Defence Acquisition Procedure 2020

The Defence Ministry introduced the Defence Acquisition Procedure 2020 (DAP 2020), replacing the previous Defence Procurement Procedure (DPP). Effective October 1, 2020, this policy aims to align with the government's 'Aatmanirbhar Bharat' initiative, boosting domestic industry through 'Make in India' projects and establishing India as a global manufacturing hub. DAP 2020 emphasizes 'Ease of Doing Business' by simplifying processes, delegating authority, reducing timelines, and making the acquisition process more industry-friendly.

The DAP covers all capital acquisitions by the Ministry of Defence (MoD) and Service Headquarters (SHQ) from indigenous and foreign sources, excluding works, land, and medical equipment. The offset policy mandates foreign defence entities to spend at least 30% of the total contract value in India through local procurement, technology transfer, or R&D for contracts above a certain value. Measures include a new category of 'Buy (Global - Manufacture in India)' for indigenization of imported spares, issuing Requests For Information (RFI), reserving categories for Indian vendors, incorporating after-sales support, increasing indigenous content, and incentivizing local material and software. To improve procurement, DAP 2020 includes a project management unit (PMU), simplified trials, and leasing as a new acquisition category. The Strategic Partnership Model (SPM) seeks to enhance indigenous defence manufacturing capabilities through private sector involvement.

Defence Acquisition Procedure 2020: A Paradigm Shift in India's Defence Procurement

India's journey towards self-reliance in defence manufacturing took a significant leap forward with the introduction of the Defence Acquisition Procedure (DAP) 2020. This policy document, which came into effect on October 1, 2020, represents a comprehensive overhaul of the existing Defence Procurement Procedure (DPP), aiming to streamline the acquisition process, promote indigenous production, and reduce the country's dependence on foreign arms suppliers. The DAP 2020 is not merely a procedural update; it signifies a fundamental shift in India's approach to defence procurement, reflecting the government's commitment to the 'Aatmanirbhar Bharat' (Self-Reliant India) initiative.

The genesis of DAP 2020 can be traced back to the recognition that the previous DPP, while having undergone several revisions since its inception in 2002, was still plagued by inefficiencies, delays, and a lack of focus on indigenous content. The need for a more agile, transparent, and industry-friendly acquisition process became increasingly apparent, particularly in the context of India's evolving security challenges and its aspirations to become a major defence exporter. To address these concerns, the Ministry of Defence (MoD) constituted a committee under the chairmanship of Apurva Chandra, an IAS officer, to review the existing DPP and formulate a new acquisition procedure that would align with the 'Aatmanirbhar Bharat' vision. The committee's recommendations formed the basis of DAP 2020, which was subsequently approved by the Defence Acquisition Council (DAC) and the Cabinet Committee on Security (CCS).

At the heart of DAP 2020 lies the principle of promoting self-reliance in defence manufacturing. The policy document emphasizes the importance of maximizing indigenous content in all acquisition projects, with a clear preference for 'Buy (Indian-IDDM)' category, which refers to the procurement of equipment designed, developed, and manufactured in India with a minimum of 50% indigenous content. This focus on indigenization is not merely a matter of economic expediency; it is also a strategic imperative, aimed at enhancing India's national security by reducing its vulnerability to external supply disruptions and ensuring the availability of critical defence technologies.

DAP 2020 introduces several measures to incentivize domestic defence manufacturers and encourage foreign companies to invest in India. These include:

• Reservation of Categories for Indian Vendors: Certain categories of defence equipment are reserved exclusively for Indian vendors, providing them with a guaranteed market and encouraging them to invest in research and development.
• Incentivizing Indigenous Content: The policy provides financial incentives for incorporating indigenous content in defence equipment, with higher incentives for products that are designed, developed, and manufactured in India.
• 'Buy (Global - Manufacture in India)' Category: This new category aims to indigenize imported spares and components by encouraging foreign companies to set up manufacturing facilities in India.
• Emphasis on Technology Transfer: The policy encourages foreign companies to transfer technology to Indian partners, enabling them to develop indigenous capabilities and reduce their reliance on foreign sources.
• Offset Policy: The offset policy mandates foreign defence companies to invest a portion of the contract value in the Indian defence sector, through local procurement, technology transfer, or setting up R&D facilities.

