“We need to diversify offsets to non-defence sectors for overall economic benefits," said Pradeep S. Mehta, Secretary General of CUTS International. "To ensure that, our offset credits are used, we need to move the Defence Offset Facilitation Agency (DOFA) which currently functions under the MoD, to be moved out of MoD to the Ministry of Commerce & Industry or Department of Economic Affairs, as practiced in many countries. Because, being under the Defence Ministry, there are internal blockages which lead to lapses. For example, US$2.24bn has lapsed last year according to the Defence Ministry in a statement in the parliament."
Mehta was speaking at a webinar organised by CUTS International under the Defense News Conclave Project, which is being implemented with the support of the US Consulate Kolkata.
Speaking at the event, Kris Osborn, President and Editor-in-Chief, Warrior Maven, said, “It is inspirational to look at what the Pentagon is doing in a technical sense to enhance multi-domain connectivity and the third offset policy” Pentagon is working extensively on collaboration with allies – sharing information and enhancing multi-domain capabilities.
Maven added that new technologies drive the need for new tactics, new implementation and regulatory framework, in this respect US and India may join together for joint technology production.
Air Marshall M Matheswaran (Retd.), Chairman and President, The Peninsula foundation, Chennai, who has been a committee member during the defence offset policy formulation spoke about the importance of technology and India being late to the party to reap the benefits.
He suggested that India should catch up and apart from indigenous research, a lot of investment in indigenous processes is required.
He further noted that, “offsets are one of the mechanisms through which India should leverage technological capabilities through its large purchases and fill-in the gaps as much as possible for its critical technology requirements”.
He also observed, “There is a need to bring in a holistic approach, bringing in direct and in-direct offsets and there is a requirement of National Offset Policy (NOP), as it is an effective tool!”. In the age of upgrades, platforms maybe old and hence they require revamping and holistic outlook.
Sanjay Pulipaka, former Senior Fellow, Delhi Policy Group, stated that “Offset Policy is not a silver bullet, but it is one among the many policies needed to improve domestic manufacturing in India”. As an independent researcher, he felt the need for a robust professional organisation that deals solely with offsets.
He further spoke about various multipliers introduced in Defence Acquisition Procedure (DAP) 2020, which includes Transfer of Technology (ToT) as an important element. Since the inception of Defence Offset Policy in 2005, it has met with various challenges but the silver lining is that, the course can be corrected and challenges can be turned into opportunities in times to come.
Kriti Upadhyaya, Vice President, Strategic Advisory, C2Ci Innovations Americas, elaborated that in countries like the US, a lot of investment is coming from the private sector and there is an open approach towards governmental policies.
Upadhyaya observed that “there is no need to mandate the offset policy, rather, incentivise it and companies who take up offset policy (voluntarily) should be given tax credits and other benefits and this would further broaden the investments”.
Lt. Gen. Anil Kapoor (Retd.), Chairman, National Advisory Committee, Asset Management Society, India, discussed about some of the best practices followed by countries around the globe.
“Defence offsets came up from the need to develop capability, the crux of defence offsets is capability development”, adding, we should take long term view as it takes time to develop capabilities.
Partha P Roy Chowdhury, Commercial Lead India for Lockheed Martin, mentioned that, “The aim of policies in India has always been to achieve macro objectives but no one is bothered with micro objectives”, citing an example of Ashok Leyland and Lockheed Martin combining to produce 100% make in India, Light Bullet Proof Vehicle (LBPF).
Amit Cowshish, former Financial Adviser (Acquisition), Ministry of Defence, has been a close watcher of the evolution of this policy. He said that the objectives of India’s defence offset policy is unclear and “for the first 7 years, the DPP (Defence Procurement Procedure) 2005 did not even specify what the objective of the offset policy was”.
There should be an offset contract that enables the vendor the freedom to achieve the objectives. He noted that the text of the policy and guidelines should be clear and training to people who are supposed to manage the offset contract should be looked into.
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