Defence Minister releases new Defence Acquisition Procedure

Published: September 28, 2020

On September 28, 2020, the Defence Minister Raj Nath Singh released a new Defence Acquisition Procedure, 2020. It has special incentives for products that are designed and developed by Indian vendors. Also, the procedure includes manufacturing category that encourages foreign investors and manufacturers to set up manufacturing facilities in the country.

Key Highlights

The Defence Acquisition Procedure (DAP), 2020 replaces the procedure that was released in 2016. The 2020 DAP hosts new ideas such as Artificial Intelligence (AI), special alloys and Made in India high end materials. Under the procedure, the following categories are to be exclusively reserved for Indian vendors

  • Buy (Indian-IDDM)
  • Make in India I and II
  • Production Agency in Design and Development
  • Ordnance Factory Board and Defence Public Sector Unit.

Key Features

  • Indigenous Content of various categories has been increased by 10%. This has been done to support Make in India initiative.
  • New Category called Buy (Global – Manufacture in India) has been introduced. The items under this category will hold minimum of 50% indigenous content on cost basis of total contract value.
  • Another new category called “Leasing” has been introduced to substitute huge initial capital outlays with periodical rental payments.
  • Price Variation Clause has been introduced. This is applicable to all cases where the total cost of the contract is more than Rs 1,000 crores.
  • Also, the new procedure provides a long-term product support that would be between three and five years after the warranty period is over.

What is Defence Acquisition Procedure?

It contains processes that should be followed by the Government entities while procuring defence items. It is framed to simplify defence procurement procedure and to achieve the objective of self-reliance. Also, the procedure aims to promote indigenous design and manufacturing of defence weapons in a time bound manner.

The first Defence Acquisition Procedure was promulgated in 2002. Since then it has been revised several times to provide impetus growth to domestic industries and also to achieve self-reliance.

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