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Offset 2012 Analysis

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The Indian defense offset policy -revised guidelines.

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Offset 2012 Analysis

  1. 1. The 2012 Indian DefenceOffset Policy- A ConciseAnalysis
  2. 2. Revised Indian Defense Offset Policy The Indian MoD has just unveiled a revised offset policy. This particular document has been awaited by the Indian and Foreign stakeholders for more than 12 months now! We are happy to present to you a brief analysis of the revised policy. The new policy has indeed moved a long way forward and incorporated several long-standing demands of the offset obligors (Foreign OEM’s). How these changes take effect on the ground, only time will tell. Should you require a more detailed presentation, please free to get in touch and we would be happy to set-up a mutually convenient day-time slot for a presentation exclusively for your organization. This presentation would cover all the major changes to the offset policy and the impact of these changes on Offset strategies of the Global OEM’s & the Indian Offset Partners. (IOP’s) For further details, please feel free to get in touch with: ► Vinay.mangla@in.ey.com (Senior Manager) ► Ankur4.gupta@in.ey.com (Senior Consultant)Page 2 OFFSET 2012-Concise Analysis
  3. 3. Major Additions- Avenues For Discharge 3.1 (a) Direct purchase / Exports FDI for Minor Addition Offset manufacture Minor Addition 3.2 Banking and maintenance 3.1 (b) Offset Discharge Investment in Technology KIND for ToT Acquisition for New MethodNew Method manufacture 3.1 (c) by DRDO & 3.1 (f) maintenance Investment in Provisioning of KIND in Indian equipment and enterprise in New Method ToT to Govt.enterprises terms of Provision of New Method including DRDO 3.1 (e) for manufacture & equipment for manufacture & 3.1 (d) maintenance. maintenance. Page 3 OFFSET 2012-Concise Analysis
  4. 4. Major additions- Items of Discharge Defense products • Items under Vessels of War has been expanded Inland & Coastal Security • New items added for Vessel; Port; Harbor and Coastal Security Services Added • Repair • R&D services from government recognized facilities.Page 4 OFFSET 2012-Concise Analysis
  5. 5. Major Additions Time Period • Offset banking validity (7 years) • Offset Discharge beyond the Enhanced duration of the Main Contract Penalties- • Maximum percentage introduced. • OEM’s barred for a Fixed number of Limited years for non-compliance. • For choosing MSME’s as IOP’s. Multipliers • For sharing Technology with DRDO Introduced and Pvt. Sector. • For sharing Dual-Use technologiesPage 5 OFFSET 2012-Concise Analysis
  6. 6. Major Additions- Offset in charge DOMW- Defense Offset Management Wing introduced; complete responsibility of ensuring a smooth Offset process post contract signing • New post- JS (DOMW) Pre contract responsibility with Acquisition wing • Roles of DDP & Acquisition Wing have now been clearly defined.Page 6 OFFSET 2012-Concise Analysis
  7. 7. Major Additions- Clearly Defined Value Addition • For calculating % of Offsets to be credited to the OEM. Objective of • Development of Globally Competitive Industries the Offset • Augmenting R&D and D&D capabilities • Encourage development of synergistic policy sectors Investment for • Clear distinction between FDI and Offsets investment in ‘KIND’Page 7 OFFSET 2012-Concise Analysis
  8. 8. Major Additions- Permitted Change in IOP partner and Item • With sound reasoning it is now permitted. Extension of time period • Permitted up to a limited extentPage 8 OFFSET 2012-Concise Analysis
  9. 9. Major Additions- Reporting Offset Discharge • Is now a Half-Yearly progress requirement report • JS(DOMW) to submit Annual an annual report on the progress of Offset various offset Appraisal programs to the DAC.Page 9 OFFSET 2012-Concise Analysis
  10. 10. Thank You

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