The offset policy, a cornerstone of India's defence procurement strategy, has been further refined under DAP 2020 to enhance its effectiveness. The policy requires foreign defence entities to spend at least 30% of the total contract value in India for contracts above a certain value. This obligation can be fulfilled through various means, including:

• Local Procurement: Sourcing goods and services from Indian companies.
• Technology Transfer: Transferring technology to Indian partners.
• Setting up R&D Facilities: Establishing research and development centers in India.
• Investing in Defence Industrial Parks: Contributing to the development of defence industrial parks in India.

DAP 2020 also seeks to streamline the defence acquisition process and reduce delays, which have been a persistent problem in the past. The policy introduces several measures to improve the efficiency and transparency of the acquisition process, including:

• Establishment of Project Management Units (PMUs): PMUs are set up to oversee individual acquisition projects and ensure that they are completed on time and within budget.
• Simplification of Trial Procedures: The policy simplifies the trial procedures for defence equipment, reducing the time and cost involved in evaluating potential acquisitions.
• Introduction of Leasing as an Acquisition Category: Leasing allows the armed forces to acquire equipment without having to make a large upfront investment, reducing the burden on the defence budget.
• Delegation of Authority: The policy delegates more authority to lower levels of the MoD and the Service Headquarters, enabling faster decision-making and reducing bureaucratic delays.

The introduction of leasing as an acquisition category is a particularly noteworthy feature of DAP 2020. Leasing provides the armed forces with a flexible and cost-effective way to acquire equipment, particularly in cases where the equipment is needed for a limited period or where the technology is rapidly evolving. Under the leasing model, the armed forces can lease equipment from domestic or foreign vendors, paying a periodic rental fee for the use of the equipment. At the end of the lease period, the equipment can be returned to the vendor, or the armed forces can choose to purchase it at a pre-determined price. Leasing can be particularly useful for acquiring equipment such as training aircraft, surveillance drones, and specialized vehicles, where the need is not permanent and the technology is constantly being upgraded.

The Strategic Partnership Model (SPM), which was introduced in the DPP 2016, has been further refined under DAP 2020 to enhance its effectiveness. The SPM aims to create larger domestic players in the defence sector by encouraging partnerships between foreign and Indian companies. Under the SPM, the MoD identifies specific platforms or technologies that it wants to indigenize and then selects Indian companies to partner with foreign companies to develop and manufacture these platforms in India. The SPM is intended to promote technology transfer, build indigenous capabilities, and create a more competitive defence industrial base in India.

One of the key challenges in implementing DAP 2020 is ensuring that the policy is effectively translated into action. This requires a concerted effort on the part of the MoD, the Service Headquarters, the defence industry, and other stakeholders. The MoD needs to provide clear and consistent guidance to all stakeholders, ensure that the acquisition process is transparent and efficient, and address any bottlenecks that may arise. The Service Headquarters need to accurately identify their equipment requirements, participate actively in the acquisition process, and ensure that the acquired equipment is effectively utilized. The defence industry needs to invest in research and development, build indigenous capabilities, and compete effectively for defence contracts.

The success of DAP 2020 also depends on the availability of adequate funding for defence procurement. The defence budget needs to be increased to reflect the country's evolving security challenges and its aspirations to become a major defence exporter. The government also needs to explore innovative financing mechanisms, such as public-private partnerships and defence bonds, to supplement the traditional budgetary allocations.

The implementation of DAP 2020 has significant implications for India's national security, its economy, and its foreign relations. By promoting self-reliance in defence manufacturing, the policy will enhance India's strategic autonomy and reduce its dependence on foreign powers. It will also boost the domestic economy, create jobs, and promote technological development. Furthermore, it will enhance India's credibility as a defence manufacturer and potentially increase its defence exports, strengthening its diplomatic influence and fostering closer ties with friendly countries.

