NEW DELHI — Foreign companies likely will welcome India’s revised guidelines for meeting defense offset obligations, announced Aug. 2 by the Ministry of Defence, which offers simpler rules — including allowing co-production and co-development in Indian defense projects to qualify as offsets.
India requires overseas companies awarded defense contracts worth more than $55 million to fulfill offsets equal to at least 30 percent of the total value.
The new Defense Offset Guideline went into effect Aug. 1.
“The key objective of the Defence Offset Policy is to leverage capital acquisitions to develop Indian defense industry by fostering development of internationally competitive enterprises; augmenting capacity for research, design and development related to defense products and services; and encouraging development of synergistic sectors like civil aerospace and internal security,” the MoD said in its official news release.
The revised guidelines make a distinction between equity and non-equity routes for foreign defense companies in their partnerships with Indian defense companies.
“Co-production, co-development, etc., will be recognized for offset credits, subject to certain conditions,” according to the MoD’s release.
The new guidelines also permit overseas-based companies to fulfill their offset obligations through technology transfer — as they have been demanding — in addition to direct offsets.
“The transfer of technology should be provided without license fee and there should be no restriction on domestic production, sale or export,” the news release states.
The revised offset policy also recognizes foreign companies’ provision of equipment or technology transfer to Indian government institutions as defense offsets. This will facilitate capacity building for research, design and development, training and education in India’s state-owned Defence Research and Development Organization laboratories, Army base workshops, Air Force base repair depots, and Naval aircraft yards, according to the release.