NEW DELHI, Dec 23:
Aiming to streamline the offset policy, the Government has restored “services” as eligible offsets for military deals and allowed foreign firms to change their Indian partner at any time, subject to approval.
The new policy provides greater flexibility to the vendors in offset contracts and aims at ensuring level playing field to Indian vendors in capital acquisitions.
One of the key aspects of the new offset policy is restoration of “services” like maintenance and repair, software and technology transfer, that were kept aside after the VVIP helicopter scandal.
This provision had been kept under abeyance with effect from May 23, 2013 due to “absence of any regulatory oversight mechanism for services”.
“However, there was a persistent demand from the industry (both domestic and foreign) for allowing services as a valid avenue for discharge of offset obligations.
“Based on several interactions and inputs, received from industries most of the services which were in abeyance, have been reinstated with checks and balances following a Ministry of Defence order,” a statement released by the Defence Ministry said.
Offsets were introduced in 2005 with an objective of developing a defence industrial base in the country. However, it has failed to deliver to its full potential.
The Defence Ministry said that vendors had been expressing difficulty to upfront provide specific description of products and their work share, supporting documents to establish eligibility of Indian Offset Partners (IOPs) and yearly discharge schedule.
“This is primarily due to the time lag between submission of technical offset offers and finalisation and subsequent implementation of offset contracts. As a result there were frequent contract amendment requests from vendors,” it said.
Accordingly, a two-pronged approach for mitigating perceived bottlenecks during pre and post-contract stages has been evolved through recent amendments to the offset guidelines.
At pre-contract stage, option has been given to the vendors to submit detailed offset proposals at a later stage. The vendor can finalise his IOPs and offset product details one year prior to the intended offset discharge, or can even undertake the offset activity and submit claims thereafter.
This will facilitate vendors to finalise a more realistic offset offer, the MoD said.
At the post-contract stage, enabling provisions have been made in the offset guidelines for change in IOP/component and re-phasing of offset schedule, thereby giving complete flexibility to the vendor.
The Standard Operating Procedure (SOP) will now make it possible to address requests from vendors to change their IOP or their offset component as per requirement during the period of the contract.
Necessary orders in this regard have been issued by the ministry, it said.
The statement said that Indian vendors participating in ‘Buy Global’ cases were at a disadvantageous position in terms of fulfilling offset obligations.
In order to promote ‘Make in India’, a level playing field has been provided and an Indian vendor has been brought at par with the foreign original equipment manufacturers in terms of fulfilling offset obligations through orders issued by the Defence Ministry, the statement said. (PTI)
Follow our WhatsApp channel