Monday, April 2, 2012

Breaking! India's New Defense Offsets Policy

Neelam Mathews
April 2, 2012

The much awaited revised offset policy is out. It reinforces its aim is to augment capacity for R&D, foster development of international competitive enterprises and give a boost to synergistic sectors like homeland security and civil aviation.

The policy recognizes:

TOT as eligible for discharge of offset obligations

Technology acquisition by DRDO for a list of specified technologies will be treated as an eligible offset with a multiplier of upto 3.

While Tier 1 subvendors can already discharge part of obligations on behalf of the main vendor, the overall responsibility will rest on the vendor.

Offsets can now be discharged within a timeframe extending to two years beyond the period of the procurement of the contract

Validity of Banking of offsets has been extended from 2 to seven years

In the discharge of offsets obligations relating to direct export, FDI, TOT  or investment in ‘kind’ through non equity route, a multiplier of 1.50 will be permitted where micro, SMEs are IOPs.

1 comment:

  1. Can offset banked be used for multiple procurement/tenders?
    In case a Tier I supplier from overseas wants to start in its right earnest to bank offset; is there any way?
    Do you know of any offset banking which is in vogue or has got MoD acceptance/approval in principle? If you can throw some light on the same!
    Is it mandatory that for Tier I to be an offset partner of the OEM, it is mandatory that the same has to be incorporated in writing during tendering stage? Is offset partnering by a Tier I possible after a tender has been opened?