Beyond financial powers
A revised framework aims to shorten procurement timelines by delegating decision-making closer to field-level officers
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 "Martand Mishra")
 "Air Marshal Sanjiv Ghuratia, Lt Gen Rajiv Kumar Sahni and Lt Gen Amardeep Singh Aujla during a tri-services display held in Chandigarh in June 2026 (PHOTO Maintenance Command IAFX)")
Air Marshal Sanjiv Ghuratia, Lt Gen Rajiv Kumar Sahni and Lt Gen Amardeep Singh Aujla during a tri-services display held in Chandigarh in June 2026 (PHOTO Maintenance Command IAFX)
The Ministry of Defence’s (MoD) Delegation of Financial Powers to Defence Services (DFPDS)-2026, a revised administrative framework, was released in June this year. This framework aims to enhance the financial powers of service chiefs, field commanders, and other defence establishments. The document, last revised in 2021, governs revenue procurement of the Indian armed forces. While announcing the revised framework, the MoD said “enhancement in the financial powers has been made up to 100 per cent”, with several categories seeing their delegated financial limits being doubled.
The DFPDS-2026 improves operational readiness, and strengthens indigenisation and research and development (R&D) through designated service-wise financial schedules, while reducing dependence on foreign original equipment manufacturers (OEMs).
These objectives appear to be closely aligned, as faster financial approvals can shorten procurement timelines and allow commanders to respond to operational requirements, while emphasising indigenous sourcing to strengthen the defence manufacturing ecosystem.
The language used in these schedules tells a more complex story. The provisions under the indigenisation schedules specifically mention “technology insertion for legacy/imported items” and “developing indigenous source” phrases that focus on replacing imported components and developing local alternatives for existing systems. In other words, the emphasis appears to be on reducing dependence on imported components and sustaining current military platforms through local solutions.
It raises an important question: Does DFPDS-2026 advance indigenous technology development, or is it designed to accelerate import substitution and sustain existing military capabilities?
 "Defence Research and Development Organisation (DRDO) conducts a successful flight test of the New Generation AKASH air defence missile from the Integrated Test Range, Chandipur, off the coast of Odisha on January 12, 2024. Image credit: PIB")
That distinction surrounds India’s evolving defence-industrial strategy. While replacing imported spares with domestic alternatives is an important step towards self-reliance, it differs from developing original technologies, critical subsystems or next-generation platforms. Experts argue that the revised financial powers should, therefore, be viewed as an enabling procurement reform rather than a standalone innovation policy.
The document is released at a time when the armed forces are seeking a faster procurement process, operational flexibility, and reduced dependence on overseas supply chains.
Lessons from recent conflicts — mainly Russia-Ukraine and West Asia — have highlighted the need for armed forces around the world to quickly procure, modify, and sustain equipment as technology evolves faster than conventional acquisition cycles.
The DFPDS-2026 is structured into five separate schedules, one for each arm of the defence establishment. These are: Army Schedule of Powers, Naval Schedule of Powers, Air Force Schedule of Powers, Integrated Defence Staff (IDS) Schedule of Powers, and Medical Services Schedule of Powers.
Each schedule mentions service-specific financial powers across a range of categories, including procurement of stores and equipment, works and infrastructure, indigenisation and research and development (R&D), training, transportation, telecommunications, and miscellaneous expenditure. These schedules also provide dedicated special financial powers for army, navy, air force and IDS commanders to sanction urgent operational procurements within their respective commands.
The medical services schedule covers financial powers specific to the Armed Forces Medical Services, such as medical stores, equipment and hospital-related sanctions. It also mentions provisions of powers for a “Lead Service” in joint or
tri-service procurement meant to enable faster combined acquisitions across the army, navy, air force, IDS, and medical services when required.
Amit Cowshish, a retired Indian Defence Accounts Service officer who handled these exercises while serving in the MoD, said the revised delegation should be viewed in context rather than as a transformational shift.
