Defence Ministry Unveils New Framework To Streamline Revenue Procurement
The Defence Ministry has introduced the Defence Procurement Manual (DPM) 2025,
a long-awaited reform aimed at overhauling the revenue procurement system of
the armed forces.
This framework will govern the acquisition of goods and
services under the revenue head, which covers operational and sustenance
requirements worth nearly ₹1 lakh crore in the current fiscal year.
The new manual is designed to ensure faster decision-making, timely resource
availability, and improved readiness of the Indian armed forces. By fostering
greater jointness among the Army, Navy, and Air Force, the document is
expected to streamline procedures while cutting down delays that often affect
operational preparedness.
Approved by Defence Minister Rajnath Singh, DPM 2025 places an explicit
emphasis on self-reliance and innovation in line with the government’s
Aatmanirbhar Bharat push in defence manufacturing and technology. For the
first time, a dedicated chapter has been added to promote indigenisation and
collaboration with industry and academia for the development of spares,
equipment, and in-house designs.
Ease of doing business has been strengthened through industry-friendly
relaxations in contractual provisions. Key changes include eliminating
liquidated damages (LD) during the prototype development phase, lowering the
minimum levy to 0.1% after development, and capping maximum penalties at
5%—with 10% only in extreme cases of delay. These measures will incentivise
genuine suppliers and reduce the burden of punitive measures.
The document also introduces assured guarantee of orders in specified
quantities, a critical step to encourage private sector and MSME participation
by offering a measure of procurement assurance. This aligns procurement with
long-term industry capacity building and sustained supply commitments.
Another major reform lies in the enhanced use of digital technologies in
procurement, ensuring transparency, fairness, and accountability. DPM 2025 has
been harmonised with updated provisions of the Finance Ministry’s general
procurement norms, ensuring consistency with broader government practices
while retaining armed forces–specific flexibility.
The rationalisation of procurement also empowers local authorities with
greater decision-making powers, thereby decentralising approvals and cutting
down bureaucratic bottlenecks. This will result in quicker payments to
suppliers, a long-standing concern of vendors working with the defence sector.
By updating the earlier DPM 2009 after more than 15 years, the new framework
reflects the evolving nature of modern warfare and the demand for agility in
procurement. It balances accountability with efficiency while ensuring that
both operational readiness and domestic industrial growth are served in
tandem.
DPM 2025 is expected to mark a paradigm shift in revenue procurement,
positioning India’s defence forces to meet emerging threats with greater
efficiency while simultaneously strengthening the indigenous defence
industrial base.
| Feature / Aspect | DPM 2009 | DPM 2025 |
|---|---|---|
| Year Introduced | 2009 | 2025 |
| Procurement Value Covered | Revenue procurement, ~₹40,000–50,000 crore then | Revenue procurement, ~₹1 lakh crore in FY25 |
| Approach | Paper-driven, centralised approvals | Digitally enabled, decentralised decision-making |
| Industry Engagement | Limited focus on indigenisation | Dedicated chapter on indigenisation & innovation |
| Penalties (Liquidated Damages) | Higher, rigid penalty norms; discouraging for vendors | Relaxed system: 0% during development, 0.1% minimum post-development, 5% cap, 10% only for extreme delays |
| Ease of Doing Business | Vendor difficulties with delays, rigid contracts | Faster payments, relaxed contracts, assured order quantities |
| Use of Technology | Minimal digital interface, mostly manual | Strong emphasis on transparency, technology use |
| Decision Authority | Highly centralised | Local procurement authorities empowered for approvals & payments |
| Alignment with Finance Ministry Procurement Rules | Partially aligned, outdated with today’s norms | Fully aligned with latest Finance Ministry guidelines |
| Support for MSMEs & Start-ups | No targeted focus | Explicit provisions to support MSMEs, start-ups, academia partnerships |
| Military Preparedness Impact | Slow procurement, delays in operational readiness | Expedited decision-making, quicker availability of resources |
Based On PTI Report
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