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Offset Clause in Defence deals

  Oct 12, 2020

Offset Clause in Defence deals

Q. Why is this in news ?

Q. What are defence offsets?

Q. When was the policy introduced?

Q. How can a foreign vendor fulfil its offset obligations?

The August 2012 Defence Ministry note mentioned these avenues:

* Direct purchase of, or executing export orders for, eligible products manufactured by, or services provided by Indian enterprises

* Foreign Direct Investment in joint ventures with Indian enterprises (equity investment) for eligible products and services

* Investment in ‘kind’ in terms of transfer of technology (TOT) to Indian enterprises, through joint ventures or through the non-equity route for eligible products and services

* Investment in ‘kind’ in Indian enterprises in terms of provision of equipment through the non-equity route for manufacture and/or maintenance of products and services

* Provision of equipment and/or TOT to government institutions and establishments engaged in the manufacture and/or maintenance of eligible products, and provision of eligible services, including DRDO (as distinct from Indian enterprises).

* Technology acquisition by DRDO in areas of high technology.

Q. Will no defence contracts have offset clauses now?

Q. Why was the clause removed?

Q. What has the CAG recently said over it?