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'India Offset Policy Attract Global Attention' Print E-mail
Written by Viswanath   
Wednesday, 11 February 2009
DPP 2008 improves domestic industrial supply and encourage investments in the Defence Sector

New Delhi : Reflecting industry aspirations, the Defence Procurement Procedure (DPP) 2008 broadly incorporates measures to improve domestic industrial supply, apart from encouraging FDI and intensifying R&D in Defence industry. The policy has been revised four times since its inception in 2002. The industry should remain hopeful that shortfalls in the policy will be accordingly reformed, said Mr. Shashikant Sharma, Director General-Acquisition, Ministry of Defence.

He was speaking at  the 2nd India Regional Offsets Conference organised by the Confederation of Indian Industry (CII) in association with The Defence Manufacturing Association (DMA) of UK and Global Offsets and Countertrade Association (GOCA) of USA. The conference witnessed over 300 participants including 130 international offset professionals, officers from Indian Government, Ministry of Defence (MoD), Armed Forces and Industry.

He specifically mentioned operational and policy challenges in defence offset. Pointing out the need for universality of offset credit transaction; policy issues with technology transfers; desire for the development; growth of indigenous defence manufacturing capabilities and the likes, Mr. Sharma's address reaffirmed that the Government is considering a more dynamic defence procurement policy structure.

Mr. Sharma added, an offsets partner is now not required to hold licence anymore to associate with Ministry of Defence. This has increased the scope manifolds from 37 to 2,000 industries, which can now consider associating with the offset programmes. He further stated 'for the establishment of a framework to develop in-house credit systems; monetary cell has been created in the Department of Defence production.  The Ministry of defence is also studying the offset policy of global economies to gather provisions for inclusion in India.

The conference saw a clear understating of India targeting the global defence market. The Ministry of Defence, Government of India envisages spending over US$ 30 billion for acquisition of military hardware and software during the eleventh five year plan. These developments will intensify new acquisitions, adoption of futuristic projects, upgradation of equipments, support services, and joint venture friendly environment amongst others. The overseas companies will be required to fulfil mandatory offsets obligation to the tune of 30-50 percent of such procurements.

Major General Mrinal Suman (Retd), AVSM, VSM, Project Director, Defence Technical Assessment & Advisory Services, CII, presented an insightful observation on business opportunities in Indian Defence sector. He said, 'India is observing exciting times in defence market with a huge shopping list. An ideal proportion of military equipment balance observed in the developed world is 30-40-30 which is spread over state-of-the-art technology; mature technology; and obsolete technology.  Whilst India's military equipment balance proportion is 15-35-50. Attempting to match up its defence infrastructure to world, India will be spending US$ 100 billion by 2020.'

Rear Admiral Rees Ward, Director General, DMA UK, said, 'like most policy DPP 2008 is an initial phase of the policy which will evolve with time. He said we have to overcome disagreements as challenges occur when we get into details of some understanding. We expect that the conference will help the international delegates understand on how to reach a meaningful dialogue with the Indian Government, and possible modes for technological transfers.'

Mr. Neil Rutter, President, GOCA said, the delegates should use this as an platform to facilitate B2B interaction. The assembly gathered here is a valid proof of professionalism and corporation shared by the industry body CII towards the cause of Indian defence industry modernisation.

Mr. Atul C Kirloskar, Chairman CII National Committee on Defence & CMD, Kirloskar Oil Engines Limited, said, 'Agenda of the conference is to help international OEMs learn about defence procedures and offsets industry in India. On the other hand Indian industry can generate a better understanding on working with OEMs and integrate with the global supply chain.'

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