In the current environment of geopolitical uncertainty, defense preparedness has taken center stage in the policy making of many countries as they are caught in some form of conflict. India has not been untouched by this environment as was seen with Operation Sindoor last year, and the government is taking measures to better prepare the country for the future. It is in this context that one should view the Draft Defense Acquisition Procedure (DAP) 2026, which aims to align procurement with the more demanding security environment, growing domestic defence-industrial base and technological character of modern warfare. The Defense Ministry has described the Draft DAP 2026 as a framework aimed at promoting jointness, atmanirbharta, integration, force modernization and rapid acquisition with scale of production. It is proposed to replace DAP 2020 and strengthen the institutional preference for the Buy Indian, Indigenously Designed, Developed and Manufactured category.
Until recently, India outsourced large quantities of its armed forces’ equipment to foreign manufacturers. But now the country has made a clear choice to change this process and ensure design, production, upgrade, integration and maintenance of the military systems it needs. The Draft DAP 2026 is significant as it seeks to move defense procurement away from the transactional model of procurement platforms towards a system that supports capacity building, industrial depth and long-term strategic autonomy. The draft also seeks to handle important matters including rapid acquisition of equipment with short technology cycles, spiral design and procurement of key platforms, and greater use of indigenous military material.
One of the notable changes in modern conflict is the increasing prevalence of software including sensors, electronic warfare suites, datalinks, secure communications, weapons integration and upgrade authorization. This is where the need to replace imported systems with indigenous systems becomes very important. A fighter aircraft, warship, missile system or unmanned platform is not strategically autonomous just because it is assembled domestically. It is autonomous only when the user country has adequate control over the design data, integration interfaces, software upgrades, lifecycle support and future modifications. This is why the old distinction between “Made in India” and “Controlled by India” has become operationally important. The Draft DAP 2026 incorporates a deeper sovereignty test into the indigenization philosophy. This asks not only where the platform is built, but who maintains the source code, who has upgrade authority, and who owns the design data needed to modify the platform after induction. Even in exceptional cases of purchasing foreign equipment a manufacturing or design and development proposal will be required.
Defense Minister Rajnath Singh has framed this as a shift from “Made in India” to “Indian ownership”. To many this may seem metaphorical, but it is much more than that. A platform, built at HAL under license with control software written in Moscow, Paris or Tel Aviv, remains a foreign capability for every critical operational objective. The new framework recognizes this and seeks to factor this into purchasing decisions.
This matters because military platforms are not fixed assets. Their relevance depends on periodic upgrades, new weapon integration, software patches, electronic warfare library updates, sensor improvements, and interoperability with other platforms. If India cannot independently modify or upgrade a system, its autonomy remains limited even if production occurs within the country. Therefore, the emphasis on indigenous design, higher indigenous content, technology readiness levels and design-development obligations in the Draft DAP 2026 should be seen as an effort to shift from domestic production to domestic control.
A very important impetus to the reform proposals have been the financial provisions. Ministry of Defense has been allocated ₹₹7.85 lakh crore in the Union Budget 2026-27, the highest allocation among all ministries and an increase of 15.19% over the Budget Estimates for FY 2025-26. Its, ₹Rs 1.39 lakh crore has been earmarked for procurement from domestic defense industries, which is about 75% of the capital acquisition budget. This is a strong demand signal, but demand alone will not create capacity unless procurement timelines are predictable, orders are reliable, and contracts reward domestic design rather than simply domestic assembly.
India’s defense production base has expanded significantly over the years. Annual defense production reached approximately ₹₹ 1.50 lakh crore in FY 2024-25, an increase of 18% over the previous year and almost 90% more than FY 2019-20. The contribution of the private sector has also increased, although defense public sector undertakings and other public sector entities account for the larger share. defense exports reached ₹Rs 23,622 crore in financial year 2024-25, government’s target ₹3 lakh crore more in annual defense manufacturing ₹Exports worth Rs 50,000 crore by 2029.
The above figures show that India has moved beyond the first phase of indigenization. Now the more difficult steps lie ahead: design depth, sub-system capability, test infrastructure, certification capability and system integration. It is at this stage that the Draft DAP 2026 aims to make an impact. It reduces procurement categories from five to four, increases indigenous content requirements, more clearly defines indigenous design, introduces technology readiness level-based classification, and creates new pathways such as low-cost capital acquisition and long-term bulk acquisition. These changes are significant because India’s acquisition system has often treated all procurements in a similar procedural manner, even though the technology cycles involved are very different. A drone swarm, an electronic warfare module, an AI-enabled surveillance tool and a major combat platform cannot be achieved through the same timelines and risk assumptions.
