NEW DELHI: Defence Secretary Shekhar Dutt has ruled out changes in the offset policy announced in the new Defence Procurement Procedure.

Under the policy, foreign vendors must directly offset 30 per cent of the cost of all defence equipment imports worth over Rs. 300 crore.

"In defence, there will be nothing but direct offset," declared Mr. Dutt, while addressing a seminar on defence procurement organised by the Federation of Indian Chambers of Commerce and Industry here.

While French and Russian companies vying for big ticket contracts have accepted the direct offset policy, American companies have been lobbying for the introduction of other variants such as exports and multiplier offsets.

U.S. insistence on change in the offset policy is understood to be one of the reasons for the delay in the acquisition of 126 multi-role fighter planes for the Indian Air Force. U.S. companies, backed by their Government, have been asking for a flexible policy that permits them to offset 30 per cent of the contract value through means other than direct offset.

Agreeing with the Indian industry's plea not to consider offsets through exports as that would deprive them of business opportunities in the country, Mr. Dutt said the origin of direct offsets was in the fact that India was an importer of big ticket defence platforms. "We can, therefore, leverage the purchasing power to acquire production ability. We have introduced the concept of direct offset to ensure continuous and reliable supply of spares, maintenance and upgradation."

Mr. Dutt said research and development work on strategic, complex and security sensitive systems would continue to be reserved for the Defence Research and Development Organisation.

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