Policy & Government

Decoding Defence Acquisition Procedure for F-OEMs in an ‘Atmanirbhar Bharat’

By ET News

Promoting Atmanirbharta (self-reliance) in defence manufacturing in India is not new. The first Defence Procurement Procedure (DPP) came out in 2002. Every subsequent DPP introduced something new to promote or enhance indigenisation.

Defence offsets (2005), Make procedure (2006), SP chapter (2016), and progressive introduction of new categorisations and increase in Indigenous Content (IC) have been introduced over the past two versions. The new procurement procedure rechristened as Defence Acquisition Procedure or DAP-2020, came into effect on 01 October 2020 with five new chapters and over 200 pages, compared to DPP-16.

A few important things happened over the past year impacting the compilation of DAP-2020. First was the coronavirus pandemic which rekindled the concept of Atmanirbhar Bharat. In DAP-2020, it brought in the concept of ‘Weapons/Platforms Banned for Import’ (negative list). The DAP reserved four categories under which the 100 odd equipment mentioned in the negative list (with more items to be included progressively) can be procured. The pandemic induced recession has also put a question mark on the present and future of defence expenditure.

Second was the release of the Defence Production & Export Promotion Policy (DPEPP) which aims to achieve a turnover of Rs 1,75,000 Crores (US$ 25Bn) including export of Rs 35,000 Crore (US$ 5 Bn) in aerospace and defence goods by 2025.

With defence exports of 10,745 crores (US$ 1.5Bn) in 2018-19, the figure of US$ 5Bn is ambitious but not impossible. The DPEPP also stipulates that 60% of the procurement will be from the ‘domestic industry’ during this period.

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