Defense Acquisition Procedure – Promoting Self Reliance in Defence Manufacturing
1Introduction
  • The Defence Acquisition Procedure (DAP) 2020 has been established in 2020 as a potential catalyst for the Atmanirbhar Bharat Abhiyaan, in the sector of defence manufacturing. 
  • The DAP eases the procurement and acquisition of upgraded technology, products and services for the Tri-Services and other allied defence services. 
  • Through its many improved features, it hopes to provide a boost to the Make in India efforts in the field– especially to MSME’s
  • It also establishes a greater degree of public accountability, transparency, fair competition and a level playing field in the sector.
2Background
  • The Defence Procurement Procedure (DPP) was first initiated in 2002 to streamline the procurement of military hardware for the Armed Forces in a systematic and time-bound manner. 
  • It was reformed in 2016, putting an emphasis on indigenously designed, developed and manufactured weapon systems and eventually moved towards self-reliance in the field of defence manufacturing. 

 

Source: 1 

3Key Features

 

  • Reservation in Categories for Indian vendors: With FDI in defence manufacturing permitted up to 100% (up to 74% under Automatic route and beyond 74% under Government route), there is an opportunity for the domestic industry to increase production in the sector. 
  • Enhancement of Indigenous Content: Each of the categories has seen an increase in the procurement and acquisition of indigenously manufactured products and technologies in the sector. This would also be facilitated by Inter-Governmental Agreements (IGAs) that would help enable Import Substitution of defence products, technologies and spare parts 

 

Category DPP 2016 DAP 2020
Buy (India -IIDM) Min 40% Min 50%
Buy (India) Min 40%

Indigenous design- Min 50% 

Otherwise - Min 60%

Buy and Make (India) Min 50% of Make Min 50% of Make
Buy ( Global - Manufacturer in India)  Category did not exist Min 50% of Buy plus Make
Buy (Global) Category did not exist Min 30% for Indian vendors

 

  • Rationalization of Trial and Testing Procedures
  • Make and Innovation: Besides Make I/II/III which are government and industry-funded efforts towards achieving greater indigenization of manufacturing, the Innovations for Defense Excellence (iDEX) was set up for incubation and infrastructure support to startup enterprises in the sector.
  • Design and Development
4Highlights
  • Buy (Global – Manufacturing in India) – This new feature mandates that the entire or part of the manufacturing procedure for equipment / spare parts / Maintenance or Repair must be conducted by the Indian subsidiary of foreign investors. 
  • Ease of Doing Business – Easier and faster facilitation of operations and decision making through the Project Management Unit; Preference is given to manufacturers producing complete defence products, rather than parts; Increase of multipliers in the offset policy with respect to direct purchase, TOTs and FDI to incentivise the discharge of offsets; Easing of trials and testing such as avoidance of duplicate trials, modification of the scope of trials, removing repeat inspections, etc.