Defence Minister Rajnath Singh has taken a significant step by approving the revised Defence Procurement Manual (DPM) 2025, marking a pivotal shift in the procurement processes for the Armed Forces. This update, the first in over 15 years, is designed to streamline and expedite revenue procurement, thereby enhancing India’s military readiness and supporting the government’s vision of Aatmanirbhar Bharat in defense manufacturing.
The DPM 2025 governs procurements worth approximately ₹1 lakh crore under the Revenue Head, aiming for simplicity, transparency, and fairness in the acquisition process. The revised manual seeks to empower the domestic defense industry, particularly small and medium enterprises (MSMEs), start-ups, and academic institutions, by promoting innovation and collaboration in research and development (R&D) with Defence Public Sector Undertakings (DPSUs).
Several key features of the DPM 2025 stand out:
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Ease of Doing Business: The manual introduces relaxed contract provisions, mitigates penalties, and offers supportive financing options to help industries tackle working capital challenges.
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Boost to R&D: It includes special provisions to foster in-house design and development, encouraging partnerships with institutions such as the Indian Institutes of Technology (IITs), the Indian Institute of Science (IISc), private enterprises, and emerging innovators.
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Industry Incentives: The manual eliminates Liquidated Damages (LD) during prototype development, caps LD at 5% in normal cases and 10% for extreme delays, while also providing a guaranteed order for up to 5–10 years.
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Faster Decision-Making: It empowers lower-level competent financial authorities to grant delivery extensions and make decisions, reducing the need for higher-level approvals and expediting the procurement process.
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Operational Readiness: The manual introduces a provision for a 15% upfront growth allocation for the repair and refit of aerial and naval platforms, aimed at minimizing downtime for critical defense assets.
- Level Playing Field: The requirement for No Objection Certificates (NOCs) from DPSUs has been abolished, ensuring that tenders are awarded based purely on competitive merit.
Moreover, the revised manual aligns with the Ministry of Finance’s procurement guidelines and introduces a dedicated chapter on innovation and indigenisation, further streamlining Government-to-Government procurements for high-value defense agreements.
Officials have indicated that the DPM 2025 is expected to not only facilitate timely access to crucial resources for the Armed Services but also encourage collaboration among the Army, Navy, and Air Force. This collaborative approach is anticipated to strengthen India’s defense ecosystem, making it more transparent and industry-friendly.
