Before choosing your Offset Partner For Indian Defense, it is vital that you are atleast abreast with the very basic fundamentals about the required defense offset guidelines.

1. A defense offset policy is drafted to leverage capital acquisitions in order to develop
the Indian defense industry by fostering the development of internationally
competitive enterprises, augmenting capacity for R&D, and encouraging the
development of synergistic sectors like civil aerospace and internal security.
But, so as to achieve such a partnership, there is a list of defense offset guidelines
that need to be followed. While the number of guidelines are umpteen, let’s help you
get a brief in this blog below.
Application of provisions
The provisions apply to every capital acquisition, may it be outright purchase from
a vendor, or purchase from a vendor that is followed by Licensed Production, where
the estimated cost of the acquisition proposal is 300 crores or more. Generally, 30%
each of both these costs of acquisition will be the required value of the offset

2. obligations. However, the Defence Acquisition Council may prescribe varying offset
obligations in special cases if required. Nevertheless, these provisions will not apply
to procurements under the Fast Track procedure, and those under the “Option”
clause, where an offset obligation was not stipulated in the original contract.
Discharge of offset obligations
The offset obligations may be discharged by one or more of the following methods
–
✓ Direct purchase or export orders for eligible products manufactured or serviced
by Indian enterprises
✓ Foreign direct investment in joint ventures with Indian enterprises for the
manufacture and/or maintenance of eligible products and provision of eligible
services
✓ Investment in ‘kind’ in terms of transfer of TOT (Transfer OF Technology) to
Indian enterprises for the manufacture and/or maintenance of eligible products
and provision of eligible services
✓ Investment in ‘kind’ in Indian enterprises in terms of provision of equipment
through the non-equity route for the manufacture and/or maintenance of eligible
products and provision of eligible services, excluding TOT, civil infrastructure
and second-hand equipment.
✓ Provision of equipment and/or TOT to government institutions and
establishments engaged in the manufacture and/or maintenance of eligible
products and provision of eligible services.
✓ Technology Acquisition by the DRDO in areas of high technology
Then, there are a multitude of other offset obligation discharge policies that are
divided into different sectors, such as vendor responsibility, performance bond,
offset credits, offset banking, value addition, Buy Global procurements, offset
valuation, and more.
Submission of offset proposals
Vendors are required to submit a written undertaking to the effect that every offset
obligation will be met. Any failure on the part of the vendor to comply with the
guidelines may result in disqualification of the vendor from any further participation
in the contract. The proposals should be submitted by a specified date, failure of
which may render the bid non-responsive, and liable to be rejected.
Evaluation of offset proposals

3. The Acquisition Wing in the Department of Defence is responsible for technical and
commercial evaluation of offset proposals received in response to RFPs, and the
conclusion of offset contracts. The Defence Offsets Management Wing in the
Department of Defence Production is responsible for the formulation of the offset
guidelines, auditing and reviewing or progress reports, and post contract
management. And, both these wings work in close collaboration for the smooth
implementation of the guidelines.
Processing of offset proposals
Technology acquisition – The Technology Acquisition Committee is responsible for
assessing the offset proposals, covering both technical and financial parameters,
including valuation of technology, and the timeframe and strategy for utilizing the
technology.
Technical evaluation – The Technical Offset Evaluation Committee (TOEC),
constituting of representatives of the Service Headquarters, Defence Finance,
DRDO, DOMW, and other experts, is responsible for scrutinizing the technical
offset proposals to ensure conformity with the offset guidelines. The TOEC report
is then forwarded to the Technical Manager, who will then process the report for
acceptance.
Approval authority – After the offset proposals are processed by the Acquisition
Manager, they will be approved by the Raksha Mantri.
Penalties – If a vendor fails to fulfil the obligations as agreed to, a penalty equivalent
to 5% of the unfulfilled offset obligation will be levied, after which the unfulfilled
offset value will be re-phased over the remaining period of the contract. The vendor
may also be liable for debarment from participation in future defence contracts for a
period of up to 5 years, the decision that will depend upon the Director General of
Acquisition.
Re-phasing requests – A vendor has the advantage of requesting re-phasing of the
offset obligations within the period of the offset contract, providing valid reasons. If
justified, the request may be granted.
Annual reporting – An annual report is submitted to the Defence Acquisition Council
in June every year, regarding the details of the contracts signed, and the status of
implementation of all on-going contracts.

4. Indian enterprises, institutions, and establishments engaged in the manufacture of
eligible products and/or provision of eligible services are referred to as Indian Offset
Partners, who are required to comply with all the above guidelines/licensing
requirements and many more. Vendors are free to select such a partner. If you’re
looking for the same too, Miracle Electronics can prove to the best Offset Partner
For Indian Defense, thanks to their complete adherence to the obligations, proven
industry capabilities, consistent R&D, and every necessary quality certification in
place!