NEW DELHI — India's government has started working on establishing a new Defence Procurement Organization, or DPO, which will be responsible for speeding up the procurement of weapons and equipment.
"The new DPO is aimed at ensuring quicker procurement of weaponry both from domestic and overseas sources as well," a senior Ministry of Defense official said. The new organization will also ensure that the entire budget is spent. Every year, over $1 billion is surrendered by MoD because of delays in procurements.
Procuring weapons sometimes takes over 10 years, and in that time, the price increases and requirements can become redundant. "Tenders are cancelled midway without much reason bringing hardship in financial terms to overseas bidders who have to prepare for the bidding process and bring their weaponry for trials at their cost," said an executive of an overseas defense company here without being named.
"Though here is a well-defined structure within the current Acquisition Wing in MoD to take care of procurements, there is lack of well-intentioned coordination between the user (defense forces), MoD and the Finance Wings," the MoD official admitted.
The DPO will be based on the recommendations of an internal committee headed by Pritam Singh, management expert and former director of the leading public business school Indian Institute of Management (IIM) Lucknow, which had recommended setting up the new defence procurement agency. Analysts and officials are skeptical, however, whether the main recommendation of the committee to make the new DPO autonomous will be put into practice fearing that the bureaucrats will not like to loosen their grip.
"The DPO is not contemplated as a replacement for Defence Procurement Board, or DPB, currently responsible for purchases," said Amit Cowshish, MoD's former financial adviser for defense acquisition. "The apex level decision-making bodies would need some restructuring, but they will continue to play a role in the new system, Cowshish added.
The new organization will likely have several technical, financial and legal experts to optimize the buying processes. However, if the new DPO is set up, it will take a minimum of three years because it will be thought out in the MoD for one year and it will take at least two more years for restructuring after the cabinet approves it, MoD officials said in private. "It might take a year or two for the new organization to gradually take over the functions presently being discharged by various agencies," said Cowshish.
Even as the DPO is being discussed, the MoD says it has taken steps to expedite weapons procurement, including reducing the Acceptance of Necessity validity to six months for "Buy" cases and one year for "Buy and Make (Indian)" cases, processing single vendor cases with due justification rather than automatic retraction, and enhancing the aim of the Fast Track Procedure to cover urgent operational requirements.
India currently imports an estimated 65 percent of its weapons needs, but expects to decrease it to 50 percent in the next five to seven years by boosting the domestic defense market.
Vivek Raghuvanshi is the India correspondent for Defense News.
