09 Jun DEFENCE OFFSET GUIDELINES
Objective of Defence Offsets .The key objective of the Defence Offset Policy is to leverage capital acquisitions to develop Indian defence industry by (i) fostering development of internationally competitive enterprises, (ii) augmenting capacity for Research, Design and Development related to defence products and services and (iii) encouraging development of synergistic sectors like civil aerospace, and internal security. These provisions will apply to all Capital Acquisitions categorized as ‘Buy (Global)’, i.e. outright purchase from foreign/Indian vendor, or ‘Buy and Make with Transfer of Technology’, i.e. purchase from foreign vendor followed by Licensed Production where the estimated cost of the acquisition proposal is 300 crore or more. They will apply to Indian firms or their Joint Ventures under “Buy (Global)” procurements. 30 percent of the estimated cost of the acquisition in ’Buy (Global)’ category acquisitions and 30 percent of the foreign exchange component in ‘Buy and Make with ToT’ category acquisitions will be the required value of the offset obligations. Offset obligations may be discharged with reference to eligible products and eligible services as described in Annexure-VI to Appendix-D. The Defence Acquisition Council (DAC) may, after consideration by SCAPCHC, prescribe varying offset obligations above 30 percent or waive the requirement of offset obligations in 2 special cases. Such directions may be made applicable for a class of cases or for an individual case depending on the factors involved, such as type of acquisition, strategic importance or urgency of the acquisition, ability of Indian defence industry to absorb the offset and any other relevant factors. The offset condition will form a part of the RFP and subsequently of the main contract. A separate offset contract will be executed simultaneously with the main contract. 2.5 These provisions will not apply to (i) procurements under the Fast Track procedure, and (ii) procurements under the ‘Option’ clause where an offset obligation was not stipulated in the original contract. In respect of procurements under the “Option” clause, where an offset obligation was stipulated in the original contract, the offset guidelines prevailing at the time of signing of the original contract would be applicable.
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