New procurement manual to bolster self-reliance in defence

The Ministry of Defence (MoD) on Sunday revised the Defence Procurement Manual, which lays down rules and procedures for sourcing new ammunition, vehicles, small arms and consumables such as spares and fuel for existing ships, aircraft and tanks. The sector has been further opened to private industry.

Spending on these items falls under the ‘revenue’ section of the MoD budget. For this fiscal, Rs 1,00,000 crore has been allocated through the revenue route. This is separate from Rs 1,80,000 crore under the ‘capital’ section, meant for high-value acquisitions such as aircraft, ships, engines, artillery guns, specialised vehicles, missiles and drones.

Defence Minister Rajnath Singh approved the new manual. In a post on X, he said, “In a major thrust to aatmanirbharta, the manual will expedite revenue procurement for the services.”

To facilitate procurements based on government-to-government agreements, the manual introduces provisions to streamline procedures for high-value purchases. It allows tenders to be awarded purely on a competitive basis, without being tied to past supplies from defence PSUs. Spares for Russian-origin equipment, long dominated by public sector companies, have now been opened up to private players.

A new provision offers support to industry through ‘handholding’ by the Services, including sharing technical know-how on existing equipment to help private firms produce spares and systems.

“The requirement of obtaining a ‘no objection certificate’ from defence PSUs before open bidding has been dispensed with, and tenders will be awarded purely on competitive basis,” the MoD said.

The revised manual also permits a 15 per cent increase in work and expenditure for repair, refit and maintenance of aircraft and ships. A new chapter has been included to promote self-reliance through innovation and indigenisation. This will encourage the design and development of defence items and spares in collaboration with public and private industry, academia, IITs, IISc and other institutions.

It is also aimed at enabling Indian industry, including startups and MSMEs, to adopt simpler processes, promote innovation and expand enterprise. Industry concerns over working capital have been addressed by providing supportive financing options and removing unnecessary penalties. “The concerns of individuals and industry wanting to venture into defence manufacturing have been addressed by relaxing many provisions of development contracts,” the MoD said.