The historical context of India's defence procurement policies is crucial to understanding the significance of DAP 2020. Since independence, India has relied heavily on imports to meet its defence needs. This dependence has made the country vulnerable to external pressures and has constrained its strategic autonomy. Over the years, successive governments have recognized the need to indigenize defence production, but progress has been slow and uneven. The DPP, which was first introduced in 2002, was intended to encourage domestic industry participation, but it has been criticized for being too complex, too bureaucratic, and too slow. DAP 2020 represents the latest effort to address these shortcomings and create a more effective and efficient defence procurement system.

Previous revisions of the DPP have had mixed results. While some revisions have led to improvements in the acquisition process, others have been less successful. One of the key challenges has been the lack of a consistent and long-term vision for defence indigenization. Policies have often changed with changes in government, creating uncertainty for the defence industry and hindering investment in research and development. DAP 2020 seeks to address this challenge by providing a clear and consistent policy framework that will guide defence procurement for the foreseeable future.

The 'Aatmanirbhar Bharat' initiative, which was launched by the government in 2020, has provided a further impetus to the indigenization of defence production. The initiative aims to make India self-reliant in various sectors, including defence, by promoting domestic manufacturing, reducing import dependence, and encouraging innovation. DAP 2020 is a key component of the 'Aatmanirbhar Bharat' initiative in the defence sector, providing a roadmap for achieving self-reliance in defence production.

Several key terms are essential to understanding DAP 2020:

• Aatmanirbhar Bharat: This Hindi phrase translates to "Self-Reliant India." It is a government initiative promoting self-reliance and reducing dependence on imports across various sectors, including defence. Its significance lies in its strategic shift towards boosting domestic manufacturing and reducing reliance on foreign suppliers.

• Defence Acquisition Procedure (DAP): This is a comprehensive document outlining the procedures and guidelines for defence acquisitions by the Ministry of Defence. Its significance is that it governs how the Indian armed forces procure military equipment and systems.

• Defence Procurement Procedure (DPP): This is the earlier version of the guidelines for defence acquisitions, now superseded by DAP. Its significance lies in representing the previous framework for defence procurement and its evolution over time.

• Make in India: This is an initiative to encourage companies to manufacture their products in India. It is a key component of the broader effort to boost domestic manufacturing and reduce import dependence.

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• Offset Policy: This is a policy that mandates foreign defence companies to invest a portion of the contract value in the Indian defence sector. It is a mechanism to promote technology transfer, local manufacturing, and R&D in India.

• Strategic Partnership Model (SPM): This is a model to enhance indigenous defence manufacturing capabilities through private sector involvement. It aims to create larger domestic players in the defence sector through partnerships between foreign and Indian companies.

Several organizations are involved in the implementation of DAP 2020:

• Ministry of Defence (MoD): As a government agency, it formulates defence policy, manages defence procurement, and oversees the armed forces. Its powers lie in the authority to make defence acquisitions, formulate policies, and allocate resources. However, it is subject to budgetary constraints, parliamentary oversight, and government regulations.

• Service Headquarters (SHQ): As a military organization, it is responsible for the operational readiness and equipment needs of the armed forces. Its powers include identifying equipment requirements, participating in procurement processes, and managing acquired assets. However, it is dependent on MoD for budget allocation and policy guidelines.

The defence acquisition process itself is a multi-stage process involving identification of requirements, formulation of specifications, vendor selection, contract negotiation, and procurement of defence equipment. The normal protocol typically involves extensive trials, technical evaluations, and commercial negotiations. DAP 2020 aims to streamline this process by reducing timelines and simplifying procedures.

The stakeholder positions are diverse and reflect varying interests:

• Indian Government: Its official position is to promote self-reliance in defence manufacturing and reduce import dependence. Its underlying interests include enhancing national security, boosting the domestic economy, and creating jobs. Actions taken include implementing the 'Aatmanirbhar Bharat' initiative, introducing DAP 2020, and providing incentives for domestic manufacturers.

