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How armed forces buy their million-dollar weapons

Priyarag Verma |

Updated: April 3, 2012, 7:11 PM IST
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How armed forces buy their million-dollar weapons
India is world's largest importer of arms and bought arms worth over $50 billion in the last 10 years.

New Delhi: There is no business like the business of war. A war involves the use of weapons and its business is not only very dangerous, but also very rewarding. India with its hostile neighbours, large defence force and burgeoning economy provides the perfect setting for a thriving weapons platforms market.

According to the Stockholm International Peace Research Institute, a global think tank that tracks the defence expenditure of all the countries, India is world's largest importer of arms and bought arms worth over $50 billion in the last 10 years.

In the last five years alone the Ministry of Defence has signed almost 500 contracts worth Rs 2 lakh crore and in the next 10 years the Indian armed forces plan to import weapon systems worth over $100 billion, making the country a must on the radar of all the major weapons platform makers even as the annual defence budget of the world in 2011-12 was over $ 1,500 billion.

The indigenous defence industrial complex in India has consistently failed to cater to the ever-increasing demand of the defence forces leaving the field open for foreign companies to peddle their latest hardware. Surrounded by hostile neighbours and also facing internal disturbances particularly in the North East and Jammu and Kashmir, the armed forces are always on the lookout for the latest weapons systems and related paraphernalia.

With the threat perception increasing day by day and technological advances taking place at the blink of an eye, the Indian defence forces have been looking at the foreign companies for the latest weapons.

This big, bad world of arms market has spawned a host of middlemen, many of them retired defence officials representing foreign companies, who try to influence the weapons systems that the Indian soldier should be armed with. Bofors scandal which broke out in 1987 and led to the rout of the then ruling Congress party under Rajiv Gandhi in the 1989 Lok Sabha elections and the Kargil Coffin scam of 1999 are just two of the more famous defence scams.

As soon as the news of the requirement of a new weapons system comes out, these brokers get active and try to influence the purchase. Since even the smallest of the defence deals run is worth several crores of rupees so the windfall for these brokers, who get huge commission to swing the contracts, is enormous. These brokers try to meet the serving defence officers and even the political leadership involved in finalising the contract to get the deal in the favour of the companies they represent.

According to the Defence Procurement Procedure - 2011 no middleman or brokers should be employed by the foreign companies to lobby for any contract. All contracts worth more than Rs 100 crore should have integrity clause whereby if there was any manipulation or deviation from the tender clauses, heavy penalty could be imposed on the offender and even the deal scrapped. The Ministry of Defence has also mandated that all weapons platforms should be bought from the manufacturer directly and not involve any marketing agency.

Most of the defence deals in India are now conducted through the Foreign Military Sale to prevent brokers from influencing the contract. But such sales are time consuming and lead to inordinate delays, cost escalation and leave the forces operating with outdated weapons systems.

The entire process to buy any hardware for the defence forces goes through a long process involving the Services Headquarters, Defence Acquisition Council, Ministry of Defence, Ministry of Finance and Cabinet Committee on Security.

However, none of the safeguards put up by the government have deterred brokers from trying their luck, sometimes with success, in swinging the deals in favour of the companies they represent.

The entire process of procuring arms and weapons platform for the defence forces follows a long-winded process which to the civilian may appear as unnecessary, but is extremely important as it not only involves the life of the soldiers, it also deals with national security.

For any weapons systems needed by the defence forces the first process is preparing the General Staff Qualitative Requirement (GSQR). The GSQR details the requirements of the forces and what they are looking for in a weapons platform. But the GSQR can be written or prepared in such a way that it favours a particular company or system. The unscrupulous elements can use money as well as honey traps to lure the defence officials involved in preparing the GSQR in favour of the organisation that they represent.

After the GSQR is finalised the process moves forward with the Request for Information (RFI) and Request for Proposal (RFP). As the name suggest RFI is used to get information about the weapons. After the RFI process is completed, the RPF is put into motion and the tendering for acquiring the system begins.

The Services Headquarters decides on the operational requirements as well as the technical parameters of the system keeping in view security considerations

The companies interested in selling their armaments submit their tenders and proposals which has both the technical as well as the financial details. Here too money and/ or honey traps can be used to prepare the tender rules to favour a certain company/ weapons system.

The technical offers are then evaluated by a Technical Evaluation Committee (TEC) to check their compliance with the RFP. The weapons systems of all TEC cleared companies are then put through a field trial evaluation. The gruelling field evaluation takes places in several regions of the country and under different weather conditions. The entire process can take several months.

A big loophole in the field trial report is that it can be written in such a way that it favours a particular weapons platform.

Based on the field evaluation report the vendors who clear by the hurdle now face the Contract Negotiations Committee, which decides on the lowest cost bidder (L1) and concludes the contract. The rules can be changed at this stage too and former defence officials used to manipulate the entire process.

The company that wins the contract then has to give the details of the product support for time period specified in the RFP, which includes spares and maintenance tools for field and component level repairs.

After this the final proposal is sent to the Cabinet Committee on Security for clearance. But at this stage political interference and manipulation cannot be ruled out. As a result the entire process can be stalled or the contract can even be cancelled.

If the Cabinet Committee on Security clears the proposal, the contract is signed and the weapons platform inducted into the armed forces.

But as it is clear there can be many a slip between the cup and the lip.

First Published: April 3, 2012, 7:11 PM IST
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