Context: Recently, the Defence Minister unveiled a new defence acquisition procedure to replace norms issued in 2016.
Implications of new defence acquisition procedure:
Help in achieving the country's goal of self-reliance
Benefits Indian vendors: Several categories of arms would now be reserved exclusively for "Indian vendors".
Indian vendors are defined as firms that are owned by resident citizens with foreign equity participation no greater than 49%
Promotes Technology transfer and local manufacturing: The new purchase category pushes for acquisition from a foreign supplier entailing technology transfer and local manufacturing
Indigenization of inputs worth at least half the contract's value.
Dropping of mandatory "offset clause": which had complicated our defence purchases and acted as a drag on technology upgradation.
Flexibility in leasing: Armed forceshave been granted the flexibility to lease military equipment such as light transport aircraft and unmanned aerial vehicles.
Issues with offset clause
Failed to achieve the goals: of creating a production base and generating jobs.
Comptroller and Auditor General (CAG) report: of the offsets worth ?19,223 crores expected till December 2018, only ?11,396 crore had shown up.
Overpricing: Inflation of costs by vendors to cover their offset commitments, thus pushing up our acquisition bills.
Room for corruption: 30% stipulation made all major arms deal vulnerable to allegations of this reverse-flow channel being a conduit for kickbacks disguised as sub-contracts for favoured firms.
For E. g- the recent Rafale controversy.
Way Forward:
More than self-reliance: The country's revised rules for the purchase of military equipment aim for self-reliance, but also seem designed to ease and hasten acquisitions from abroad.
Dealing with threats: As geopolitics in Asia gets fraught with tension, the threats faced by our country lend urgency to the cause of defence preparedness.
Our armed forces deserve the equipment they demand without any delays caused by a complex acquisition rigmarole.