• Indian Defence Industry: Its official position is to increase participation in defence procurement and develop indigenous capabilities. Its underlying interests include expanding market share, enhancing technological capabilities, and increasing profitability. Actions taken include investing in R&D, forming partnerships with foreign companies, and advocating for policies that favor domestic manufacturers.

• Foreign Defence Companies: Their official position is to maintain access to the Indian defence market while complying with offset obligations. Their underlying interests include securing contracts, maintaining market share, and leveraging Indian capabilities for global supply chains. Actions taken include participating in tenders, forming joint ventures with Indian companies, and investing in local manufacturing facilities.

The broader implications of DAP 2020 are far-reaching:

• Political: Strengthening of India's strategic autonomy and reduced dependence on foreign powers.

• Diplomatic: Enhanced credibility as a defence manufacturer and potential for increased defence exports.

• Security: Improved security through self-reliance and a stronger domestic defence industrial base.

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• Economic: Boost to the domestic economy, job creation, and technological development.

• Technological: Incentivizes technological innovation and development within the country.

DAP 2020 is connected to several related ongoing issues, including the modernization of the Indian armed forces, reducing dependence on foreign arms suppliers, and promoting indigenous defence manufacturing. It also has historical connections to previous Defence Procurement Procedures (DPP) and their revisions, as well as efforts to indigenize defence production since independence.

Looking to the future, the outlook is for increased participation of domestic industry in defence procurement, reduced import dependence, and the emergence of India as a global defence manufacturing hub. However, the success of DAP 2020 will depend on effective implementation, adequate funding, and a sustained commitment to self-reliance in defence production.

The challenge now lies in effective execution. Bureaucratic inertia, lack of coordination between different stakeholders, and inadequate funding could all derail the implementation of DAP 2020. It is essential that the MoD takes proactive steps to address these challenges and ensure that the policy is implemented in a timely and efficient manner.

One of the key areas of focus should be on building indigenous capabilities in critical defence technologies. India needs to invest heavily in research and development to develop its own intellectual property and reduce its reliance on foreign technologies. This requires a long-term commitment to funding R&D, as well as creating a supportive ecosystem for innovation.

Another important area is streamlining the defence procurement process. The current process is often slow, cumbersome, and opaque. DAP 2020 aims to address these issues, but it is essential that the policy is implemented effectively and that the procurement process is made more transparent and efficient.

The success of DAP 2020 also depends on the active participation of the private sector. The private sector has a crucial role to play in building indigenous defence capabilities and competing effectively for defence contracts. The government needs to create a level playing field for the private sector and provide it with the necessary incentives to invest in defence production.

Finally, it is essential that the government maintains a consistent and long-term vision for defence indigenization. Policies should not change with changes in government, and there should be a clear and consistent roadmap for achieving self-reliance in defence production.

In conclusion, DAP 2020 represents a significant step forward in India's efforts to indigenize defence production and reduce its dependence on foreign arms suppliers. The policy has the potential to transform the Indian defence sector and make India a major player in the global defence market. However, the success of DAP 2020 will depend on effective implementation, adequate funding, and a sustained commitment to self-reliance in defence production.

The focus on indigenous content is not without its critics. Some argue that prioritizing domestic production could lead to compromises in quality and performance, particularly in areas where India lacks the necessary technological expertise. They contend that a more balanced approach is needed, one that combines indigenous production with strategic imports to ensure that the armed forces have access to the best available equipment.

However, proponents of DAP 2020 argue that the risks of relying on foreign suppliers outweigh the potential compromises in quality. They point to instances where India's defence imports have been disrupted due to geopolitical factors, highlighting the vulnerability of relying on external sources for critical defence equipment. They also argue that investing in indigenous production will create jobs, boost the domestic economy, and promote technological innovation.

The emphasis on 'Ease of Doing Business' is another key aspect of DAP 2020. The policy aims to simplify the acquisition process, reduce bureaucratic delays, and create a more industry-friendly environment. This is particularly important for attracting foreign investment and encouraging domestic companies to invest in defence production.

