India’s Defence Acquisition Process and Priorities

By Prof Satya Narayan Misra

New Delhi. India was the world’s second largest arms importer from 2020-2024, with Russia as the largest source of supply (38%), according to the SIPRI report 2025.

This is a far cry from the near monopoly erstwhile USSR/Russia enjoyed vis a vis other countries due to hyphenated foreign policy that India pursued, where converting Russian technology to tanks and fighters was the major source of India’s defence armoury. The Karghil war in 1999 was a major wakeup call, leading to integration of Service Hqrs with the Ministry of Defence (MoD), placement of Director General – DG – (Acquisition ) as the nodal authority for acquisitions, full private sector participation in defence production and allowing 26 per cent Foreign Direct Investment (FDI) by 2001.

Most importantly, the defence acquisition process, which was generally shrouded in secrecy then got had a transparent procurement procedure with the purchase of revenue items covered under DPM -2005 and Capital items under DPP-2005.

There was a common thread that stitched the two documents, transparency to the outside buyers in terms of pre-qualification, short-listing and award criteria.

These documents have undergone periodic revision, yet the spirit of acquisition has remained the same, Transparency and Probity.

All eyes are now on the upcoming deal for 114 French Rafale Multi Role Fighter Aircraft, close on heels of acquiring 36 of them by 2022 as emergency requirement.

The DAP (Defence Acquistion Procedure) runs in to 720 pages, and Make in India & Strategic Partnership are now the buzzwords. All the same, the acquisition priority & process are often inadequately understood.

The Acquisition Priority

When DPP 2005 was originally mooted, there were two options for acquisition; Import (Buy) or Get Technology, and Make in India (Buy & Make).

The technology transfer arrangements were initially inked with Russia for a slew of fighter aircraft like the Mig 21, Mig 29, SU 30 and tanks like T-72 and T 90 tanks.

The DPP 2005 sowed the seeds of wide tendering instead of buying from one country.

This was in sync with our foreign policy of de-hyphenation.

Countries like Israel came in with offers for UAVs, Radars and Communication systems, USA for heavy lift Helicopters, Heavy and Medium Transport Aircraft, Maritime Patrol Aircraft, France for Combat aircraft for Indian Air Force and Navy.

The Make category, where India would manufacture major systems based on indigenous design was added as an option only towards 2007. An offset provision was added for acquisitions exceeding a certain amount (Rs 2000 Cr now), where the vendor would discharge 30 percent of the cost by outsourcing items to Indian vendors, thereby transferring technology and also facilitating exports.

The Make category took precedence over Buy, or Buy & Make.

The Make in India Story

After the Modi government took over, the Foreign Direct Investment (FDI) limit has been increased to 74 percent. More importantly, keeping in view the need to promote indigenous Design & Development and private sector participation, the Buy category has a new sub category Buy (IDDM) which will have an indigenous Design & Development content of 50 Percent.

The Buy & Make will also have a subcategory of Buy & Make (Indigenous).

Significantly, Technology can now be acquired by private companies, which was earlier the sole prerogative of the Defence Public Sector Undertakings (DPSUs) and Ordnance factories.

And 65 percent of Defence Procurement has to be from indigenous sources.

Notably, 75 percent of the modernization budget is earmarked from the modernisation budget of the Defence Services.

Major platforms coming out of indigenous Design and Development are the Light Combat Aircraft (LCA) Tejas, Navy’s aircraft carrier INS Vikrant, Army’s Main Battle Tanks and Advanced Towed Artillery Gun System (ATAGS) guns.

Despite these success stories, critical sub systems like propulsion, weapons and sensors still remain out of the pale of indigenous story.

Our Self Reliance Index in critical platforms is rather quite low, making India the second largest importer globally.

The Kalam Initiative

Dr APJ Abdul Kalam , who helmed the Defence Research and Development Organisation (DRDO) was the father of the country’s Integrated Guided Missile Development Programme (IGMDP), which led to success stories in the operational success of Prithvi , Akash and Agni missiles.

