India's defence budget for 2025–26 exceeds ₹6.8 lakh crore, with the capital acquisition component (equipment and infrastructure) at ₹1.7+ lakh crore. The Defence Acquisition Procedure (DAP) 2020 has opened up defence procurement to private Indian companies and MSMEs in a way that was not possible even five years ago.
DAP 2020 Procurement Categories
- Buy (Indian-IDDM) — highest priority. Indigenously Designed, Developed, and Manufactured. Minimum 50% indigenous content. Reserved for Indian companies.
- Buy (Indian) — manufactured in India with minimum 50% indigenous content. Foreign OEMs can participate through Indian subsidiaries or JVs.
- Buy and Make (Indian) — initial purchase from foreign OEM with technology transfer for subsequent manufacturing in India.
- Buy (Global) — open international tender. Only for items where no Indian source exists. Minimum 30% offset obligations for contracts above ₹2,000 crore.
Entry Points for MSMEs
- iDEX (Innovations for Defence Excellence) — challenges for defence startups. Grants up to ₹1.5 crore for prototype development. Guaranteed purchase order on success.
- SRIJAN portal — lists 35,000+ defence items being imported that India wants to indigenise. MSMEs can offer to manufacture these.
- Ordnance Factory Board vendors — supply of components, raw materials, and sub-assemblies to defence production units.
- Defence offset — large foreign defence contracts (₹2,000+ crore) require 30% offset in India. Foreign OEMs actively seek Indian MSME partners.
- GeM for defence — routine supplies (stationery, furniture, IT equipment, uniform) to defence establishments through GeM.
Key Procuring Entities
- Acquisition Wing, MoD — capital acquisitions for Army, Navy, Air Force
- Defence PSUs — HAL, BEL, BDL, BEML, MDL. Each has its own vendor registration and procurement system.
- DRDO — R&D equipment, lab supplies, and technology development contracts
- MES (Military Engineer Services) — construction and maintenance of military installations across India
- ASC (Army Supply Corps) — provisions, rations, and general supplies for the Army
Getting Started
- Register as a defence vendor on the MoD vendor portal (defenceportal.gov.in)
- Obtain Industrial Licence for defence items under Schedule I of the Industries Act (if manufacturing controlled items)
- NSIC registration helps for MSMEs seeking defence supply contracts
- Check SRIJAN portal for import substitution opportunities matching your manufacturing capabilities
- Attend DEFEXPO and Aero India for networking and understanding requirements