Thursday, 18 Sep, 2025
The manual, which governs revenue procurements under the Operations and Sustenance segment, seeks to guarantee timely access to critical resources at optimal costs. Image Source: PTI
The 2025 update has been formulated in consultation with the Armed Forces and other stakeholders, and aligned with the Finance Ministry’s latest Manual for Procurement of Goods.
Defence Minister Rajnath Singh has cleared the Defence Procurement Manual (DPM) 2025, a key policy document designed to modernise and simplify the revenue procurement process of the Ministry of Defence (MoD). The updated framework is expected to address the evolving operational needs of the Armed Forces, enhance jointness among the three Services, and ensure faster decision-making to maintain high levels of military readiness.
The manual, which governs revenue procurements under the Operations and Sustenance segment, seeks to guarantee timely access to critical resources at optimal costs. It also reinforces the government’s push towards Aatmanirbharta (self-reliance) in defence by encouraging greater participation of domestic industry including private firms, MSMEs, start-ups, and established Defence Public Sector Undertakings (DPSUs). Ease of doing business has been further embedded in the document, with an emphasis on harnessing the capabilities of India’s defence manufacturing ecosystem. With procurement under the MoD valued at nearly ₹1 lakh crore for the current financial year, the revised DPM is expected to play a pivotal role in balancing efficiency with transparency, accountability, and fair competition.
The last version of the manual was issued in 2009. The 2025 update has been formulated in consultation with the Armed Forces and other stakeholders, and aligned with the Finance Ministry’s latest Manual for Procurement of Goods. Notably, the new edition introduces a dedicated chapter on innovation and indigenisation, providing a structured roadmap for in-house design and development of defence spares and equipment. This initiative will leverage partnerships with public and private industry, leading academic institutions such as IITs and IISc, and young innovators to accelerate India’s journey towards indigenous defence capability.
The new manual also introduces a long-term order assurance mechanism, allowing guaranteed procurement commitments for up to five years, extendable by another five years in exceptional cases. To support successful development, provisions have been made for the Armed Forces to provide handholding assistance including sharing technical know-how, existing equipment, and other necessary inputs with industry partners.
In a move aimed at improving efficiency, the revised framework delegates greater authority to Competent Financial Authorities (CFAs) at field and lower formation levels. This is expected to speed up decision-making, reduce unnecessary movement of files between different levels of command, and ensure timely payments to suppliers. Importantly, CFAs have now been empowered to grant extensions in delivery schedules, regardless of the duration of delay, in consultation with their financial advisors eliminating the need for higher-level approvals.
The recent update in the defence procurement process is expected to provide a significant boost to the defence production in the country. India’s defence manufacturing output has touched a record ₹1,50,590 crore in FY 2024-25, marking an 18 percent jump from the previous year’s ₹1.27 lakh crore and a striking 90 percent surge since FY 2019-20, when production stood at ₹79,071 crore. Defence Minister Rajnath Singh hailed the achievement as a testament to the country’s strengthening defence industrial base, crediting the Department of Defence Production, Defence Public Sector Undertakings (DPSUs), public manufacturers, and private industry for their role in driving growth. DPSUs and other public sector units accounted for around 77 percent of the total output, while the private sector contributed 23 percent, up from 21 percent in FY 2023-24. The figures underscore the rising influence of private players in India’s defence ecosystem.
India’s Defence production
Source: Department of Defence Production, Ministry of Defence
Officials attribute the sustained year-on-year growth in both segments- 16 percent for DPSUs and 28 percent for private firms in FY 2024-25 to sweeping policy reforms, improved ease of doing business, and a decade-long push for indigenisation. Strategic policies have been crucial in accelerating this progress, promoting private sector involvement, fostering technological innovation, and advancing the creation of sophisticated military platforms. The significant increase in the defence budget rising from ₹2.53 lakh crore in 2013-14 to ₹6.81 lakh crore in 2025-26 underscores the nation's unwavering commitment to bolstering its military infrastructure.
The government aims to nearly quadruple India's annual defence output to ₹3 lakh crore by 2028-2029, while more than doubling defence exports from the current ₹23,622 crore to ₹50,000 crore. India has transitioned from being heavily import-dependent to increasingly prioritising self-reliance and indigenous defence manufacturing. In a significant boost to exports, the country shipped a diverse range of products, including ammunition, arms, sub-systems, complete systems, and components to nearly 80 nations in the recently concluded financial year.
India’s Defence Exports
Source: Department of Defence Production, Ministry of Defence
The Department of Defence Production (DDP) and the Department of Military Affairs (DMA) have released five Positive Indigenisation Lists (PILs) covering a range of items, including LRUs, assemblies, sub-assemblies, sub-systems, spares, components, and high-end materials. These lists establish clear timelines for when procurement will be restricted to domestic manufacturers. As of February 2025, more than 3,000 of the over 5,500 listed items have been successfully indigenised. Notable technologies that have been developed domestically include artillery guns, assault rifles, corvettes, sonar systems, transport aircraft, light combat helicopters (LCHs), radars, wheeled armoured platforms, rockets, bombs, armoured command post vehicles, and armoured dozers.
According to the MoD, a series of policy reforms in recent years has strengthened the sector. Measures include simplifying industrial licensing procedures, removing certain components from licensing requirements, and extending licence validity periods. In the past fiscal year, the Standard Operating Procedure for export authorisation was also streamlined, with new provisions introduced to further boost India’s defence export potential.
The update made to the Defence Procurement Manual in 2025 aims to expedite the revenue procurements for the armed forces, simplifying process for domestic industry and supporting innovation in the manufacturing of defence equipment.
