A More ‘ Atmanirbhar ‘ Bharat has started twisting tails of GLOBAL DEFENCE Companies for defaulting
Russian Aircraft Corporation had signed a contract for INR 7230 crores in 2008 itself for the upgrade of 69 MiG-29 fighters but they have still not honoured their contract to invest INR 2169 crores in India as per the Offset clause. No wonder they have not received further orders for anything.
Similarly Boeing of US had signed a contract in 2010 for INR 8175 Crores for the supply of 10 heavy-lift aircraft and later on supplied one more C17. However they have also not honoured their commitment to invest INR 2452. 5 crores. Recently their chief has visited India and was scampering around to quickly set a Maintenance & Repair facility in Nagpur.
Rafael Advanced Defence Systems too signed a contract for INR 1500 Crores in 2014 for the supply of Barak missiles; Elbit Systems of Israel for INR 2025 Crores contract in 2014 for the supply of thermal imaging fire control systems for T-72 tanks; BAE Systems’ GCS International Limited for INR 4065 Crores contract for the supply of 140 ultra-light howitzer guns; Dassault Aviation, Safran, Thales of France for INR 65250 Crores contract signed in 2016 for the supply of 36 Rafale fighters and also Elta Systems of Israel for the supply of air route surveillance radars. However all have defaulted so far in setting up things under the Offset clause. These biggest names in the global defence industry have won contracts to supply a range of products — from airplanes to missiles, helicopters and guns — to India.
No wonder now the Ministry of Defence (MoD) has decided to crack the whip to get these foreign defence companies to honour their offset commitments linked to multi-Crores contracts received from India. The Defence Acquisition Council (DAC), which is the apex body of the MoD for finalising procurement for the three services, is scheduled to meet at the end of this month.
The review committee that prepares the agenda for the DAC is scheduled to meet on May 11. Sources said offset default is one of the subjects that would come up at the DAC.
The MoD, according to sources, is preparing to issue a final warning to the defaulters with a message that if they do not deliver on their offset promise, the government would be forced to bar them from any future bidding.
As per the government of India’s defence offset policy 2005, 30% of the value of the contract has to be spent in India by companies winning Indian defence contracts.
Over the last 15 years, offset commitments to the tune of $13 billion have been made by foreign original equipment manufacturers (OEMs). But these companies have so far executed contracts worth only $2.4 billion.
The ministry of defence has issued multiple warnings and show-cause notices and imposed penalties on several suppliers. Yet, the foreign original equipment manufacturers have not honoured their commitments.
Henceforth either the so called biggies fall in line as per MoD ‘s orders or their arms orders from India will simply evaporate.