New Defence Procurement Procedure – 2016
Capital Acquisition schemes are broadly classified as, ‘Buy’, ‘Buy and Make’, and ‘Make’. Under the ‘Buy’ scheme procurement are categorized as ‘Buy (Indian – IDDM)’, ‘Buy (Indian)’, and ‘Buy (Global)’. The three categories under the ‘Buy’ scheme refer to an outright purchase of equipment. Under the ‘Buy and Make’ scheme, the procurement are categorized as ‘Buy and Make (Indian)’ and ‘Buy and Make’. The two categories under ‘Buy & Make’ scheme refer to an initial procurement of equipment in Fully Formed (FF) state in quantities as considered necessary, from the appropriate source, followed by indigenous production in a phased manner through comprehensive Transfer of Technology (ToT).
The decreasing order of priority is:a
- Buy (Indian – IDDM)
- Buy (Indian)
- Buy and Make (Indian)
- Buy and Make
- Buy (Global)
- In addition to the above listed categorization, there is the ‘Make’ categorization, which aims at developing long-term indigenous defence capabilities. Depending upon factors such as Indian industry’s capability, access to technology, time frame required and available for development, the ‘Make’ category of procurement would be pursued in isolation, in sequence or in tandem with any of the five categories under ‘Buy’ or ‘Buy and Make’ classifications.
Above were the categorizations. Let’s understand the new term, Buy (India-IDDM)
Buy (India-IDDM): ‘Buy (Indian-IDDM)’ category refers to the procurement of products from an Indian vendor meeting one of the two conditions: products that have been indigenously designed, developed and manufactured with a minimum of 40% Indigenous Content (IC) on cost basis of the total contract value; OR, products having 60% IC on cost basis of the total contract value, which may not have been designed and developed indigenously.
Apart from above definition, it would also be good to revise already existing terms
Buy (Indian): ‘Buy (Indian)’ category refers to procurement of products having a minimum of 40% IC on cost basis of the total contract value, from an Indian vendor.
Buy and Make (Indian): ‘Buy & Make (Indian)’ category refers to an initial procurement of equipment in Fully Formed (FF) state in quantities as considered necessary, from an Indian vendor engaged in a tie-up with a foreign OEM, followed by indigenous production in a phased manner involving ToT of critical technologies as per specified range, depth and scope from the foreign OEM. Under this category of procurement, a minimum of 50% IC is required on cost basis of the ‘Make’ portion of the contract.
Buy and Make: ‘Buy & Make’ category refers to an initial procurement of equipment in Fully Formed (FF) state from a foreign vendor, in quantities as considered necessary, followed by indigenous production through an Indian Production Agency (PA), in a phased manner involving ToT of critical technologies.
Buy (Global): ‘Buy (Global)’ categorization refers to outright purchase of equipment from foreign or Indian vendors. In case of foreign vendors, Government to Government route may be adopted, for equipment meeting strategic/long term requirements.
Make: Acquisitions covered under the ‘Make’ category refer to equipment/system/sub-system/sub-assembly, major components, or upgrades thereof, to be designed, developed and manufactured by an Indian vendor.
