 |
| Indian BAE Systems Hawk Trainer |
Ajai Shukla
Critics say proposed change legitimises imports, instead of the aim of erecting a viable domestic defence equipment industry
The ministry of defence (MoD) is poised to sharply dilute its Defence Offset Guidelines (DoG) during the coming fortnight.
MoD and industry sources tell Business Standard that among the amendments the apex Defence Acquisition Council (DAC) is to clear on June 24 is one that would allow foreign vendors to discharge their offset obligations with minimal production and value addition in India.
While some of the likely amendments to the DoG are broadly acceptable, a controversial new proposal has set alarm bells ringing among Indian defence producers. This innocuous, but far-reaching, amendment relates to how ‘value addition’ will be calculated when an Indian Offset Partner (IOP) produces a system or a sub-system for a foreign vendor (offset credit is only given for value addition in India). Imported items have always been excluded from the ‘value add’, calculated as the IOP’s billed cost for the equipment supplied to the foreign vendor, less the cost of imported items used by the IOP. The proposed amendment would allow the IOP to buy foreign parts from Indian sub-vendors, and present that as value-add, provided the sub-vendor is paid in rupees.
Read the full story at Business Standard