E-Paper
Navigating India’s defence procurement framework
This article is authored by Himanshu Vij and Akhil Anand, partners, JSA Advocates & Solicitors.
India’s defence procurement framework is undergoing a gradual but significant transition. As part of broader efforts to strengthen domestic defence manufacturing capabilities and reduce reliance on imports, the Government of India has introduced policy measures encouraging greater participation by private industry in the defence sector. While these developments present significant opportunities for Indian companies, participation in defence procurement programmes requires engagement with the specialised procurement architecture administered by the ministry of defence (MoD), as well as careful navigation of the contractual, regulatory and compliance considerations unique to the defence sector.
India has historically been among the largest importers of defence equipment globally. Against this backdrop, the Government of India has increasingly emphasised the development of indigenous defence manufacturing capacity as part of broader efforts to reduce reliance on imports and strengthen domestic capability in critical defence technologies.
Policy initiatives under the broader Atmanirbhar Bharat framework have sought to encourage domestic production and increase participation by Indian industry in defence manufacturing. In furtherance of this objective, the MoD has issued a series of Positive Indigenisation Lists identifying defence items to be procured from domestic sources. These measures are intended to channel procurement demand towards domestic industry and encourage investment in indigenous manufacturing and supply chain development, including participation by startups and MSMEs.
The policy emphasis on indigenisation has also been reflected in the growth of India’s defence manufacturing sector. Defence production reached a record ₹1.54 lakh crore in FY 2024–25, while defence exports rose to ₹23,622 crore during the same period. The sector has also witnessed increasing participation by private players across manufacturing and defence supply chains.
It is critical to bear in mind that government remains the principal buyer for the defence equipment and systems. While procurement opportunities may arise at the state government level, the procurement is driven by the MoD. Therefore, the significance of private sector participation must be assessed in the context of the procurement and regulatory framework administered by the MoD.
Recent policy reforms and indigenisation initiatives have also translated into increased participation by private sector across the defence manufacturing ecosystem. Indian companies are increasingly participating either independently or through joint-ventures, consortium, technology collaboration for development of domestic capabilities. Private sector participation is already visible in developing various indigenous platforms such as small arms manufacturing, artillery systems, defence platforms and unmanned aerial platforms
The evolving procurement ecosystem is further reflected in the government’s increasing willingness to involve private sector in major defence programmes, including the Advanced Medium Combat Aircraft (AMCA) programme, where private sector-led consortiums have been shortlisted for participation in prototype development of the aircraft.
The defence sector has also witnessed greater integration of Indian industry into global defence supply chains through joint ventures and technology collaborations. Foreign investment policies have been progressively liberalised in support of this objective, including permitting foreign direct investment up to 74% under the automatic route, with higher investment subject to government approval in specified circumstances.
The defence procurements are administered by MoD through Defence Acquisition Procedure (DAP), which governs capital acquisitions of major platforms and weapon systems, and the Defence Procurement Manual (DPM), which governs revenue procurement such as spares, consumables, maintenance equipment and operational support requirements. Both the frameworks are significant as they determine how procurements are identified, evaluated and finalised.
The MoD has also continued to refine these frameworks through periodic revisions, including the release of the draft Defence Acquisition Procedure, 2026 for stakeholder comments and the revised Defence Procurement Manual, 2025.
While increasing private sector participation presents significant commercial opportunities, defence procurement remains different from ordinary government contracting. The counterparty is usually the Union government, and procurement decisions are governed by strategic and national security considerations.
Historically, a large part of defence production in India was undertaken through defence public sector undertakings. Procurement in that model was often based on internal allocation or long-standing supply arrangements, rather than arm’s length commercial contracts with independent private suppliers.
Defence tenders may require detailed technical declarations, integrity undertakings, eligibility documents and security-related confirmations. Non-compliance, even at the bid stage, may result in disqualification, suspension or debarment from future procurement opportunities. For private bidders, compliance with procurement conditions is not a formality.
The contractual issues are equally significant which the private companies will now have to face will not be a mere formality. Defence contracts may involve offsets, technology transfer commitments, confidentiality obligations, performance-linked milestones, export control issues and intellectual property restrictions, particularly where a foreign OEM is involved. These are not merely commercial terms; they often affect how the project is structured and implemented.
Disputes may arise from delay, cost escalation, changes in specifications, testing requirements, acceptance standards or technology transfer obligations. In defence contracts, such disputes may also be shaped by confidentiality concerns, restricted information and sovereign procurement decisions. For this reason, companies entering the sector need to treat legal structuring and contract management as core parts of their defence business strategy, not as post-award formalities.
India’s evolving defence procurement framework is gradually reshaping the relationship between the government and private industry in the defence sector. While policy reforms and indigenisation initiatives continue to expand opportunities for private participation, engagement with the sector remains closely tied to the specialised procurement architecture administered by the MoD.
For companies seeking to participate in defence procurement programmes, success will depend not only on technological capability and manufacturing capacity, but also on a clear understanding of the contractual, regulatory and compliance framework governing defence procurement in India.
(The views expressed are personal)
This article is authored by Himanshu Vij and Akhil Anand, partners, JSA Advocates & Solicitors.
