The total value of defense offset commitment that needed to be implemented over the last 15 years has been estimated at USD 6.83 billion, the government said in Lok Sabha on Friday.
Replying to a question, Minister of State for Defense Ajay Bhatt said offset claims worth 82.13 per cent of the total offset commitment have been submitted till August 1.
The figure of the total offset commitment of USD 6.83 billion is also till August 1.
Under India’s offset policy, the foreign defense entities, for all contracts worth Rs 2000 crore or more are mandated 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 activities.
However, the offsets are not applicable to procurements under ‘fast track procedure’ and in ‘option clause’ cases if the same was not envisaged in the original contract.
Further, no offsets are applicable in contracts under intergovernmental agreements.
Asked whether the government is aware that over the last 15 years, a large number of foreign companies have not fully implemented their defense offset obligations within the original deadline set for their implementation, Bhatt said “yes”.
When asked about the total value of defense offset commitment that had to be implemented during the period, he said it is USD 6.83 billion till August 1.
“Total of 15 companies have missed the first deadline set for implementation of their defense offset commitment. Further details being strategic and sensitive in nature, (and) cannot be disclosed,” Bhatt said.
“For unfulfilled offset obligations, penalty as applicable has been imposed on the defaulting vendors as per the governing defense offset guidelines,” I added.
Further, I have noted that “re-phasing” of offset obligations has been allowed to enable vendors to discharge the pending offset obligations in genuine cases.
In March, a parliamentary standing committee asked the defense ministry to be more cautious and transparent in ensuring the fulfillment of offset requirements in defense contracts.
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