1. Context

 To ensure Self-reliance in defence manufacturing, to further promote 'Make in India' and 'Aatmanirbharta' in defence and enable Ease of Doing Business, Defence Acquisition Procedure (DAP) 2020 has been established.

2. About

The Defence Acquisition Procedure (DAP) 2020 was established 2020 as a potential catalyst for AtmaNirbhar Bharat Abhiyan in the sector of defence manufacturing.

3. Background

The Defence Procurement Procedure (DPP) was first initiated in 2002 to streamline the procurement of military hardware for the Armed Forces in a systematic and time-bound manner. 

It was reformed in 2016, putting an emphasis on indigenously designed, developed, and manufactured weapon systems, and eventually moved towards self-reliance in the field of defence manufacturing

4. Advantages of Defence Acquisition Procedure

• The DAP eases the procurement and acquisition of upgraded technology, products, and services for the Tri-Services and other allied defence services.
• Through its many improved features, it hopes to boost the Make in India efforts in the field– especially to MSME.
• It also establishes a greater degree of public accountability, transparency, fair competition, and a level playing field in the sector

5. Purpose

•   To encourage wider participation and a broad base indigenous defence manufacturing sector in the country, the total order quantities in acquisition cases are to be split between shortlisted vendors, wherever viable.
•  Further, the other technically qualified bidders who have not been awarded a contract will be issued a certificate by the Services indicating that the product has been successfully trial evaluated, to facilitate vendors to explore other markets
•  To create an ecosystem that fosters innovation and encourages technology development in Defence by engaging R&D institutes, academia, industries, startups, and individual innovators
• To enable the budding startup talent pool of the country to contribute towards the twin mantras of self-sufficiency and indigenization, the procurement process under the iDEX procedure of DAP 2020 has been simplified. 
•  As advised by the Ministry of Finance and to reduce the financial burden on the Indian Defence Industry whilst maintaining financial safeguards, the requirement of Integrity Pact Bank Guarantee (IPBG) has been dispensed with.

5. Key Features

5.1.Reservation in Categories for Indian vendors: With FDI in defence manufacturing permitted up to 100% (up to 74% under the Automatic route and beyond 74% under the Government route), there is an opportunity for the domestic industry to increase production in the sector.

5.2.Enhancement of Indigenous Content: Each of the categories has seen an increase in the procurement and acquisition of indigenously manufactured products and technologies in the sector. This would also be facilitated by Inter-Governmental Agreements (IGAs) that would help import substitution of defence products, technologies, and spare parts.

5.3.Rationalization of Trial and Testing Procedures

The Innovations for Defense Excellence (iDEX) was set up for incubation and infrastructure support to startup enterprises in the sector.

It mandates that the entire or part of the manufacturing procedure for equipment / spare parts / Maintenance or Repair must be conducted by the Indian subsidiary of foreign investors. 

5.4.Ease of Doing Business

Easier and faster facilitation of operations and decision making through the Project Management Unit; Preference is given to manufacturers producing complete defence products, rather than parts; Increase of multipliers in the offset policy concerning the direct purchase, TOTs, and FDI to incentivize the discharge of offsets; Easing of trials and testing such as avoidance of duplicate trials, modification of the scope of trials, removing repeat inspections, etc.

Source: pib