“It would be unfair to read too much into this document, regardless of what the ministry says. I might be missing something but I have not been able to put my finger on anything particularly exciting in it,” said Cowshish.
According to him, revisions to financial powers have been carried out periodically to account for inflation and changing operational costs.
“Financial powers have always been revised periodically. With inflation and rising costs, people down the chain simply need higher limits to continue doing what they were already doing,” he added.
While the revised document repeatedly refers to indigenisation and R&D, he argued that the mechanism is not entirely new. He said that the powers related to indigenisation were there earlier as well and it’s not something “fundamentally new in that regard”.
The significant question, experts say, is what kind of indigenisation these powers are likely to support.
The document appears to strengthen financial authority for local sourcing, technology insertion, repair and maintenance activities, and replacement of imported components. These measures improve operational readiness by enabling formations to sustain existing equipment more efficiently, particularly where foreign supply chains remain vulnerable.
Cowshish drew a distinction between such activities and other technology development programmes.
Using the example of military repair workshops, he said: “The workshops repairing tanks or aircraft are trying to replace imported components and spare parts with indigenous ones. It is a very limited exercise, but it goes hand in hand with the larger indigenisation effort funded through the capital budget.”
Cowshish further clarified that major indigenous development programmes continue to be funded separately.
“The real big-ticket indigenisation projects are funded through the capital budget. These delegated powers are meant for a different purpose as they help sustain local replacement of imported parts rather than fund major technology development,” he stated.
Rahul Rawat, research assistant in New Delhi-based think tank Observer Research Foundation, agrees that import substitution forms an important component of the policy, but cautions against viewing it negatively.
India’s self-reliance efforts today, Rawat explained, operate at three distinct levels: Replacing imported spare parts through domestic suppliers, upgrading legacy or foreign-origin platforms using indigenous software, sensors and subsystems, and finally, designing entirely indigenous systems.
“Import substitution is one of the central purposes of the reform, but it is not disguised,” he said, noting that the revised delegation is expected to improve indigenisation of supply chain and upgrades, while also partially supporting original indigenous development.
The effort to build homegrown inventory cannot simply be replaced overnight, he explained.
“The Indian military cannot replace its existing inventory and needs to sustain and integrate it effectively with new capabilities. Thus, domestic substitution is not necessarily evidence of policy failure. It is often the pragmatic way to maintain readiness while a parallel new indigenous industrial base develops,” Rawat stated.
He described import substitution both as an opportunity and a potential risk, as he called it as a “bridge” for domestic suppliers who are transitioning from just developing spare or replacement components to “redesigning, controlling the relevant interfaces, developing the next-generation subsystem, and eventually becoming the design authority”.
“However, it may become a trap when imported assemblies are merely replaced or locally assembled without control over critical technology, interfaces or intellectual property,” he added.
While the recent production figures show an increase in developing parts and having indigenous substitution for imports, it also suggests that “technological sovereignty remains suboptimal relative to production figures”, he said.
The financial powers also seek to shorten procurement timelines by delegating decision-making closer to the field-level officers. Under the revised ceilings, annual sanction limits have been raised to Rs 800 crore for commanders of the Northern and Eastern Army Command, while Western, Southern, Central, and South Western commands are capped at Rs 400 crore.
Rawat believes it is precisely at this level that the reform is likely to have its most immediate impact. “The military advantage depends not just on possessing advanced platforms but on the capacity to organise military capabilities faster than the adversary can counter,” he said.
According to him, it shortens the financial approval process — which currently takes a year in some cases, if not months — with direct support to the adaptation cycle.
“An existing operational problem requires rapid approval, testing, development of an initial batch of prototypes, deployment, user feedback, modification, and later mass production. It (DFPDS-2026) supports the adaptation cycle by enabling rapid testing and certification, user feedback, and subsequent scaling of products,” Rawat explained.
