Defence Acquisition Procedure- 2020

• 01 Oct 2020

• On 28^th September, 2020, the Defence Ministry unveiled the Defence Acquisition Procedure (DAP) – 2020.
• The first Defence Procurement Procedure (DPP) was promulgated in the year 2002.
• It has since been revised periodically to provide impetus to the growing domestic industry and achieve enhanced self-reliance in defence manufacturing.
• The Defence Ministry had approved constitution of Main Review Committee under Chairmanship of DG (Acquisition) Shri Apurva Chandra in August, 2019 for preparation of DAP-2020.

Salient features of DAP -2020

Reservation in Categories for Indian Vendors

• The policy reserves several procurement categories for indigenous firms.
• DAP 2020 defines an “Indian vendor” as a company that is owned and controlled by resident Indian citizens, with foreign direct investment (FDI) not more than 49 per cent.

Enhancement of Indigenous Content

• It promotes greater indigenous content in arms and equipment of the military procures, including equipment manufactured in India under licence.
• In most acquisition categories, DAP-2020 stipulates 10 percent higher indigenisation than DPP 2016.

New Buy (Global–Manufacture in India) Category

• This stipulates indigenisation of at least 50 percent of the overall contract value of a foreign purchase bought with the intention of subsequently building it in India with technology transfer.

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.

Design & Development

• A separate dedicated chapter has been incorporated for acquisition of systems Designed and Developed by Defence Research and Development Organisation(DRDO), Defence Public Sector Undertakings (DPSUs) and Ordnance Factory Board (OFB).

Import Embargo List

• The import embargo list of 101 items that the government promulgated last month has been specifically incorporated into DAP 2020. (An embargo is a government order that restricts commerce with a specified country or the exchange of specific goods.)

Offset Liability

• The government has decided to remove the offset clause if the deal is done through inter-government agreement (IGA), government-to-government or an ab initio single vendor.
• The offset clause requires a foreign vendor to invest a part of the contract value in India.

Significance

• Boost to Atmanirbhar Bharat & Maker in India Initiative: Abhiy DAP 2020 has been aligned with the government’s vision of the Atmanirbhar Bharat and empowering Indian domestic industry through Make in India initiative with the ultimate aim of turning India into a global manufacturing hub.