One of the measures introduced to improve the 'Ease of Doing Business' is the delegation of authority to lower levels of the MoD and the Service Headquarters. This is intended to speed up decision-making and reduce the need for approvals from higher authorities. However, it is essential that this delegation of authority is accompanied by appropriate accountability mechanisms to prevent corruption and ensure that decisions are made in a transparent and impartial manner.

Another measure is the simplification of trial procedures for defence equipment. The current trial procedures are often lengthy and complex, adding to the time and cost of acquisition projects. DAP 2020 aims to streamline these procedures by reducing the number of trials required and focusing on the most critical performance parameters.

The introduction of leasing as an acquisition category is a welcome addition to the defence procurement toolkit. Leasing provides the armed forces with a flexible and cost-effective way to acquire equipment, particularly in cases where the equipment is needed for a limited period or where the technology is rapidly evolving.

However, it is important to ensure that leasing agreements are structured in a way that protects India's interests and avoids creating long-term dependencies on foreign suppliers. The terms of the lease should be carefully negotiated to ensure that the armed forces have the right to use the equipment effectively and that the technology is transferred to India over time.

The Strategic Partnership Model (SPM) has the potential to transform the Indian defence sector by creating larger domestic players and promoting technology transfer. However, the SPM has been criticized for being too complex and for lacking transparency. It is essential that the SPM is implemented in a fair and transparent manner and that all qualified companies are given an equal opportunity to participate.

The success of the SPM also depends on the willingness of foreign companies to transfer technology to their Indian partners. The government needs to create a supportive environment for technology transfer and ensure that foreign companies are incentivized to share their know-how with Indian companies.

DAP 2020 also includes provisions for promoting defence exports. The policy aims to make India a major defence exporter by providing incentives for domestic companies to export their products and by streamlining the export approval process.

However, India faces significant challenges in becoming a major defence exporter. The country's defence industry is still relatively young and lacks the scale and sophistication of its counterparts in other countries. India also faces stiff competition from established defence exporters, such as the United States, Russia, and France.

To overcome these challenges, India needs to invest in research and development, build indigenous capabilities, and create a supportive ecosystem for defence exports. The government also needs to actively promote Indian defence products in international markets and provide financial assistance to domestic companies to participate in international tenders.

The implementation of DAP 2020 requires a coordinated effort on the part of the MoD, the Service Headquarters, the defence industry, and other stakeholders. The MoD needs to provide clear and consistent guidance to all stakeholders, ensure that the acquisition process is transparent and efficient, and address any bottlenecks that may arise. The Service Headquarters need to accurately identify their equipment requirements, participate actively in the acquisition process, and ensure that the acquired equipment is effectively utilized. The defence industry needs to invest in research and development, build indigenous capabilities, and compete effectively for defence contracts.

The success of DAP 2020 also depends on the availability of adequate funding for defence procurement. The defence budget needs to be increased to reflect the country's evolving security challenges and its aspirations to become a major defence exporter. The government also needs to explore innovative financing mechanisms, such as public-private partnerships and defence bonds, to supplement the traditional budgetary allocations.

The implementation of DAP 2020 has significant implications for India's national security, its economy, and its foreign relations. By promoting self-reliance in defence manufacturing, the policy will enhance India's strategic autonomy and reduce its dependence on foreign powers. It will also boost the domestic economy, create jobs, and promote technological development. Furthermore, it will enhance India's credibility as a defence manufacturer and potentially increase its defence exports, strengthening its diplomatic influence and fostering closer ties with friendly countries.

DAP 2020 is not a panacea for all the challenges facing India's defence sector. However, it represents a significant step forward in the country's efforts to indigenize defence production and reduce its dependence on foreign arms suppliers. The policy has the potential to transform the Indian defence sector and make India a major player in the global defence market. However, the success of DAP 2020 will depend on effective implementation, adequate funding, and a sustained commitment to self-reliance in defence production. The journey towards 'Aatmanirbhar Bharat' in defence is a long and arduous one, but DAP 2020 provides a solid foundation for achieving this ambitious goal.