DAC clears capital acquisition proposals worth Rs 2.12 lakh crore for defence forces

1. At a Glance

• The Defence Acquisition Council (DAC), chaired by the Raksha Mantri, granted Acceptance of Necessity (AoN) to capital acquisition proposals worth about Rs 2,12,000 crore for all three Services. [1]
• AoN is in-principle administrative approval and the first step in capital procurement. It is not a contract signature or final financial sanction. [1][5]
• About 82% of the procurements will come from Indian industry. This links to Aatmanirbhar Bharat in defence. [1]
• Why it matters for UPSC: GS‑III (security, indigenisation, defence procurement), drone and counter-drone warfare, and the Prelims vocabulary of procurement (AoN, C‑UAS, VSHORADS, AODS).

2. Why in the News

• 26 Oct 2026: the DAC, chaired by Shri Rajnath Singh, accorded AoN worth about Rs 2.12 lakh crore covering the Army, Navy and IAF. [1]
• The package is weighted towards drones, counter-drones, air defence and surveillance. It includes Long Range Kamikaze Drones, C‑UAS, VSHORADS and an Integrated Surveillance & Strike System. [1]

3. Background & Evolution

• Rationale: a single apex body inside MoD to approve capital acquisitions, with AoN as the formal recognition of a Service requirement. [5]
• Procedural chain: in-principle AoN comes first. Later stages involve the Administrative Wing of MoD with Defence (Finance), and the Finance Minister / Cabinet Committee on Security (CCS) where needed. [5]
• Milestones:
• DAC set up in 2001 on the recommendations of the post‑Kargil Group of Ministers on reforming national security (unverified).
• DAP 2020 replaced DPP 2016 (unverified).
• 2022 amendments to DAP 2020 (DRDO-hosted circular): imports became an exception needing specific DAC / Raksha Mantri approval. Earnest Money Deposit (EMD) replaced the Integrity Pact Bank Guarantee for cases with AoN above Rs 100 crore. [3]
• 16 Mar 2023: MoD letter recording DAC approval to replace the Technology Development Fund (TDF) procedure in DAP 2020 with a simplified version. [4]
• 30 Nov 2023: DAC accorded AoN worth about Rs 2.23 lakh crore. Items included HAL's Light Combat Helicopters and LCA Mk 1A. [2]
• 26 Oct 2026: AoN worth about Rs 2.12 lakh crore, about 82% from Indian industry. [1]

4. Core Static Facts

Service-wise items (26 Oct 2026) [1]

5. Multi-Dimensional Analysis

Economic

• About 82% domestic sourcing [1] keeps most of the about Rs 2.12 lakh crore [1] in the domestic defence industrial base, including MSMEs and start-ups.
• AoN is only the first step [5]. Actual capital spending follows contract signature over several years, so the headline figure is not a single-year budget outlay.

Strategic / Security

• The heavy weight on drones, kamikaze drones, C‑UAS and VSHORADS [1] shows a doctrinal shift towards cheap, massed unmanned systems and layered short-range air defence.
• Navy AODS addresses the threat of adversaries' anti-ship missiles [1]. This bears on sea control in the Indian Ocean Region.
• The forward-area weather radar and HMVs [1] support operations in high-altitude and difficult terrain.

Scientific / Technological

• Indigenous design and construction of major naval platforms [1] reflects maturing warship design capacity.
• Simplifying the TDF procedure [4] aims to speed up R&D by industry and start-ups for niche technologies.

Governance / Administrative

• Several stages follow AoN: Defence (Finance), then FM or CCS [5]. Delays between AoN and contract are a recurring bottleneck.
• Making imports an exception that needs DAC or RM approval [3] puts indigenisation into procedure. Tying EMD to AoN above Rs 100 crore [3] is meant to secure bidder seriousness.

Joint‑ness

• An LMRH shared by the Army and IAF [1] points to common platforms and theatre-level integration.

6. Recent Developments (last 12–18 months)

• 26 Oct 2026: AoN worth about Rs 2.12 lakh crore, about 82% from Indian industry. [1]
• Other 2026 DAC approvals and the status of the draft DAP 2026 were reported only in non-whitelisted sources. Verify them on pib.gov.in or mod.gov.in before use.

7. Prelims Hooks

• The DAC is chaired by the Raksha Mantri, not the PM or CDS. [1]
• AoN = Acceptance of Necessity = in-principle administrative approval. [1]
• AoN is the first step of capital procurement. Later approvals may involve the FM or CCS. [5]
• AoN accorded on 26 Oct 2026 is worth about Rs 2,12,000 crore. [1]
• About 82% of these procurements are from Indian industry. [1]
• VSHORADS = Very Short‑Range Air Defence System. It counters small aerial threats. [1]
• C‑UAS (platform-based) is meant to improve tank survivability. [1]
• AODS = Active Offboard Decoy System (Navy). It counters anti-ship missiles. [1]
• LMRH will be used by both the Army and the IAF. [1]
• GSRS = Gun Shot Response System. It gives real-time situational awareness. [1]
• The X‑Band Doppler Weather Radar (mobile) is for the IAF, for weather surveillance in forward areas. [1]
• Under the amended DAP 2020, imports need specific DAC or RM approval. [3]
• EMD replaced the Integrity Pact Bank Guarantee for AoN above Rs 100 crore. [3]
• On 30 Nov 2023 the DAC accorded AoN worth about Rs 2.23 lakh crore, including LCH and LCA Mk 1A. [2]

