Under AK Antony’s tenure of more than six years, the country’s defence sector has lurched from crisis to crisis. Our Armed Forces are inadequately prepared
Rajiv Gandhi, had once said that employing agents or middlemen in defense contracts is an internationally accepted norm and a regularised practice. He admitted that there was a need to review India's policy on such matters. In international defence deals, agents are normally identified and they are involved right from the process of bidding to the execution of the contract. They are also accountable for time-bound deliveries. The commission for their services is open and often in the public domain.
On the other hand, according to Indian defence procurement rules, hiring agents and middlemen, paying or accepting bribe is prohibited, and is considered illegal. Moreover, the Government can cancel a contract, any time, in case the integrity clause is violated at any stage. The seller also has to forfeit any security money it may have deposited as a bidder. However, a chronological analysis of what has happened in the history of various deals in the procurement of equipment has shown many cancellations due to slew of scams, involving illegal kickbacks and commissions. Also, there has been a huge escalation from the original price due to inordinate delays caused by bureaucratic hiccups.
To name a few important examples, the AgustaWestland helicopter deal unearthed huge amount of kickbacks by middlemen from Italy and India, resulting into the cancellation of the contract midway in January 2014. Interestingly, the advance money as security has not yet been recovered. The INS Vikramaditya deal, that was finalised a decade back with the Russians, got botched up by bureaucratic indecisiveness, causing inordinate delays and resulting into a 137 per cent increase over the original price of 2007.
In practice, what happens is that instead of a recognised agent, there are several clandestine agents in both seller and buyer countries. The accountability regarding timely delivery, in the process, gets diluted. To achieve vested interests, parties put roadblocks at every possible stage, resulting into delays and subsequent escalation of price. Moreover, the amount is so big that even a small slice of the cake could change the fortunes of a person. The recent case of corruption in the dealings of a British firm, Rolls-Royce, with Hindustan Aeronautics limited, for the procurement of parts used in various aircraft including trainer jets, has now gone into the CBI net. It has been alleged that commission was given to a Singapore-based company for obtaining the Indian contract. This cancellation is going to severely impact our defence preparedness .
However, in this case, taking cognisance of Indian procurement rules, the UK company, after allegations of corruption surfaced, is thinking of cutting down the number and role of agents. India’s Defence Minister, Mr AK Antony, claims that he has not spared anyone found guilty. Unfortunately, it has not helped the ailing defence sector, because honesty is not a substitute for efficiency and administrative capability, more so when the country's integrity, security and sovereignty are at stake. Sadly, the Minister has neither been able to check corruption nor inordinate delays in the execution of contracts. Time and again there have been reports of shortages of ammunition, obsolete artillery lack of modern equipment, and a big gap existing in defence preparedness.
Indigenisation of manufacturing of defence equipment is one area that needs to be addressed urgently. It is a pity that India does not manufacture even a war-worthy gun. Besides, there is always a danger that countries leading in the defence sector, might gang up and exploit India's vulnerability in their favour. Overhauling of the working in the Defence Ministry, by revisiting the guidelines regarding our procurement policy, even if it means flowing with the stream running in the developed world, and bending some rules to make the system more efficient and transparent, along with adequate funding for indigenous manufacturing sector, should be encouraged.