Thursday, November 30, 2023

New SIPRI Report Puts India’s Procurement Policies In The Spotlight: Has DAP 2020 Delivered?

By Aritra Banerjee

The Stockholm International Peace Research Institute (SIPRI) has released new data on global arms transfers that have far-reaching implications for India’s indigenous defence industry, procurement planners, and strategic aspirations in the international arms trade.

According to SIPRI’s analysis, India remains the world’s largest importer of major arms despite a decline of 11% in arms imports from 2013-17 to 2018-22. With an 11% share of the total global imports, India has held the notorious distinction of being the leading global arms import market for almost three decades spanning from 1993-2022.

The report highlights India’s endeavours to reduce reliance on a single supplier and domestically produce major arms as the critical factor that has led to declining arms imports. Furthermore, SIPRI notes that the country’s convoluted and time-consuming arms procurement process, as laid out in the Defence Acquisition Procedure 2020 (DAP 2020), has impeded its ability to import arms.

Has DAP 2020 Removed Procurement Hurdles?

The DAP 2020, which replaced the earlier Defence Procurement Procedure 2016 (DPP 2016) on 1 October 2020, is critical to the country’s efforts to modernise its military capabilities and strengthen its national security. Amit Cowshish, a former Financial Advisor (Acquisition) at the Ministry of Defence (MoD), notes that the DAP 2020 is a complex blend of policies and procedures that apply to the procurement of equipment, weapon systems, force multipliers, and other platforms for the country’s armed forces and the Indian Coast Guard (ICG). It aims to ensure greater efficiency and transparency in the procurement process while promoting domestic defence industry development.

The DPP 2002, a predecessor to the DAP 2020, had outlined clear objectives to enable swift procurement of approved requirements for the armed forces within specified time frames and optimal use of allocated budgetary resources. In pursuing this goal, the procedure emphasised the importance of upholding the highest standards of probity, public accountability, transparency, and free competition.

At the heart of the DPP 2002 was the objective of fostering self-reliance in the country’s defence equipment sector, a priority that remains relevant as India seeks to reduce its dependence on foreign suppliers and build a robust domestic defence industry. The subsequent iterations of the procurement procedure expanded on the objectives of the earlier version. The Defence Ministry intended to provide a “level playing field” for private and public sectors while reaffirming its commitment to self-reliance in producing and acquiring defence equipment.

The DAP 2020 has further elaborated on these objectives by setting the ambitious goal of developing India into a global defence manufacturing hub. As the country marks two decades of pursuing these objectives, assessing the effectiveness of the policies and procedures designed to achieve them is appropriate.

Over the past two years, India has intensified its efforts to position itself as a global manufacturing hub for defence equipment. This has involved a range of measures, including streamlining procurement processes, promoting investment in the sector, and encouraging greater collaboration between domestic and foreign defence companies.

However, Cowshish notes that the DAP 2020 has been criticised due to its complexity and potential delays in the procurement process, a view in line with the recent SIPRI report. While progress has been made towards achieving the objectives set out in earlier versions of the procurement procedure, there is still much work to be done to make India a global leader in defence manufacturing.

Moreover, the implementation of DAP 2020 has been challenging. For instance, official data on the average time to finalise contracts is unavailable, and the MoD’s provision of information on acquisition programmes needs to be increased. This lack of transparency has made it easier for vendors to navigate the decision-making process, and more routine disclosures are necessary to assess DAP 2020’s impact on probity and accountability in the procurement process.

Another challenge facing the DAP 2020 is whether the limited budget allocated for capital acquisitions is utilised optimally. The persistent and widening gap between the requirement projected by the armed forces and the budgetary allocation poses a significant challenge to the procurement process, which must balance the need for critical capabilities wit

Despite these challenges, the DAP 2020 represents a critical step forward for India as it seeks to strengthen its national security and build a more robust and capable defence sector. The sustained commitment to self-reliance and innovation in this critical sector bodes well for India’s long-term security and economic growth.

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