With ease of doing business in mind, government makes amendments to defence offset guidelines

NEW DELHI: In an attempt to improve the ease of doing business, the Ministry of Defence has initiated various policy measures to address the concerns of the industry. The government has made provisions with an intent to provide greater flexibility to the vendors in offset contracts.

The government has also reinstated services as an avenue for discharge of offset obligations and provided a level playing field to Indian vendors in Capital acquisitions to boost ' Make in India'.

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"Vendors had been expressing difficulty to upfront provide specific description of products and their work share, supporting documents to establish eligibility of Indian Offset Partners (IOPs) and yearly discharge schedule. This is primarily due to the time lag between submission of technical offset offers and finalisation and subsequent implementation of offset contracts. As a result there were frequent contract amendment requests from vendors. Accordingly, a two pronged approach for mitigating perceived bottlenecks during pre and post contract stage has been evolved through recent amendments to offset guidelines. At pre contract stage option has been given to the vendors to submit detailed offset proposals at a later stage," said a Ministry of Defence press release.

The vendor can now finalise his IOPs and offset product details one year prior to the intended offset discharge, or can even undertake the offset activity and submit claims thereafter. This will facilitate vendors to finalise a more realistic offset offer.

At the post contract stage, enabling provisions have been made in the offset guidelines for change in IOP/component and re-phasing of offset schedule, thereby giving complete flexibility to the vendor. The Standard Operating Procedure (SOP) will now make it possible to address requests from vendors to change their IOP or their offset component as per requirement during the period of the contract. The Defence Procurement Procedure ( DPP) has a provision for foreign foreign Original Equipment Manufacturers ( OEMs) to discharge their offset obligations through 'Services'. This provision had been kept under abeyance with effect from May 23, 2013 due to absence of any regulatory oversight mechanism for Services.

"There was a persistent demand from the industry (both domestic and foreign) for allowing Services as a valid avenue for discharge of offset obligations. Based on several interactions and inputs, received from industries most of the ‘Services’ which were in abeyance, have been reinstated with checks and balances following a Ministry of Defence order in this regard on December 07, 2015," said the release.