The Defence Acquisition Council (DAC), chaired by Defence Minister Rajnath Singh, on 7 September 2026 accorded Acceptance of Necessity (AoN) for capital acquisition proposals worth about ₹1.10 lakh crore. Around 98 percent of the approved procurement value will be sourced from the Indian industry, giving a major push to indigenous defence manufacturing. The decision, taken in New Delhi, signals a clear shift towards self-reliance under the Atmanirbhar Bharat initiative while strengthening combat readiness across the Army, Navy and Air Force.
What Is the Defence Acquisition Council and What Does Acceptance of Necessity Mean?
The Defence Acquisition Council (DAC) is the highest decision making body in the Ministry of Defence for capital procurement, which means buying new weapons, platforms and support systems that count as long term assets. It was created in 2001 following recommendations of the Group of Ministers on reforming the national security system after the Kargil conflict, to create a dedicated and faster procurement structure. The council gives in principle approval, monitors major projects and decides on technology transfer under the Buy and Make categories.
Acceptance of Necessity (AoN) is the first formal step in the defence capital acquisition cycle. It is the administrative approval that confirms the need for a weapon or system and allows it to be included in procurement planning. AoN does not mean a contract has been signed, it means the proposal can now move to the next stages such as issuing a Request for Proposal (RFP), technical evaluation, field trials and commercial negotiations. Without AoN, budget planning and tendering cannot begin.
Who Heads and Who Sits in the Council
The DAC is chaired by the Raksha Mantri, the Defence Minister. Its key members include the Chief of Defence Staff (CDS) and the Chiefs of the Indian Army, Indian Navy and Indian Air Force, along with the Defence Secretary, Secretary Defence Production, Secretary Defence Research and Development who is also Chairman of Defence Research and Development Organisation (DRDO), and the Financial Adviser (Defence Finance). The Defence Procurement Board (DPB), headed by the Defence Secretary, and the Services Capital Acquisition Categorisation Committee support the DAC by examining proposals before they reach the council. For cases beyond ₹500 crore, AoN must be accorded by the DAC itself, while smaller cases are handled at lower levels.
How Capital Acquisition Moves from AoN to Contract
Capital acquisition in defence refers to building or buying assets that enhance long term combat capability, as distinct from revenue spending on day to day maintenance and consumables. After AoN is accorded, the process under the Defence Acquisition Procedure (DAP) 2020 moves through RFP issue, bid evaluation, trial evaluation, staff evaluation, cost negotiation by a Contract Negotiation Committee, and finally approval by the competent financial authority and signing of the contract. AoN validity is limited. Under DAP 2020, AoN for Buy categories stays valid for six months and for Buy and Make (Indian) categories for one year. If RFP is not issued within that period, fresh approval is needed, which keeps the process time bound.
What Did the Council Clear in the Rs 1.10 Lakh Crore Package?
The 7 September 2026 approvals cover all three services as well as joint structures. According to the Ministry of Defence, the package is estimated at about ₹1,10,000 crore and is focused on mobility, survivability, surveillance, propulsion and electronic warfare. About 98 percent of the value is earmarked for Buy (Indian) and Buy (Indian-IDDM) categories, which means production by Indian vendors with high indigenous content.
Proposals for the Indian Army
For the Army, AoN was accorded for Chemical, Biological, Radiological and Nuclear (CBRN) Recce Vehicles, High Mobility Vehicles (HMVs), Self Propelled Mechanical Mine Layers (MMLs), Advanced Light Helicopters (ALHs), Trawl Tanks and the Sarvatra Bridge System. CBRN Recce Vehicles are specialised armoured vehicles fitted with sensors to detect, identify, monitor and mark areas contaminated by chemical, biological, radiological or nuclear agents. HMVs improve movement of troops and logistics across deserts, mountains and marshy terrain. Self Propelled Mine Layers allow quick and responsive laying of anti tank mines in difficult ground. Trawl Tanks are tanks fitted with mine ploughs to clear paths through minefields, while the Sarvatra Bridge System, developed by DRDO, provides mobile bridging to help fighting formations cross canals and gaps during operations. ALHs will be shared with the Air Force and will perform complex missions across all terrains and weather conditions.
