Decoding the Draft Defence Acquisition Policy: What's Hot, What's Not

On 10 February, the Ministry of Defence released the draft Defence Acquisition Procedure 2026, the policy framework that governs how India buys military equipment, platforms, and systems for its armed forces. Set to replace DAP 2020, the new draft arrives at a time when the gap between India's defence ambitions and its procurement machinery has become difficult to ignore acquisition cycles that stretch for years, technologies that age before induction, and an innovation ecosystem that struggles to move beyond prototypes.

The draft proposes to address these by shifting the focus from where defence equipment is manufactured to who owns its design and intellectual property a move the MoD is framing as a transition from 'Made in India' to 'Owned by India.' We look at what the draft proposes, how it differs from its predecessor, and what it could mean for India's defence ecosystem.

What is DAP 2026?

The Defence Acquisition Procedure is India’s structured policy framework for procuring defence equipment, platforms, and systems under the capital budget. It governs every stage of the procurement cycle—from identifying what the armed forces need, to soliciting proposals from industry, conducting trials, negotiating contracts, and managing deliveries. Its objective is to ensure that all three armed forces receive the right equipment at the right time, while aligning procurement decisions with the country’s evolving strategic goals.

Unlike an Act of Parliament, the DAP does not require legislative approval. It functions as an internal rulebook that guides defence procurement processes within the government, and can be revised by executive order.

The first such procedure, called the Defence Procurement Procedure (DPP), was introduced in 2002 to systematise military hardware procurement for the armed forces. It has been revised multiple times since—in 2006, 2008, 2011, 2013, and 2016—each iteration reflecting changes in strategic priorities, industrial capabilities, and geopolitical realities. The 2016 revision put particular emphasis on indigenously designed, developed, and manufactured weapon systems.

In 2020, the procedure was renamed the Defence Acquisition Procedure and overhauled significantly to align with the Atmanirbhar Bharat (self-reliant India) initiative. DAP 2020 came into effect on 1 October 2020, introducing import embargoes on 101 items, redefining the ‘Indian Vendor’ concept with a 50% Indian ownership requirement, a new Buy (Global – Manufacture in India) category, and provisions for leasing defence equipment. It established five prioritised procurement categories: Buy (Indian-IDDM), Buy (Indian), Buy and Make (Indian), Buy (Global – Manufacture in India), and Buy (Global).

On 10 February 2026, the Ministry of Defence released the draft DAP 2026 for public and stakeholder consultation, with a feedback deadline of 3 March 2026. Once finalised and notified, it will replace DAP 2020 and is expected to take effect from 1 April 2026, synchronised with the financial year. The capital procurement budget for FY 2026–27 is estimated at approximately ₹2.19 lakh crore, of which 75%—around ₹1.39 lakh crore—has been earmarked for procurement from domestic industry.

The Need for DAP 2026

DAP 2020 succeeded in creating an institutional preference for Indian vendors and gave momentum to domestic defence manufacturing. However, experience over the past five years revealed persistent structural challenges that the policy was unable to fully address.

Acquisition cycles remained long. Technologies often became obsolete before they could be inducted into the forces. The innovation ecosystem, despite support through iDEX and the Make procedure, struggled to scale beyond prototypes into actual procurement. The proliferation of procurement categories and sub-categories—over a dozen when Make, Innovation, Design & Development, Strategic Partnership, and other procedures were included—created confusion rather than clarity for both procurement officials and industry.

Most critically, while DAP 2020 pushed for ‘Make in India,’ it did not adequately address the question of who owns the technology being made. India’s defence ecosystem traditionally focused on Transfer of Technology (ToT) and licensed manufacturing. But even after acquiring ToT, the parent company’s approval was often required for any modification or integration of additional systems—a constraint that limited both operational flexibility and strategic autonomy.

(Retd) Major General Rajpal Punia, Yudh Seva Medal (YSM), who served in the Indian Army for 38 years, underscored this concern: “At best, India receives around 80 percent, while key and critical technologies are never fully shared. In defence, until we start designing and manufacturing on our own, we will remain dependent on other countries. This applies to space, drones, and every other sector.”

(Retd) Air Marshal Ravi Gopal Krishna Kapoor pointed out that this dependency extends well beyond hardware. According to him, every modern aircraft in today’s air force is software-driven. “When India does not own the intellectual property rights to these systems, it is effectively sharing confidential and strategic data with other countries. Therefore, ownership of such software is crucial for long-term strategic advantage and national security,” he said.

Indigenous content verification under DAP 2020 was also a weak point. Declarations were largely self-reported, and the absence of a rigorous audit mechanism meant that claims of indigenisation were often difficult to verify. The indigenous design concept existed on paper but lacked enforceable definitions and penalties for false claims.

The draft DAP 2026 is built around a fundamental philosophical shift: from prioritising where defence equipment is manufactured to prioritising who owns its design, intellectual property, and source code. The Ministry of Defence has framed this as a move from ‘Made in India’ to ‘Owned by India.’