Dr Kalam, who later became the President of India, also finalised the Joint Venture initiative with Russia for the BrahMos cruise missiles, (effectively used in the recent Operation Sindoor to decimate Pakistan’s army-sponsored terrorist targets).

BrahMos has Land, Air and Naval variants, in steady production, and its range and speed are being increased further from Mach 3 (Three times the Speed of Sound).

Another major initiative of Dr Kalam was the joint design, development and production collaboration for MR SAM Barak missiles with Israel.

The LCA program after , several hiccups , has now seen fruition with Tejas aircraft. The Kalam Committee had worked out India’s SRI at 30 percent in 1993 and had suggested a road map to improve it to 70 percent by 2005, by investing greater attention to critical technologies like stealth, AESA radars, passive seekers, Focal Plane Array sensors, gas turbine engines, smart weapons and munitions.

Joint Ventures and Joint Design & Development with reputed international OEMs and design houses should be India’s thrust areas in order to fill up the void in critical technologies.

The Private Sector in Pivotal Role

The Kelkar Committee, observing how the Services have been hostage to the captive DPSUs had mooted the idea of Public-Private-Partnerships in 2006, with emphasis on providing level playing field to the private sector players.

The Dhirendra Singh Committee in 2015 suggested a Strategic Partnership model  between major DPSUs and major private sector players. Sadly the idea has not taken off.

The government has, therefore, been very sensibly roping in the private sector to play a major role in bolstering India’s Military Industrial Capability.

For instance, for the Advanced Medium Combat Aircraft (AMCA) programme to develop as a stealth fighter jet, the private sector is being associated in a big way. It is in this perspective that India is partnering with French firm Safran to codevelop and manufacture 120 kilonewton thrust engine for AMCA.

There have been some bitter lessons out of DRDO’s failed mission to develop a gas turbine engine (Kaveri) for LCA. Foreign OEMs have to be associated, and accordingly, in the 114 Multi Role Fighter Aircraft (MRFA) deal now being finalised with the French. Of the 114 Rafales, 96 are to built in India in association with the Tatas and Mahindras.

So far, HAL has enjoyed monopoly but even with major chunks of new programmes going to the private sector HAL would give way to greater private sector participation, which will be bot, its hands would be full with the current and pending programmes. Involvement of the private sector would bring in accountability, effective quality management, better employee work culture, and most important, timely delivery with precision manufacturing.

Actually, there are several deliverables like the Advanced Light Helicopters which can easily be outsourced to the private sector.

The Acquisition Process

The Services have Long term, Short term & Annual Acquisition Plans.

After categorisation of a system has been decided, Buy, Buy & Make and Make , with Buy (IMMD) getting highest priority, the SQRs are formulated by the Services.

After an RFP is floated based on the Services Quality Requirements (SQRs), the respective Service conducts Technical and Field Trials to shortlist the eligible vendors. This is an elaborate and time-consuming process, with trials conducted in plains, high altitude and desert areas under different ambient conditions. The Contract Negotiation Committee then conducts price and commercial terms with the lowest tenderer.

Where technology transfer is envisaged, the thrust is to work out the Range and Depth of technology. Very often the OEM may be chary of parting with critical technology.

Russia has been generally open to the idea of full transfer of technology, while USA used to be reluctant. the Trump Administration seems to be more willing to share higher levels if India bought critical systems from the US.

Many American OEMs are keen to set up production bases in India, but with the private sector.

The IGA Route

The DPP provides for Inter Government Agreements, with specified countries, for strategic reasons and technology transfer.

Most of the deals with Russia fall within this category.

The Rafale deal with France for 36 fighters is an example, and the acquisiton of 114 jets follows the same lines. India is looking for 50 to 60 percent of Technology Transfer in the MRFA process.

ToT is not easily shared, additional costs are there, and ultimately, indigenous development of critical systems is the only solution. Development time and costs though can be cut down by acquiring Tech from outside sourcesd and steadily move forward in the Self reliance quotient.

— The author is a former Joint Secretary (HAL) in the Ministry of Defence.