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Defence Acquisition Procedure 2020 

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Defence Acquisition Procedure 2020The Defence Acquisition Procedure 2020 (DAP 2020) came into effect from October 01, 2020. It was released by Defence Minister Rajnath Singh.

i.DAP 2020 will replace the existing Defence Procurement Procedure (DPP) 2016. 

ii.It will remain in force till 30th September, 2025.

iii.The First Defence Procurement Procedure (DPP) was promulgated in 2002.

Main Review Committee: 

The Main Review Committee was constituted under Chairmanship of Director General (Acquisition), Apurva Chandra in August, 2019 for the preparation of DAP 2020.

What is Defence Acquisition Procedure?

A Defence Acquisition Procedure is a set of processes that should be followed by Government Entities while procuring Defence items.

Vision of DAP 2020:

The Main Aims of DAP 2020 are:

  • Aligning Acquisition Policies with Atmanirbhar Bharat (self-reliant India).
  • Empowering Indian Defence Industry through Make in India.
  • Making India a Global Manufacturing Hub.

i.The Emphasis of DAP 2020 has been on “Simplification, Delegation, Reduced Timelines”, promotion of Indigenous Defence Industries to attain self-reliance in Defence and reduce the import dependency of Defence Materials.

ii.DAP 2020 also highlights the change in Government’s Policy from ‘Procurement’ to ‘Acquisition’.

Major Reforms:

Project Management Units (PMU):

i.Project Management Units (PMU) to be constituted for Time Bound Defence Procurement Process and Faster Decision Making.

ii.It will obtain advisory and consultancy support to streamline the Acquisition process. 

Setting up of Technology Assessment Cell:

Technology Assessment Cell will bring out technological readiness of the Industry from time to time.

Simplification of Trial Procedure:

i.Since the Trial Procedures are the longest part of the procurement process and have caused major delays in the process.

ii.In Order to arrest delays the procedure has been restricted to physical evaluation of core operational parameters. 

iii.Certificate of Conformance (CoC) from NABL (National Accreditation Board for Testing and Calibration Laboratories)/Internationally accredited and government designated labs will be accepted.

iv.It has a provision of Rectifying the shortcoming during the trial phase.

Two New Provisions in DAP 2020:

Defence Acquisition Procedure 2020 introduced two new provisions for procurement

i.Procurement through Defence Research and Development Organisation (DRDO) or Defence Public Sector Undertakings (DPSUs).

ii.Fast Capital Acquisition of Essential items by the Armed Forces.

Revision of Offset Clause:

i.Under the DAP 2020, the Offset clause has been removed for Inter-Governmental Agreements (IGA), Government to Government Deals (G2G) and single-vendor deals. However, Competitive multi-vendor procurement cases will still have offsets.

ii.Preference will be given for manufacture of complete defence products, and 

iii.India adopted the Offset Policy in 2015 for defence capital purchase above INR 300 through imports. 

Reasons for revision of Offset Clause:

i.According to a report tabled by Comptroller and Auditor General (CAG) of India in Parliament, offset contracts have failed to bring high-end military technology into the country. 

ii.The report also cited the INR 59, 000-crore Rafale Deal, stating that Dassault Aviation and weapons-supplier MBDA have not confirmed the transfer of technology to Defence Research and Development Organisation (DRDO), which was part of the offset clause.

iii.The removal of the offset clause will also increase the savings as Foreign Military Contractors increase prices by 10% to cater to their offset commitments.

Offset Clause 

It is a commitment made by international players to boost India’s domestic defence industry, if India is buying defence equipment from it. 

Leasing:

i.DAP 2020 for the first time has introduced the concept of Leasing of Defence Equipments.

ii.Leasing will save huge capital outlays with periodical rental payments. 

Leasing of Russian Submarines:

i.In March, 2019 India signed a USD 3 Billion contract for lease of Akula-1 class nuclear-powered attack submarine from Russia for a period of 10 years.

ii.It also operates a Russian nuclear-powered attack Submarine (SSN) on lease.

Three kinds of Acquisitions:

i.DAP envisages three kinds of acquisition –  

  • 10 years Integrated Capability Development Plan (ICDP)
  • Five years Defence Capital Acquisition Plan (DCAP)
  • Two years Annual Acquisition Plan (AAP)

ii.It lays down the planning process at three levels.

Category of Buy (Global – Manufacture in India):

i.DAP 2020 has incorporated the new category of Buy (Global-Manufacture in India)

ii.It includes manufacture of entire or part of equipment, spare, assembly, Maintenance, Repair and Overhaul (MRO) through the global manufacturer’s subsidy in India.  

Recently, Static HF Trans-receiver sets and Smart Anti Airfield Weapon (SAAW) were granted approval under the Buy IDDM (Indian Indigenously Designed Developed and Manufactured) category. 

Acceptance of Necessity (AoN):

To reduce time for procurement Single Stage Accord of Acceptance of Necessity (AoN) in all cases upto INR 500 crores has been introduced. 

Reservation in Categories for Indian Vendors:

Categories like Buy IDDM, production agency in Design & Development will be reserved for Indian vendors whose Foreign Direct Investment (FDI) is not more than 49%.

Enhancement of Indigenous Content:

Category DPP 2016 DAP 2020
Buy (Indian-IDDM) Minimum 40% Minimum 50%
Buy (Indian) Minimum 40% Indigenous Design (Minimum – 50%), Or Minimum 60%
Buy & Make (Indian) Minimum 50% of Make Minimum 50% of Make
Buy (Global Manufacture in India)               – Minimum of 50% of Buy Plus Make
Buy (Global) Minimum for Indian vendors

Conclusion:

i.According to a report by Stockholm International Peace Research Institute (SIPRI), India is the second largest importer of Defence Equipments.

ii.India has accounted for 9.2% of Total Global Arms Imports during the period 2015-2019.

iii.The Government of India is taking several steps to reduce the import dependency.

iv.The DAP 2020 highlights the vision of the Government to boost Domestic Defence Manufacturing Units, and also to make it an attractive market for investment from Global Manufacturers.