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After a long wait of 16 years, the Ministry of Defence has unveiled the Defence Procurement Manual 2025 (DPM 2025), rewriting the rules for revenue procurement – spares, ammunition, maintenance, and services – worth nearly Rs 1 lakh crore annually. Beyond a procedural update, the manual signals a policy shift: from a system designed to control and constrain, to one intended to enable agility, fairness, and innovation.
Why It Matters
Revenue procurement often gets less attention than big-ticket capital acquisitions. Yet it directly sustains operational readiness. A grounded aircraft or an idle warship because of missing spares has as much impact as a delayed fighter deal. For years, cumbersome rules, excessive reliance on financial advisors, and harsh penalty regimes created bottlenecks, hurting both the industry and the Services. DPM 2025 aims to break this cycle.
From Compliance-Heavy to Enabling Framework
The new manual empowers Competent Financial Authorities at lower levels to make routine decisions that once required multiple layers of approval. It matters: when spares are needed at short notice, the Services can now act faster without waiting for higher clearances.
By reducing the Integrated Financial Advisors’ role, the system is moving away from a culture of control and concurrence toward one of accountability and trust. The challenge will be ensuring that this autonomy is exercised responsibly – making decisions quickly without weakening oversight.
NOC Scrapped: A Level Playing Field at Last
The most consequential reform is the removal of the requirement for private companies to secure No Objection Certificates from Defence Public Sector Undertakings before bidding. This long-standing grievance had tilted the field in favour of state-run enterprises.
By scrapping it, the Ministry is signalling a deliberate intent to treat public and private suppliers on equal terms. In tandem, provisions for guaranteed orders of up to five years (extendable to ten), capped penalties, and softer norms on prototype development are designed to reduce risk for MSMEs and start-ups. These steps matter because the barriers to entry in defence have historically kept smaller firms out, limiting innovation and competition.
From Punitive to Supportive
The 2009 manual carried a punitive flavour – heavy liquidated damages and rigid contract enforcement even during the development phase. The 2025 version adopts a more collaborative stance. No damages will apply during development; minimal penalties (0.1%) will follow the prototype stage; and overall damages will be capped at 5–10%.
This shift reflects a recognition that innovation requires room for trial and error. Excessive penalties discourage risk-taking, particularly among start-ups and MSMEs. By softening the rules, the manual lowers the cost of participation, which could broaden the supplier base.
Innovation as Policy
A dedicated chapter on innovation and indigenisation marks another significant departure. For the first time, the manual explicitly encourages partnerships with IITs, IISc, and universities. It aligns defence procurement with India’s wider innovation policy, where disruptive technologies are often pioneered outside traditional defence firms.
By recognising academia and start-ups as credible partners, DPM 2025 could help India tap into dual-use technologies like AI, robotics, and advanced materials. The long-term test will be whether these provisions translate into sustained R&D contracts or remain well-intentioned text.
Structural Bottlenecks Addressed
Other provisions address persistent pain points. A 15% upfront provisioning for repairs and maintenance of naval and aerial platforms reduces downtime. Streamlined procedures for government-to-government procurements ensure urgent, high-value deals are not lost in paperwork. Expanded tendering norms empower units to source spares and repairs more flexibly.
Taken together, these reforms aim to build resilience into supply chains – a necessity in an era when operational readiness depends as much on timely repairs as on new acquisitions.
The Risks Ahead
Reform on paper does not guarantee reform in practice. Three risks could blunt the manual’s impact:
- Cultural Resistance: Delegation of powers may face inertia within a bureaucracy accustomed to centralised control. Old habits can slow down even the best-designed rules.
- Industry Capacity: MSMEs and start-ups may find it challenging to scale up to defence-grade quality and volumes, even with eased norms. Without parallel investments in skills, testing infrastructure, and financing, their participation may remain limited.
- Balancing Autonomy and Oversight: Reducing financial concurrence accelerates decisions but also raises oversight risks. Transparency mechanisms must evolve to prevent misuse without reintroducing delays.
These are not minor challenges. Unless implementation is backed by cultural change and industry support, the manual risks becoming another well-drafted but under-implemented reform.
The Strategic Balance
At its heart, DPM 2025 is an attempt to balance three imperatives: speed, fairness, and self-reliance. Faster procurement cycles sustain operational readiness. Fairer rules widen the supply base and invite innovation. And a stronger push for indigenisation supports India’s long-term strategic autonomy.
The Defence Ministry has, in effect, reframed procurement from being a compliance-heavy process into a strategic enabler. The manual is less about forms and clauses than about signalling intent: to create a procurement ecosystem that supports Atmanirbharta by design, not by exception.
Ravi Shankar
Dr Ravi Shankar has over two decades of experience in communications, print journalism, electronic media, documentary film making and new media.
He makes regular appearances on national television news channels as a commentator and analyst on current and political affairs. Apart from being an acknowledged Journalist, he has been a passionate newsroom manager bringing a wide range of journalistic experience from past associations with India’s leading media conglomerates (Times of India group and India Today group) and had led global news-gathering operations at world’s biggest multimedia news agency- ANI-Reuters. He has covered Parliament extensively over the past several years. Widely traveled, he has covered several summits as part of media delegation accompanying the Indian President, Vice President, Prime Minister, External Affairs Minister and Finance Minister across Asia, Africa and Europe.
