India tightens up offset enforcement

by Jon Grevatt

According to MoD figures, discharged defence offsets in India (up until mid-October 2021) were valued at USD3.21 billion: a year-on-year increase of 65%. The figures also show that the MoD has rejected offset claims worth nearly USD480 million. (Indian MoD)

The Indian government is tightening up its enforcement of defence offsets, seeking to ensure that foreign contractors discharge obligations in line with commitments.

An offset official in the Ministry of Defence (MoD) in New Delhi has confirmed to Janes that the ministryt is taking a harder line with non-compliance. Warnings and possible penalties will be delivered to contractors who fail to perform in line with offset contracts, he said.

“The priority is to ensure that foreign contractors are discharging offsets … In the case of non-performance they will be penalised. If they are violating the terms they should be penalised otherwise it will be a free-for-all,” said the official, who did not want to be identified.

His comments follow recent reports in India that the MoD's Defence Offset Management Wing (DOMW) has threated to ban one US contractor and has put another 11 firms on a ‘watchlist' for possible offset penalties.

Under Indian offset regulations if non-compliance continues the companies will face losing bank guarantees or scheduled contract payments.

Confirming these developments, the MoD official said, “This is not the first time we have done this. This is part of the process to ensure that offsets are discharged in line with obligations.”

Criticism

The MoD's move to enhance the enforcement of defence offsets is thought to be a response to the country's Comptroller and Auditor General (CAG), which criticised the MoD in September 2020 for its “weak” monitoring of offsets programmes.

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