Proposals for the Indian Navy
For the Navy, the DAC cleared the procurement of Arudhra Radars and the design, development and subsequent procurement of Marine Gas Turbines (MGTs). The Arudhra Radar is a medium power radar that will replace existing Air Route Surveillance Radars at various naval air stations and improve detection and tracking of aerial targets. Marine Gas Turbines are the core propulsion units for modern warships. Indigenous development of MGTs is strategic because India has traditionally depended on foreign suppliers for warship engines, and local development will reduce that dependence while supporting future shipbuilding.
Proposals for the Indian Air Force and Joint Systems
For the Air Force, the DAC approved several proposals to enhance the war fighting capability of fighter aircraft, transport aircraft and helicopters, including support for upgrades and sustainment. In addition, the council accorded AoN for the Ground Based Multi Purpose Jammer (GBMPJ) and for the installation of the Defence Forces Secure Access Card (DEFSAC) System. The GBMPJ is an electronic warfare system that can jam adversary radars and disrupt enemy air defence networks. DEFSAC is a secure identity and access control system for defence personnel and establishments, aimed at strengthening information security and physical access management across the forces.
How Defence Procurement Works Under DAP 2020
India’s capital procurement is governed by the Defence Acquisition Procedure (DAP) 2020, which came into effect on 1 October 2020 and replaced the Defence Procurement Procedure 2016. The document, issued by the Ministry of Defence, lays down the steps from need identification to contract signing, with a strong focus on indigenisation. It aligns with the Atmanirbhar Bharat Abhiyan and the Make in India initiative and reserves core categories exclusively for Indian vendors.
The procedure is implemented through the Defence Procurement Portal and linked systems such as the Government e Marketplace (GeM) and the Central Public Procurement Portal (CPPP). The portal is the official interface for publishing RFPs, vendor registration and e procurement, which improves transparency and reduces timelines.
Priority Categories and Indigenous Content Requirements
DAP 2020 defines acquisition categories in order of priority, with Buy (Indian Indigenously Designed, Developed and Manufactured) or Buy (Indian-IDDM) at the top. This category requires the equipment to be indigenously designed and developed and to have at least 50 percent indigenous content (IC) on cost basis. The other major categories are summarised below.
| Category | Who Can Participate | Minimum Indigenous Content Required |
|---|---|---|
| Buy (Indian-IDDM) | Indian vendors | 50 percent and must be indigenously designed and developed |
| Buy (Indian) | Indian vendors | 50 percent if indigenously designed, otherwise 60 percent |
| Buy and Make (Indian) | Indian vendors, with transfer of technology for Make portion | 50 percent of the Make portion |
| Buy (Global Manufacture in India) | Foreign and Indian vendors | 50 percent of Buy plus Make on cost basis |
| Buy (Global) | Foreign and Indian vendors | No requirement for foreign vendor, 30 percent for Indian vendor |
A simple verification method is prescribed where indigenous content is calculated on the Base Contract Price, which is total contract price less taxes and duties. The higher indigenous content thresholds under DAP 2020 compared with earlier versions push both public and private industry to deepen domestic sourcing of material, components and software.
Atmanirbhar Bharat and Make in India in Defence Production
Atmanirbhar Bharat, announced in 2020, aims to make India self reliant across critical sectors by boosting local manufacturing, reducing import dependence and building resilient supply chains. In defence, this vision is implemented through five Positive Indigenisation Lists that embargo the import of more than 5,012 items beyond specified timelines, forcing procurement from domestic sources. The lists cover platforms, systems, spares and components, including items ranging from artillery guns to sensors.
Complementary initiatives include Innovations for Defence Excellence (iDEX), launched in 2018, the Technology Development Fund (TDF) and the two Defence Industrial Corridors in Uttar Pradesh and Tamil Nadu, which have drawn investment commitments of more than ₹74,000 crore combined. Make in India in defence focuses specifically on turning India into a manufacturing hub for military hardware, with provisions to encourage foreign direct investment through the automatic route up to 74 percent while protecting strong local value addition. The difference is useful to remember. Atmanirbhar Bharat is the larger national self reliance framework, while Make in India is the industrial programme within it that channels investment and production into Indian factories.
