Asia > Southern Asia > India > Ease Of Doing Business: India Amends Defense Offset Norms

India: Ease Of Doing Business: India Amends Defense Offset Norms

2015/12/26

In an attempt to improve the relieve of doing business and promote PM Narendra Modi's 'Make in India' initiative, India today relaxed defense offset guidelines, bringing an Indian vendor at par with the foreign OEM in terms of fulfilling offset obligations.

This will provide better flexibility to the vendors in offset contracts and reinstatement of services, and ensure a level playing field to Indian firms in capital acquisitions.

Vendors had been expressing difficulty to upfront provide specific description of products and their work share, supporting documents to establish eligibility of Indian Offset Partners (IOPs) and yearly discharge schedule.

This is primarily due to the time lag between submission of technical offset offers and finalization and subsequent implementation of offset contracts. As a result, there were frequent arrangement amendment requests from vendors.

Accordingly, a two-pronged approach for mitigating perceived bottlenecks during pre and post arrangement stage has been evolved through recent amendments to offset guidelines.

At pre-arrangement stage, option has been given to the vendors to submit detailed offset proposals at a later stage. The vendor can finalize his IOPs and offset product details one year prior to the intended offset discharge, or can even undertake the offset activity and submit claims thereafter. This will facilitate vendors to finalize a additional realistic offset offer.

At the post arrangement stage, enabling provisions have been made in the offset guidelines for change in IOP/component and re-phasing of offset schedule, thereby giving complete flexibility to the vendor.

The Standard Operating Procedure (SOP) will presently make it possible to address requests from vendors to change their IOP or their offset component as per requirement during the period of the arrangement.

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