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FICCI applauds promulgation of Defence Acquisition Procedure 2020

Oct 01, 2020

NEW DELHI, 01 October 2020: Highlighting the sentiments of the Indian Defence Industry, Mr SP Shukla, Chair, FICCI Defence Committee and Group President - Agri, Aerospace, Defence & Steel and Member - Group Executive Board of the Mahindra Group, today applauded the release of the Defence Acquisition Procedure (DAP) 2020 by the Ministry of Defence.

"Industry welcomes the promulgation of the DAP 2020 which reflects the voice of various stakeholders and is guided by PM's vision of Atmanirbhar Bharat. The Industry compliments Ministry of Defence, under the leadership of Mr Rajnath Singh for bringing out a comprehensive acquisition procedure. Industry has been awaiting the release of industry-friendly revisions to the acquisition procedure. Combined with the series of positive reforms undertaken by the Government in the last few months, this announcement of working in a time bound manner will accelerate placement of programmes to Indian defence industry," Mr Shukla added.

FICCI has been acting as the 'Voice of Indian Industry' during the deliberations leading to the finalisation of the DAP 2020. Several industry friendly features adopted in the new document have been through direct contributions of FICCI and its members. FICCI's recommendation for incorporating a price variation clause for contracts above 36 months irrespective of contract size has found acceptance and is a welcome step. In a major boost to the MSME sector, contracts for procurement cases under 100 Cr for Buy Indian and Make categories have been reserved for this sector.


The DAP has also included a new innovative procedure for leasing of platforms.  This method will provide a fillip where the short-term requirements exist or at times when there is a cash crunch.  It will also allow the services to use an equipment and see its efficacy and then decide on its purchase. 


Over the past few months, several important policies have been promulgated in the run up to the DAP 2020, including the notification of a negative list of Weapon Platforms ineligible for imports. Enhancement of IC content in all categories under DAP 2020 signals Government's intent and reaffirms the commitment to indigenous defence production.   


"Various measures to speed up the acquisition process, simplify trial methodology and industry friendly changes to commercial terms such as introduction of Price Variation Clause are welcome. This will lower the cost of acquisitions as the bidders will not have to factor for inflation in their bids. It is a win�win for both the ministry and the industry," said Mr Shukla.


The chapter on Strategic Partnership model with private sector approved by the Cabinet Committee on Security is retained. It signals government's intention of moving forward with the strategic partnership model with the private sector as announced and without any changes. 


Indian Defence Sector remains committed to the Prime Minister's vision of Atmanirbhar Bharat in the defence sector, with the private sector in defence manufacturing having matured to a point where it can compete for manufacturing large platforms.  As the Ministry of Defence buys platforms from the Indian private sector, they will become very competitive in the global market leading to India becoming a global manufacturing hub. DAP 2020 will provide an impetus to this development story.