8. Rs 2.12 Lakh Crore Is a Promise of Future Spending, Not Money Spent

• The approval is almost as big as one full year of capital spending
• Capital outlay (money for new assets, not salaries or running costs) for defence in 2026-27 is Rs 2,31,010 crore [6].
• This one AoN is worth about Rs 2.12 lakh crore [1], so it nearly equals the whole year's capital budget. The capital budget also has to cover land, buildings and older contracts.

• So this money can only be paid out over many years. Each new AoN adds to future bills.

• Old contracts already take up the new money

• Committed liabilities are payments still owed on contracts signed in earlier years [6].
• From 2016-17 to 2019-20, these payments were larger than the whole modernisation budget every year. The gap was 15% to 33% [6].

• When old bills use up the budget, little is left to sign new contracts. An AoN can then wait for years.

• We can no longer check how much money is already locked

• Data on committed liabilities has not been published since 2019-20 [6].

• Without it, nobody outside MoD can tell whether this Rs 2.12 lakh crore can actually be paid for.

• Salaries and pensions squeeze out new equipment

• Salaries and pensions are about 44% of defence spending in 2026-27 [6].
• Capital is only 29%. It has averaged 27% over the last decade, against the 40% the Standing Committee on Defence called ideal [6].
• The 8th Pay Commission may raise salaries and pensions further [6]. That would leave even less room for capital.

9. The Long Road From AoN to a Weapon in the Soldier's Hand

• Too many approval steps slow every case
• CAG studied 11 Indian Air Force contracts worth about Rs 95,000 crore. It found every case passes through 11 stages from start to contract signing [7].
• CAG said the delays came mainly from this complex, multi-level approval process [7].

• AoN is only the first of these stages [5]. A big AoN headline says little about when the equipment will arrive.

• CAG has found that delays hit troops directly

• CAG (2019) found delays of up to four years in buying essential clothing and equipment for troops at high altitude [6].

• This matters for the present package too. It includes High Mobility Vehicles and forward-area radars meant for difficult terrain [1].

• The weak point is often the first step, when the need is written down

• CAG called the stage where the Air Staff Qualitative Requirements (the technical specifications for an item) are written a crucial stage [7].
• If specifications are unrealistic or keep changing, a case can stall long after AoN.

10. Indian Industry Has Delivered Late Before

• Buying Indian does not guarantee buying on time
• CAG checked Army capital contracts with defence PSUs (DPSUs, government-owned defence companies) in the XI Army Plan (2007-12) [8].
• Contracts worth Rs 30,098 crore were badly delayed. That was 63% of the value of all contracts with DPSUs [8].

• Reasons: long development time, slow testing of pilot samples, dependence on foreign vendors, and unclear contract terms [8].

• An Indian label can hide foreign parts

• One reason for those DPSU delays was dependence on foreign vendors [8]. An Indian supplier can still wait on imported parts.

• So the 82% figure [1] counts where the order goes, not where each part is made. A foreign supply problem can still stop an Indian order.

• Import dependence is still high

• India was the second-largest arms importer in 2020-2024 [6].
• PRS notes three weak spots: few Indian firms in high-tech manufacturing, too little R&D spending, and concerns about quality [6].
• Drones and counter-drone systems need fast-changing electronics and software. If R&D is weak, the Indian version may already be out of date when it arrives.

11. What This Package Does Not Fix

• The Army still has too much old equipment
• In 2023, only 15% of Army equipment was new-generation. The ideal is 30% [6].
• 45% was old-generation, against an ideal of 30% [6].

• Drones and VSHORADS [1] add new capability at the edges. They do not replace the large stock of ageing equipment.

• The Air Force fighter gap sits outside this package

• The IAF has 31 active fighter squadrons. It is authorised to have 42 [6].
• It needs at least 180 fighter aircraft and is about 130 trainer aircraft short [6].

• The IAF part of this AoN covers helicopters, air defence, weapons and a weather radar [1]. It has no fighters. The 114-Rafale approval of February 2026 is a separate track [6].

• The Navy's Russian-origin aircraft remain a spares problem

• Many naval aviation assets are of Russian origin. The Navy depends on the OEM (original equipment manufacturer, the company that built the item) for maintenance and spares [6].
• New indigenous platforms and AODS [1] reduce this dependence only over time.

12. What Should Change, and Who Should Do It

• MoD should publish committed liabilities data again
• The data stopped after 2019-20 [6].

• Parliament can only judge whether a big AoN is affordable if it can see what is already owed.

• Finance Ministry and MoD should settle the non-lapsable fund question

• A non-lapsable fund is money that does not expire at the end of the financial year if it is not spent.
• The Standing Committee on Defence (2017) asked for one. It said lack of money delays equipment purchases and hurts operational readiness [9].
• The 15th Finance Commission also backed it. The government says constitutional provisions do not allow it. The 16th Finance Commission (2026) made no recommendation [6].

