Commerce Ministry to soon seek cabinet nod on national offset policy

NEW DELHI: The Commerce and Industry Ministry would seek the Cabinet's approval this month to roll out a national offset policy that proposes to make it mandatory for foreign firms to source part of their government or PSU contracts from domestic manufacturers.

The draft policy proposes that foreign firms selling goods worth over Rs 300 crore to the government or public sector units will have to source part of their supplies from domestic manufacturers.

"The committee of secretaries have discussed the draft policy. They have suggested some changes and we have done that. We have again sent that for an inter-ministerial consultation. By next week, we will send the final Cabinet note for approval," a senior commerce ministry official said.

The policy mainly aims at boosting growth in the local manufacturing sector. It would help attract investments; acquisition of new technology, raw material and assets; increase R&D capacity; and enhance exports.

As per draft policy prepared by the Commerce Ministry, the minimum value of the offset obligation would be 30 per cent of the estimated cost of import, which means that the company will have to procure this percentage from local players as the government aims to boost domestic manufacturing.

The national offset policy ( NoP) would be applicable to procurement by central government as well as state-run firms.

Sectors covered under the NoP include civil aerospace, power, fertiliser, railways, and other transportation, ports and shipyards, mining, medical equipment, medicine and telecom.

However, sectors such as defence, atomic energy and space would not be covered under the policy. The defence sector has a separate policy, while atomic energy and space would pursue offsets in their contracts independently.

As part of the ' Make in India' campaign, the government is taking several steps to boost growth of manufacturing and create jobs.