Understanding India’s Offset Policy For Defense – Miracle Electronics

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India is the worlds largest importer of arms,
which is why the country needs great investment.
It also needs the best technology and partnership
from abroad, which is why it has certain
government offset policies that aim to attract
foreign involvement.
Offset partnering aims to provide additional
benefits to the buyer from a foreign supplier,
and because defense procurement involves a
substantial amount of public money, the policies
ensure that at least some of it is ploughed back
into the local economy. Being the largest
importer of defense goods, the potential value of
offset is significant, which means that if its
all implemented correctly, the defense policy
pertaining to offsets can effectively change the
defense industry and boost the RD
sector. Indias offset policy Past
Present First introduced as part of the Defense
Procurement Procedure in 2005, the policy
included the threshold for the applicability of
offsets to stand at Rs. 300 crore. But later,
this was increased to Rs. 2000 crore, meaning
that only those foreign OEMs that win contracts
worth over Rs. 2000 crores will have to plough
back at least 30
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• of the contract value into Indian enterprises as
  offsets. Also, the penalty provisions clearly
  ensured that the responsibility of offset
  discharge is put on the foreign OEMs and their
  tier-1 vendors.
• Later, in the Defense Procurement Procedure of
  2016, the changes included six various ways in
  which foreign OEMs can discharge their offset
  obligations, namely
• Direct purchase of, or execution of, export
  orders for the eligible products and services by
  Indian enterprises
• Foreign direct investment (FDI) in joint
  ventures with Indian enterprises
• Investment in kind in terms of transfer of
  technology for eligible goods and services
• Investment in kind in Indian enterprises in terms
  of provision of equipment through the non-equity
  route for the manufacture and/or maintenance of
  eligible products and provision of eligible
  services (excluding transfer of technology,
  civil infrastructure and second-hand equipment).
• Provision of equipment and/or transfer of
  technology to government institutions and
  establishments engaged in the manufacture and/or
  maintenance of eligible products and provision of
  eligible services, including the DRDO.
• Technology acquisition by the DRDO in areas of
  high technology.
• Introduction of defense funds
• The government has introduced SEBI-regulated
  funds for defense and internal security. By
  investing in such funds, a firms offset
  obligation is considerably reduced. Further, the
  discharge of offsets through such a route means
  that foreign OEMs do not have to carry out a
  meticulous search for an Indian Offset Partner.
  Such SEBI-regulated funds can encourage the
  development of technology through RD, along
  with giving stimulus to the defense sector of
  India. This system also helps the government
  keep proper tabs on the amount of money that
  foreign OEMs are investing in India, bringing
  complete transparency in operations.
• Although some industry sectors are criticising
  the Indian government for effectively reducing
  offset obligations of foreign OEMs through the
  above means, the

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• development of the defense sector in India is
  significantly important. And, because foreign
  OEMs require support and assistance from the
  government policies, the above-mentioned
  amendments proposed by the government of India
  will certainly help to go a long way!
• To conclude,
• Foreign OEMs are relied upon more than ever to
  meet Indias defense requirements. India needs
  immediate access to technologies to deploy the
  funds in the right manner, and become a
  self-sustaining military power house. Foreign
  OEMs are very keen to supply defense goods to
  the Indian government, but the problem of being
  unsure of how to discharge the offset obligations
  is what prevents them from entering the market.
  This is why they very carefully analyse and
  examine every aspect before choosing their
  offset partner for Indian defense.
• What makes Miracle Electronics the perfect offset
  partner?
• An Indian offset partner is required to comply
  with the guidelines and licensing requirements
  specified by the Department of Industrial Policy
  and Promotion as applicable. Miracle Electronics
  clearly complies with every such requirements,
  and also possesses the following traits
• Miracle Electronics has consistent RD, and
  proven industry capabilities.
• Miracle Electronics is equipped with all
  necessary quality certifications including AS
  9100D, ISO 134852016, ISO 90012015, Conformity
  for CE Marking, UL recognition for Insulation
  system for Transformers, UL recognition for Wire
  Harness Cable Assemblies (Looms), CE
  Compliance, RoHS Compliance, and REACH
  Compliance.
• Miracle Electronics has extensive experience in
  preparing monthly offset reports in the
  stipulated format.
• Miracle Electronics can bring cost savings by
  integrating main and offset programmes for cost
  efficiency.

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All of these traits, combined with Miracle
Electronics complete adherence to offset
obligations, is what makes us the ideal offset
partner for Indian defense!