LEASING MILITARY EQUIPMENT

There is no way that India can replace many of its military requirements with leased equipment. The environment, the risk of loss and damage may impose prohibitive lease terms on any contract. However, there is scope in the logistics, coastal policing, search and rescue and training spheres, argues

- SANJAY BADRI-MAHARAJ

Faced with shortages of funding and the need to constantly induct military equipment, the Draft Defence Procurement Procedure 2020 has proposed the innovative step of leasing noncombat equipment, for training, logistics and support functions.

Leasing is permitted under two categories — Lease (Indian) where Lessor is an Indian entity and is the owner of the assets and Lease (Global) where Lessor is a Global entity. Under the latter, the Indian Navy procured two American high-altitude long-endurance drones into the Navy — Sea Guardian, the unarmed version of the deadly Predator series on lease. In, addition to these that were procured under a one-year contract from an American firm, the Indian Navy has also gone in for leasing of a logistics ship from an Indian firm.

The DAP – the Defence Acquisition Procedure 2020 – defines leasing as a “means to possess and operate (a military) asset without owning the asset” and adds that it provides a useful way “to substitute huge initial capital outlays with periodical rental payments”. In this regard, the leasing of military equipment is not dissimilar to commercial vehicle leasing and the leasing of commercial aircraft which has become the norm for airlines who do not wish to be saddled with aircraft whose ownership is vested with them as well as all maintenance responsibilities.