How Indian Army's needs are not being met

The comptroller and auditor general (C&AG) had thrown a cat among the pigeons with his report on management of ammunition used by the Indian Army. The report was tabled in the Parliament on April 8, 2015.

The report makes it clear that while ammunition must be available at any given point of time to sustain 40 days of intense two-front war, the available stock of what is known as the war wastage reserve (WWR) was nowhere near this target at the end of the year 2012-13. The situation is unlikely to be materially very different as on date.

This could not have come as a surprise to the ministry of defence (MoD). As brought out in the report, a five-year roll-on indent was placed by MoD on the ordnance factory board (OFB) to supply mutually agreed quantities of various types of ammunition but the annual budgetary support asked for by the OFB was much less than what it should have been asking for if it had to meet the corresponding production targets. Consequently, the short-fall vis-à-vis the target ranged up to 73 per cent of the total types of ammunition.

Targets

It was known that annual targets fixed in consultation with the OFB will not meet the entire requirement of ammunition. Therefore, to supplement the supply from OFB several procurement cases were initiated to buy ammunition from abroad.

The report brings out that no procurement of ammunition took place against the nine cases initiated for procurement through the capital route during the period 2008-13. This was because of delay in finalisation of specifications, complexities involved in transfer of technology, or because the process threw up only a single vendor as the possible supplier.

Thus, because of the ministry's misplaced sensitivity about single-vendor situations, ammunition could not be obtained even when it was there for the asking. Some procurement cases were also initiated under the revenue stream which follows a somewhat simplified procedure. Surprisingly, contracts could be concluded in only about 20 per cent of these cases. To add to the woes, ineffective quality control by the ordnance factories at the stage of production led to ammunition worth Rs 1,618 crore being rejected subsequently. In addition, ammunition worth Rs 814 crore was declared unserviceable even during its shelf life, apparently because of the poor quality.

The story does not end here. Ammunition worth Rs 3,578 crore was lying in segregated condition because its use had been banned following some accident and stock worth another Rs 2,109 crore was awaiting repairs. All this adds up a substantial amount, probably close to what the Army spends each year for buying ammunition.

Probably sensing that the 2010 roll-on indent had failed to produce the desired result, another ammunition roadmap was approved by the ministry in July 2013, albeit one year after the proposal was initiated by the army. A revised indent was placed on the OFB in October 2013. Simultaneously, cases were initiated to buy ammunition from abroad to bring up the stock to at least 50 per cent of the authorised WWR by 2019. This would have been a saving grace but the early indications are not very encouraging. Going by the budget figures for 2015-16, OFB's supply of ammunition is unlikely to see any jump.

Supply

As for other sources of supply, out of 17 import cases approved-in-principle in July 2013, as many as seven cases were at the request for proposal (RFP) stage. In six cases technical evaluation of the offers was being carried out and contract negotiations were on in three cases. One case was being procured through the capital route.

The end result is that no contract had been signed as of December 2014. Two things stand out. One, in 2010 the OFB accepted the responsibility it obviously knew it could not discharge, both in terms of the quantity of ammunition produced and its quality. It set up a seven-member committee to recommend measures for augmentation/creation of capacities to meet the target but the committee's report was never brought before the OFB. Two, there is something wrong with the way proposals for procurement of ammunition from local trade and import are being processed.

Lessons

It is important to learn lessons from the way this issue has been handled over the past and make amends. The C&AG has made recommendations to tide over the problem, the most important of which is that MoD should devise a mechanism to fully meet Army's requirement by taking into account OFB's capacity and the budget availability. There is no use buying equipment and weapon systems if these cannot be used when needed for want of ammunition and repairs. Budgetary constraints can be overcome, considering that year over year (YoY) sums are returned unutilised.

What is required is single-minded pursuit of the target of making up at least 50 per cent of the total WWR deficiency by 2019. This calls for entrusting responsibility to a single person or a group of persons who will be around in 2019 so they could be held accountable. Of course, they will need to be empowered and made to report directly to the minister (even minister of state) on a monthly basis. Extraordinary situations call for extraordinary solutions.