Policy & Government

Should MoD Persist with Defence Offsets?

The draft Defence Procurement Procedure (DPP) 2020, released by the Ministry of Defence (MoD) on March 20, exempted foreign vendors from discharging offset obligation in all ‘Buy (Global)’ cases exceeding Rs 2,000 crore other than those processed on the single-vendor basis under specific Inter-governmental Agreements (IGAs), including the Foreign Military Sales (FMS) programme of the US Government (USG).

The FMS programme is administered through a standing framework devised by the USG under which individual deals are finalised between the MoD and the Defence Security Cooperation Agency (DSCA) of the USG, which in turn enters into specific contracts with the US companies for supplying the equipment to India. The offset contract in all such cases is, however, negotiated by the MoD directly with the US company supplying the equipment through FMS, as the USG does not take any responsibility for offsets as a matter of policy.Read More…

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