Defence
Explained: From Softer Penalties To Faster Clearances — What’s New In Defence Procurement Manual 2025
A full-scale model of AMCA unveiled at Aero India 2025 (MoD/Twitter)
Defence Minister Rajnath Singh on Sunday (14 September) approved the Defence Procurement Manual (DPM) 2025, a revised document that aims to streamline, simplify, enable and rationalise the revenue procurement process in the Ministry of Defence.
The new manual, coming after more than a decade since the last version in 2009, is expected to cater to the emerging requirements of the Armed Forces in the era of modern warfare.
Focus on Aatmanirbhar Bharat and Innovation
The DPM 2025 seeks to expand the role of the domestic industry, including private players, MSMEs, and start-ups, alongside traditional Defence Public Sector Undertakings (DPSUs).
A new chapter has been added to promote innovation and indigenisation, encouraging collaboration with institutions such as IITs, IISc, and universities to design and develop defence items and spares.
Industry-Friendly Measures
The manual addresses concerns of suppliers by easing financial pressure and relaxing penalties. Key features include:
No liquidity damages during the development phase.
Minimal LD of 0.1 per cent will be levied post development of the prototype.
Capped damages at 5 per cent, rising to 10 per cent only for extreme delays.
Guaranteed orders for up to five years, extendable to ten in some special cases.
Handholding support from Services, including sharing technical expertise and equipment.
Faster Decision-Making at Lower Levels
The manual empowers Competent Financial Authorities (CFAs) at field/lower formations to take decisions that previously bounced between levels—speeding up procurement, cutting file movement, and ensuring timely payment to suppliers.
CFAs may grant extensions of delivery periods irrespective of the quantum of delay in consultation with their financial advisors, without approaching higher authorities.
Maintenance, Repairs, and Special Procurement
To reduce downtime of critical equipment, the manual allows a 15 per cent upfront growth provision for repairs, refits, and maintenance of naval and aerial platforms.
It also expands the scope of limited tendering up to Rs 50 lakh, and beyond that in exceptional circumstances.
In case of proprietary items, provision for procurement on Propriety Article Certificate basis has been kept subject to parallel efforts for exploring the market for identification of alternative sources.
To facilitate procurements based on Government-to-Government agreements, adequate provision has been included to streamline the procedure being followed in such special arrangements adopted for high value procurements.
Competitive Bidding Without NOCs
In a significant change, the requirement of obtaining a No Objection Certificate from DPSUs before open bidding has been removed.
All tenders will now be awarded purely on competitive basis, addressing long-standing concerns about a level playing field between private and public players.
Why It Matters
The Defence Ministry believes DPM 2025 will not only ensure timely availability of resources but also enhance jointness among the three Services and improve preparedness for modern warfare.
According to a statement by the Defence Minister's office, the budget for revenue procurement in BE 2025 is about Rs 100,000 crore.
"In a major thrust to aatmanirbharta, the Manual will expedite revenue procurement for the Services, enable indian industry, including start ups and MSMEs, with simple processes, promote innovation and support enterprise," the statement said.
"Working capital issues faced by industries have been eased by providing supportive financing options and relaxing unecessary penalties," it added.
