CORE CONCERNS IN INDIAN DEFENCE AND THE IMPERATIVES FOR REFORMS CORE CONCERNS IN INDIAN DEFENCE AND THE IMPERATIVES FOR REFORMS Editor Vinod Misra INSTITUTE FOR DEFENCE STUDIES & ANALYSES NEW DELHI PENTAGON PRESS Core Concerns in Indian Defence and the Imperatives for Reforms Vinod Misra (Editor) First Published in 2015 Copyright © Institute for Defence Studies and Analyses, New Delhi ISBN 978-81-8274-818-7 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without first obtaining written permission of the copyright owner. Disclaimer: The views expressed in this book are those of the authors and do not necessarily reflect those of the Institute for Defence Studies and Analyses, or the Government of India. Published by PENTAGON PRESS 206, Peacock Lane, Shahpur Jat, New Delhi-110049 Phones: 011-64706243, 26491568 Telefax: 011-26490600 email: [email protected] website: www.pentagonpress.in Branch Flat No.213, Athena-2, Clover Acropolis, Viman Nagar, Pune-411014 Email: [email protected] In association with Institute for Defence Studies and Analyses No. 1, Development Enclave, New Delhi-110010 Phone: +91-11-26717983 Website: www.idsa.in Printed at Avantika Printers Private Limited. CONTENTS Foreword vii Contributors ix Abbreviations xi Overview xix 1. India’s External Security Environment and its Impact on Indian Defence 1 Kanwal Sibal 2. The Conundrum of Indian Defence and Civil-Military Relationship 9 Shekhar Dutt 3. Roots of Civil-Military Schism in India: The Need for Synergy 19 Arun Prakash 4. India’s Defence Organisation: A Re-Orientation and the Need for Change 38 Srinivasapuram Krishnaswamy 5. Higher Defence Organisation and The Pursuit of Jointness 52 Deepak Kapoor 6. Defence Planning in India at Crossroads 74 Amiya Kumar Ghosh 7. Defence Planning, Programming and Budgeting: An Agenda for Reform 101 Narendra Singh Sisodia and Amit Cowshish 8. Defence R&D 121 A Sivathanu Pillai vi Core Concerns in Indian Defence and the Imperatives for Reforms 9. Acquisition in Defence 143 Vinod Misra 10. Strengthening the Defence Industrial Base in India 156 Ravindra Gupta 11. Defence Budget: Constraints and Capability Building 172 Vinay Kaushal 12. Financial Management in Defence 208 Amit Cowshish 13. Defence Manpower 231 Satish Nambiar 14. Logistics and Supply Chain Management 245 Pramod Vasant Athawale 15. India’s Offset Policy: The Way Forward 270 Satya Narayan Misra 16. Arms Trade Offset: Global Trend and ‘Best’ Practices 289 Laxman Kumar Behera 17. Oversight in Defence 310 Vinod Rai 18. Oversight for Defence: Mechanism, Objectives and Methodology 323 Pratyush Sinha Annexures 335 Vinay Kaushal and Laxman Kumar Behera Index 368 FOREWORD We are living in an uncertain global and regional security environment. The nature of conflict is changing; terrorism, cyber threats, pandemics, economics, financial instabilities, migrations, etc., endanger global, regional and national security. Our responses have to be tailored to meet these new challenges. The Kargil war in 1999 and the Mumbai terror attacks in 2008 were reminders of the changing nature of conflict. In 2001, on the recommendation of the Kargil Review Committee, a Group of Ministers (GoM) came up with a set of recommendations for a comprehensive reform of the Indian security management system. Since then, the debate on the role of defence forces in the nation’s security and on the need for defence reforms has intensified. Although a number of measures have been taken, the debate remains unstoppable and inconclusive. Taking note of the growing and justifiable public interest in defence issues, the IDSA in 2013 embarked on a project to identify the core issues of defence reforms debate. Several knowledgeable experts, who have had intimate knowledge of the issues involved, were invited to contribute. Most authors had earlier occupied senior positions in the government and participated in policymaking processes. They were also involved in the implementation of reforms at different times. Their contributions in the present volume provide fascinating glimpse and diverse perspectives on the evolution and complexities of Indian defence reform process. The issues covered in this volume range from a discussion on India’s security environment and higher defence management to critical aspects of defence reforms like defence planning, jointness, R&D, budgets and India’s defence acquisition policies. I am confident that the book will be found to be useful by the strategic community. The volume will hopefully enrich the debate and also provide useful ideas to policymakers. I congratulate the IDSA, and particularly the editor Shri Vinod Misra, for bringing out this edited volume at a useful juncture