Defence Procurement Manual 2025

Why the Defence Procurement Manual 2025 Falls Short Despite Lofty Goals

₹1 lakh crore. That’s the scale of estimated revenue procurements mapped under the newly approved Defence Procurement Manual (DPM) 2025. For the first time since 2009, the manual has been revised, ostensibly to accelerate procurement processes, foster indigenous innovation, and modernize the role of domestic industry in defence manufacturing. It promises order guarantees up to five years, decentralization of decision-making, and faster payments to suppliers. But beneath these bold assertions lies an uncomfortable reality: the structural weaknesses that have long plagued India's defence procurement system remain largely unaddressed.

Institutional Architecture: A Long Overdue Reboot of Revenue Procurement

The Defence Procurement Manual governs revenue purchases, distinct from capital acquisitions, which are covered under the Defence Acquisition Procedure (DAP). The 2025 update aligns with Finance Ministry guidelines, integrating indigenisation and innovation as new focal areas and emphasizing partnerships among DPSUs (Defence Public Sector Undertakings), private firms, and premier research institutions like IITs and IISc. While this synergy with academia reflects a progressive step, the timeline for its implementation remains unclear.

Operationally, the manual promises decentralization, empowering field formations and local commands with greater autonomy to make procurement decisions. However, whether this autonomy extends meaningfully beyond symbolic measures is open to debate, given historically tight bureaucratic oversight by the Ministry of Defence. Additionally, indigenisation mechanisms under the manual are incentivized through longstanding programmes such as SRIJAN, but India’s dependency on foreign components for critical platforms remains a bottleneck.

Policy Depth: The Numbers Do Tell a Story, But Not All of It

India’s indigenous defence production reached a peak of ₹1,27,434 crore in FY 2023-24—a staggering increase of 174% compared to ₹46,429 crore in FY 2014-15. This growth is supported by a sharp rise in defence exports, which surged 30-fold in the last decade, from ₹686 crore in FY 2013-14 to ₹21,083 crore in FY 2023-24. Combined with a massive defence budget of ₹6.81 lakh crore for 2025-26, India’s manufacturing ecosystem appears ripe for further expansion under the DPM.

Yet, the fine print complicates the narrative. While policies like iDEX (Innovations for Defence Excellence) have fostered an innovation culture through startups, the bulk of indigenous production still revolves around licensed manufacturing, assembly, and system integration rather than full-cycle technological development. Moreover, critical gaps persist in areas like material science, chip technology, and jet propulsion systems—troubles that are notably absent from the manual's provisions.

Skepticism over Implementation: Is Centralization Still Looming?

The promise of decentralized procurement, a highlight of the manual, does not fully align with India’s bureaucratic institutional culture. Historically, the Ministry of Defence has exerted significant control over revenue procurement policy formulations and approvals, which contradicts the idea of field-driven decision-making. A similar attempt at decentralization under the DAP 2020 demonstrated limited success due to inadequate capacity-building at lower levels of decision-making hierarchy.

Further complicating matters is the manual's assurance of payment acceleration and vendor order security for five years. Procurement payment delays have long been a thorn in India's defence ecosystem, often exacerbated by cumbersome audit processes. Will the revised manual bypass these entrenched inefficiencies? That remains uncertain, as prior iterations have failed to resolve procedural bottlenecks for suppliers, particularly MSMEs.

Lessons from Israel’s Procurement Practices

An instructive comparison is Israel’s defence procurement model. While India stresses indigenisation, Israel’s approach prioritizes high-value-added technology development. The Israeli government directly funds critical R&D through long-term grants and steering committees that ensure both innovation and rapid deployment. Unlike India, where financial allocations often struggle to translate into measurable STEM advances, Israel has scaled its domestic ecosystem to deliver cutting-edge unmanned systems, such as the Heron TP drones.

India’s DPM 2025, though lofty in aims, remains a procedural manual rather than a transformative framework. For meaningful indigenisation, the government must emulate Israel’s model by coupling procurement with targeted R&D mechanisms backed by defined milestones. A generic "chapter on innovation" without operational clarity risks falling flat.

Forward-Looking Assessment: Metrics for Success or Failure

If DPM 2025 succeeds, the following markers will demonstrate its impact:

• A measurable reduction in procurement delays at field-command levels.
• A higher proportion of indigenously developed systems rather than assembled imports.
• An increase in high-tech exports that leverage complete product cycles.

However, several unresolved structural limitations could impede progress. The long-discussed issue of fragmented domestic supply chains, underfunded R&D, and limited coordination between the Defence Ministry and the Ministry of Science and Technology remains glaringly absent from the manual’s roadmap. In the absence of these, the document risks operating as an administrative patch rather than a strategic instrument.

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