Sunday, 3 September 2017

India has a full-time defence minister again! Nirmala Sitharaman elevated from commerce to defence

Sitharaman will have 20 months to galvanize moribund “Make in India” in defence

By Ajai Shukla
Business Standard, 3rd Sept 17

The government, facing criticism over the absence of a full-time defence minister since March, when Manohar Parrikar moved back to Goa, has promoted the erstwhile minister for commerce and industry, Nirmala Sitharaman, to head the ministry of defence (MoD) as a full cabinet minister.

Sitharaman will assume charge of the MoD on Tuesday, when the outgoing defence minister, Arun Jaitley, returns from an official visit to Japan.

She will be India’s second woman defence minister after Indira Gandhi, who served twice in that post – briefly for a few months in 1975, and then again from 1980-82 in her final, ill-fated stint as prime minister. The apex Cabinet Committee on Security (CCS) will, for the first time, have two women members – Sitharaman and External Affairs Minister Sushma Swaraj.

Sitharaman will be the National Democratic Alliance’s third defence minister since it formed the government in May 2014. For two tenures, totalling 11 months, Arun Jaitley ran the MoD in addition to his primary charge as finance minister – from May to November 2014, and from March this year. In between, Parrikar held the job for 28 months. Sitharaman will have 20 months before the 2019 general elections to leave her imprint on a challenging job.


Of this, at least three months would go in learning her extremely complex and technical new job. The MoD has five departments headed by secretary level bureaucrats, in addition to the three military services. Even Pranab Mukherjee, when appointed defence minister in 2004, took three months to master the job, and Sitharaman does not have his range or experience. Doing little to help her transition will be her poorly-regarded deputy, Subhash Ramrao Bhamre.

A key result area for the new minister will be to kick off “Make in India” in defence. Prime Minister Narendra Modi has publicly declared that defence manufacture would be a key pillar of “Make in India”, but neither Jaitley nor Parrikar could translate this into reality.

Both worked to issue new policy initiatives like the Defence Procurement Procedure of 2016, which mandates preference being given to procurement of Indian Designed, Developed and Manufactured (IDDM) equipment; and also a Strategic Partners policy. However, no major equipment has been built or procured under these initiatives. In March, following an earlier pattern, the MoD surrendered Rs 7,000 crore of unspent capital procurement funds.

Similarly, the development and acquisition of “Make” category equipment – such as the Tactical Communications System, and the Future Infantry Combat Vehicle – which was initiated during the United Progressive Alliance government, has still to see the light of day.

Major reforms to the higher defence structure, such as the appointment of a tri-service commander and integrated theatre commands, which Bharatiya Janata Party leaders have repeatedly promised, remain to be delivered.

Of 99 reform recommendations in the Parrikar-appointed Shekatkar Committee, the MoD last week announced the acceptance of 65. Most important recommendations were left unaddressed.

Even so, private defence firms are upbeat about Sitharaman’s elevation to the defence ministry, given her reformist credentials as commerce minister.


“At least we will have a full-time defence minister again, who can devote her entire attention to the defence ministry and carry on the good work being done for private industry”, says Rajinder Bhatia, head of the Kalyani Group’s defence vertical.

Rahul Chaudhry, who heads Tata Power (Strategic Engineering Division) terms Sitharaman an “outstanding choice”, who worked hard as commerce minister to support “Make in India”.

He cites the example of the changes enforced by Sitharaman to the General Financial Regulations, which mandate that in government tenders above Rs 50 lakhs, Indian vendors who offer a product at a price up to 20 per cent higher than an equivalent foreign product must be awarded the contract at the lowest bid price. This has been a long-standing demand from India’s private defence firms.

There is also speculation in industry circles that Sitharaman, with her commerce ministry background, would be favourably inclined to liberalise the foreign direct investment (FDI) cap in defence above the prevailing 49 per cent under the automatic route. Up to 100 per cent FDI is permitted, but only in cases where the MoD is satisfied that strategically vital technology is being brought into India.