This shift rests on four pillars. First, deepening self-reliance by ensuring Indian ownership and control over core technologies. Second, accelerating procurement timelines so that technologies do not become obsolete before they reach the forces. Third, widening the industrial base by bringing startups, MSMEs, and the private sector more meaningfully into mainstream defence procurement. And fourth, positioning India as a credible defence exporter, not just a manufacturer for domestic consumption. The DAP 2026 seeks to “weave the security of the nation and technological growth in a single thread and create the canvas for Viksit Bharat-2047.”

It also aims to align India’s defence acquisition with the rapidly evolving geo-strategic landscape, the growth of the Indian economy, the expansion of the private defence industry, and the technological imperatives of modern warfare—where artificial intelligence, autonomous systems, cyber operations, electronic warfare, and space assets are reshaping the battlefield.

Key Differences Between DAP 2020 and DAP 2026

DAP 2020 had five prioritised procurement categories. The draft DAP 2026 reduces these to four by removing the ‘Buy (Indian)’ category altogether. Under DAP 2020, Buy (Indian) allowed the acquisition of equipment from an Indian vendor with at least 60% indigenous content, even if the equipment was not indigenously designed or developed. By eliminating this route, DAP 2026 raises the bar: the preferred procurement path is now Buy (Indian-IDDM), where the equipment must be indigenously designed, developed, and manufactured. Wholly owned Indian subsidiaries of foreign defence firms do not qualify.

The reason for this is straightforward. The Buy (Indian) and Buy (Indian-IDDM) categories were similar enough in intent to cause confusion, and the existence of the Buy (Indian) route allowed companies to claim indigenisation without necessarily owning the design. Merging the two into a single, stricter standard forces the system to prioritise genuine indigenous capability.

Secondly, the minimum indigenous content requirement under Buy (Indian-IDDM) has been raised from 50% to 60%, with incentives—including a price credit of up to 15%—for higher localisation and genuinely indigenous design. More importantly, the way indigenisation is measured and verified has been overhauled. Under DAP 2020, indigenous content was based on percentage declarations. DAP 2026 introduces a financial formula (CBCP–CFC), requires tier-wise reporting of the supply chain, and mandates batch-wise certification. The MoD will verify claims within two years of contract signing, and penalties apply for false declarations.  

The most consequential shift in the entire document centres on the ownership of design, source code, and intellectual property—not just the location of manufacturing. Under the older framework, even after a ToT agreement, the original equipment manufacturer often retained effective control over upgrades, modifications, and the integration of additional subsystems.

Air Marshal Kapoor observed that the Ministry of Defence, by placing greater emphasis on intellectual property ownership and control over critical design elements, is helping the country strengthen self-reliance and strategic independence. The implications are wide-ranging: from routine maintenance and mid-life upgrades to the ability to export derivative platforms without seeking the original OEM’s permission.

Along with hardware, the MoD is also expected to focus on software- and AI-driven technologies under DAP 2026, recognising that in modern defence systems, software is often as strategically significant as the platform itself.

The draft also introduces several new procurement mechanisms. Long Term Bulk Acquisition is designed to give industry greater visibility into future demand, enabling companies to plan investment and production capacity with confidence. Low-Cost Capital Acquisition (LCCA), capped at ₹75 crore per project with an annual ceiling of ₹2,000 crore, is meant for fast-moving, relatively inexpensive technology items—drones, sensors, electronic warfare modules, and similar systems where speed of deployment matters more than elaborate procurement formalities. The Other Capital Procurement Procedure (OCPP), designed for special cases that do not fit conventional ‘Buy’ or ‘Make’ frameworks, allows the government to address unique or unconventional defence requirements through customised procurement processes, especially during emergency situations.

Innovation Mainstreamed

Under DAP 2020, iDEX (Innovations for Defence Excellence) and the Make procedure were largely peripheral to mainstream procurement—useful for nurturing startups and prototypes but not well integrated into the actual acquisition pipeline. DAP 2026 brings them into the mainstream. iDEX, the Technology Development Fund (TDF), and Make categories are now formal acquisition paths. Projects under Make and iDEX will feature spiral development—platforms can be inducted in an initial configuration and progressively upgraded—and five years of assured orders.

A major concern so far has been the uncertainty about whether the government will eventually procure what private sector players, particularly startups, develop. This uncertainty has discouraged investors from backing such ventures. With these reforms, the armed forces stand to receive equipment more quickly, while startups and defence companies gain a more predictable environment—increasing confidence on both sides.

The changes also extend to the space sector. Lt Gen Anil Kumar Bhatt (Retd), Director General of the Indian Space Association (ISpA), noted: “It is definitely a significant improvement over the last DAP, and it will make things much easier. From the space perspective, as the [space] sector is quite different from other sectors, the government is using this document to push the overall space technology ecosystem, and it will definitely have a positive impact.”

The draft also mandates monitoring of procurement timelines from the Request for Information stage itself, with concurrent activities planned to compress the overall acquisition cycle. Strict timelines have been introduced for both sides: if the authorities fail to submit the required Statement of Case within approximately 15 months of issuing an RFI, the entire process must be restarted. Companies are required to respond within 2 to 4 months when the government seeks information.

