Defence Acquisition Procedure 2020 Amended to Promote ‘Make in India’

To further promote ‘Make in India’ and ‘Aatmanirbharta’ in defence and enable Ease of Doing Business, Defence Acquisition Procedure (DAP) 2020 has been amended based on the approvals accorded by the Defence Acquisition Council (DAC) in respect of the following:

• Going forward all modernisation requirements of the Defence Services and Indian Coast Guard are to be indigenously sourced irrespective of the nature of procurement. Import of defence equipment/sourcing from Foreign Industry of capital acquisitions should only be an exception and undertaken with specific approval of DAC/Raksha Mantri.
• As advised by the Ministry of Finance and to reduce the financial burden on the Indian Defence Industry whilst maintaining financial safeguards, the requirement of the Integrity Pact Bank Guarantee (IPBG) has been dispensed with. Instead, Earnest Money Deposit (EMD) will be taken as bid security for all acquisition cases with an Acceptance of Necessity (AoN) cost of more than Rs 100 crore. EMD will be valid for the selected vendor up to the signing of contracts and returned to remaining vendors post declaration of selection. Post contract, Integrity Pact will be covered through the Performance Cum Warranty Bank Guarantee (PWBG). Further, as per extant Government of India policy, EMD is not required from Micro and Small Enterprises (MSEs).
• To encourage wider participation and a broad base indigenous defence manufacturing sector in the country, the total order quantities in acquisition cases are to be split between shortlisted vendors, wherever viable. Further, the other technically qualified bidders who have not been awarded a contract will be issued a certificate by the Services indicating that the product has been successfully trial evaluated, to facilitate vendors to explore other markets.
• To create an ecosystem which fosters innovation and encourages technology development in Defence by engaging R&D institutes, academia, industries, startups and individual innovators, the iDEX framework was launched by Prime Minister Shri Narendra Modi in April 2018. Existing provisions of DAP 2020 link the procedures of Staff Evaluation, CNC and award of Contract for iDEX procurement, to the procedure in ‘Buy (Indian- IDDM)’, which entails a long period of approximately two years before placement of the order. To enable the budding startup talent pool of the country to contribute toward the twin mantras of self-sufficiency and indigenization, the procurement process under the iDEX procedure of DAP 2020 has been simplified. With this simplification, the time taken from the grant of AoN to the signing of the contract will be reduced to 22 weeks.
• The make-II procedure of DAP-2020, involving indigenisation of defence equipment through industry-funded projects at the prototype development stage, has been simplified by incorporating Single Stage Composite Trials of prototypes and dispensing off with quantity vetting and scaling for initial procurements in the delegated cases. Post simplification, the timelines in the Make-II procedure will be reduced to 101-109 weeks from an existing total time period of 122-180 weeks.