The threshold limit for defence offsets was fixed at Rs.300 Crore in 2008. Keeping in view enhancement in cost of procurement on account of offsets in such cases and difficulties faced by smaller OEMs in executing offset obligations, the threshold limit has been enhanced to Rs.2000 Crore in DPP-2016.
No negative impact is envisaged with this change in limit on indigenous enterprises and local manufacture.
The following provisions have been made in the DPP 2016 to promote indigenous enterprises and self-sufficiency with respect to technology and arms production:
A new category of acquisition has been introduced Buy Indian (IDDM), to promote indigenous design development and manufacturing. Under this category, indigenously designed equipment with minimum of 40% indigenous content (IC), or equipment with 60% IC will be considered for acquisition. This category will be the most preferred acquisition category and one rank above the Buy (Indian) category.
Buy (Indian) category of acquisition requires a minimum IC of 40% (as compared to 30% in the previous DPP) and in Buy and Make (Indian) category, minimum IC of 50% will be required in Make portion of the scheme. Flexibility has been given to AoN according authority to change percentage of IC.
Definition of Indian Vendor has been incorporated in the DPP.
Make Procedure has been refined to ensure increased participation of Indian industry.
List of potential Make projects has been identified and a 2-year roll on plan for Make cases introduced in the Annual Acquisition Plan (AAP).
Buy & Make and Buy and Make (Indian) categories also have a Make portion which is a result of technology transfer from either Indian or Foreign vendors which are shared with Defence / Private Production Agencies.
Investment in kind in terms of Transfer of Technology (ToT) to Indian enterprises for the manufacture and / or maintenance of eligible products and provision of eligible services. This could be through joint ventures or through the non-equity route for co-production, co-development and production or licensed production of eligible products and eligible services.
Provision of equipment and / or ToT to Government institutions and establishments engaged in the manufacture and / or maintenance of eligible products and provision of eligible services, including DRDO.
In the discharge of offset obligations related to technology acquisition by DRDO, a multiplier up to 3 is permitted.
Para 47 of Chapter-II of DPP-16 provides for provision of ToT to an Indian Vendor for providing Maintenance Infrastructure in Buy (Global) category cases. The Indian entity could be an Indian vendor or entities like OFB / Army Base Workshops / Naval Aircraft Yards / Base Repair Depots of Air Force.
This information was given by Raksha Rajya Mantri Dr Subhash Bhamre in a written reply to Shri Derek Obrien in Rajya Sabha today.
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