India signs $6-bn defence offset deals in 3 years with foreign firms

File Photo: India’s junior defence minister Shripad Naik.

New Delhi: India has signed a cumulative $5.67-billion defence offset from 21 contracts with foreign companies in the last three years. This would mean the Narendra Modi government clinched overseas deals worth at least $20 billion during the period, bringing benefits to the local industry

India’s defence offset policy currently envisages the investment of 30 per cent of any military contract of Rs 2,000 crore ($280 million) value or more, signed with foreign vendors, back into the Indian market, through direct purchases of arms and equipment, components and parts, technology transfers and other defence and civil aviation industry services from local aerospace and defence industry.

India has been pursuing the defence offset policy since 2006, but has tweaked its clauses over the years in a bid to energise the local industry, including increasing the minimum value of Rs 300 crore ($42 million) to Rs 2,000 crore for offset clause to apply in an overseas contract.

In a reply to questions in Parliament of India today, Minister of State for Defence Shripad Naik said the Department of Defence Production had carried out a study on the impact of offsets on the Indian defence industrial base through the Ministry of Defence-run think tank, Institute for Defence Studies and Analysis (IDSA).

According to the study, the defence ministry has signed 52 offset contracts valued at $11.79 billion till March 2019 to be discharged through Indian Offset Partners. Though no more details of the offset contracts were provided, Naik indicated that the increase in the defence offset value was due to the efforts and reforms brought about by the Modi government.

These included reforms to stimulate private-sector expansion in India, local defence manufacturing, and foreign direct investment (FDI) in defence. “Further, so far FDI amounting to Rs 1,812 crore ($252.5 million) has been reported by the companies in the defence and aerospace sector (in India) since April 2014,” he said.

Since the opening of private sector participation in defence production in 2001, 452 Industrial Licenses (ILs) have been issued till October 2019 for manufacture of a wide range of defence items, out of which a total of 109 licenses have been issued in the last three financial years.

Separate procedure for ‘Make-II‘ category has been notified by Defence Procurement Procedure (DPP) to encourage indigenous development and manufacture of defence equipment. Till date, 44 proposals for development by industry have been given ‘In-principle’ approval under Make-II.

In separate replies to questions from members of the House of the People (Lok Sabha), the lower chamber under the bicameral legislature system, Naik gave these details too:

File Photo: French firm Dassault Aviation’s Rafale fighter aircraft.

RAFALE JET: French aircraft-maker Dassault Aviation has handed over three Rafale fighter jet to the Indian Air Force (IAF) till date, which are being used for training of the IAF pilots and technicians in France.

The Performance Audit Report of the government auditor — Comptroller and Auditor General (CAG) — on the Capital Acquisition in IAF presented to Parliament on Feb. 13, 2019 has brought out that the entire package price of the 36 Rafale procurement is 2.86% lower than the Audit Aligned Price compared to the 2007 tender process fot the Medium Multi Role Combat Aircraft, which was cancelled in mid-2015.

The Inter-Governmental Agreement was signed on Sep. 23, 2016 between the Government of India and the Government of French Republic along with Aircraft Package Supply Protocol (APSP) signed with Dassault Aviation and Weapons Package Supply Protocol (WPSP) signed with French arms maker MBDA for the purchase of the 36 Rafale fighter aircraft in a fly-away condition. The Indian government has not recommended any company for making Rafale jets for India.

CYBER SECURITY: Attempts of cyber hacking and cyber attacks is an ongoing activity in the cyber world. There has been no report of cyber attacks making significant damage on defence establishments during the recent years.

The government has approved establishment of a Defence Cyber Agency to control and coordinate the Joint Cyber operations.

The classified information of the tri-services are well guarded. To mitigate cyber threats, all the three Services have established their respective Cyber Emergency Response Teams (CERT). Adequate safeguards have been instituted in the form of Cyber Audits, Physical Checks and Policy Guidelines to ensure a robust cyber posture of armed forces.

OFB LABOUR: As on Nov. 1, 2019, the total number of employees in Ordnance Factories are 80,754.

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