Study OAS ·
Defence Procurement Manual (DPM) 2025
What’s the News?
- Defence Minister Rajnath Singh approved the Defence Procurement Manual (DPM) 2025, to govern revenue procurement for the Armed Forces.
- It replaces a manual last updated in 2009.
- Purpose is to make procurement for spares, ammunition and sustainment — under “Operations & Sustenance” — faster, more responsive, and more indigenous.
DPM 2025: Key Reforms & Objectives
- Streamlined Procurement:
- Covers revenue procurements valued at ₹1 lakh crore annually for operations, sustenance, and maintenance.
- Introduces collegiate decision-making and empowers Competent Financial Authorities (CFAs) at lower levels to approve extensions and bids without higher-level referrals.
- Industry-Friendly Measures:
- Relaxed Penalties: No liquidity damages (LD) during development phase; post-prototype LD reduced to 0.1% (capped at 5–10% for extreme delays).
- Assured Orders: Guaranteed quantity orders for up to 5 years (extendable to 10 years in special cases) to ensure stability for suppliers.
- Handholding Support: Technical know-how and equipment sharing by armed forces for prototype development .
- Self-Reliance Focus:
- New chapter on innovation and indigenization to foster collaboration with private industry, MSMEs, startups, academia (e.g., IITs, IISc).
- No Objection Certificate (NOC) requirement from Defence Public Sector Undertakings (DPSUs) removed for open bidding, ensuring a level playing field.
- Operational Efficiency:
- 15% upfront growth provision for repair/maintenance of aerial and naval platforms to reduce downtime.
- Limited tendering allowed for procurements up to ₹50 lakh (and beyond in exceptional cases) for specialized goods.
Additional Info
- Defence Acquisition Procedure (DAP): The DPM governs revenue procurement, which covers day-to-day operational needs and maintenance. In contrast, the Defence Acquisition Procedure (DAP), last updated in 2020, governs capital procurement, which involves the acquisition of new platforms, equipment, and systems.
- Defence Acquisition Council (DAC):
- The DAC is the highest decision-making body in the Ministry of Defence for capital acquisitions, headed by the Defence Minister.
- It was formed in 2001 to ensure timely and efficient procurement for the Indian Armed Forces.
- Its key functions include according Acceptance of Necessity (AoN) for proposals and categorising them under 'Buy', 'Buy & Make', and 'Make' categories.
- Major Indigenisation Initiatives:
- "Aatmanirbhar Bharat" and "Make in India": The DPM is a step towards achieving the goals of these missions by creating a robust defence manufacturing ecosystem.
- Positive Indigenisation Lists: The government has issued multiple lists of defence items whose import is banned, creating guaranteed domestic orders.
- Innovations for Defence Excellence (iDEX): A program launched in 2018 to engage startups and MSMEs in defence R&D.
- SRIJAN Portal: An online platform that facilitates indigenisation by providing access to items that were previously imported.
- Defence Industrial Corridors: Two corridors in Uttar Pradesh and Tamil Nadu have been established to boost defence production by attracting investments.