of time. New Delhi ARVIND GUPTA October, 2014 Deputy NSA & Former Director General, IDSA CONTRIBUTORS Vinod Misra, a former Secretary Defence (Finance), Ministry of Defence, Government of India, is presently Distinguished Fellow at the Institute for Defence Studies and Analyses. Kanwal Sibal is former Foreign Secretary, Ministry of External Affairs, Government of India. Shekhar Dutt, a former Governor (Chhattisgarh), was Deputy National Security Advisor and Defence Secretary, Ministry of Defence, Government of India. Arun Prakash is former Chief of Indian Navy. Srinivasapuram Krishnaswamy is former Chief of Indian Air Force. Deepak Kapoor is former Chief of Indian Army. Amiya Kumar Ghosh is former Financial Advisor (Defence Services), Ministry of Defence, Government of India. Narendra Singh Sisodia is former Secretary (Defence Production), Ministry of Defence, Government of India and Director General, Institute for Defence Studies and Analyses. Amit Cowshish, a former Financial Advisor (Acquisition), Ministry of Defence, Government of India, is presently Distinguished Fellow at the Institute for Defence Studies and Analyses. A Sivathanu Pillai is former Chief Controller of Research and Development, Defence Research and Development Organisation (DRDO), Ministry of Defence and former head of BrahMos Aerospace. Ravindra Gupta is former Secretary, Department of Defence Production, Ministry of Defence and Ministry of Civil Aviation, Government of India. Vinay Kaushal, a retired Indian Air Force officer, is presently Consultant to the Institute for Defence Studies and Analyses. Satish Nambiar, a retired Lt General of Indian Army and a former head of the United Service Institution of India, is presently Distinguished Fellow at the Institute for Defence Studies and Analyses. x Core Concerns in Indian Defence and the Imperatives for Reforms Pramod Vasant Athawale is former Air Officer Commanding-in-Chief, Maintenance Command, Indian Air Force. Satya Narayan Misra is former Joint Secretary (Aerospace), Ministry of Defence, Government of India. Laxman Kumar Behera is Research Fellow at the Institute for Defence Studies and Analyses. Vinod Rai is former Comptroller and Auditor General of India. Pratyush Sinha is former Central Vigilance Commissioner. ABBREVIATIONS A&N Andaman and Nicobar ADGWE Additional Director General Weapons and Equipment AEW Airborne Early Warning AFLC Air Force Logistics Command AFMC Air Force Material Command AFSC Air Force Systems Command AG Adjutant General AGPL Actual Ground Position Line ALH Advanced Light Helicopter ANC Andaman and Nicobar Command ANURAG Advanced Numerical Research and Analysis Group AoB Allocation of Business AOC Army Ordnance Corps APC Armoured Personnel Carrier ARC Administrative Reforms Commission ARF ASEAN Regional Forum ARTRAC Army Training Command ASAT Anti-Satellite Weapon ASEAN Association of Southeast Asian Nations ATF Aviation Turbine Fuel ATM Anti-Tank Missile BAFO Best and Final Offer BCA Budget Control Act BDL Bharat Dynamics Ltd BEL Bharat Electronics Ltd BIS Bureau of Industry and Security BRDB Border Roads Development Board BRDs Base Repair Depots BRO Border Roads Organisation BSc Bachelor of Science BUR Bottom-Up Review xii Core Concerns in Indian Defence and the Imperatives for Reforms C&AG Comptroller and Auditor General CAPF Central Armed Police Forces CBGA Centre for Budget and Governance Accountability CBI Central Bureau of Investigation CBP Capability Based Planning CCPA Cabinet Committee of Political Affairs CCS Cabinet Committee on Security CCV Canadian Content Value CD Conference on Disarmament CDM Chief of Defence Material CDS Chief of Defence Staff CEP Circular Error Probability CFA Competent Financial Authority CFD Computational Fluid Dynamics CGE Central Government Expenditure CIDS Chief of Integrated Defence Staff CII Confederation of Indian Industry C-in-C Commander in Chief CISC Chief of Integrated Staff to the Chairman, Chiefs of Staff Committee CJS Chief of Joint Staff CKD Completely Knocked Down CNS Chief of Naval Staff COSC Chief of Staff Committee COTS Commercial Off The Shelf CPI Consumer Price Index CPWD Central Public Works Department CSP Customer Supplier Partnership CST CENTRAL SALES TAX CVC Central Vigilance Commission CVD Countervailing duties CVO Chief Vigilance Officer D&E Designed and Engineered DAC Defence Acquisition Council DAD Defence Accounts Department DAPA Defence Acquisition Programme Administration DBMS Database Management Systems DCC Defence Committee of the Cabinet DCP Defence Capability Plan DDG Demand for Grant DDP Department of Defence Production Abbreviations xiii DDR&D Department of Defence Research & Development DE&S Defence Equipment