The low-cost capital acquisition route is particularly relevant for fast-moving technologies. it has been banned ₹Rs 75 crore per project, with annual limit ₹2,000 crore, and is designed for systems where long procurement timelines may dilute operational relevance. Systems in artificial intelligence, unmanned platforms, electronic warfare, cyber capabilities, and software-defined military applications can become obsolete within a short period of time. If the acquisition cycle takes several years, the armed forces may induct equipment that has already lost technological relevance. A faster, shorter and more flexible path can help to experiment, test, buy and iterate services. This is especially important for startups and small technology firms, which cannot avoid long procurement delays or uncertain testing processes.
The long-term bulk acquisition route addresses a different but equally important weakness: demand uncertainty. Defense manufacturing requires companies to invest in specialized tooling, testing infrastructure, skilled manpower, supply chain and quality systems before scaling up production. Private industries, MSMEs and component suppliers may not make such investments if orders remain fragmented, unpredictable or subject to frequent delays. Long-term visibility allows companies to plan capacity against reliable demand and reduces the tendency to treat defense as a tender-driven market rather than a long-horizon industrial commitment. This gives the industry advance visibility of requirements based on which capacity investments can be planned rather than guesswork.
These procurement changes also fall within the broader innovation and industrial policy architecture. ADITI programme, with a fund of ₹Provides grant up to Rs 750 crore ₹Rs 25 crore per project for deep-tech defense startups. This is important because many emerging military technologies will not come solely from traditional defense production channels. They will need small firms, startups, research institutes and private integrators to work through faster cycles of experimentation and product development. Similarly, two defense industrial corridors in Uttar Pradesh and Tamil Nadu have attracted investment commitments ₹Rs 9,145 crore unlocked with signing of 289 MoUs ₹66,423 crore in potential opportunities. These corridors aim to create regional manufacturing ecosystems, but their success will depend on whether procurement pipelines, testing infrastructure and supply-chain integration can convert investment commitments into production capacity.
The cumulative FDI inflows figure also reflects the market confidence gap that procurement reforms alone cannot close. Despite 74% FDI through the automatic route and 100% growth with government approvals for cutting-edge technology, cumulative inflows into the defense sector between April 2000 and June 2025 stood at only $21.74 million. For a sector with medium-term investment potential of $130 billion, this is not just a regulatory failure. This reflects the long procurement cycle risks, exit uncertainty, limited order visibility and the difficulty of long-term technology partnerships in a region where policy frameworks change every few years. The long-term bulk acquisition route is partly the answer to this problem. However, investor confidence in the sustainability of the structure is itself a variable that no procurement document can fully resolve.
Exports should also be integrated into this capacity-building logic. Export markets enforce quality discipline, after-sales support standards and external evaluation. They create scale and bring Indian products under comparative scrutiny. Therefore, growth in defense exports is not only a commercial achievement but also a mechanism for improving product reliability and industrial competitiveness. India will need strong certification systems, financing instruments, lifecycle support arrangements and credible seller assurance frameworks to sustain export growth.
Many of the key proposals made in the Draft DAP 2026 will be a bit complex to implement, such as translating ownership language into contract design, with enforceable provisions on intellectual property, interface control, software access, lifecycle support and technology absorption. Without this, domestic manufacturing may remain limited to production functions while critical technology layers remain outside Indian control. Similar risks exist in the prototype-to-production transition, where indigenous systems are often dependent on foreign sub-systems for reliability and certification, making later replacement difficult. This is why outlining and timely monitoring of technology readiness level from the RFI stage should be used seriously and not as a procedural check.
India is trying to reduce dependence on foreign platforms and exert deeper control over technologies that shape military effectiveness. The Draft DAP 2026 is an important step in that process, but it cannot succeed through import substitution alone. Capabilities in advanced combat aircraft, aero-engines, unmanned systems, secure communications, electronic warfare and defense-grade semiconductors will require disciplined acquisition timelines, reliable demand visibility, serious contract design, rigorous technology assessment, investor confidence and above all, accumulation of design authority, production learning and institutional memory. If pursued in that spirit, India’s acquisition reform could shift the system from procedural compliance to long-term capacity building.
(Views expressed are personal)
This article is written by Prafulla Pathak, Team Lead and Utkarsh Dewan, Consultant, NFPRC Foundation.
