New
Delhi, Oct 24 ANI: Defence Minister A.K.Antony today said that the private sector participation in defence production has been allowed and foreign direct
investment is allowed upto 26 per cent. Addressing the
National Seminar on defence offsets being organised by the
Institute for Defence Studies and Analyses IDSA here, Antony said that private sector
will henceforth require industrial licence only if it is stipulated under the requirement for defence
industry. He asserted that under defence procurement procedure the off set
policy have been revised and some
improvements including introduction of offset
banking,
list of defence
products and relaxation of industrial licensing requirement are some of its highlights. The latest revision was carried out recently and has been in vogue since September 1, 2008. India's offset provision applies to
all Capital Acquisitions categorised as "buy Global" or "Buy and Make with
Transfer of Technology", where the estimated cost of the acquisition proposal is Rs. 300 crore or more. A minimum offset of 30 per cent of the indicative cost is required in such acquisitions. The offset obligations of the foreign
vendors can be met either through
investment in our domestic defence industrial infrastructure, including defence R and D, leading to Joint Ventures, co-development and co-production of defence items, or through purchase or execution of
export orders for defence goods and
services produced by
Indian defence enterprises, both in
public and private sector. Antony said a dedicated single
window agency known as Defence Offset Facilitation
Agency DOFA has been set up to facilitate offset related
work. He made it clear that mandate of the
agency is to interact with various stake holders, assist in implementation of
policy apart from suggesting
improvement to make it more comprehensive. Referring to offsets which have become a common feature of
international arms
trade, the Minister said the offset obligations of foreign
vendors in
India can be met either through
investment in the domestic defence industrial infrastructure including
research and development and co-production of defence items. "The
policy and the procedural framework for rapid transformation of defence capabilities
will be further strengthened," he added. Offsets are today a common feature of
international arms
trade. It is estimated that offsets and related forms of counter-
trade constitute five to thirty per cent of global
trade. More than 100
countries use the mode of offsets in their arms contracts.
Business and
trade analysts put the exact volume of defence offsets at the global level at over five billion dollars each year. The
United States, the biggest arms
exporter in recent times, is one of the largest providers of offsets. In 2006 alone, it signed nearly 3.5 billion dollars worth of offset contracts with more than 20 companies located in 12 different
countries. At the global level, the threshold of defence offsets, that is the minimum value of the contract at which offsets apply, is as low as 0.5 million dollars, where as offsets as a percentage of the value of arms contract is more than 100 for some
countries. India's defence offset
policy has been promulgated as part of Defence Procurement Procedure. The offset
policy has undergone two revisions since it was first promulgated in 2005. ANI