India’s Defence Procurement Manual 2025: Key Changes, Impact and Challenges
On September 14, India's Ministry of Defence (MoD) introduced the Defence Procurement Manual (DPM) 2025, the first comprehensive update of the manual since 2009. It is designed to streamline revenue purchases that sustain day-to-day operations and ensure operational readiness of the Indian Armed Forces, in line with contemporary needs and the government’s self-reliance goals.
The author points out that the new manual focuses on faster decision making, jointness among the Services, and promoting indigenous innovation. DPM 2025 governs roughly ₹1 lakh crore (USD 11.4 billion) of annual expenditure and is distinct from capital acquisitions that are handled under the Defence Acquisition Procedure.
Six key reforms stand out in the DPM 2025. First is the ease of doing business for the private sector defence industry. The requirement for a No Objection Certificate (NOC) from DPSUs before going for open tenders has been abolished. All tenders will now be purely competitive, levelling the playing field between DPSUs and private players.
Second, a new innovation & indigenisation chapter encourages in-house design with universities and start-ups, treating procurement as a lever to build domestic technology.
Third, there is a relaxation of financial penalties with softer liquidated damages. By lowering punitive risks for vendors, especially during innovation stages, the government hopes to incentivise genuine efforts.
Fourth, the Services can commit to orders for up to five years (extendable by another five), thereby ensuring predictability in supply orders, particularly for the smaller players.
Fifth, Competent Financial Authorities at field units are now empowered to take many procurement decisions without referring to higher headquarters. These delegations aim to accelerate procurement cycles and reduce red tape.
Sixth, maintenance and repair procedures have become more efficient with a 15% “growth of work” margin that allows additional repairs for faults discovered during servicing without fresh approvals.
While the DPM 2025 is widely seen as a positive reform, there is also a need to address the potential challenges that could arise during its implementation. A cultural shift will be required in procurement organisations that have traditionally been compliance-heavy. Procurement cycles can be cut down only if prevalent risk-averse habits are overcome through structured training.
The implementation could also face challenges if the domestic industry is unable to meet the technical requirements or quality standards of the armed forces. Handholding by the Services and incentives by the government will be required to ensure that the industry rises to these challenges.
Finally, provisions like the assured five-year orders hinge on steady budgetary availability and long-term planning. If there is unpredictability in the availability of funds, it could erode credibility and deter investment.
To read this DPG Policy Brief Vol. X, Issue 25, please click "India’s Defence Procurement Manual 2025: Key Changes, Impact and Challenges.
