Buy and Make (Indian) Category

Buy and Make (Indian) is one of the five acquisition categories defined under India's Defence Acquisition Procedure (DAP) 2020. It is designed for situations where India needs a specific defence capability that does not yet exist domestically, but where the government is committed to building that capability in India over time through a technology transfer arrangement with a foreign original equipment manufacturer (OEM).

What is Buy and Make (Indian) Category in government procurement?

Under DAP 2020, all defence procurement is classified into five categories in order of preference: Buy (Indian-IDDM), Buy (Indian), Buy and Make (Indian), Buy and Make, and Buy (Global). The government must justify moving to a lower category if a higher-priority category cannot meet the requirement.

Buy and Make (Indian) works as follows: the government procures an initial quantity of the equipment from a foreign vendor through direct import (the "Buy" phase). Simultaneously, the foreign vendor is required to transfer the technology for manufacturing that equipment to an identified Indian Production Agency (IPA), a private or public sector Indian company. In the subsequent "Make" phase, the IPA manufactures the remaining quantity required by the armed forces using the transferred technology. The technology transfer must be sufficient to enable the IPA to manufacture at least 50% indigenous content in the equipment it produces.

The foreign OEM and the Indian IPA bid jointly. The IPA is typically selected either by the foreign OEM from a list of eligible Indian companies or through a government-managed selection process. The IPA must be a company registered in India. There is no restriction on the foreign OEM holding equity in the IPA, subject to FDI limits in defence (74% under automatic route, 100% with government approval).

This category is used when: the technology is too complex for India to develop from scratch in the required timeframe, the requirement is urgent enough that waiting for indigenous development is not acceptable, and the government determines that building domestic manufacturing capability is strategically important enough to pay the premium of a technology transfer arrangement.

Why it matters for bidders

For Indian defence contractors, Buy and Make (Indian) tenders are significant opportunities to acquire advanced manufacturing technology that would otherwise take decades to develop independently. Companies that successfully execute a Buy and Make (Indian) contract end up with production lines, trained workers, and intellectual property rights for specific equipment, creating a lasting competitive advantage.

For foreign OEMs, Buy and Make (Indian) is a market entry mechanism that India effectively requires for major capital procurement. A foreign company that refuses to participate in technology transfer arrangements for Indian defence finds itself unable to access the world's largest arms import market. The calibrated technology transfer, the OEM decides how much technology to share and retains what it considers most sensitive, is a negotiation between commercial interest (selling to India) and strategic caution (not sharing core technology).

Indian SMEs and MSMEs increasingly participate as sub-vendors to IPAs executing Buy and Make (Indian) contracts, supplying sub-assemblies and components. The DAP 2020 encourages this through indigenous content requirements that cascade down the supply chain.

Example

India procures 36 Rafale aircraft from France under the inter-governmental agreement framework. Dassault Aviation transfers specified technologies to Indian aerospace companies, including HAL, which manufactures components, representing a partial Buy and Make (Indian) structure, though the Rafale deal is more complex given its inter-governmental nature. A cleaner example is the acquisition of Bofors-technology 155mm artillery guns: after the initial import controversy, India subsequently pursued 155mm howitzers through Buy and Make (Indian) routes with Indian companies like Mahindra and Tata partnering with foreign OEMs to manufacture domestically.

Key rules / thresholds

The Indian Production Agency must manufacture a minimum specified quantity domestically, with indigenous content (IC) increasing over the contract period. The minimum indigenous content requirement in the Make phase under Buy and Make (Indian) is 50% by cost of the total contract value of the Make phase. Failure to achieve the required IC results in financial penalties and can trigger contractual remedies by MoD.