Defence Ministry amends Defence Acquisition Procedure 2020 to promote 'Make in India'

In a bid to promote the ‘Aatmanirbharta’ vision of self-reliance in India’s defence sector and to facilitate ‘Make in India,’ the Ministry of Defence amended the Defence Acquisition Procedure 2020. In the latest announcement, the Defence Ministry stated that from now onwards, all the modernisation requirements of the three armies and the Indian Coast Guard will be indigenously sourced irrespective of the nature of procurement.

The Defence Ministry also announced that Imports of defence equipment sourced from foreign industry for capital acquisitions should be declined and should only be done with the approval of the Defence Minister. Another major highlight of the amended pact is that the requirement of the Integrity Pact Bank Guarantee has been waived to reduce the financial burden on the domestic industry.

Defence Acquisition Procedure 2020 amended to promote 'Aatmanirbharta'

“The necessity of an Integrity Pact Bank Guarantee (IPBG) has been waived, as advised by the Ministry of Finance, in order to ease the financial burden on the Indian Defense Industry while retaining financial protections. Instead, for all purchase instances with an Acceptance of Necessity (AoN) costing more than Rs 100 crore, an Earnest Money Deposit (EMD) will be used as a bid security,” ministry revealed in a press statement.

“The EMD will be valid for the selected vendor until contracts are signed, after which, it will be returned to the remaining vendors. Integrity Pact shall be covered by the Performance Cum Warranty Bank Guarantee after the contract is completed (PWBG) Furthermore, EMD is not required from Micro and Small Enterprises under current Government of India legislation (MSEs),” the statement read further.

Besides, the total order quantities in acquisition situations will be distributed between shortlisted vendors to encourage broader involvement and a broad base indigenous defence manufacturing sector in the country. In addition, the services will offer a certificate to other technically qualified bidders who have not been awarded a contract, confirming that the product has been successfully trial-tested, allowing vendors to explore other markets.

Even the procurement process under DAP 2020's iDEX method has been simplified to allow the country's expanding startup talent pool to contribute to the twin principles of self-sufficiency and indigenization.