kumarpradeep1

1
The Defence Offset Contract How It Has Changed
Over The Years
The defence offset, an obligation by an
international player to boost Indias domestic
defence industry, if India is buying defence
equipment from it, involves a very costly
contract. Thats because the Government wants
part of the money to either benefit the Indian
industry, or to allow the country to gain in
terms of technology. It is obligatory for the
supplier to either reverse purchase, execute
export orders, or invest in the local industry or
RD in the buyers domestic industry. This
policy was adopted in the year 2005, with the
first contract being signed in the year 2007.
The idea behind this policy was that since we
have been buying a lot of defence equipment from
foreign countries, we can leverage our buying
power by making them discharge offset
obligations. The goals stated in the year
2012 While the first offset contract was signed
in the year 2007, it was only in the year 2012
that the Government stated the objective for
defence offsets. It stated, 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.
2
The amendment in the year 2016 Until 2016, the
foreign vendor was required to declare every
detail right around the time of signing the
contract. However, a new policy emerged in April
2016, which amended it to allow to provide the
details either at the time of seeking offset
credits, or one year prior to the discharge of
offset obligations. Then, in the year 2020,
further amendments were again made. The
amendment in the year 2020 Ever since the first
policy, all defence procurements exceeding Rs.
300 crore have been entailed offset obligations
of at least 30, with the percentage being
permitted to be increased or decreased by the
Defence Acquisition Council. But now, as per the
latest tweaks, government-to-government
agreements, ab initio single vendor contracts,
or inter-governmental agreements will now not
have any offset clauses anymore. Nevertheless,
all other international deals that are
competitive, and have multiple vendors vying for
it, will continue to have a 30 offset clause.
This tweak came because vendors would load extra
cost in the contract to balance the costs, and
doing away with the offsets can bring down the
costs in such contracts. Which offset partner
to choose? As per the defence offset guidelines,
foreign vendors are free to select any Indian
company as their offset partner and multiple
foreign vendors have seen to be choosing Miracle
Electronics as their offset partner. Thats
because theyve witnessed the various advantages
that come with partnering with Miracle
Electronics as their offset partner for Indian
defense, such as the consistent RD, proven
industry capability, complete adherence to offset
obligations, compliance with all requisite
Indian regulations and contract requirements,
and a lot more. Besides, Miracle Electronics is
also equipped with all the necessary quality
certifications like AS 9100D, ISO 134852016, ISO
90012015, conformity for CE marking, UL
recognition for insulation system for
transformers, UL recognition for wire harness and
cable assemblies, CE compliance, RoHS
compliance, and REACH compliance.
3
(No Transcript)