India's Defence Acquisition Procedure (DAP) 2026 marks a pivotal shift towards technological sovereignty in defence manufacturing. Released earlier this week by the Ministry of Defence (MoD) for stakeholder feedback until 3 March, the policy prioritises Indian ownership of intellectual property (IP), source code, critical design data, and upgrade authority, wrote By Rajiv Roy-Chaudhury in ET News web portal.

This approach aims to transition from mere assembly under licence to full control over military platforms, reducing long-standing dependencies on foreign suppliers.

The policy emerges amid India's accelerating push for self-reliance. Historically, the nation has imported most of its high-end defence equipment, with imports accounting for over 60% of procurement budgets in the early 2010s. Initiatives like 'Make in India' have spurred growth, but critics argue they delivered manufacturing without design mastery. DAP 2026 addresses this by redefining success as 'Owned by India', not just 'Made in India'.

Central to this is the resistance to equating foreign original equipment manufacturers' (OEMs) Indian subsidiaries with domestic firms. Indian vendors must retain majority ownership and control to qualify for preferential bids. This stance, long advocated by domestic industry bodies like the Society of Indian Defence Manufacturers (SIDM), safeguards against foreign dominance in key contracts.

Licence production has been a cornerstone of modernisation, yielding assets such as Scorpene-class submarines, Sukhoi Su-30MKI fighters, T-90 tanks, and BAE Systems Hawk trainers. Yet these deals often withhold core technologies. The C-295 transport aircraft programme, partnering Airbus with Tata Advanced Systems Limited (TASL), exemplifies this: manufacturing will occur in India, but design rights for modifications remain with Airbus.

Negotiations for Hindustan Aeronautics Limited (HAL) to produce GE's F414 engines for the Light Combat Aircraft (LCA) TEJAS MK-2 and Advanced Medium Combat Aircraft (AMCA) MK-I highlight persistent hurdles.

Despite offers of 80% technology transfer, sensitive 'hot-section' technologies were excluded, stalling talks since 2023. Such exclusions perpetuate vulnerabilities in sustainment and upgrades.

DAP 2026 counters this through a robust Indigenous Content (IC) framework, resetting the faltering offsets policy. Offsets, meant to deliver technology transfers, have underperformed; from March 2021 to March 2025, only one contract materialised amid diluted thresholds and exemptions for government-to-government (G2G) deals. The new policy embeds localisation directly into procurement contracts, mandating IC in 'Buy (Global)' categories without relying on post-contract offsets.

IC thresholds rise from 50% to 60%, phased in over programme lifecycles. Parts made in India, exported for processing, and reimported now count towards compliance. This flexibility addresses challenges in joint ventures, where programmes like TEJAS MK-I and INS Vikrant exceeded targets through indigenous efforts, but niche tech imports lag.

Service headquarters retain discretion to lower IC for specialised equipment, though rarely invoked. Tensions persist: industry seeks leniency, while Chief of Defence Staff General Anil Chauhan has chided firms for over-promising on indigenisation. DAP 2026 balances ambition with pragmatism, fostering deeper technology absorption.

Global collaborations remain vital, given the complexity of modern platforms. Successes like the BrahMos supersonic cruise missile with Russia and Barak 8 medium-range surface-to-air missile (MR-SAM) with Israel demonstrate G2G efficacy. These yielded joint IP and export rights, bolstering India's strategic posture.

Recent strides include France's Safran partnering with DRDO's Gas Turbine Research Establishment (GTRE) for AMCA jet engines. Under G2G, this promises full technology transfer, IP ownership, and export freedoms—potentially transformative for India's aero-engine independence.

The India-UK electric naval engine project with Rolls-Royce, advanced during Prime Minister Keir Starmer's October 2025 visit, eyes a bilateral G2G pact. Rolls-Royce offers full transfer for AMCA engines, though current bans limit scope. DAP 2026 could lift such restrictions selectively, incentivising risk-sharing.

Facilities under G2G deals signal momentum: General Atomics assembling MQ-9B Predators locally, and Dassault building Rafale MRO and fuselage plants. These embed foreign investment while prioritising Indian control, aligning with the decade-end goal of a self-sustaining ecosystem.

Challenges loom large. Private sector capacity, supply chain resilience, and skilled manpower gaps hinder scale-up. DRDO's R&D must accelerate, complemented by private innovation under iDEX schemes. Testing infrastructure, from wind tunnels to hypersonic ranges, requires urgent investment.

Geopolitically, DAP 2026 positions India amid great-power competition. Reducing Russian reliance—now at 45% of inventory—via diversified partnerships with France, Israel, and the US counters sanctions risks. It also counters China's dominance in regional tech, where Beijing owns full IP stacks.

Export ambitions underpin the vision. BrahMos sales to the Philippines and Indonesia prove viability; DAP 2026's IP focus enables competitive offerings. By 2035, India targets $25 billion in exports, funding further R&D.

Implementation hinges on incentives: streamlined approvals, export credits, and multi-year funding. The Defence Corridors in Uttar Pradesh and Tamil Nadu must mature, integrating MSMEs into global chains.

Critics warn of overreach; rushed indigenisation risks capability gaps against agile adversaries. Yet DAP 2026's phased approach mitigates this, blending openness with safeguards.

This policy is a strategic wager on India's industrial base. If executed adeptly, it could elevate the nation from importer to exporter of advanced platforms, securing sovereignty in an interconnected world.

The writer is former strategy director, BAE Systems India