However, greater financial authority does not automatically translate into higher expenditure, as Cowshish emphasised that financial delegation should not be confused with budget allocation.
He said that these powers are somewhat similar to having a driver’s licence. “To use that licence, you also need a car. Similarly, delegated powers are useful only if adequate funds are actually available. You may have the authority to spend Rs 10 crore, but if only Rs 10 lakh has been allocated, you can spend only Rs 10 lakh,” Cowshish said, highlighting a need for an increase in the defence budget at the planning level.
The same distinction is important for the domestic industry, as higher financial limits may enable fast procurement decisions at command or unit level, but they do not translate into more contracts. Available opportunities for the industry — particularly micro, small, and medium enterprises (MSMEs), private sector, and startups — will depend on whether the government backs the powers with higher budgetary allocations.
“It is not the enhancement of financial powers that will benefit MSMEs. It is a higher budgetary allocation. If the allocation increases, contracts will increase. If the allocation remains limited, contracts will remain limited,” Cowshish said.
Rawat also believes that defence public sector undertakings (DPSUs) are likely to remain better-placed with these contracts — despite an increase in number of private-sector defence companies — in the near term because of their production infrastructure, experience, and long-standing relationships with the services.
However, experts argue that private companies and MSMEs could benefit in emerging technology segments such as drones, counter-unmanned systems, artificial intelligence (AI), and cyber & electronic warfare, where they have developed expertise. Consistent procurement and better coordination across commands, and repeated orders would allow companies to scale production, invest in R&D, and build long-term capabilities, rather than relying on isolated contracts.
While DFPDS-2026 and the revised Delegation of Financial Powers to DRDO (DFP-2026) together represent complementary elements of self-reliant India (Atmanirbhar Bharat), Rawat argues that financial delegation alone cannot create an integrated innovation ecosystem.
“DFPDS-2026 and DRDO DFP-2026 present a coherent delegation in terms of an operational-demand-pull element intertwined with a technology-push model. However, they are not yet a fully integrated innovation system. Financial powers are part of the strategy, but the same also demand synchronisation and coordination of projects and activities among different stakeholders,” Rawat explained.
According to Rawat, the two frameworks have different purposes. While DFPDS-2026 enables user-led, service-specific procurement, the DRDO delegation is tied to strategic, pre-project R&D, and formal technology development programmes. He added that the two must remain complementary to avoid duplication of projects undertaken jointly by the services and DRDO.
Cowshish makes a similar argument, but from the perspective of institutional planning for R&D.
“R&D today is fragmented. DRDO is doing its part, the Department of Defence Production has its own initiatives, the services undertake limited projects, and DPSUs pursue their own programmes,” Cowshish said. According to him, empowering individual organisations is useful, but coordination remains the missing piece.
“While it is useful to give the services greater powers to undertake limited R&D projects, the entire effort has to be coordinated towards a common national objective. That institutional framework for coordination is perhaps what is still missing,” he said.
Cowshish argued that procurement reforms alone cannot substitute for long-term capability planning for the armed forces as it requires substantive strategising.
“Acquisition is only a subset of defence planning. R&D, production, procurement and indigenisation have to be part of a single long-term strategy. Planning is a 24x7 job, and unless there is a dedicated institution driving that process, coordination will continue to remain sub-optimal,” Cowshish added.
DFPDS-2026 can be viewed less as a watershed moment for indigenous defence technology and more as an administrative reform aimed at improving operational readiness at unit or command level. Without increases in budgetary allocations and an institutional mechanism to align procurement, R&D, and capability development, it is likely to remain an enabling procurement reform. Whether these reforms can transition from mere operational readiness to true indigenous technological capability will depend on broader defence innovation, not just on financial powers.
Written By
Martand Mishra
Martand Mishra has started his reporting career with defence coverage. He is a graduate of the Indian Institute of Mass Communication. He enjoys reading books on defence, history and biographies.
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First Published: Aug 10 2026 | 5:40 AM IST
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