The Ministry of Defence has issued amendments to DPP 2013 (Defence Offset Guidelines). The two
amendments, with retrospective effect, will go a long way in easing the
execution of bottle-necks as well as greatly reducing the overall contract
negotiation period.
Till
now the submission of details of Indian Offset Partners and work
package used to almost start with main RFP response. There used to be
a number of queries seeking clarifications further complicated by the prolonged
procurement process and stringent technical offset evaluations, followed
by multiple layers of processing and approvals by Defence
Acquisition Committee (DAC). Henceforth, these will be approved by
the Secretary (Defence Production) and OEM can provide details
of offset obligations executed either at the time of seeking offset
credits or one year prior to discharge of offset obligations through the Indian
Offset Partner.
Amendment
has also provided more flexibility to foreign OEMs in choosing
partners. There will be flexibility to change Indian partners and
allocating work shares with a minimal process. With these amendments,
foreign companies will now be able to select partners and contracts even
at the 'execution stage', instead of a few years in advance. Both these
amendments, with retrospective effect, are likely to help in the smooth
execution of defence offsets.
However,
there would be additional 5 per cent enhancement in the offset obligations as a
penalty, if OEM is unable to fulfil its offset obligations. Amendments are
enclosed.