INDIA Law and Practice Contributed by: Alina Arora, Samarth Gupta and Parth Singh, Shardul Amarchand Mangaldas & Co
• Ministry of External Affairs, GoI (MEA) – the MEA oversees UN sanctions and treaty commitments. The above-mentioned departments consult one another in discharging their functions – for instance, DPIIT considers industrial licence applications in con - sultation with the MoD and the MEA, and the MoD decides defence-sector FDI proposals subject to MHA security clearance. 1.3 Definition of “Defence” and “Dual-Use” For FDI and manufacturing licences, if manufacturing an item requires an industrial licence under the IDRA (as per the DPIIT list) or a manufacturing licence under the Arms Act, then such manufacture falls within the defence sector. From a regulatory standpoint, the concept of “dual- use” items is more relevant to export control, with the Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) list listing dual-use items. 1.4 International Frameworks and Treaty Obligations India is dualist, with treaties becoming domestically binding only through domestic legislation. United Nations Security Council (UNSC) resolutions take effect through orders issued under the UNSC Act. India belongs to the Missile Technology Control Regime (2016), the Wassenaar Arrangement (2017) and the Australia Group (2018). It adheres to Nuclear Suppliers Group guidelines and is party to the Chem - ical and Biological Weapons Conventions, with the SCOMET list built on these commitments. India is neither a NATO member nor party to the Arms Trade Treaty. EU defence directives have no effect. 2. Procurement and Government Contracts in the Defence Sector 2.1 Defence Procurement Legislation Executive orders (compiled as the GFRs issued by the GoI’s Ministry of Finance), rather than statute, govern public procurements in India.
Within the overarching structure of the GFRs, the defence procurement regime is bespoke. Depend - ing on the nature of procurement, the MoD applies the DAP 2020 (capital acquisitions of equipment, platforms and systems) or the DPM 2025 (revenue procurement of goods and services, including main - tenance, spares, repair and information technology). A draft DAP 2026, released for public consultation on 10 February 2026, will replace the DAP 2020 once finalised. The DAP 2020 and the DPM 2025 provide for exemp - tions/dispensations in specific procurement situations – for example, fast-track procurement, emergency procurement (EP), inter-governmental agreement (IGA) (government-to-government transactions), and buyer nominated/single-source situations. The obligations of original equipment manufacturers (OEMs) and suppliers in defence procurements flow from tender documents and the resulting contract (typically based on the standard contract), rather than a single statute. 2.2 Contracting Authorities and Entities Subject to Defence Procurement Rules The DAP 2020 and the DPM 2025 apply to the buyer, which is typically an instrumentality of the GoI. The DAP 2020 governs capital acquisitions (excluding works, land and medical equipment) by the MoD, the Service Headquarters of the Indian Army, the Indian Navy and the Indian Air Force, the Integrated Defence Staff, and the Indian Coast Guard. DPM 2025 governs revenue procurement across MoD, the Defence Ser - vices and their subordinate organisations. The Defence Research and Development Organisa - tion (DRDO) and defence public-sector undertakings (DPSUs) buy under their own procurement manuals. In India, private companies are never buyers and are bound only as participating bidders, suppliers, and subcontractors through the tender documents and contract terms. 2.3 Types of Contracts and Value Thresholds Purchases charged to the capital budget (ie, new equipment, platforms, upgrades and major refits)
86 D EFENCE CON TRACTS 2 026
CHAMBERS.COM
Powered by FlippingBook