By VIVEK RAGHUVANSHI
NEW DELHI — Industry executives and analysts are lauding India’s move to allow overseas defense companies to fulfill their offset obligations by partnering with local companies, a step aimed at benefiting the indigenous firms and the original equipment manufacturers (OEMs).
But the mechanics of how foreign firms will get credit hasn’t been determined, prompting some analysts to argue that increasing the foreign direct investment (FDI) limit would have done a better job of collaboratively boosting India’s defense industrial capabilities.
Leaving aside the desire to increase FDI, the offset rule changes have been received well, a U.S. industry source said. “No companies were complaining,” he said.
Offsets are industrial compensation in exchange for a defense purchase. Under Indian law, whenever a foreign company signs a deal with India that’s worth more than $60 million, at least 30 percent of the total amount of the deal must be in the form of offsets. The objective of the offsets is to boost India’s nascent domestic defense industry.
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