• The Committee (2022) also asked for a dedicated fund for this. It has not been created [6].

• MoD should cut the approval stages CAG counted

• CAG found 11 stages between starting a case and signing the contract, and blamed the multi-level process for delays [7].

• A successor to DAP 2020 should set a time limit for each stage after AoN, so approvals do not stall.

• MoD should write firm contract terms with Indian suppliers

• CAG listed unclear contract terms as one cause of DPSU delays [8].

• With 82% of this package going to Indian industry [1], clear delivery dates and penalties matter more than before.

• Government should move capital spending towards the 40% level

• The Standing Committee on Defence called a 60:40 revenue-to-capital ratio ideal. The 2026-27 capital share is 29% [6].
• The Committee (2018) also suggested defence spending of about 3% of GDP. The 2026-27 level is 2.0% [6].

13. Anchors for Answers

• Data: Defence capital outlay 2026-27 (BE) is Rs 2,31,010 crore, which is 29% of defence spending. The ideal set by the Standing Committee is 40% [6]
• Data: Committed liabilities were larger than the modernisation budget every year from 2016-17 to 2019-20, with a shortfall of up to 33% in 2018-19 [6]
• Data: Defence spending is 2.0% of GDP in 2026-27, down from 2.3% in 2014-15. Salaries and pensions take about 44% [6]
• Data: IAF has 31 active fighter squadrons against 42 authorised [6]
• Report/Committee: CAG Report No. 3 of 2019 (IAF capital acquisition) found 11 stages per case, with delays caused by the multi-level approval process [7]
• Report/Committee: CAG Report No. 19 of 2016 found Rs 30,098 crore, or 63%, of DPSU contract value delayed [8]
• Report/Committee: Standing Committee on Defence (2017) recommended a non-lapsable capital fund [9]
• Scheme: Technology Development Fund, simplified in 2023 [4]. It funds R&D by industry and start-ups, which is relevant to the R&D shortfall flagged by PRS [6]

14. Mains Relevance

• GS‑III: Security challenges and their management; various security forces and their mandate; indigenisation of technology; defence technology. Also GS‑III Economy, on industrial policy and Make in India.
• GS‑II (in part): Government policies and interventions, and transparency in procurement.
• Question stems: 1. Large Acceptances of Necessity do not automatically become timely capability. Examine the bottlenecks in India's defence capital acquisition cycle and suggest reforms. (250 words) 2. Drones and counter-drone systems now dominate India's recent defence acquisitions. Discuss the doctrinal and industrial implications. (150 words) 3. Assess how procedural reforms in defence acquisition have furthered the goal of Aatmanirbharta in defence. (250 words)

15. Related Topics to Study Next

• Defence Acquisition Procedure 2020 and its successor: the rulebook that governs AoN, categories and imports.
• Positive Indigenisation Lists: the import-embargo lists that complement the import-as-exception rule.
• iDEX and the Technology Development Fund: R&D channels for start-ups and MSMEs linked to the TDF reform. [4]
• Defence Industrial Corridors (UP and Tamil Nadu): the production base for the 82% domestic share.
• Counter-drone and loitering munitions: the core technology theme of this AoN.
• Chief of Defence Staff and Department of Military Affairs: jointness and prioritising procurement.
• Project 75I and indigenous warship programmes: context for the "major naval platforms".
• Defence budget, capital outlay and its trends: the AoN figure versus the annual capital outlay.

16. NCERT Concepts to Revise

• Comptroller and Auditor General (Polity): CAG audits found multi-stage approvals and late Indian suppliers delaying defence purchases; the note uses these findings.
• Cabinet Committee on Security (Polity): CCS gives later approval for big defence purchases after the in-principle AoN step.
• Standing committee (Polity): The Standing Committee on Defence set the 40% capital ideal and sought a non-lapsable fund.
• Capital budget (Economy): Explains why the Rs 2.12 lakh crore AoN is compared with the yearly defence capital outlay.
• Demand for grants (Economy): Defence spending and capital outlay figures come from the Demand for Grants, which Parliament votes on.
• Industrial policy (Economy): The 82% domestic sourcing and import-as-exception rule are industrial policy tools for self-reliance in defence.

17. Common Errors / Trap Areas

• AoN is not a contract and not a budget allocation. It is the first in-principle step. FM or CCS approvals may follow. [5]
• Chair confusion: the DAC is chaired by the Defence Minister, not the CDS, NSA or PM. [1]
• Mixing up figures: Rs 2.12 lakh crore (Oct 2026) [1] versus Rs 2.23 lakh crore (Nov 2023). [2]
• Service attribution: AODS is for the Navy. The X‑Band Doppler Weather Radar is for the IAF. LMRH is Army + IAF. C‑UAS is mounted on platforms to protect tanks. [1]
• "82% from Indian industry" means the share of procurements sourced domestically. It does not mean 82% indigenous content in each item. [1]