Defence Procurement Policy (DAP)
Indian Economy
- PYQs2
- Articles1
Background
Critical for national security, 'Make in India' initiative, indigenous defence industry growth, efficient utilization of public funds, technological self-reliance, and strategic autonomy.
The Defence Acquisition Procedure (DAP) is the framework governing capital acquisitions of the Indian Armed Forces, aiming to ensure self-reliance, transparency, and efficiency in defence procurement. It outlines various acquisition categories, procedures for indigenous manufacturing, and provisions for technology absorption and upgrades.
Facts & tables
- Objective
- Modernize armed forces, promote indigenous manufacturing, ensure cost-effectiveness.
- Key Provisions (current)
- Allows Commercial-Off-The-Shelf (COTS) systems, streamlines upgrades, includes financial buffers for repairs/upgrades.
- Challenge with Rapid Technology
- Current transactional model struggles with rapidly evolving technologies like tactical drones, leading to obsolescence.
- Proposed Shift
- Move from transactional purchases to long-term 'managed service contracts' or partnerships for continuous upgrades and R&D.
| Type | Reference |
|---|---|
| Conceptual area | Emerging Information Technologies |
| Conceptual area | Indian Economy |
| Conceptual area | Public Finance & Taxation |
| Body | Role |
|---|---|
| Ministry of Defence | Formulates and implements |
| Indian Armed Forces | Beneficiary and end-user |
Prelims angle
Prelims angle: Statement-based questions
Prelims angle: Conceptual understanding
- DAP governs capital acquisitions for Indian Armed Forces.
- Aims for self-reliance, transparency, and efficiency.
- Current DAP allows COTS and streamlines upgrades.
- Challenges with rapid tech evolution (e.g., drones) due to transactional model.
- Shift towards long-term partnerships/managed service contracts proposed for continuous capability.
Ministry sets policy; regulator often has quasi-judicial powers.
| Year | Framing tags |
|---|---|
| 2022 | Statement-based questions, Conceptual understanding |
| 2016 | Multi-statement analysis, Conceptual understanding |
Timeline
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Emerging Information Technologies
Conceptual area
-
Indian Economy
Conceptual area
-
Public Finance & Taxation
Conceptual area
-
Prelims 2016
Multi-statement analysis, Conceptual understanding
-
Prelims 2022
Statement-based questions, Conceptual understanding
-
Moving from drone purchases to drone partnerships
India's Defence Procurement Policy (DAP) is evolving to address challenges posed by rapidly changing defence technologies like drones, moving towards a partnership model for sustained capability and continuous upgrades.
See also
No related topics linked yet.
Past papers
2016–2022 · 2 questions
In the news
Moving from drone purchases to drone partnerships
India's Defence Procurement Policy (DAP) is evolving to address challenges posed by rapidly changing defence technologies like drones, moving towards a partnership model for sustained capability and continuous upgrades.
Try these PYQs
With reference to the expenditure made by an organisation or a company, which of the following statements is/are correct ?
1. Acquiring new technology is capital expenditure.
2. Debt financing is considered capital expenditure, while equity financing is considered revenue expenditure.
Select the correct answer using the code given below:
Statement 1 is correct. Acquiring new technology - This is a capital expenditure. When a company acquires new technology (like software, machinery, or equipment), it's considered an investment that will benefit the organization for several years. The cost is added to the company's asset base and depreciated over its useful life. Statement 2 is incorrect. Debt vs. Equity Financing - The way a company finances its expenditures (debt or equity) doesn't determine whether it's a capital or revenue expenditure. The nature of the expense itself matters more. |Aspect|Capital Expenditure| Revenue Expenditure |
|--|--|--|
|Definition |Expenditure incurred for acquiring or improving fixed assets, which provide long-term benefits.|Expenditure that is incurred for routine operations and maintenance, providing short-term benefits.|
| Purpose|To acquire, enhance, or extend the life of assets such as buildings, machinery, or equipment.| To meet day-to-day operational needs, like salaries, utilities, and maintenance.|
|Impact on Assets | Increases the value of assets or creates new assets. |Does not increase the value of assets.|
|Accounting Treatment |Recorded as an asset on the balance sheet and depreciated over time. |Recorded as an expense in the profit and loss statement for the current period.|
|Time Horizon |Long-term benefit, typically spread over several years. |Short-term benefit, usually within the current year.|
|Examples | Purchase of machinery, construction of buildings, land acquisition. |Salaries, wages, rent, repairs, and maintenance costs.|
Which of the following is/are included in the capital budget of the Government of India?
1. Expenditure on acquisition of assets like roads, buildings, machinery, etc.
2. Loans received from foreign governments.
3. Loans and advances granted to the States and Union Territories.
Select the correct answer using the code given below.
Statement 1 is correct: This is a classic example of Capital Expenditure. This type of spending creates physical assets for the country and is long-term in nature. Therefore, it is included in the capital budget. Statement 2 is correct: This is a Capital Receipt. When the government receives a loan, it creates a liability (it has to be repaid in the future). Since it affects the government's liabilities, it is part of the capital budget. Statement 3 is correct: This is also a form of Capital Expenditure. When the central government grants a loan, it creates a financial asset for itself (the loan is an asset that will earn interest and be repaid). As this spending creates an asset, it is included in the capital budget. Since all three items are either capital expenditures or capital receipts, they are all part of the Capital Budget of the Government of India.