DEFENSE ACQUISITION PROCEDURE – PROMOTING SELF RELIANCE IN DEFENCE MANUFACTURING
- 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.
- 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.
3 Key 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
- 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.