Defence Ministry Does Away With Offset Policy In Rafale-Like Govt-To-Govt Deals After CAG Pulls Up Centre

As per the previous offset policy, it was mandatory for the foreign defence entities, for all contracts worth more than Rs 300, to spend at least 30 per cent of the total contract value in India.

New Delhi: Days after the Comptroller and Auditor General (CAG) came down hard on the government over poor implementation of the offset policy, Centre has  done away with offset requirements for government-to-government defence deals and single-vendor contracts under a new policy unveiled on Monday for the procurement of arms and military platforms for the armed forces.

The Defence Acquisition Procedure (DAP) released by Defence Minister Rajnath Singh provides for allowing the three forces to take on lease military equipment, hardware and platforms like helicopters, simulators and transport planes as per operational requirements as it could be a cheaper option than their procurement, an official close to the development told news agency PTI.

Last week, CAG pulled up French defence giant Dassault for not meeting its contractual obligation to reinvest in India after the sale of 36 Rafale fighter aircraft to the Indian Air Force.

As per the previous offset policy, it was mandatory for the foreign defence entities, for all contracts worth more than Rs 300, to spend at least 30 per cent of the total contract value in India through procurement of components, transfer of technologies or setting up of research and development facilities.



The CAG, while submitting its report in Parliament, had specifically mentioned about the Rs 59,000-crore Rafale deal, and said the manufacturer of the plane Dassault Aviation and weapons supplier MBDA were yet to fulfil their offset obligations of offering high technology to India. The offset component in the deal was 50 per cent.

"Offsets will not be applicable in single vendor, government-to-government and IGA (inter-government agreement) deals as per DAP 2020," Apurva Chandra, Director General of Acquisition in the defence ministry told the news agency, adding the offset policy will remain in force contracts involving competitive bidding.

"No offset contract has led to transfer of technology," he said indicating that it could be the reason behind the government decision," Chandra added.



As per reports, the revised Defence Acquisition Procedure (DAP) 2020 will come into effect from October 1 and will also incorporates new chapters on information and communication technologies, post-contract management, acquisition of systems developed by the state-run defence entities like the DRDO and Defence Public Sector Undertakings (DPSUs).

The Ministry of Defence (MoD) also pointed out that DAP 2020 has been aligned with the vision of the government's 'Aatmanirbhar Bharat' (self-reliant India) initiative and to empower the Indian domestic industry through 'Make in India' projects with the ultimate aim of turning the country into a global manufacturing hub.

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