In Parliament - Defense Minister on DPP and contracts with 30% Offsets Clause

May 14, 2012

Posted by - Neelam Mathews

AK Antony, Defense Minister said in Parliament-

The Defense Procurement Procedure (DPP) is refined and updated periodically. DPP was last reviewed in 2010 on the basis of experience gained during its implementation and feedback received from various stakeholders including Armed forces, Indian defense industry, Industry Associations and Original Equipment Manufacturers. DPP-2011 was promulgated with effect from 1^st January, 2011. The amendments aim at expediting decision making, simplification of contractual and financial provisions and establishing a level playing field for the public sector and private sector.

            17 Offset contracts have been signed so far with a value of about US $ 4.279 billion. Details are given in table below. The offset contracts are at various stages of execution.

            The offset policy was introduced in 2005. It is a relatively new policy and in the process of evolution. The first offset contract was signed in 2007. Implementation of the Offset contract is co-terminus with the execution of the main contract as per present guidelines. Indian Industry both public and private sector are benefitting through investments and purchases by foreign vendors who have signed Offset contracts. The positive impact of Offsets on development of the indigenous Defence industrial base will be visible in the coming years.

                 The amount spent on Capital Acquisition from indigenous sources during the last five years is as follows:-

(Rupees in crores)

Year		2006-07		2007-08		2008-09		2009-10		2010-11
Amount spent		21612.24		17993.08		20347.74		25920.48		31444.55

The accounting system does not separately capture data regarding procurement from Indian private sector companies.

LIST OF CONTRACTS WITH 30% OFFSET CLAUSE

S. No.		Name of Scheme		Offset amount (in US dollars)		Date of signing of contract
AIR FORCE
1		MPR		5,406,000		16.10.2007
2		Mig-29 Upgrade		308,271,669		07.03.2008
3.		Mi-17 V-5 Helicopters (MLH)		405,070,000		15.12.2008
4.		Medium Altitude EO/IR recce System for Jaguar Aircraft		21,086,031		06.02.2009
5.		P-IV (HAROP) System		44,310,000		13.02.2009
6.		C-130 J-30 ac FMS Case		219,000,000		06.03.2009
7.		Low Level Transportable Radar (LLTR)		34,750,000		29.07.2009
8.		AW 101 WIP Helicopter		224,140,000 (Euro166,878,608)		08.02.2010
9.		Sensor Fuzed Weapon		102,540,000		15.11.2010
10.		C-17 Aircraft (VHETAC - FMS Case)		1,091,700,000		14.06.2011
11.		Mirage-2000 Upgrade		592,810,000 (Euro 441,367,882)		29.07.2011
12.		MICA IR and RF Msl		386,400,000 (Euro 287,690,000)		31.01.2012
Total = US $ 3,435,483,700
NAVY
1.		Fleet Tanker		55,279,455 (Euro 41,563,500)		23.04.2008
2.		Long Range Maritime Reconnaissance Anti Submarine Warfare Aircraft		641,260,500		01.01.2009
3.		Fleet Tanker under Option Clause		55,279,455 (Euro 41,563,500)		31.03.2009
4.		Air Route Surveillance Radar (ARSR)		11,164,800		06.11.2009
5.		Unmanned Aerial Vehicles (UAV)		80,774,390		04.03.2010
Total = US $ 843,758,600
Grand Total = US $ 4,279,242,300