“Make In India” in Defence: Embedding Industry-wide Dialogue and Consultation

The “Make In India” mantra requires a refreshingly new attitudinal change to India’s policy-making processes—namely, fostering a culture of trust between government and industry/ business stakeholders1. It may, therefore, be useful to envision how India’s Defence Procurement Procedure (DPP) could be retrofitted with this new vision by incorporating a culture of dialogue and consultations into the defence acquisition process itself, as a necessary prerequisite for building enhanced confidence and trust in MoD’s procurement systems in the longer-run.

While the DPP mandates its own revision once every two years2, the provision is silent on external consultation protocols for the same. To that extent, it may be useful to incorporate mechanisms for formal public consultations with the Indian defence industry on drafts of proposed changes before their adoption by the Defence Procurement Board (DPB)and the Defence Acquisition Council (DAC). The suggestion is not really new and has been practiced earlier on a few occasions by the MoD: present “Make” procedures were based on recommendations of an inter-disciplinary group closely involving the Indian defence industry3; and more recent changes relating to indigenous content determination and for streamlining of “Buy and Make (Indian)” category of defence acquisitions4 relied extensively on industry consultations for fine-tuning the initial drafts. In a more general context, the Committee of Secretaries (CoS) had also supported the idea of prior public consultations for important policy formulations5; and these CoS recommendations, together with useful past experiences in the MoD, could therefore provide a ready basis for mandating circulation of proposed DPP changes for industry comments and suggestions prior to DPB and DAC consideration.

Such engagement would also ensure better alignment of the process of DPP amendment with international best practices: every single EU Directive related to public procurement, defence acquisitions and PPP contracts routinely undergoes multiple rounds of stakeholder discussions on proposed drafts6For a list of ongoing consultations of the EC on public procurement reforms; see, Public Consultations, available online http://ec.europa.eu/internal_market/publicprocurement/modernising_rules/…. Similarly, under the US public procurement system—both defence and non-defence—initial drafts of proposed regulatory changes are mandatorily published7 with a standard 30-day notice period; and the final regulations necessarily indicate how certain public suggestions have been incorporated therein, or why certain stakeholder suggestions have not been accepted in the final rules: indeed an exceedingly high degree of transparency and consultations for refinement of procurement regulations practiced worldwide. This spirit of openness in the US procurement rule-making system permeates in its task-force functioning as well: the Acquisition Advisory Panel for procurement reforms8 in the US setup in the mid-2000s was mandated by the US Congress to conduct its proceedings in public, and the Panel invited suggestions from all stakeholders on its draft report before finalising its suggestions. In contrast, the report of the Dhall Committee on public procurement reforms in India, as well as the more recent suggestions on defence acquisition reforms made by the Naresh Chandra Committee and the Rabindra Gupta Committee, have remained unavailable to Indian industry stakeholders, virtually ignoring the latter’s potential for contributing meaningfully to the important reforms process.

A critical decision-point very early in MoD’s capital acquisition processes is the categorisation of procurement proposals into “global” versus “domestic” procurements, and “outright purchases” versus “Buy and Make” decisions9. The DPP now mandates a preferred order of categorisation10; and the next set of DPP reforms could therefore focus on improved information-sharing protocols between MoD and the Indian industry, perhaps along the lines of the US system where security-vetted key management personnel from its domestic industry routinely enter into in-depth, wide-ranging discussions on planned capabilities with DoD’s acquisition workforce right from very early stages of acquisition planning. In contrast, DPP’s present system of industry meetings facilitated by HQIDS is rather ad-hoc, with unilateral presentations by industry associations11 based on “hearsay” information on user requirements: a situation that could be easily and substantially improved. Similarly, RFIs issued by MoD may need transformation from essentially requiring one-way responses from industry stakeholders, and the RFI process could itself easily be converted into a far-more useful and impactful tool for market research and decision-making on categorisation and on the capabilities planned for eventual acquisition by the MoD using formal, bilateral discussions. Recent DPP changes to “Make” already allow for advance planning and industry consultations12; and this core idea can therefore quickly be seeded into all categories of capital acquisitions permitted under the DPP, rather than being limited to only “Make” as at present.

Improved dialogue and consultations could eventually help MoD in more ways than one: the possibility of close analysis and unconstrained dissection of proposed drafts by public stakeholders will surely improve the quality of initial drafts in the first place; while traditional stakeholder distrust in defence acquisitions could safely be expected to reduce significantly, and perhaps even be eliminated altogether, if permanent platforms are made available to the Indian industry for aligning its capabilities and planned investments in infrastructure and R&D with MoD’s technical and weapons requirements well in advance of actual initiation of procurement cases.

Foreign vendors are already able to showcase their wares to Indian armed forces during joint military exercises; and it is time that a level-playing field is provided to the Indian defence industry for being able to showcase its capabilities and manufacturing plans to users in the defence establishment in a much more structured and formal manner than is possible at present. In sum, even though MoD already interacts with the Indian defence industry is a number of small and ad-hoc ways; the challenge going forward for the “Make In India” mantra to become an all-pervasive reality in defence acquisitions in India will be to multiply manifold the onset, frequency, range and depth of its industry engagements.

Views expressed are of the author and do not necessarily reflect the views of the IDSA or of the Government of India

• 1. New Mindset, http://www.makeinindia.gov.in/policy/new-initiatives/.
• 2. 76, Chapter-I, Defence Procurement Procedure-2013, p.28.
• 3. 3, Chapter-III, ibid, p.188.
• 4. PIB (2013), Salient Features of Defence Procurement Procedure – 2013, available online http://pib.nic.in/newsite/erelease.aspx?relid=96361.
• 5. Ministry of Law (2014), Decisions taken in the meeting of the Committee of Secretaries (CoS) held on 10th January, 2014 under the Chairmanship of Cabinet Secretary on the Pre-legislative Consultation Policy (PLCP) (including principal and subordinate legislation), available online http://lawmin.nic.in/ld/plcp.pdf.
• 6.
• 7. As an example of initial and final rule publication, including reasons for incorporation and/ or non-incorporation of stakeholder feedback in the context of DFARS changes on counterfeit electronic parts in defence acquisitions in the US; see, Federal Register Notice dated May 0, 2014 (DFARS Case 2012-D055),available onlinehttps://www.federalregister.gov/articles/2014/05/06/2014-10326/defense-f….
• 8. See, generally, OMB (2007), Report of the Acquisition Advisory Panel to the Office of Federal Procurement Policy and the United States Congress, available online http://www.acquisition.gov/comp/aap/24102_GSA.pdf.
• 9. 18-20b, Chapter-I, supra n.2, pp.8-10.
• 10. 20a, Chapter-I, ibid, pp.9-10.
• 11. 18, Chapter-I, ibid, pp.8-9.
• 12. 10a, Chapter-III, ibid, p.191.