Armed forces granted permission to avail platforms, equipment on lease

Amidst the debate of prioritising its requirement due to budgetary constraint, the ministry of defence has now allowed armed forces to procure military platforms on rent from a friendly country. Platforms like a transport fleet, trainers, simulators and machinery required for search and rescue missions have, so far, been permitted to be procured on lease.

Armed forces are struggling to meet its requirements due to budgetary constraints and have been constantly asked for prioritise their needs.

While unveiling the Draft Defence Procurement Procedure 2020 (DPP-2020), Defence Minister Rajnath Singh introduced the "lease" category that gives flexibility to military to procure equipment on rent instead of buying it from the Original Equipment Manufacturer (OEM).

"Leasing has been introduced as a new category for acquisition in addition to existing ‘Buy’ & ‘Make’ categories to substitute huge initial capital outlays with periodical rental payments. Leasing is permitted under two categories i.e, Lease (Indian) where lessor is an Indian entity and is the owner of the assets and Lease (Global) where lessor is a global entity," according to a statement by the ministry of defence. The statement clarified that these pertain to military equipment not used in "actual warfare".

On the logistics front, Indian military can have its transport fleet on rent instead of buying. Indian Army's vehicles and other transport platform can be covered under this new clause, where service and repairs will be the responsibility of OEM. Air transport requirement can also be met with this new clause, as IAF is struggling to replace its 1960's vintage Avro transport fleet.

Then comes training platforms like simulators, which can be procured on lease. Simulation software is the training tool for the armed forces in a realistic and immersive environment whilst saving both time and money.

"There are several Indian as well foreign firms that make simulators. Simulated training is becoming as valuable as the real on-field training today," an officer said. The officer maintained that procurement of software and systems related projects are significant as in such projects, obsolescence is very fast due to rapid changes in technology and flexibility in the procurement process is required to keep up with the technology.

Under this new clause, Indian government may also go for procuring Utility Seaplane Mark 2 (US-2) amphibian aircraft from Japan. Indian government has been trying to acquire this amphibian aircraft for several years, but budgetary constraints always put brakes on the acquisition. The 47-tonne US-2 aircraft doesn't require a long airstrip to take-off or land. It is capable of taking off from land and water (300-metre stretch). It can carry loads of upto 18 tonnes and can be engaged in search and rescue operations. With a range of over 4,500km, it can patrol areas 1,800km away and react to an emergency by landing 30 armed troops even in 10-foot waves.

"This aircraft is one of the best in HADR missions. And Indian armed forces regularly participate in such search missions and platform like this further enhance India's capability," said an official. According to MoD officials, leasing introduced as another category for acquisition in addition to the existing ‘Buy’ and ‘Make’ as it provides for an innovative technique for financing of equipment.

"Leasing provides means to possess and operate the asset without owning and is useful to substitute huge initial capital outlays with periodical rental payments," the official explained.

Cases in which while procurement is not feasible due to time constraint and the asset/capability is needed for a specific time or would be under utilised if procured, can be proffered to be made available on lease.

The official added that in case smaller numbers of assets are needed and maintenance infrastructure expenditure would be high, lease rentals are a better option compared to a one-time acquisition cost.

"Lease option would be useful to gain experience for operational exploitation of equipment," the official added.

Navy chief Karambir Singh has also expressed concern over the Navy’s share of the defence budget, which has declined from 18 per cent in 2012 to approximately 13 per cent in the current financial year.

Recently, Chief of Defence Staff General Bipin Rawat, whose mandate is to prioritise the procurement of equipment keeping in mind the balanced modernisation of the three services, has advised for staggered acquisition. Besides commenting on Navy's requirement of third aircraft carrier, General Rawat has also advised IAF to go for staggered acquisition of its fighter jets.