The document analyzes revisions made to India's defense offset policy. Major changes include expanding eligible defense products and services, introducing multipliers for partnerships with MSMEs and technology transfers, extending the offset period and banking validity, limiting penalties for non-compliance, and defining roles for offset evaluation. Reporting requirements were also clarified, with half-yearly discharge reports and an annual appraisal submitted to the Defense Acquisition Council. The analysis concludes that the policy has addressed many long-standing demands but the effects will only be seen over time.

1. The 2012 Indian Defence
Offset Policy- A Concise
Analysis

2. Revised Indian Defense Offset Policy
The Indian MoD has just unveiled a revised offset policy. This particular
document has been awaited by the Indian and Foreign stakeholders for more
than 12 months now! We are happy to present to you a brief analysis of the
revised policy.
The new policy has indeed moved a long way forward and incorporated
several long-standing demands of the offset obligors (Foreign OEM’s). How
these changes take effect on the ground, only time will tell.
Should you require a more detailed presentation, please free to get in touch
and we would be happy to set-up a mutually convenient day-time slot for a
presentation exclusively for your organization. This presentation would cover
all the major changes to the offset policy and the impact of these changes on
Offset strategies of the Global OEM’s & the Indian Offset Partners. (IOP’s)
For further details, please feel free to get in touch with:
► Vinay.mangla@in.ey.com (Senior Manager)
► Ankur4.gupta@in.ey.com (Senior Consultant)
Page 2 OFFSET 2012-Concise Analysis

3. Major Additions- Avenues For Discharge
3.1 (a)
Direct
purchase
/ Exports
FDI for
Minor Addition Offset manufacture Minor Addition
3.2 Banking and
maintenance 3.1 (b)
Offset
Discharge Investment in
Technology KIND for ToT
Acquisition for New Method
New Method manufacture
3.1 (c)
by DRDO &
3.1 (f) maintenance
Investment in
Provisioning of KIND in Indian
equipment and enterprise in
New Method ToT to
Govt.enterprises
terms of
Provision of New Method
including DRDO
3.1 (e) for manufacture & equipment for
manufacture & 3.1 (d)
maintenance.
maintenance.
Page 3 OFFSET 2012-Concise Analysis

4. Major additions- Items of Discharge
Defense products
• Items under Vessels of War has been expanded
Inland & Coastal Security
• New items added for Vessel; Port; Harbor and
Coastal Security
Services Added
• Repair
• R&D services from government recognized facilities.
Page 4 OFFSET 2012-Concise Analysis

5. Major Additions
Time Period • Offset banking validity (7 years)
• Offset Discharge beyond the
Enhanced duration of the Main Contract
Penalties- • Maximum percentage introduced.
• OEM’s barred for a Fixed number of
Limited years for non-compliance.
• For choosing MSME’s as IOP’s.
Multipliers • For sharing Technology with DRDO
Introduced and Pvt. Sector.
• For sharing Dual-Use technologies
Page 5 OFFSET 2012-Concise Analysis

6. Major Additions- Offset in charge
DOMW- Defense Offset Management Wing
introduced; complete responsibility of
ensuring a smooth Offset process post
contract signing
• New post- JS (DOMW)
Pre contract responsibility with Acquisition
wing
• Roles of DDP & Acquisition Wing have now been
clearly defined.
Page 6 OFFSET 2012-Concise Analysis

7. Major Additions- Clearly Defined
Value Addition • For calculating % of Offsets to be
credited to the OEM.
Objective of • Development of Globally Competitive
Industries
the Offset • Augmenting R&D and D&D capabilities
• Encourage development of synergistic
policy sectors
Investment for • Clear distinction between FDI and
Offsets investment in ‘KIND’
Page 7 OFFSET 2012-Concise Analysis

8. Major Additions- Permitted
Change in IOP partner and Item
• With sound reasoning it is now permitted.
Extension of time period
• Permitted up to a limited extent
Page 8 OFFSET 2012-Concise Analysis

9. Major Additions- Reporting
Offset
Discharge • Is now a Half-Yearly
progress requirement
report
• JS(DOMW) to submit
Annual an annual report on
the progress of
Offset various offset
Appraisal programs to the DAC.
Page 9 OFFSET 2012-Concise Analysis

10. Thank You