Organisation (DRDO), the premier agency for military research in India.
However, despite receiving billions of dollars to develop effective indigenous weapons systems, these state-owned labs have largely failed to do so:
- Light Combat Aircraft and Main Battle Tank projects have seen cost overruns of over ten times, without producing equipment that the military wants to use.
- A project to manufacture much needed 155mm artillery guns in conjunction with the Swedish company Bofors was shelved after the procurement scandal of the mid-1980s. So, most of the army's artillery still dates from the 1960s and 1970s.
- Various missile systems have gone through many tests, but the poor quality of components in particular has resulted in several failures, the latest in Prithvi's premature dive into the Bay of Bengal in April 2010, and Agni II Prime's failed launch in December 2010.
In keeping with governance failures elsewhere in the bureaucracy, these well-funded state labs are not subject to independent external scrutiny. Instead, the head of DRDO is the defence minister's scientific adviser, which presents a clear conflict of interest.
Absence of a level-playing field
In 2001, the domestic defence industries were opened up to the private sector. However, distrust of private industry continues to frustrate the large Indian players -- such as Larsen & Toubro, Tata, Mahindra, Godrej Boyce and Bharat Forge -- that now bid for contracts.
The PSUs still hold a monopoly on a wide range of orders, and enjoy many other advantages, such as not having to pay import duty.
The annually updated Defence Procurement Policy is designed to make tender and bidding more transparent, after a slew of procurement corruption scandals bedeviled successive administrations. However, the dominance of civilian committees continues to impede the process.
In July last year, the fourth attempt in 25 years to procure new artillery systems for the Army collapsed. The bidding process was down to two finalists at the stage of live fire trials. However, one was suddenly blacklisted, leaving only BAE systems (UK). The defence establishment refused to proceed with only one vendor, and the process ended in disarray. When a fresh tender was issued in January, BAE opted out, on the grounds that it was too costly and unpredictable to compete again.
In addition, the bidding process has been made more complex by the new requirement for foreign vendors to 'offset' 30-50% of the value of orders through indigenisation of production. This may not work, given the reluctance of many Western vendors to work with state-owned enterprises, let alone transfer advanced technologies to them