In a major policy shift aimed at fostering self-reliance and accelerating defence modernisation, Defence Minister Rajnath Singh has approved the Defence Procurement Manual (DPM) 2025, which explicitly allows for active participation of private players, MSMEs, and startups in the revenue procurement processes.
The revised manual, which comes after more than a decade since the last version was issued in 2009, is designed to streamline, simplify, and rationalise revenue procurement across the Armed Forces, the MoD announced in a statement on Sunday. With the procurement under the Revenue Head (Operations & Sustenance Segment) estimated at ₹1 lakh crore for FY 2025-26, the DPM 2025 represents a significant opportunity for the domestic industry.
“This is a landmark reform that will drive innovation, reduce dependency on imports, and enhance the responsiveness of our procurement processes,” the Defence Ministry’s official statement read.
Among the key reforms in DPM 2025 are:
Increased Role for Private Sector & Startups:
The manual seeks to utilise the “potential, expertise, and capability” of India’s growing defence ecosystem by facilitatingwider participation from private firms, MSMEs, and start-ups. Provisions have been eased to lower entry barriers, making the sector more accessible to emerging players.
Supportive Development Framework:
In a bid to encourage innovation and indigenisation, development contracts have been made more flexible. For instance, no Liquidated Damages (LD) will be levied during the prototype development phase, and reduced LD(as low as 0.1 per cent ) post-development. The maximum LD has been capped at 5 per cent , and only in exceptional delays will it go up to 10 per cent .
Guaranteed Orders & Handholding:
The manual provides assured order guarantees for up to five years, extendable under special cases. Additionally, the Armed Forces will offertechnical handholding to developers, including access to existing equipment and know-how.
Ease of Doing Business & Transparency:
The revised DPM integrates updated public procurement norms, embracing digital processes, transparency, and accountability. It also removes bureaucratic bottlenecks such as the earlier requirement for No Objection Certificates (NOCs) from Defence PSUs before open bidding — a move aimed at levelling the playing field.
Field-Level Empowerment:
Financial powers have been decentralised, enabling Competent Financial Authorities (CFAs) at lower levels to take timely decisions on procurement, delivery extensions, and bid management, without waiting for approvals from higher authorities.
Thrust on Innovation & Academia Collaboration:
A new chapter focuses on indigenisation through collaboration with academia, including IITs, IISc, and private institutions. The goal is to harness the talent of young innovators to develop advanced defence systems and components.
The Ministry said the DPM 2025 aligns with the government’s broader vision of Aatmanirbhar Bharat (self-reliant India), especially in the strategically sensitive defence sector. By breaking traditional procurement silos and encouraging private innovation, the Ministry aims to ensure the timely availability of critical equipment while reducing costs.
With the revised framework, the Ministry hopes to strengthen jointness among the Services, reduce operational downtime through upfront provisioning in repair and refit, and streamline high-value Government-to-Government procurements.
The Defence Ministry described the move as a step towards a more agile, transparent, and innovation-driven procurement system — one that reflects the realities of modern warfare and the strategic need for speed, flexibility, and indigenous capability.
Published on September 14, 2025
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