India’s Defence Procurement Manual 2025 Brings Fair Play
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The revised document to expedite revenue procurement for the Services, enable the domestic industry with simple processes, promote innovation & support enterprise
Working capital issues faced by industries were eased by providing supportive financing options & relaxing unnecessary penalties
R&D by industry, academia & DPSUs to get a boost through several enabling provisions
Posted On: 14 SEP 2025 6:39 PM by PIB Delhi
Raksha Mantri Shri Rajnath Singh has approved the Defence Procurement Manual (DPM) 2025 to further streamline, simplify, enable & rationalise the revenue procurement process in the Ministry of Defence and cater to the emerging requirements of the Armed Forces in the era of modern warfare. The new manual is aimed at achieving self-reliance in fulfilling the needs of the Armed Forces under Revenue Head (Operations & Sustenance Segment). It will foster jointness among the three Services and help in maintaining the highest level of military preparedness through expeditious decision-making. It will ensure the timely availability of requisite resources to the Armed Forces at an appropriate cost.
The DPM 2025 replaces the old manual from 2009. That means rules are being updated after 16 years, which is a major shift. Revenue procurement deals with supplies, repairs, spares, and maintenance, while capital procurement is for new, large equipment like fighter jets or warships. This manual focuses on the revenue side. By promoting jointness, the Army, Navy, and Air Force can share resources and reduce costs.
Ease of doing business has been further strengthened in the document, which aims to boost Aatmanirbharta in defence manufacturing & technology. The objective is to utilise the potential, expertise, and capability of the domestic market in the defence sector by ensuring active participation of private players, MSMEs, start-ups, etc., along with the well-established Defence Public Sector Undertakings (DPSUs).
MSMEs and start-ups often face challenges such as financing gaps and heavy penalties for small delays. The manual seeks to ease those pressures. The focus on Aatmanirbharta, or self-reliance, helps India cut down on imports. This trend has already been supported by initiatives like iDEX (Innovation for Defence Excellence), which brings in start-ups to innovate in defence technology.
Procurement of goods and services by the Defence Services and of other organisations under the Ministry of Defence is regulated by DPM, which was last promulgated in 2009. This Manual was under revision in the Ministry in consultation with the Armed Forces and other stakeholders.
Since 2009, technology and threats have changed rapidly, including drones, AI, and cyber warfare. Updating the rules makes procurement faster and more relevant. The revision involved consultations with the Services, private industry, academia, and DPSUs, ensuring the manual balances both military needs and industry challenges.
The DPM lays down the guiding principles and provisions for all revenue procurements in the Ministry valued at around Rs 1 lakh crore for the current Financial Year. There has been a pressing need for this manual to be aligned with the latest developments in the field of public procurement, duly ensuring the use of technology in procurement with utmost fairness, transparency, and accountability.
This huge sum of Rs 1 lakh crore shows the scale of operational procurement. Any delays can affect readiness. Public procurement rules have also moved towards e-procurement and digital systems, making processes more transparent. DPM 2025 is now aligned with those broader finance rules.
The revised document has been aligned with the updated provisions of the Manual for Procurement of Goods issued by the Ministry of Finance. As a major thrust to Aatmanirbhar Bharat, a new chapter has been included to promote self-reliance through innovation and indigenisation. This will help in the indigenisation of defence items/spares through in-house designing and development in collaboration with public/private industries, academia, IITs, IISc & other private institutions of repute by utilising the talent of young bright minds.
By involving IITs and IISc, India is leveraging its best technical minds. Indigenisation reduces dependence on foreign suppliers, protects national security in crises, and creates local jobs.
The concerns of the individuals/industry who want to venture into this sector have been addressed by relaxing many provisions of developments contracts. Provision has been introduced not to levy Liquidity Damages (LD) during the development phase. Minimal LD @ 0.1% will be levied post-development of the prototype. The maximum LD to be levied has been lowered to 5%, and in case of inordinate delays only, the maximum LD will be 10%. This will result in incentivising those suppliers who genuinely try to meet the deadline but make the supplies with little delay.
Relaxing LDs makes it easier for new suppliers and start-ups to join, since innovation often faces risks. The focus is on encouraging genuine efforts rather than punishing small delays.
In addition, a provision has been made to provide an assured guarantee of orders in terms of quantity, up to five years and beyond that, up to another five years in special circumstances. Another provision has been introduced to provide requisite support through handholding by the Services in terms of sharing of technical know-how, existing equipment, etc., to ensure successful development.
This assurance helps the industry plan better. If companies know they have confirmed orders, they can invest confidently. The Services are also helping with technical know-how, which means smaller players can succeed more easily.
The revised document will empower the Competent Financial Authorities at the field level/lower formations, expedite decision making, avoid movement of files between lower and higher levels and ensure timely payment to the suppliers. Competent Financial Authorities (CFAs) have been empowered to decide in consultation with their financial advisors in respect of granting an extension in the delivery period, irrespective of the quantum of delay, without approaching higher authorities.
This cuts bureaucracy. Suppliers often complain about late payments, which hurt small firms. Allowing CFAs to grant delivery extensions without higher approval gives more flexibility in practical situations.
The concept of collegiate decision-making has been further strengthened in line with existing practice being followed in the case of the acquisition of capital assets. The CFAs have now been delegated the power to increase bid opening dates up to a certain limit in case there is a lack of participation, without referring the matter to their Financial Advisors to increase participation.
This flexibility ensures more bidders can join. Collegiate decision-making, which uses group oversight, adds transparency and reduces risks of bias.
In view of the complexity of repair/refit/maintenance of various aerial and naval platforms, an upfront provision of 15% in growth of work has been extended for all such activities to reduce the downtime of equipment and ensure its availability for operations with minimum delay. To fulfil the need of those goods which are specialised in nature and available with limited sources as per the new provisions, Limited Tendering can be resorted to for a value 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.
Allowing a 15% growth margin in repair/refit contracts helps respond to sudden needs, keeping equipment ready. Limited tendering and proprietary items rules give clarity while still pushing for competition where possible.
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. The issues related to a level playing field between various players have been addressed by incorporating suitable provisions in the revised manual. The requirement of obtaining a No Objection Certificate from some DPSUs before going for open bidding has been dispensed with, and tenders will be awarded purely on a competitive basis.
G2G deals, often for large foreign equipment, will now face fewer delays. Removing the need for DPSU “No Objection Certificates” allows private firms to compete fairly, creating a level playing field.
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