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Guide 03 Indigenisation and Make in India

What is the Make-II procedure, and how does it differ from Make-I?

Make is the Defence Acquisition Procedure's route for developing equipment in India before it is bought. Under Make-I the government funds part of prototype development; under Make-II the industry funds the prototype itself, with no government money, typically for import substitution or an innovative solution the vendor proposes.

Topic
Indigenisation and Make in India
Checked
23 September 2026
Sources
4
Questions
5

01

Make-I versus Make-II, in practice

Both are Defence Acquisition Procedure routes for developing new equipment rather than buying an existing design. Make-I gives the government a role in funding prototype development. Make-II carries no government funding at all: the vendor develops and funds its own prototype, most often to substitute an import or to offer an innovative solution the armed forces had not specified. Successful development under either route is intended to lead to an order, not just a technology demonstration.

02

Why a vendor takes on Make-II without a funding guarantee

The return for carrying the development cost is the prospect of an assured order once the prototype is accepted, and both DAP 2020 and the draft DAP 2026 lean further this way: the draft proposes spiral development and five years of assured orders for Make and iDEX projects. On the revenue side, DPM 2025 already gives up to five years and beyond of assured orders for items developed under indigenisation by public or private players, whatever the acquisition route that produced them.

03

The contract terms that actually change under indigenisation

DPM 2025 caps liquidated damages on indigenisation contracts at 0.1 percent per week, against 0.5 percent per week that applies elsewhere, and reserves the general 10 percent maximum liquidated damages figure for cases of inordinate delay rather than routine slippage. Read these clauses into any Make-II or indigenisation contract before quoting a delivery schedule, since they change how much risk a missed date actually carries.

04

Where Make-II sits against the Buy categories

DAP 2020 gives first preference in capital acquisition to Buy (Indian-IDDM), meaning equipment indigenously designed, developed and manufactured, which requires at least 50 percent indigenous content; the draft DAP 2026 proposes raising that to 60 percent. Make-II is not a Buy category at all: it is how an item becomes something that can later be bought under Buy (Indian-IDDM) or a similar route, by proving the design and the prototype first.

Asked next

Questions people also ask

What is the Make-II procedure, and how does it differ from Make-I?

What is the main difference between Make-I and Make-II?

Make-I involves government funding for part of prototype development; Make-II does not. Under Make-II the vendor develops and funds the prototype itself, typically to substitute an import or offer an innovative solution, and the return is the prospect of an order once the prototype is accepted rather than a development grant along the way.

Does Make-II guarantee an order once the prototype works?

Not automatically, but the terms are moving that way. The draft DAP 2026 proposes five years of assured orders for Make and iDEX projects once accepted, and DPM 2025 already provides for assured orders running up to five years and beyond for items developed under indigenisation. Exact quantities and terms are still fixed case by case in the resulting contract.

What liquidated damages apply to a Make-II or indigenisation contract?

DPM 2025 caps liquidated damages on indigenisation contracts at 0.1 percent per week, compared with 0.5 percent per week that applies to other contracts, and the general 10 percent maximum is levied only for inordinate delay rather than ordinary slippage. Confirm the clause actually written into your own contract, since DPM 2025 sets the ceiling, not a fixed figure.

How does Make-II relate to Buy (Indian-IDDM)?

They are different stages, not competing routes. Make-II is how a vendor develops and proves a prototype, often with no prior government funding. Buy (Indian-IDDM), which DAP 2020 treats as the most preferred capital acquisition category, requiring at least 50 percent indigenous content, is how a proven design is then procured at scale. A Make-II success can feed into a later Buy (Indian-IDDM) order.

Can a new company with no defence experience use Make-II to get started?

Yes, alongside other routes. Buyers may relax prior turnover and experience requirements for micro and small enterprises, iDEX funds startups and individual innovators directly, and SRIJAN lists items open to new developers, alongside Make-II's industry-funded prototype route. Critical, security-sensitive items may still require prior experience regardless of which route is used.

Checked against

Sources

  1. 01Make-I and Make-II procedures under DAP, Press Information Bureau, Ministry of Defence
  2. 02Draft DAP 2026: proposed changes to Make and iDEX projects, Press Information Bureau, Ministry of Defence
  3. 03DPM 2025: assured orders and liquidated damages for indigenisation contracts, Press Information Bureau, Ministry of Defence
  4. 04Relaxed turnover and experience norms for micro and small enterprises, Development Commissioner, Ministry of MSME

This guide explains how the system works in general, as the documents above describe it, and was last checked on 23 September 2026. Rules and thresholds change: the governing document is the authority, not this page.

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