Defence Acquisition Reforms: What Can We Expect?

India is set to amend its Defence Acquisition Procedure (DAP) within the next few months, aiming to address longstanding challenges in its defence procurement system.  In this week’s Defence Mantra, Nitin A Gokhale shares his insights into the key challenges being faced by industry as well as the forces.

Challenges Faced by Defence Companies and Stakeholders:

1. Cumbersome Procurement Processes: The existing procurement procedures have been criticized for being plagued by delays, often failing to meet timelines. This inefficiency hampers timely acquisition and affects operational readiness.
2. Complex Licensing and Regulatory Hurdles: The defence sector remains one of the last areas under stringent industrial licensing, creating barriers for new entrants and limiting competition. The prolonged approval processes deter potential investors and slow down innovation.
3. Limited Private Sector Participation: Historically dominated by public sector undertakings, the defence manufacturing ecosystem has not fully leveraged the capabilities of private enterprises. This imbalance restricts the industry’s growth and modernisation potential.
4. Dependence on Foreign Technology: India’s reliance on imports for critical technologies, such as jet engines and advanced avionics, underscores the need for indigenous development to achieve true self-reliance

Nitin explains that the MoD  has acknowledged the existing challenges and emphasised the government’s commitment to reform. He says the government understands the necessity of creating a level playing field for both public and private sectors.

BharatShakti had recently organised a closer door Round-Table with officials from the MoD, military leaders involved with procurement, as well as industry including OEMs and MSMEs to sit across the table and have free and frank discussions and deliberations on necessary reforms to streamline procurement and enhance self-reliance in defence manufacturing.

Nitin mentions some of the issues that were highlighted:

• The key drivers behind the latest amendments to the Defence Acquisition Procedure (DAP)
• How the revised DAP aligns with India’s vision of Aatmanirbhar Bharat in defence manufacturing
• What specific challenges in the existing procurement system is this amendment trying to address?
• How will the new amendments make it easier for Indian private players, especially MSMEs, to participate in defence procurement
• Will there be any changes to the trial and testing procedures to speed up acquisition?
• Is there a move to streamline offset obligations for foreign OEMs to encourage technology transfer?
•   What impact will the DAP amendments have on foreign Original Equipment Manufacturers (OEMs) looking to invest in India?
•   How is India balancing the need for foreign technology while strengthening indigenous capabilities?
•   Will the new DAP amendments level the playing field between Defence PSUs (DPSUs) and private companies?

Noting that BharatShakti’s roundtable discussions and industry feedback should influence further refinements to the policy, Nitin says he hopes that there will be a considerable impact that these amendments will have on India’s defence industry over the next five years.

It is necessary to have more frequent revisions to DAP in the future to keep pace with evolving defence needs.