The Defence Procurement Procedure (DPP) as enunciated by Manohar Parrikar, when Defence Minister, is not merely a procurement procedure- it is also an opportunity to improve efficiency of the procurement process, usher change in the mind-sets of the stake holders and promote growth of the domestic defence industry
No words could be truer than that. How India enhances its defence potential and its form of procurement will decide the future of its indigenous defence industry. And within the vast volumes of the procedure, no one categorisation can help achieve self-sufficiency than the ‘Make’ category, where state of the art defence equipment is designed, developed, tested and manufactured in India.
The DPP came into being in 2002. However, the ‘Make’ category was only introduced in the 2005 version. Even then no details were provided until release of the version in 2006 where detailed instructions were provided.
The ‘Make’ category continued to be included as a standalone category in subsequent versions in 2008, 2009, 2011, 2013. In the 2016 edition, Make was bifurcated into Make I and Make II. There also, adequate clarity was not provided for Make II, hence a separate chapter dedicated to Make II was introduced in May 2018.
In the latest version of the DPP, now known as DAP (Defence Acquisition Procedure) 2020, Make Category has been bifurcated into three, namely Make I, Make II and Make III.
In the 2006 edition, the scope of Make Category was as under:
The Defence Procurement Procedure ‘Make’ will cover all capital acquisitions of high technology complex systems and upgrades undertaken by indigenous research, design and development. These would be undertaken by Ordnance Factory Board (OFB), Defence Public Sector Undertakings (DPSUs) and Indian industry and industries identified as Raksha Udyog Ratna (RUR)/Consortia on a level playing field on shared development cost.
In the 2016 edition, the bifurcation was as under:
Make-I (Government Funded). Projects under “Make-I” sub-category will involve Government funding of 90 percent, released in a phased manner and based on the progress of the scheme, as per terms agreed between MoD and the vendor.
Make-II (Industry Funded). Projects under Make-II category will involve prototype development of equipment /system/platform or their upgrades or their subsystems/sub-assembly/ assemblies/components with a focus on import substitution, for which no government funding will be provided for prototype development purposes.
And now in the latest edition the scope is as under:
Make-I (Government Funded). Projects involving design and development of equipment, systems, major platforms or upgrades thereof by the industry. For Projects under Make-I sub-category, MoD will provide financial support upto 70 percent of prototype development cost or maximum 250 crores per DA. Funding would be released in a phased manner based on the progress of the scheme, as per terms agreed between MoD and the Development Agency(ies). The final percentage of funding to be provided would vary from case to case and would be dependent upon nature of the project and the fund support sought by the selected Development Agencies (DAs) for development of prototype.
Make-II (Industry Funded). Projects under Make-II category will include prototype development of equipment/ system/platform or their upgrades or their subsystems/sub-assembly/ assemblies/components/materials/ ammunition/software, primarily for import substitution/ innovative solutions by the private industry & OFB, for which no government funding will be provided. In Make-II, where solutions have been offered even by a single individual or a firm or suo-moto proposal, the cases would be progressed as a Resultant Single Vendor. However, SHQ should seek for multivendor options in such cases, if feasible, before progressing the case as single vendor case.
Make-III. These would encompass subsystems/subassembly/assemblies/ components/materials/ammunition, etc. which although not designed/ developed indigenously, but can be manufactured in India as import substitution for product support of weapon systems/equipment held in the inventory of the Services. Indian firms may manufacture these either in collaboration or with ToT from foreign OEMs.
Till the last edition, only Indian companies, under a strict definition of ownership and control were permitted to participate in Make programmes. However, this has been modified in the latest edition as under:
Eligibility & Categorisation. Only Indian entity & DPSU/OFB as per Para 22 of Chapter I, are eligible for participation under Make categories. In case of Make-III, an Indian vendor can enter into a JV with OEM. Successful development under Make I and Make II would result in acquisition, from successful Development Agency(ies) (DA/DAs), through the ‘Buy (Indian- IDDM)’ category with indigenous design and development and a minimum of 50 percent IC. Schemes under Make III will be procured under the Buy ‘Indian’ category with a minimum of 60 percent IC.
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