Knowledge Enabler Defence Acquisition Procedures: Chapter 1 Session 1 Acquisition Categories

Summary

This session of Defense Acquisition Procedure (DAP) 2020, Chapter 1, provides an in-depth overview of capital acquisition schemes, procurement categories, and indigenous content requirements. It explains the Buy, Buy & Make, and Make/Innovation schemes, highlighting priorities for domestic production and phased technology transfer from foreign OEMs. The session covers categories like Buy Indian IDDM, Buy Indian, Buy Global, and outlines Make 1, 2, 3 schemes, as well as innovation initiatives for startups and MSMEs funded through the Technology Development Fund. Emphasis is placed on developing long-term indigenous defense capabilities while ensuring compliance with government priorities and promoting domestic industry participation.

Takeaways

• 📘 DAP 2020 Chapter 1 focuses on defense acquisition, procurement categories, acquisition planning, and indigenous content.
• 💰 Capital acquisition schemes control budget expenditure and cover acquisitions excluding works, land, and medical equipment.
• ⚙️ Capability acquisition is divided into three schemes: Buy, Buy & Make, and Make, with Make focusing on indigenous development.
• 🇮🇳 Buy (Indian – IDM) category requires fully indigenously designed, developed, and manufactured products with minimum 50% indigenous content.
• 🏭 Buy (Indian) allows procurement from Indian vendors without indigenous design, requiring 60% indigenous content on the base contract price.
• 🌐 Buy Global involves foreign vendors or Indian vendors using foreign technology, requiring 30% indigenous content or offset obligations.
• 🔗 Buy & Make schemes involve phased indigenous production with technology transfer from foreign OEMs, achieving minimum 50% indigenous content on the make portion.
• 📈 Make schemes (Make 1, 2, 3) promote indigenous prototype development, innovation, and import substitution, with varying funding and content requirements.
• 💡 Innovation initiatives target startups and MSMEs for low-capital, high-innovation projects, supported by the Technology Development Fund.
• 🏛️ Internal service organizations can develop equipment independently or with private industry, with procurement conducted under Buy Indian IDM or Buy Indian categories.
• 📊 Procurement priority favors Buy Indian IDM, followed by Buy & Make Indian, Buy & Make Global Manufacturing in India, and then Buy Global.
• ✅ Positive list of indigenization mandates procurement of critical items only under Buy Indian IDM or Buy Indian categories.

Q & A

What is the primary focus of Chapter 1 in the Defense Acquisition Procedure (DAP) 2020?

Chapter 1 covers acquisition planning, categories of acquisition, and indigenous content for capital acquisitions, excluding works, land, and medical equipment.

Which organizations are responsible for capital acquisitions under DAP 2020?

Capital acquisitions are managed by the Ministry of Defense (MoD), Services Headquarters (SHQs), Indian Coast Guard, DRDO, Ordnance Factory Board, and DPSUs, with DRDO, Ordnance Factory Board, and DPSUs following their own procedures.

How is capital acquisition categorized in DAP 2020?

Capital acquisition is categorized into three types: short- to medium-term acquisitions, long-term indigenous defense capability development, and other acquisitions like overhauls, upgrades, and replacements.

What are the three acquisition schemes introduced in DAP 2020?

The three acquisition schemes are Buy, Buy and Make, and Make (the latter being newly introduced in DAP 2020).

What are the subcategories of the 'Buy' scheme and their key requirements?

The 'Buy' scheme has three subcategories: Buy (Indian – IDM) requires ≥50% indigenous content; Buy (Indian) requires ≥60% indigenous content; Buy (Global) involves foreign purchase, with Indian vendors needing ≥30% indigenous content and offsets if project cost ≥ ₹2000 crore.

What is the priority order of procurement categories under DAP 2020?

The priority order is: Buy (Indian – IDM) > Buy and Make (Indian) > Buy and Make (Global, manufactured in India) > Buy (Global).

What is the purpose of the Make schemes (Make-I, Make-II, Make-III) in DAP 2020?

Make schemes focus on developing indigenous capabilities: Make-I involves government-funded prototype development; Make-II covers innovative solutions without government funding; Make-III is for import substitution of existing systems in inventory.

What role does the Technology Development Fund (TDF) play in DAP 2020?

TDF supports prototype development for DRDO-sponsored projects by Indian vendors, particularly MSMEs and startups, and ensures procurement follows Buy (Indian – IDM) guidelines with shared intellectual property rights.

How is indigenous content calculated for procurement under DAP 2020?

Indigenous content is calculated on the base contract price, which is the total contract price minus taxes and duties, and varies according to the procurement category (e.g., 50% for Buy IDM, 60% for Buy Indian).

What is the positive list of indigenization and how does it affect procurement?

The positive list includes equipment that must be procured only under Buy (Indian – IDM) or Buy (Indian) categories. Other categories like Buy and Make Indian or Buy Global cannot be used, and the buy quantity for these items must be zero.

How does DAP 2020 support innovation and startups in defense acquisition?

Innovation schemes such as Defense Innovation for Excellence encourage projects by startups and MSMEs with low capital investment and high innovation. Government funding is provided in Make-I, and TDF helps in prototype development.

Can vendors eligible for higher procurement categories participate in lower categories?

Yes, vendors eligible for higher categories can participate in lower categories if they meet the requirements, subject to approval and justification by SHQs.