All you need to know about the DAP
What is it?
On September 28, 2020, Defence Minister Rajnath Singh unveiled the new Defence Acquisition Procedure (DAP) 2020, as a part of the government’s “Atmanirbhar Bharat Abhiyan”.
The DAP was first promulgated in 2002 to streamline defence goods procurement and give a boost to our domestic defence manufacturing sector.
Do we need it?
India is currently the world’s second-largest importer of defence equipment and armoury after Saudi Arabia. This amounts to 12% of our total domestic imports and 9.5% of the global imports between 2014–18. Before this, we topped the list for 8 years in a row, and this dropped to the 2nd place because of delayed deliveries and not because of any enhanced self-sourcing capabilities.
What’s new in the policy?
To further its agenda towards self-reliance, the following revisions were introduced in the policy:
- The Offset Guideline — the earlier requirement for a manufacturer to invest at least 30% of defence good value in India in parts/components has been tweaked to give greater preference to complete manufacturing in government-to-government, single vendor and Intergovernmental Agreements (IGA)
- The New Leasing Policy — Army, Navy and Airforce can now lease defence goods instead of buying them
- Faster Procurement& Acquisitions — single-stage accord of Acceptance of Necessity (AoN) in all cases up to Rs 500 crore has been instituted. This reduces the procedural hassles in defence procurement and aids time-bound, faster decision making
- Enhanced Indigenous Content — At least 50% in domestic armaments & goods and at least 60% in defence platforms (make in India)
What’s Good?
- Clear intentions to provide opportunities to achieve self-reliance through greater involvement of private players
- Emphasis on faster decision making and improved procurement process
- Separate chapter on Information & Communication Technology (ITC) procurement for defence sector to leverage on our edge in the IT
- Reforms towards post-contract management (like services like inspection, repair, replenishment etc.)
What’s Unclear?
The new DAP 2020 will stay in effect for 5 years and many would welcome it as a positive reform. Like most policy reforms, however, only time will tell how impactful it is really is.
India has witnessed strenuous border tensions this year, and it’s only logical the government wants to strengthen the sector. With adequate financial support and finer procedural support, these reforms may help the defence sector in achieving its ultimate aim of becoming a defence manufacturing hub.
Other developments in Defence
Last quarter, the government had raised the Foreign Direct Investment cap in the defence sector from 49% to 74% through an automatic route to strengthen its emphasis towards growing defence manufacturing in the country. It also unveiled a Defence Production and Export Promotion Policy last month to enhance defence manufacturing turnover and grow defence exports in aerospace and defence goods and services sector in the next five years.
