Overview of Defence Procurement Manual 2025
The Defence Procurement Manual (DPM) 2025 marks a significant update to streamline and rationalize the Ministry of Defence’s (MoD) revenue procurement processes. This is crucial as the current financial year's revenue procurement is valued at ₹1 trillion.
Objectives and Features of DPM 2025
- Addresses concerns of defence firms regarding penalties, delays, and order stability.
- Promotes competitive self-reliance in the defence sector.
- Softens liquidity damages:
- Eliminates damages during the development phase.
- Imposes a minimal 0.1% post-prototype development phase.
- Caps damages at 5%, with a rise to 10% for severe delays.
- Guarantees order stability for up to five years, extendable to 10 years in certain cases.
- Includes a 15% upfront provision for repair, refit, and maintenance.
- Doubles the scope of limited tendering from ₹25 lakh to ₹50 lakh, with exceptions for higher limits.
- Enhances private sector participation by removing the need for a "no-objection certificate" from defence public-sector undertakings.
- Encourages innovation and indigenization through collaboration with institutions like IITs and IISc.
Empowerment and Accountability
- Empowers Competent Financial Authorities (CFAs) to make independent decisions:
- Allows CFAs to extend delivery periods in consultation with financial advisors.
- Permits CFAs to extend bid-opening dates without referring to financial advisors when participation is sparse.
- Introduces a collegial decision-making process to maintain checks and balances.
Challenges and the Way Forward
India's defence procurement needs urgent modernization to improve combat readiness:
- Capital acquisition processes need similar updates to overcome planning and procedural issues.
- Current procurement practices negatively impact combat readiness, as seen in the diverse aircraft types used by the Indian Air Force.
DPM 2025 is a positive step, but a comprehensive procurement ecosystem is essential given the increasing hostility in the neighborhood.
