NextFin news, India's Defence Minister Rajnath Singh approved the Defence Procurement Manual (DPM) 2025 on Sunday in New Delhi, introducing a new framework to streamline, simplify, and rationalize the revenue procurement process within the Ministry of Defence.
The updated manual replaces the 2009 edition and is designed to meet the evolving needs of the Armed Forces in modern warfare. It governs revenue procurements valued at approximately ₹1 lakh crore for the current fiscal year and aligns with the latest procurement norms of the Ministry of Finance.
The DPM 2025 emphasizes promoting self-reliance (Aatmanirbharta) in defence manufacturing by encouraging participation from private industry, micro, small and medium enterprises (MSMEs), start-ups, academia, and Defence Public Sector Undertakings (DPSUs). It includes a new chapter focused on innovation and indigenization, facilitating collaboration with institutions such as the Indian Institutes of Technology (IITs) and the Indian Institute of Science (IISc) for design and development of defence items and spares.
To incentivize suppliers, the manual limits liquidated damages (LD) to a maximum of 5%, with a possible increase to 10% only in cases of extreme delays. No LD will be levied during prototype development, encouraging genuine efforts. Additionally, suppliers are assured guaranteed orders for up to five years, extendable under special circumstances, along with technical support from the Services.
The manual empowers Competent Financial Authorities (CFAs) at the field level with greater autonomy to extend delivery deadlines, adjust bid opening dates, and ensure timely payments to suppliers, thereby reducing bureaucratic delays. It also reinforces collegiate decision-making to improve efficiency.
Other provisions include a 15% growth allowance for complex repair and maintenance work on aerial and naval platforms to reduce downtime, permission for limited tendering up to ₹50 lakh, and streamlined procurement under Government-to-Government agreements for high-value acquisitions.
The DPM 2025 also addresses concerns about fair competition by removing the requirement for No Objection Certificates from DPSUs before open bidding, ensuring transparent and competitive tendering processes.
Defence Minister Rajnath Singh stated that the new manual will ensure the timely availability of critical resources, foster jointness among the three Services, and maintain the highest levels of military preparedness through expeditious decision-making.
These reforms aim to strengthen India's defence manufacturing ecosystem, enhance ease of doing business, and support the Armed Forces' operational and sustenance needs effectively.
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