On September 29th, 2020 the defence minister of India, Rajnath Singh unveiled the Defence Acquisition Procedure, 2020 (DAP) which contains measures intended towards boosting India’s defence industry and to promote the ideals of ‘Make in India’ and ‘Aatmanirbhar Bharat’. Official government sources believe that defence is a key sector that will help the government achieve its goal of the USD 5 trillion economy in 2024.
DAP introduces a series of conceptual, structural and procedural reforms, making sure that contemporary technology based equipment is made available to the defence services, and to modernise the Armed Forces. Official word on DAP envisages it as based on the concept of “Womb to “Tomb” having certain unique aspects such as supplier constraints, technological complexity, foreign suppliers, high cost, foreign exchange implications and geo-political ramifications, different from the standard open market commercial form of procurement. DAP 2020 focuses on simplifying the defence acquisition procedure and institutionalising the monitoring mechanism with concurrent actions using digital technologies and database for selection of best equipment in a transparent and competitive manner giving adequate opportunities to capable vendors. The ‘Make in India’ initiative of the Government of India focuses on increasing participation of Indian vendors including MSMEs, and this has been further refined in DAP 2020 to make it more objective and time bound with focus on Indian industry especially MSMEs.
DAP 2020 will come into effect from October 01, 2020. DAP remains in place for 5 years and the last one was issued in 2016. Some of the key feature of DAP 2020 include: a separate procurement category called ‘leasing’, procurement of information and communication technology (ICT) systems and post-contract management. The first draft of the DAP in March had introduced ‘leasing’ as one of the categories to get defence equipment at affordable rates. The new draft has a whole chapter on it explaining the terms, conditions and procedure for ‘leasing’. 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.
The indigenous content ratio has also been hiked by 10% to support ‘Make in India’ initiative. For the first, a system has been introduced to verify the indigenous content. Only the minimum necessary will be bought from abroad, while the rest will be manufactured in India. Also, the chapter on ICT systems and products has been introduced to harness India’s expertise in IT and software technologies.