As India sharpens its focus on Atmanirbharta (self-reliance) in defence manufacturing, the Ministry of Defence (MoD) is gearing up for a major overhaul of the Defence Acquisition Procedure (DAP) 2020. The planned reforms—slated to roll out as part of a broader “Defence Reforms 2.0” in 2025—aim to address longstanding concerns over complexity, sluggish procurement timelines, and barriers to indigenous innovation.
At the core of this initiative is a growing consensus: India’s current acquisition process is too slow and too rigid to support the pace of modern warfare. With major platform inductions taking upwards of seven years, both industry stakeholders and the armed forces are urging for transformative changes.
Against this backdrop, BharatShakti recently convened a high-level roundtable titled “Defence Acquisition Simplified: A Stakeholder Dialogue,” moderated by Editor-in-Chief Nitin A. Gokhale. The event brought together over 25 participants, including representatives from the three services, senior MoD officials, and defence industry leaders from large firms and MSMEs. Over a span of three hours, stakeholders engaged in candid brainstorming on how to make DAP-2020 simpler, faster, and more responsive to operational realities.
Key Takeaways from the Stakeholder Dialogue
- Accelerating Acquisition Timelines
Stakeholders highlighted that current acquisition cycles often exceed timelines by 2-3 times. Recommendations included:
- Introducing a default “fast-track” procurement category with sub-18-month delivery targets.
- Empower BFDs (Board of Financial Delegation) with autonomy to avoid regressions due to vendor complaints.
- Setting strict 60-day deadlines for trials and evaluations.
- Trial and Evaluation Bottlenecks
Challenges related to time-consuming and redundant testing procedures were flagged. A key suggestion was to accept simulation-based certifications for training systems developed by Indian firms, reducing reliance on live trials.
- Supporting Startups and MSMEs
Startups and small enterprises expressed concern on genuine Make in India capabilities and being overshadowed by larger DPSUs. Proposed reforms included:
- Modular participation frameworks.
- Access to defence testing infrastructure.
- Enabling MSME consortia and joint ventures to bid competitively.
- Payments and Contracting Delays
Long delays in post-contract payments—often exceeding nine months—have strained industry cash flows. To mitigate this:
- A real-time payment-tracking dashboard, modeled on state treasury systems, was proposed.
- Performance-Based Logistics (PBL) models with 5–10-year lifecycle support were recommended.
- Overregulation and Redundancy
Participants called for rationalising the acquisition process:
- Cut non-essential steps, especially for repeat procurements.
- Replace committee-heavy approvals with file-based clearances wherever feasible.
- R&D and Innovation Incentives
To promote indigenous innovation:
- Guaranteed order-based incentives for Make-I and Make-II projects were proposed.
- Broader and more transparent use of Chapter 7 (Strategic Partnership Model) was recommended.
- Dispute Resolution
Frivolous complaints that stall projects were a major concern. It was proposed that such issues be filtered and resolved at the BFD level with legally binding outcomes.
Specific Technical Suggestions
| Issue | Recommendation |
| Acquisition Delays | Default fast-track procurement with clear delivery targets |
| Vendor Complaints | Limit complaint-based regressions; empower BFDs |
| Simulated Trials | Accept Indian simulation certificates, especially for training systems |
| Infrastructure | Develop regional testing hubs for MSMEs |
| Payment Transparency | Implement payment dashboards |
| Lifecycle Support | Mandate long-term PBL contracts |
| Frivolous Vendors | Strengthen blacklisting norms |
| Modular R&D | Allow sub-system-based procurement for startups |
Critical Issues Raised
- Prioritization of IDDM Category: Participants noted that the highest priority category—Buy Indian (IDDM)—is often bypassed in favour of Buy & Make (Indian), leading to premature tie-ups with foreign OEMs. Stakeholders demanded that indigenous options be exhaustively explored before foreign solutions are considered.
- Capacity Assessment: The current allowance of 2+2+2-year extensions for absorbing critical technologies was criticized for enabling long-term imports without indigenisation guarantees. On-ground capacity verification was suggested as a prerequisite before issuing tenders.
- Make-II: Single Vendor Clause: The DAP clause pushing for multi-vendor solutions in Make-II cases, even after a suo-moto proposal from a single capable firm, was seen as discouraging. A recommendation was made to modify or remove this clause to ensure genuine manufacturers are not disincentivized.
- Offsets and IP Transfer: It was proposed that offsets be tied to meaningful knowledge transfers and IP sharing, especially in training aids like simulators.
- Private Sector Participation: To counterbalance the preference for PSUs and DRDO, the dialogue proposed mandatory private sector participation—based on criteria like market capitalisation—in large orders or DRDO-licensed production.
- Monitoring Indigenisation: Several cases of underreported Indigenous Content (IC) were raised. It was suggested that IC verification be conducted through physical inspections and monitored throughout the contract lifecycle.
- Graded Evaluation for IC: A point-based evaluation system in technical-commercial bids was suggested to reward higher IC levels, encouraging genuine indigenisation over superficial compliance.
Shipbuilding Reforms Proposed
CFA Approval and BNE Costing
Delays due to finalising single vendor BNE (Buyer Nominated Equipment) costs were noted. It was recommended that:
- BNE costs are treated as variable and finalised post-contract, using 2nd Stage CFA approval (currently available for some categories).
- This would expedite contract conclusion without compromising accountability.
End of Nominations in Shipbuilding
A clear call was made to eliminate nomination-based shipbuilding contracts and move to competitive bidding for all indigenous designs, aligning with MoD’s “no nomination” stance.
Redrafting the Price Variation Clause (PVC)
Stakeholders pushed for a revamped PVC applicable to all contracts with delivery timelines exceeding 36 months. Key suggestions included:
- PVC to apply from the date of bid submission.
- Removal of PVC upper caps.
- Indices, weightages, and formulas to be defined at the EOI/RFI stage in consultation with industry.
The Road Ahead
The Ministry of Defence, in its 2024 year-end review, acknowledged systemic issues in the current procurement process and confirmed that a major revamp of DAP 2020 is in progress—with over 100 amendments already initiated. Stakeholders have been invited to submit written recommendations, complete with process flows and implementation models. BharatShakti seeks further suggestions and feedback from all the stakeholders at mailto:officeofnitingokhale@bharatshakti.in.
As the MoD prepares to launch Defence Reforms 2.0, industry voices appear more united than ever in demanding a leaner, faster, and more transparent acquisition ecosystem that enables India’s armed forces to keep pace with rapidly evolving threats while fostering a truly indigenous defence industrial base.
Team BharatShakti
