India Approves Transfer Of Technology As Defence Offsets

  • 12:00 AM, April 4, 2012
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The Indian MoD has allowed transfer of technology (TOT) as defence offsets which means international companies winning defence contracts will be able to reduce to a considerable percentage the value of direct offsets under any deal, a decision to this effect has been taken by Defence Acquisitions Council (DAC) last Monday. This and other measures such as offsets credit worth 300% of the value of technology if the vendor transfers to the government owned Defence R & D Organization (DRDO), extending by two years the period within which vendors must discharge offset obligations and extending the validity of banked offset credits to seven years from the earlier four years will greatly ease difficulties faced by foreign vendors in discharging defence procurement orders in India, the measures have not been made official by the MoD, but several Indian media outlets reported quoting sources in the MoD. Currently, foreign vendors winning contracts worth US$50 million or more are required to implement offsets amounting to 30% of the contract value. Under the new offsets guidelines, ToT should be provided without licence fee that there should be no restriction on domestic production, sale or export of goods manufactured with the transferred technology, the reports said. India’s technology-starved DRDO will receive a tremendous boost as the new policy provides a multiplier of three times if the technology is transferred to DRDO. However, the private industry is peeved at this favouritism to the DRDO. A private industry executive told without willing to be quoted, “you will see a long line of foreign vendors outside DRDO and nobody will partner with Indian private industry for TOT. It gives them (DRDO) an unfair advantage”, said the source.