Defence Acquisition Procedure 2020

Defence Acquisition Procedure (DAP) 2020 has been amended based on the approvals accorded by Defence Acquisition Council (DAC).

What are the changes?

• 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.
• Requirement of Integrity Pact Bank Guarantee (IPBG) has been dispensed with. Instead, Earnest Money Deposit (EMD) will be taken as a bid security for all acquisition cases with Acceptance of Necessity (AoN) cost more than Rs 100 crore.
• The procurement process under iDEX procedure of DAP 2020 has been simplified. With this simplification, time taken from grant of AoN to signing of contract will be reduced to 22 weeks.
• Make-II procedure of DAP-2020 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.

What are the categories mentioned in DAP-2020?

1. Make-I category –

• Projects under ‘Make-I’ sub-category will involve Government funding of 90%, released in a phased manner and based on the progress of the scheme, as per terms agreed between MoD and the vendor.
• The list of projects which were accorded ‘Approval In-Principle (AIP)’ by Collegiate Committee of MoD is as follow:
  • • Indian Air Force: Communication Equipment with Indian Security Protocols (Routers, Switches, Encryptors, VoIP Phones and their software).
    • Indian Air Force: Airborne Electro Optical pod with Ground Based System.
    • Indian Air Force: Airborne Stand-off Jammer
    • Indian Army: Indian Light Tank
• This is for the first time since the launch of DAP-2020 that Indian Industry has been involved in development of big ticket platforms such as Light tank and Communication Equipment with Indian security protocols.

2. Make-II Category –

• Projects under ‘Make-II’ category will involve prototype development of equipment/ system/ platform or their upgrades or their sub-systems/ sub-assembly/assemblies/ components, primarily for import substitution/innovative solutions, for which no Government funding will be provided for prototype development purposes.
• In addition, AIP has also been accorded to following five projects under industry-funded Make-II procedure –
  • • Indian Air Force: Full Motion Simulator for Apache Helicopter
    • Indian Air Force: Full Motion Simulator for Chinook Helicopter
    • Indian Air Force: Wearable Robotic Equipment for Aircraft Maintenance
    • Indian Army: Integrated Surveillance and Targeting System for Mechanised Forces
    • Indian Army: Autonomous Combat Vehicle

Salient features of DAP-2020 –

With the new Foreign Direct Investment policy announced,  DAP 2020 has adequately included provisions to encourage FDI to establish manufacturing hubs both for import substitution and exports while protecting interests of Indian domestic industry. Specific reforms enunciated in Aatmanirbhar Bharat Abhiyan, have been incorporated as under –

• Notify a List of Weapons/Platforms for Ban on Import – Relevant incorporation has been done in the DAP to ensure that NO equipment is procured ex import post timelines notified.
• Indigenisation of Imported Spares.
• Request For Information – RFI stage will explore willingness of the prospective foreign vendors to progressively undertake manufacture and setup an indigenous eco system at the spares/sub component level.
• New Category of Buy (Global – Manufacture in India) – The new category incorporates ‘manufacture of either the entire/part of the equipment or spares/assemblies/sub-assemblies/Maintenance, Repair and Overhaul (MRO) facility for the equipment, through its subsidiary in India.
• Co-production through Inter-Governmental Agreement (IGA) – This enables establishment of co-production facilities through IGA achieving ‘Import Substitution’ and reduce Life Cycle Cost.
• Contractual Enablement – Buyer’s Right to optimise Life Cycle Support costs and system enhancements through indigenous eco system incorporated.
• FDI in Defence Manufacturing – With the announcement of new FDI Policy, suitable provisions have been incorporated like new category ‘Buy (Global – Manufacture in India)’ done to encourage foreign OEMs to setup ‘manufacturing/maintenance entities’ through its subsidiary in India while enabling requisite protections to domestic industry.
• Time Bound Defence Procurement Process and Faster Decision Making –  As part of the Defence Reforms announced in the Atmanirbhar Abhiyan, setting up of a PMU has been mandated to support contract management. The PMU will facilitate obtaining advisory and consultancy support in specified areas to streamline Acquisition process. Other issues included in these reforms are:-
• Simplification of Trial Procedures – DAP 2020 emphasises the need to conduct trials with an objective to nurture competition based on the principles of transparency, fairness and equal opportunities to all and not as a process of elimination.
• Ease of Doing Business –  One of the key focus areas of the review was to implement ‘Ease of Doing Business’ with emphasis on simplification, delegation and making the process industry friendly with certain specific provisions.
• Reservation in Categories for Indian Vendors – The categories of Buy(Indian-IDDM), Make I, Make II, Production Agency in Design & Development, OFB/DPSU and SP model will be exclusively reserved for Indian Vendors meeting the criteria of Ownership and Control by resident Indian Citizens with FDI not more than 49%. This reservation will provide exclusivity in participation to domestic Indian industry.
• Enhancement of Indigenous Content
• Offsets – The Offset guidelines have been revised, wherein preference will be given to manufacture of complete defence products over components and various multipliers have been added to give incentivisation in discharge of Offsets.