(An Article in TOI, New Delhi, on May 22, 2009)Indian Offset Policy articulations are based on the Indian Perspective of its domestic consumption, technology issues, and exports. And rightly so. All DPPs / Offset Policy Issues point in this direction, routinely revised as we learn, with national interest at its core.
Barring the US, a very few other countries have experience in Defence Offsets, and that too ‘rapped-up’ in the Offsets are both Direct & Indirect Offsets. Most of these Recipient Countries of Offsets are small or Allies of the US. In case of India, it is entirely different. Reasons are many.
India, as I have understood, has articulated its Offset Policy in the spirit of ‘by India, for India’, leaving enough scope for modifications as we gain experience. India’s Offset Policy therefore does not fit into any ‘blue print’.
The primary aim of the Policy is to make Indian Defence Industry state-of-the-art, and competitive with a view to retain independence in defence & policy matters. Some of the important decision matrix discerned by Me on critically analysing the Policy is:
Issue of ‘Hostile Take Over’. This limits the FDI to 26%.
Indian Investors are encouraged to invest their money in the Indian Defence Industry infrastructure. Control of the strategic industry is needed.
Govt. has permitted the ‘Obligor’ to select the ‘local partner’, but remains interceded to ensure that the contract to Manufacture / TT / Buy-Back / Exports, etc, from India fits into the Strategic Defence Policy parameters, Indian Defence Industry being part of it.
Licensed Production in India in the past needs to be differentiated in the present context where the Govt. of India may now insist on clauses like, Meeting the Domestic Need First, Buy-Back, Exports, etc. We are now in a strong bargaining position as a Buyer. We need not carry the baggage of the past. Co-development and Co-production with contracts suitably concluded are a distinct possibility to launch the Industry into the world defence market.
Security & Suspicion are co-related. The Govt. is likely to give information to the production agencies on ‘need-to-know’ basis, enough to move ahead. Suspicion is likely to end progressively.
‘Banking of Offsets’ could be revisited.
We need to allow the existing Offset Policy to move on the maturity curve. The ground situation would force it to correct itself.
What the Private Defence Industry should ask is how the Govt. proposes to assure ROI for them against global competition, especially in view of the Technology Issues, and needs of the Armed Forces to remain state-of-the-art always?
Brigadier (Retired) Sukhwindar Singh
http://www.svipja.com/
(A Global e-Solution for Offsets)
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