French Government rejects Offset conditions for Rafale Fighters
Updated: Aug 17, 2015 02:18:39pm
New Delhi, Aug 17 (KNN) The French Government has rejected India’s demand for a 50 per cent offset clause for direct purchase of 36 Rafale fighter jets by India as decided by the French President and Indian Prime Minister recently.
Offset policy is an essential component of all big defence deals with foreign suppliers, as per the Defence Procurement Procedure (DPP), 2005, under which the foreign company has to procure from or invest back a portion of the deal into India. The Policy is under an advance stage of revision.
Offset clauses are introduced by almost all buying countries in big defence contracts, with an objective to promote indigenous component of the supplies and what is more important to encourage transfer of state of the art technology to domestic manufacturing sector.
However, at least in case of India, the foreign suppliers of defence items are hesitant to work in this area and according to sources, unfulfilled offset obligations of more than Rs 20,000 crores have piled up from the ongoing contracts.
The 50 per cent offset clause was part of the original tender that was floated for 126 fighter jets a decade back. However, as the deal now has been watered down to direct purchase of 36 fighter planes only, French Government has cited huge cost escalation if the offset clause is insisted.
The French have instead offered to take part in the ‘Make in India’ initiatives like option for making Falcon business jets in India or even the Rafales for future, besides other projects.
As per reports some Defence Ministry officers also support the French position. How can 50 per cent offset clause be asked when the French are offering the fighters at the same rate at which its Air Force is buying, they opined.
The issues related to participation of MSMEs in defence offset and dovetailing of defence procurements with Make in India, were taken in up a seminar organised by FISME recently.
Defence Minister, Manohar Parikkar was the chief guest at the seminar and in his addressed assured that the issues related to participation of MSMEs in Defence offset will be addressed in the new Defence Procurement Policy 2015. (KNN/ DB)
Offset policy is an essential component of all big defence deals with foreign suppliers, as per the Defence Procurement Procedure (DPP), 2005, under which the foreign company has to procure from or invest back a portion of the deal into India. The Policy is under an advance stage of revision.
Offset clauses are introduced by almost all buying countries in big defence contracts, with an objective to promote indigenous component of the supplies and what is more important to encourage transfer of state of the art technology to domestic manufacturing sector.
However, at least in case of India, the foreign suppliers of defence items are hesitant to work in this area and according to sources, unfulfilled offset obligations of more than Rs 20,000 crores have piled up from the ongoing contracts.
The 50 per cent offset clause was part of the original tender that was floated for 126 fighter jets a decade back. However, as the deal now has been watered down to direct purchase of 36 fighter planes only, French Government has cited huge cost escalation if the offset clause is insisted.
The French have instead offered to take part in the ‘Make in India’ initiatives like option for making Falcon business jets in India or even the Rafales for future, besides other projects.
As per reports some Defence Ministry officers also support the French position. How can 50 per cent offset clause be asked when the French are offering the fighters at the same rate at which its Air Force is buying, they opined.
The issues related to participation of MSMEs in defence offset and dovetailing of defence procurements with Make in India, were taken in up a seminar organised by FISME recently.
Defence Minister, Manohar Parikkar was the chief guest at the seminar and in his addressed assured that the issues related to participation of MSMEs in Defence offset will be addressed in the new Defence Procurement Policy 2015. (KNN/ DB)
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