Opinion- On new Offsets Policy

By- John Williams

Williams Global Advisors

1.     Objectives of the Offset Policy have been clarified.  The objectives are:

a.     Development of globally competitive industries

b.     Enhancement of India’s R&D and Design capabilities

c.     Encouraging the development of synergistic sectors (I’m assuming this could include sectors such as homeland security, but possibly even energy, and communications down the road)

2.     A new nodal agency has been introduced with responsibility for offset discharge management (post-contract)

a.     The new Defense Offset Management Wing (DOMW) will have full responsibility for offset contract management

b.     A new position (JS – DOMW) has been created for this purpose

c.     Pre-contract responsibility still rests with DDP and Acquisition Wing

3.     Major enhancements to the policy include:

a.     Offset discharge period of performance (PoP) extended by 2 years beyond main contract PoP

b.     Offset banking extended to seven years

c.     Use of multipliers has been introduced for a) choosing MSMEs as IOPs, b) transferring technology to DRDO, and c) for transfer of dual use technology

4.     List of eligible services have been expanded to include:

a.     Repair

b.     R&D services from government recognized facilities

5.     Methods of discharging offset obligations have been expanded

a.     Transfer of Technology to DRDO

b.     Equipment provisions to DPSUs for manufacture and maintenance

c.     IN-KIND investment to private industry for manufacture and maintenance

d.     IN-KIND investment for ToT for point c. above

6.     Reporting:  Changed from quarterly to half-yearly

7.     Investment:  In-kind investment has been clarified as a separate category of investment from FDI