The impact is visible in recent performance data. Defence production rose to a record ₹1.78 lakh crore in 2025-26, up from about ₹46,000 crore in 2014-15 and ₹84,643 crore in 2020-21, while defence exports surged to ₹38,424 crore in 2025-26 from ₹686 crore in 2013-14, with Indian firms now exporting to more than 80 countries. The Defence Research and Development Organisation (DRDO), established in 1958 and headquartered in New Delhi, remains the core design agency supporting this indigenisation.
Why Is 98 Percent Domestic Sourcing Significant?
The commitment that 98 percent of the ₹1.10 lakh crore package will come from Indian industry is not just an economic choice, it shapes operational independence. High domestic content means spares, maintenance, upgrades and overhaul can be handled within the country, reducing vulnerability to supply disruptions during crises. It also keeps the life cycle cost lower, since long term support does not depend on foreign vendors for critical components such as engines, radars and electronic warfare suites.
For the broader defence ecosystem, orders of this scale provide steady demand to Defence Public Sector Undertakings (DPSUs), private manufacturers, Micro, Small and Medium Enterprises (MSMEs) and start ups. The Ministry of Defence has reserved categories like Buy (Indian-IDDM) exclusively for firms owned and controlled by resident Indian citizens with limited foreign shareholding, which directs opportunities to domestic players. A large share of execution is expected to flow through prime contractors who then subcontract to smaller firms for components, materials and services, spreading capacity creation across the supply chain.
In budgetary terms, the push coincides with a sharp rise in the defence budget to ₹7.85 lakh crore in 2026-27, including pensions, which is about 15.2 percent higher than the previous year and close to 2 percent of GDP. The capital expenditure component has more than doubled to about ₹2.19 lakh crore since 2014-15, creating fiscal space for sustained indigenous procurement rather than ad hoc foreign buys.
The Way Forward
The accord of AoN is only the starting line. Each proposal must now receive formal minutes, followed by RFP issue within the AoN validity window, technical trials and commercial negotiations. The Ministry of Defence has, as part of its Year of Reforms 2025 agenda, issued guidelines to reduce timelines at various stages of the capital acquisition process, and the Defence Acquisition Procedure will continue to be updated, with a draft DAP 2026 already circulated for comments.
The next indicators to watch are how quickly RFPs are issued for the Army’s CBRN vehicles and mine layers, for the Navy’s Arudhra radars and marine gas turbines, and for the Air Force’s GBMPJ, as well as whether indigenous content targets of 50 to 60 percent are met without cost overruns. If execution stays on track, the package will strengthen deterrence on land, at sea and in the air while consolidating India’s shift from being the world’s largest arms importer to a manufacturer and exporter of defence equipment. The standing target of ₹3 lakh crore in annual defence production and ₹50,000 crore in exports by 2029 gives a clear benchmark against which the success of such high domestic sourcing decisions will be measured.
Key Takeaways
- The Defence Acquisition Council (DAC), chaired by Rajnath Singh, accorded Acceptance of Necessity (AoN) on 7 September 2026 for capital acquisition proposals worth about ₹1.10 lakh crore.
- About 98 percent of the approved procurement value will be sourced from Indian industry under the Atmanirbhar Bharat framework.
- For the Indian Army, AoN covers CBRN Recce Vehicles, High Mobility Vehicles, Self Propelled Mechanical Mine Layers, Advanced Light Helicopters, Trawl Tanks and Sarvatra Bridge System.
- For the Indian Navy, AoN covers Arudhra Radars to replace Air Route Surveillance Radars and indigenous design and development of Marine Gas Turbines for warship propulsion.
- For the Indian Air Force and joint systems, approval includes upgrades for fighters, transports and helicopters, plus the Ground Based Multi Purpose Jammer (GBMPJ) and DEFSAC System.
- The DAC was set up in 2001 and is the highest decision making body for defence capital procurement, while AoN is the in principle administrative approval that precedes RFP and contract signing.
- Capital procurement is governed by Defence Acquisition Procedure (DAP) 2020, where Buy (Indian-IDDM) requires 50 percent indigenous content and Buy (Indian) requires 50 to 60 percent.
