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How not to deal with defence corruption

Sunil Dasgupta and Stephen P. Cohen; Tue Apr 02 2013

INDIAN EXPRESS DATED 02Apr 2013

The problem is not foreign suppliers, but a dysfunctional defence marketplace

The furore over the latest arms procurement scandal in India — this time over the AgustaWestland helicopters — has led, predictably, to calls for greater indigenisation of the military industrial complex, as if excluding foreign weapons-makers will clean up the corruption.

The problem is not foreign suppliers, but a defence marketplace where domestic industry produces low-quality weapons at great cost, often late, which India's armed services do not want. To the extent that foreign suppliers act in venal manner, it is because India's defence marketplace is dysfunctional. Excluding foreign sellers only reduces the number of players and externalises the problem; it does not stop corruption.

The so-called "China solution," which lauds Beijing's success in weapons development and manufacture, is misconstrued: China's self-reliance has not produced new conventional weapons. Chinese aircraft, tanks and ships are quite ordinary platforms.

Its successes in nuclear, missile, laser, and cyberwar technologies are all unconventional. The causes of Chinese successes in unconventional military technologies are many, but it is worth remembering that the Chinese government has used an extensive spying campaign in pursuit of commercial and military secrets. This consequences of the campaign are now catching up with Beijing as the United States and other Western powers gear up to prevent Chinese infiltration.

As an emerging power, India is better off being seen as a benign force. It is better off buying technology rather than stealing it. It is better off inviting the world to participate in its rise than keeping the world outside and suspicious. Better off acting transparently in the defence marketplace even at the cost of sacrificing secrecy. Better off reforming its procurement system, rather than winnowing down the market. India buys weapons from foreign suppliers not only to develop military capacity but also to build relationships with other key countries that facilitate its rise.

The key instrument of economic efficiency in any market, pricing, is mind-bogglingly inefficient when it comes to armaments. Weapons in the same category made by different manufacturers are not readily comparable, especially at the higher rungs of the technology ladder. There are too few sellers and even fewer buyers to make a truly competitive market. Further, the value of a particular weapon-system in the context of a national security strategy is hard to calculate. Try, for example, figuring out whether missiles or attack aircraft have greater utility; practically every government faced with the decision went with both, the most expensive and least efficient option.

India's defence market faces these challenges and more. We argued in our book Arming without Aiming that Indian military procurement is disconnected from national objectives. Indian grand strategy de-emphasises the use of force and consequently, the military receives little strategic guidance from the political leaders. Prime Minister Manmohan Singh, for example, has repeatedly said at conferences with Indian military commanders that the country's primary threats are internal, without publicly clarifying the role of the armed forces in meeting internal security challenges. Only the Indian army participates in internal security operations, that too, in well defined areas such as Kashmir; what should the Indian Air Force and the Indian Navy do? According to the Constitution, the armed forces are not responsible for internal security. The police, which is responsible for domestic law and order, remains in the hands of the states and outside the ability of the Central government to reform.

On the military side, the result is that the services are left to define the threats they believe the country faces and accordingly they appear to be preparing to fight three different wars against three different enemies.

Today, the army thinks it needs an air force of its own, the navy wants to acquire its own thermonuclear capability, and the IAF appears to be planning for wars independent of the other two services.

India was one of the first countries in the world to integrate officer training — at the NDA and the Staff College — but everything else seems to be contributing to service rivalries.

India's unified commands are feeble and there is no movement on a new combined defence chief. Only actual wars and initial setbacks seem to produce inter-service cooperation, such as between the army and the IAF in Kargil.

The problem is exacerbated by the lack of military expertise in the political and bureaucratic class. Several retired defence secretaries we spoke with during the course of writing Arming without Aiming reported that it was not until their second or third postings in the ministry that they had acquired a sense of competence in the field.

Arun Singh, one of the more respected defence ministers in Indian history, once proposed keeping certain IAS and IFS officers in defence-related positions for much of their careers — in effect creating a specialist cadre within the civilian bureaucracy. Another option might be to bring in outside civilian experts from the academy or journalism into government for short-periods of time like in the American system, but the thought of lateral entry into the civil service, or a defence cadre within the IAS, remains unthinkable.

The Indian defence industry is largely state-owned and has its own problems of bias and corruption that result in cost and quality losses for the armed forces. The DRDO and the defence public sector units operate as a monopoly with attendant failures in innovation, cost, and accountability. The scientific advisor to the defence minister, who shapes procurement decisions, also heads the military research labs, which puts him in the position of evaluating his own work in comparison with those of others. This conflict of interest is not even seen as a source of corruption.

The continued absence of Indian firms in the defence marketplace reflects a deep-seated ideological bias against profit as a motive for productive action. The expectation that Indian private industry, if allowed entry into the military production, will be less corrupt is misguided as well. Doubtless, the government will have greater control over an Indian seller than it does over a foreign supplier, but the actions of businesses alone do not cause corruption; government officials have to take bribes. There is no reason to expect that Indian firms will not be asked to pay up to win contracts.

These dysfunctions persist behind the trope of secrecy. Military-strategic matters are national secrets no doubt, but the process of buying weapons (that are already owned by other countries) hardly needs to be conducted in secret. Similarly, the DRDO, which is not building any unheard of weapon-system, should conduct itself in full public view and allow its scientists to join the peer review system. Closed-off organisations generally fail to innovate; little wonder that only 3 per cent of DRDO scientists and engineers have PhDs. Opening up the military research and weapons procurement process to public view would reduce the potential for corruption, and it would not be worse than the present glacial acquisition process.

Indian defence badly needs reform, but the recommendations of several high-powered committees — including those headed by Arun Singh, Naresh Chandra and the irreplaceable K. Subrahmanyam (Kargil review) — remain ignored by several governments. India needs to begin at the beginning, with a clearer vision of the role of the military and use of force in the country's rise as a great power.

This vision must balance between domestic and external threats to security, include non-military challenges, push through difficult reforms to enhance harmony across government agencies and departments and welcome transparency. With defence matters not on the electoral agenda, we are not very hopeful this will happen without the shock of another crisis.

Dasgupta is a non-resident senior fellow at the Brookings Institution, Washington DC. Cohen is senior fellow, foreign policy, at Brookings