Make Category (Make-I, Make-II)

The Make Category is a pathway under India's Defence Acquisition Procedure (DAP) 2020 specifically designed to develop defence equipment entirely within India through the country's own design and development effort. Unlike Buy categories that procure existing equipment, Make creates new capabilities. It is split into Make-I (government-funded development) and Make-II (industry-funded development), making it India's primary mechanism for building original defence technology from scratch.

What is Make Category (Make-I, Make-II) in government procurement?

Make-I involves the government funding the design and development phase. The government selects typically two Indian development agencies (IDAs) and funds up to 70% of the development cost for each through milestone-based payments. At the end of the development phase, the government procures the proven equipment, with preference going to the IDA that passes trials. This route is used for high-risk, high-cost development where pure private funding would not be viable, such as combat aircraft systems, advanced sensor suites, and complex missile sub-systems.

Make-II is industry-funded. The Indian company self-finances the entire design and development phase at its own cost and risk. If the company successfully develops a prototype that meets the Services Qualitative Requirements (SQRs) and passes trials, the government commits to procuring a minimum order quantity. The financial risk is on the private company, but so is the intellectual property and the profit from production orders. Make-II is better suited to lower-complexity items where companies are confident of developing solutions without government capital.

Both Make-I and Make-II restrict participation to Indian companies, no foreign OEMs allowed as primary bidders, though JVs with up to 49% foreign equity are permitted. This makes Make the most indigenous of all DAP categories.

The Ministry of Defence issues Expressions of Interest or Requests for Information to identify Indian companies capable of participating before issuing the formal Make case. The SQRs are often developed collaboratively between the user service, DRDO, and potential development agencies to ensure they are technically achievable within the Indian industry ecosystem.

Why it matters for bidders

Make-I tenders represent substantial government funding that flows directly to selected Indian development agencies before any production revenue begins. Companies with design and development capability, defence PSUs like HAL and BEL, and private players like TATA Advanced Systems, L&T Defence, and Bharat Forge, actively pursue Make-I cases as a way to grow technology capability at reduced financial risk.

Make-II is increasingly popular with startups and SMEs because the barrier to entry is lower, there is no need to be a large company with defence experience. Under DAP 2020, Make-II minimum order value thresholds were reduced and the process was simplified to encourage wider participation. iDEX (Innovations for Defence Excellence) operates as a fast-track Make-II-like mechanism for early-stage startups.

The production contract that follows a successful Make case can be worth hundreds of crores or thousands of crores depending on the equipment, the development investment is amortised over the production contract, so companies that win the development phase are well positioned to win the production contract too.

Example

The Light Combat Helicopter (LCH), indigenously developed by HAL, illustrates the Make pathway. HAL received government funding to develop the LCH over several years (Make-I logic). After passing extensive trials, the Indian Air Force and Army placed initial orders for 15 helicopters, the production contract that recoups the development investment. For Make-II, a private company developing a new counter-drone system for the Army would self-fund the prototype, demonstrate it at Army trials, and if selected, receive a production contract. The company owns the technology and earns all production profits.

Key rules / thresholds

For Make-I, government funding is limited to 70% of development cost per agency, with the agency bearing 30%. For Make-II, there is no government funding of development, the company bears 100%. However, the government guarantees that if development is successful, it will not resort to importing the same item for at least 10 years, providing production order certainty. Indigenous content in the final product must be at least 50% by cost under both Make-I and Make-II.