DAP 2020 relied primarily on government inspections for quality assurance. DAP 2026 proposes a shift to a combination of self-certification and third-party certification, with government audits as a check rather than the primary mechanism.

Finally, there is greater thrust of exports at a time when several developing countries have started looking at India as a supplier of cost-effective military equipment. India’s defence exports reached a record ₹23,622 crore in FY 2024–25, up from less than ₹1,000 crore in 2014. The government has set a target of ₹50,000 crore in defence exports by 2029–30. DAP 2026 attempts to hardwire this ambition into the procurement process itself: exportability has been made a desirable Qualitative Requirement (QR) for new platforms. This means that when the armed forces define their requirements, they are expected to consider whether the platform can also be sold to friendly foreign nations—ensuring equipment is designed for international markets from inception, not adapted for export as an afterthought.

Prof Ankit K, Assistant Professor at Rashtriya Raksha University and Subject Matter Expert at the Centre for Joint Warfare Studies (CENJOWS), highlighted that the industrial push under DAP 2026 also carries diplomatic signals. “France, for example, is playing a larger role, especially in aerospace. The Indo-Pacific has become increasingly relevant for defence-industrial cooperation. There is also greater emphasis on offsets, local assembly lines, and positioning India as a future defence exporter,” he said.

Expected Impact

If implemented as proposed, the most immediate impact on the armed forces would be in procurement speed. The combination of TRL-based categorisation, single-vendor provisions for mature indigenous technologies, the LCCA pathway for smaller acquisitions, and stricter timeline enforcement should reduce the gap between identifying a capability need and getting equipment to the forces. The spiral development model means forces would receive initial versions of platforms sooner and get upgrades progressively, rather than waiting years for a fully perfected system that may be outdated by the time it arrives.

For the domestic defence industry—particularly startups and MSMEs—the policy addresses two long-standing problems simultaneously. The five-year assured order guarantee for successful iDEX and Make projects, combined with the Long Term Bulk Acquisition procedure that provides demand visibility, should reduce the uncertainty that has historically discouraged private investment in defence R&D. The single-vendor provision for high-TRL indigenous systems is potentially transformative for Indian companies that have invested in developing their own products: it protects them from being undercut by foreign competition at the last stage of procurement.

On the export front, designing platforms with exportability as a baseline requirement—rather than an afterthought—could accelerate India’s transition from being one of the world’s largest defence importers to a meaningful exporter. India now exports to over 100 countries, and the MoD signed a record 193 contracts worth over ₹2.09 lakh crore in FY 2024–25—the highest ever—of which 177 contracts worth ₹1.69 lakh crore went to domestic industry.

The IP ownership provisions, if enforced rigorously, could fundamentally alter India’s defence-industrial relationship with foreign OEMs. For decades, Transfer of Technology rarely meant full transfer. If DAP 2026 succeeds in ensuring that Indian entities retain design rights, source code, and upgrade authority, it would give the country genuine strategic autonomy—the ability to modify, upgrade, and adapt defence systems independently.

Challenges and Shortcomings

The ambition of DAP 2026 is considerable, but India’s defence procurement history offers several reasons for caution. The first is institutional capacity. Defence procurement in India involves multiple layers of approval, inter-service coordination, and bureaucratic processes. Past policy revisions have often been undermined not by poor intent but by the inability of existing institutional machinery to execute reforms at the required pace.  

The second is industrial readiness. Raising the indigenous content bar to 60% and demanding genuine indigenous design assumes that Indian industry has the depth—in materials, subsystems, electronics, and software—to meet these requirements across the board. For many high-end defence systems, particularly in areas like aero-engines, advanced sensors, and certain electronic warfare systems, this capacity is still being built.

Prof Ankit K acknowledged this tension: “Indigenisation remains a priority; the government is also trying to balance imports and domestic production. At this stage, imports cannot be completely replaced.”

The third is the compliance burden. The stricter verification regime, formula-based indigenous content calculations, and tier-wise reporting requirements could disproportionately burden MSMEs and startups that lack the administrative infrastructure of larger defence companies. Similarly, the single-vendor provision, while a strong incentive for indigenous innovation, creates risks around pricing, accountability, and potential rent-seeking if not paired with robust cost-benchmarking and performance guarantees.

DAP 2026, if adopted in its current form, represents a genuine conceptual advance over its predecessor. The shift from ‘Made in India’ to ‘Owned by India’ is more than a slogan change. By centering procurement on three aspects—technology transfer with actual IP retention, Indian production with enforceable indigenous content standards, and integration with domestic subsystems rather than simple assembly—the draft acknowledges realities that earlier policies skirted. However, the true test of DAP 2026 will lie in its implementation—whether the institutional machinery can match the ambition of the document, whether Indian industry can rise to meet higher benchmarks, and whether the government can maintain consistency of intent across procurement cycles. The Ministry of Defence has invited stakeholders to submit their comments and suggestions by 3 March 2026.