India News | Par Panel Asks Def Ministry to Be Cautious in Implementation of Offset Requirements

New Delhi, Mar 16 (PTI) A parliamentary standing committee on Wednesday asked the defence ministry to be more cautious and transparent in ensuring the fulfilment of offset requirements in defence contracts.

According to a report tabled in Lok Sabha by the panel, a total of 57 defence offset contracts have been signed as on date and the total obligations under them are estimated at around USD 13.52 billion "to be discharged over a period from 2008-2033".

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"Out of the total contracted obligations USD 4.59 billion has been discharged by the vendors, of which USD 2.9 billion has been accepted in audit and the balance claims are under clarification/examination," it said.

The committee, while appreciating the efforts of the ministry in bringing down the total offset obligations, expressed the hope that it would take appropriate measures in the "right earnest" for clearing the balance claims at the earliest that are under "clarification/examination".

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It said such a measure would result in further strengthening of the defence industrial base.

Under the offset policy, the foreign defence entities, for all contracts worth Rs 2000 crore or more, are mandated to spend at least 30 per cent of the total contract value in India through procurement of components, transfer of technologies or setting up of research and development activities.

However, the offsets are not applicable to procurements under 'fast track procedure' and in 'option clause' cases if the same was not envisaged in the original contract.

Further, no offsets are applicable in contracts under intergovernmental agreements.

"While expressing satisfaction that the Defence Offset Monitoring Wing is effectively discharging its duties, the Committee recommends the ministry to be more cautious and transparent as the scope of offset has been increased from Rs 300 crore to Rs 2,000 crore or more," the committee said.

"The Committee desire that the ministry should try to establish some import substitute products industry while discharging the 30 per cent obligation," it said.

On foreign direct investment in the defence manufacturing sector, it said the amount is over Rs 3243 crore between 2014 and 2021.

The committee, headed by Jual Oram, comprises around 30 lawmakers including Congress MP Rahul Gandhi and NCP chief Sharad Pawar.

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