Defence Acquisition Procedure (DAP) 2020

APR 26

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Why in news?

  • In an effort to further promote ‘Make in India’ and ‘Aatmanirbharta’ in defence and enable the ease of doing business, the Defence Acquisition Procedure (DAP) 2020 has been amended based on the approvals accorded by the Defence Acquisition Council (DAC).

About DAP 2020:

  • The new policy superseded the Defence Procurement Procedure of 2016.
  • The DAP contains policies and procedures for procurement and acquisition from the capital budget of the MoD in order to modernise the Armed Forces including the Coast Guard.

Highlights of the new policy:

  • Reservations for Indigenous firms:
    • The policy reserves several procurement categories for indigenous firms.
    • DAP 2020 defines an “Indian vendor” as a company that is owned and controlled by resident Indian citizens, with foreign direct investment (FDI) not more than 49 per cent.
  • New Buy (Global–Manufacture in India) category:
    • This stipulates indigenisation of at least 50 per cent of the overall contract value of a foreign purchase bought with the intention of subsequently building it in India with technology transfer.
  • Greater indigenous content:
    • It promotes greater indigenous content in arms and equipment of the military procures, including equipment manufactured in India under licence.
    • In most acquisition categories, DAP-2020 stipulates 10 per cent higher indigenisation than DPP 2016.
  • Import embargo list:
    • The “import embargo list” of 101 items that the government promulgated last month has been specifically incorporated into DAP 2020.
    • An embargo is a government order that restricts commerce with a specified country or the exchange of specific goods.
  • Offset liability:
    • The government has decided not to have an offset clause in procurement of defence equipment if the deal is done through inter-government agreement (IGA), government-to-government or an ab initio single vendor.
    • The offset clause requires a foreign vendor to invest a part of the contract value in India.

Recent Amendments:

  • Going forward all modernisation requirements of the Defence Services and Indian Coast Guard are to be indigenously sourced irrespective of the nature of procurement.
  • Import of defence equipment/sourcing from Foreign Industry of capital acquisitions should only be an exception and undertaken with specific approval of DAC/Raksha Mantri.
  • To enable the budding startup talent pool of the country, the procurement process under the iDEX procedure of DAP 2020 has been simplified.

PRACTICE QUESTION:

With reference to ‘Defence Acquisition Procedure (DAP) 2020’, consider the following statements:

1. It promotes greater indigenous content in arms and equipment of the military procures

2. DAP 2020 provides for a mandatory 50% ‘offset clause’ in procurement of defence equipment if the deal is done through inter-government agreement

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Answer