Defence offsets agency unsettled by frequent transfers - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Tuesday 2 October 2007

Defence offsets agency unsettled by frequent transfers

by Ajai Shukla
Business Standard, 1st Oct 2007

In a move that has taken foreign and domestic arms vendors by surprise, the head of the Ministry of Defence's (MoD's) high-profile Defence Offsets Facilitation Agency (DOFA), Dr Kiran Chadha, has been prematurely moved out. Exactly a year after DOFA was set up in Oct 2006, the joint secretary who was promoted to head it and play a pivotal role in the evolution of a new Defence Offsets Policy, has been transferred to the Ministry of Women and Child Development (MoWCD). The transfer order is likely to be served today, on 1st October.

This blow to continuity within DOFA seems likely to be followed by more. The incoming head of DOFA, Mr Chaman Kumar, has just one year left in the five-year tenure that civil servants are authorised in Delhi. He is being shifted to DOFA after reportedly having run afoul of his present boss, Minister for Women and Child Development, Renuka Chowdhury. According to service rules Mr Chaman Kumar is due to be posted out of Delhi in mid-2008.

The MoD has repeatedly stated that the development of India's domestic arms industry hinges on successfully implementing a Defence Offsets Policy. The policy framework was laid out in the Defence Procurement Policy 2006 (DPP-2006), which mandated that all foreign vendors must plough back at least 30% of the value of any defence contract they conclude with India. However, important components of the policy are still being worked out, a process being spearheaded by the DOFA.

Two months ago, another secretary level official, vitally involved in offset policy, the Director General of Acquisitions, Mr Shilabhadra Banerjee, was transferred out of the MoD. The Secretary Defence Production, Mr KP Singh, who heads the process, will be retiring later this year.

Dr Kiran Chadha is learned to have represented against her premature posting to the Cabinet Secretary. Postings of senior IAS officials are handled by the Department of Personnel and Training (DoPT) and cleared by the Appointments Committee of the Cabinet. Her representation terms her posting as "illegal" and an "arbitrary move" and points out that the DoPT, in a separate Right to Information case, revealed that her tenure with the MoD was to continue till October 2010.

The DOFA chief's transfer has raised eyebrows amongst the majority of foreign arms vendors, many of which have set up office in India in order to liaise with DOFA and to finalise offset agreements with Indian defence manufacturers. Several key decisions regarding offsets policy, such as the permissibility of "offset banking", are still awaited and vendors believe these changes in DOFA could delay those further.

The country head of the European Aeronautic Defence and Space Company, or EADS, Stefan Billep, points out that it took time to develop a working relationship with the DOFA head. Praising Dr Chadha, Mr Billep said, "The DOFA chief was very proactive, and she always had an open ear to listen to us. We eventually reached a good rapport."

MoD sources, who wish to remain anonymous, suggest that Dr Chadha was moved out because the powerful Indian Administrative Service (IAS) lobby was not pleased to see an officer from the Central Secretariat Service, which is Dr Chadha's parent service, enjoy the high profile which attended the DOFA head. The three ministers in the MoD, Mr AK Antony, MM Pallam Raju and Rao Inderjit Singh, are all believed to have supported the continuation of the outgoing DOFA head.

The change is likely to go ahead on Monday. The new head of DOFA, Mr Chaman Kumar, is an IAS officer.

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