The Hindu : National : Don’t be chary of offset clause, aviation majors told

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Don’t be chary of offset clause, aviation majors told

Sandeep Dikshit

Defence Minister cautions them on the need to play by the rules

A.K. Antony

BERLIN: India has asked aviation majors not to be chary of the hefty domestic sourcing requirement (offset) for mega defence tenders but cautioned them of the need to play by the rules.

Aviation companies taking part in multi-billion dollar tenders have been complaining in private about the hefty 50 per cent offset clause. They have also been taking shortcuts in securing orders that prompted the Defence Ministry to recently cancel a tender for 200 helicopters.

Defence Minister A.K. Antony said the offset clause in defence purchases was meant to be a “bridge” to help Indian companies learn from the expertise of their vastly experienced foreign counterparts.

“These policies are designed not only to further develop our capabilities in production of land, air and naval defence equipment, but also to encourage co-development and co-production with international manufacturers,” Mr. Antony said.

The Defence Minister is here to jointly inaugurate the Berlin air show with German Chancellor Angela Merkel where India is the partner country for the first time in the exposition’s 99-year history. He is leading a delegation comprising Indian Air Force (IAF) Chief Air Chief Marshal Homi Major, Defence Secretary Vijay Singh and Director General (Acquisitions) S.K. Sharma.

Integrity clause

Mr. Antony was speaking at a reception in his honour with the IAF band playing in the backdrop and his German counterpart Franz Josef Jung and other senior officials in attendance. While there were tremendous opportunities in the civil and military aviation sectors, procurement policies have been streamlined and were transparent. India asks all participants in defence contracts to sign an integrity clause that obliges them not to indulge in unfair practices.

Mr. Antony’s tenure has seen the cancellation of contracts or their reference to the Central Bureau of Investigation (CBI) when there has been a hint of misconduct.

Mr. Antony spelt out why India had become an attractive destination for foreign majors in all sectors. He also set out the terms of engagement which India sought from them.

“The transformation of a plural democracy of over one billion people will not only dramatically alter India’s economic prospects but will also have a far-reaching impact on the global economy. India has a large and growing pool of skilled and highly qualified manpower. In a global economy where knowledge and technology are the key drivers of growth, India is well positioned to emerge as a major economy in the coming years.”

But India desired an engagement on its terms. India has placed record orders for planes with major global manufacturers to meet its growing demand.

At the same time, there is a renewed thrust on modernisation of aviation infrastructure, including airports, navigation and surveillance systems to keep pace with this fast expanding traffic. India also seeks to encourage active indigenisation in defence production as well as greater investment in research and development.

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