Saturday, June 18, 2011

BREAKING- MoD releases new list civil aerospace products eligible for offsets.

Posted by- Neelam Mathews
Time- 1:00pm IST

While detailed amendments on the Offset Policy are awaited, the Indian MoD has amended the list of civil aerospace products that are eligible for offsets.

For the Defence Procurement Procedures (DPP) 2011, the civil aerospace products eligible for Offsets stands modified as per the following:-

Ammended version
Annexure VI to Appendix D
(Refer to Para 2.1a to Appendix D)
§  All types of fixed wing as well as rotary aircraft including their air frames, aero engines,aircraft components and avionics.
§  Aircraft design and engineering services.
§  Technical publications
§  Raw material and semi-finished goods.
§  Flying training institutions and technical training institutions (excluding civil infrastructure).
§  Design, Development, Manufacture, Upgrade of all types of fixed wing and rotary wing aircraft or their airframes, aero engines, avionics, instruments and related components
§  Composites, forgings and castings for thier products
§  Training Aids vis simulators, associated equipment, software and computer based  training modules
§  Guidance and Navigation equipment
§  Test facilities and equipment required for testing, certification, qualification and caliberation of above products
§  Software specially designed, developed or modified for the above products
§  Linkage of services and explanation of Services to be considered for Civil Aerospace
§  Explicit mention of Upgrades to be considered as eligible for Offset
§  Expansion of what in a training institution is considered as offsetable. The earlier definition was ambigious as Flying training institutions and Technical institutions was a very wide descriptor which has now been narried to include CBT & Simulator but training schools including training aircraft appear to be out of the purview
§  Software has been elaborated. This opens doors (albiet in a not so clear way) for Software specially designed, modified and developed for manufacture of components for civil aerospace will be considered (however this needs to be validated).
§  Test facilities for components has also been explicitly introduced,
§  Raw materials have been excluded and this is a major change.
Additional Notes
The revision also introduces a note specifically stating that wherever the Offset arrangements envisage a provision of equipment  by a foreign vendor/OEM as a “grant” (without being linked to a commercial arrangement), then it should be to a DPSU or a Government entity only
This note is extremely important as it links offset models built around items provided under grants to companies and the resultant savings from them to be limited to DPSUs/ government entities.


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