The Ministry of Defence has rolled out the Defence Procurement Manual (DPM) 2025, introducing a 25% product reservation for Micro and Small Enterprises (MSMEs) and offering major relaxations for start-ups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT).
This landmark reform aims to strengthen domestic defence manufacturing, spur innovation, and build a resilient and globally competitive supply chain. By aligning procurement procedures with the Ministry of Finance and central government norms, the revised manual streamlines regulatory processes while encouraging private participation.
The new policy is expected to directly benefit around 14,000 MSMEs and 350 defence start-ups, expanding their visibility in government contracts. It follows the Ministry of MSME’s broader mandate that at least a quarter of all central procurement should be sourced from smaller enterprises.
Lower Barriers, Faster Procurement
Responding to long-standing industry concerns, DPM 2025 removes prior turnover and experience requirements for eligible start-ups, provided they meet technical and quality benchmarks. Both MSMEs and start-ups have also been exempted from bid security or earnest money deposits (EMD), addressing a key financial bottleneck for smaller firms.
The manual further integrates measures from the iDEX (Innovations for Defence Excellence) and Defence Acquisition Procedure (DAP) 2020, ensuring a uniform ecosystem for innovation-driven procurement. A newly introduced chapter titled “Promoting Self-Reliance through Innovation and Indigenisation” underscores collaboration between the armed forces, industry, academia, and research institutions such as IITs and IISc to indigenise critical components and defence systems.
Transparency and Accountability at the Core
The DPM 2025, valued at approximately ₹1 lakh crore in revenue procurement for FY26, is designed to enhance fairness, transparency, and accountability in the defence procurement process. It sets clear indicative timelines—18–19 weeks for single bids, 22 weeks for two-bid, and 24 weeks for two-stage bidding—to address long-standing concerns about delays.
The manual is structured into two volumes: Volume I details core procurement procedures, while Volume II includes appendices, government orders, and standardised forms for clarity.
Defence Minister Rajnath Singh called the reform a “decisive step toward transforming procurement systems,” while Defence Secretary Rajesh Kumar Singh emphasised its goal of reducing entry barriers and fostering grassroots innovation to make India’s defence sector more inclusive and competitive.