Defence Ministry set to sign offset agreements

The Defence Ministry is set to sign the first two offset agreements with foreign companies under the new defence procurement policy. The success with the first two cases of the new offset clause could make it difficult to accede to the American request to make changes in the offset clause, Ministry officials said.

Under the offset clause, all foreign vendors must compulsorily source one-third of the price of all defence equipment worth over Rs.300 crore from India.

The first test case for this clause is for the import of medium portable radars. The winner of the contract, Elta of Israel, has agreed to meet the conditions of the policy in letter. It will buy components worth one-third of the value of the contract from an Indian company. The runner up, the French company Thales, too was prepared to source one-thirds of the quoted price from India.

The second import contract, where the offset policy will be implemented, is for a fleet tanker for the Navy. Both foreign companies competing to supply the tanker have agreed to meet the “direct offset” clause.

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