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India updates defence procurement rules again

Janes Defence Budgets (JDB) forecasts strong real-term growth in India's military expenditure in the coming years. JDB forecasts that India will grow its expenditure on procurement from USD17.2 billion in 2022 to USD23.3 billion in 2030. (Janes Defence Budgets)

The Indian Ministry of Defence (MoD) has announced additional updates to its procurement regulations in line with ongoing efforts to simplify defence trade and spur local manufacturing.

The MoD said on 25 April that new changes to the Defence Acquisition Procedure (DAP) 2020 provide a commitment to local sourcing over imports; reduce the financial burden on Indian bidders; encourage wider industrial participation in research, development, and production; and accelerate equipment trials.

The MoD said the changes will “promote ‘Make in India' in defence and enable ease of doing business”. It added that a significant element of the updated DAC 2020 is the priority to procure from local sources unless a requirement to import is outlined by the MoD's principal procurement authority, the Defence Acquisition Council (DAC), which is headed by Defence Minister Rajnath Singh.

“Going forward, all modernisation [defence] requirements are to be indigenously sourced irrespective of the nature of procurement,” said the MoD. “[The] import of defence equipment, [and] sourcing from foreign industry [in] capital acquisitions, should only be an exception and undertaken with specific approval of the DAC.”

To “reduce the financial burden on India's defence industry” the MoD said it has discontinued a requirement for local firms to provide an integrity pact bank guarantee, which is intended to secure against corruption in procurement. Instead, the MoD will now require local companies to provide an ‘earnest money deposit', which will be returned to the bidder following selection.

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