The commerce ministry has traditionally pushed for liberalised FDI in defence in order to bring in investment and create manufacturing jobs. MoD decision-makers and private defence firms have stoutly resisted this, aiming to protect Indian defence industry.

"Under the existing policy India allows 100 per cent FDI if the vendor is bringing in defence technologies that India needs, but are not available in the country. Where we have the technology, FDI should remain limited to 49 per cent. India has experienced technology denial regimes on multiple occasions,” says Jayant Patil, L&T’s whole-time director for defence business.

11 comments:

Anonymous said...

Let us not judge a person before they even takeover !
This government has laid down a blueprint, it will be followed.

Alok Asthana said...

The article points out that there is glee in private sector due to Ms Sitaraman's image of being friendly to their interests. Don't see any mention that there is fear in PSUs that she'll kick their backsides to make them deliver. Hardly a good omen. Not the mark of an able administrator. Is so easy to hand over responsibilites, and profits, to someone else.

Anonymous said...

Indian indigenous arms Industry is a Joke! Let's not dream, this defence minister is not been put there to make sweeping reforms but to play second fiddle to the Modi/Ajit Doval partners who have their own take on things.
No the problems of India's defence can only be solved when revolutionary change comes to the Management of the Indian economy and the larger Indian bureaucracy, IAS which has choked progress to death in India.
India was lucky to inherit a professional Army from the British. The C in C was the second most powerful person after the Viceroy.
In a democracy it is right the Army is always subordinate to the civil government, but that does not mean subordinate to the civil administration, the currupt IAS. This is why the whole thing has gradually become a recipe for disaster.
India is best advised not to get itself tangled in any war until our Defence forces are reformed and sorted out which could take years.
The new defence minister does not even realise the extent of the malaise effecting her Ministry, coming from the BJP she only understands the patriotic songs of primitive RSS people who, and I hate to say this are uneducated and are only one generation away from defecation in the fields.
The Minister may come from JNU but the experience did not seem to enlighten her, otherwise she would not got herself involved with these Parcharaks and bigoted people she would have aspired for higher things in life.

Anonymous said...

@Alok ...Ah ... who according to you has ever been a good defence Minister in the history of Independent India ? Is there anything like a good Defence Minister Indian System and politico - beaurocratic dispensation ever likey to produce .... the structure whose foundations were laid by the likes of Nehru. Kataju and Menon can only gow Kaddus.... that too bitter ones

Alok Asthana said...

Too many guys here named Anonymous'. Ajay should introduce a system of labelling them more finely e.g. anon 1, anon 2 etc.
And why would a person be scared to reveal his name, beats me. If rules or position doesn't permit you to post here, don't.

Anonymous said...

Alok trying to be too smart to duck the debate because it doesn't suit you just like some desi bandal baaz bloggers
Why do you care about Id just put your point don't be a coward

Subha Sanjeev said...

Eyeing to focus on military preparedness, Make in India and welfare of soldiers, 56 years old Nirmala Sitharaman on Thursday took over the riegn of south block with unique distinction to become the first full time woman defence minister of the country.

chehar said...

right Alok Asthana.Too many guys here named Anonymous

Anonymous said...

What a disgrace for the nation that we need to celebrate appointment of a full time defence minister. truly a failure of this govt.
Now there is too little time at hand for her to do anything worthwhile, they should just focus on a few large programs and ensure that they close the orders rather than doing too many things at the same time. but too much to ask.

Sudip Das said...

@Alok Asthana agree with you, there are too many so called experts who do not even have the courage to reveal their identification. There is acomment above, asking who had been a good defense minister.Two names which immediately comes to my mind are A K Antony and Manohar Parrikar. Nirmala Sitharaman has been appointed defense minister because she will sign wherever she will be asked to, without asking any question and applying her mind. This is required for awarding the single engine fighter contract of Indian air force to a specific consortia

Alok Asthana said...

Nirmala is a plain bhagwa minister. If Modi/RSS tells her to go in for purchase of weapons from some blacksmith in Ahmedabad, she won't think twice.
Funds from undisclosed donors are about to go up tremendously for BJP, along with the claim of 'No scams in my time'. UPA were amateurs, NDA is efficient.