“We need to diversifying offsets to non-defence sectors for overall economic benefit. 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 0which lead to lapses. For example, US$2.24bn has lapsed last year according to the Defence Ministry in a statement in the
parliament”, said Pradeep S. Mehta, Secretary General of CUTS International.
Mehta was speaking at a webinar was organised by CUTS International under the Defense News Conclave Project, being implemented with the support of the US Consulate Kolkata. This project aims at creating awareness about the importance of India-US defence relations, particularly in the context of contemporary developments in the Indo-Pacific region and defence modernisation.
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.
He was speaking at a webinar, titled “India’s Defence Offset Policy: Challenges & Opportunities” which saw former offset committee members among the distinguished panelists. 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 we should catch up and apart from indigenous research, a lot of investment in indigenous processes is required. He further mentioned 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 that, “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”.
Suggesting the carrot approach, she mentioned that the private players should be welcomed to innovate and produce dual-use technologies. While there are challenges, Upadhyaya mentioned that “There is cost advantage in India, with respect to great abundance of STEM labour, something that the US is suffering with. India should use this as an offset obligation and reap the benefits”.
Towards the end of her remarks, Upadhyaya stated that doing away with the offsets may not be the best strategy, rather giving more flexibility, working towards a fast procurement timeline and surrounding systems can be reinforced.
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. With the three clarion calls: Atma Nirbhar Bharat, Make-in-India and Start-up India, in his view, India is focusing on developing capability. He concluded his intervention by stating that “The defence offset needs to be taken into a lifestyle approach”, which would leverage life cycle sustainment. 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). He added that Transfer of Technology (ToT) is the worst thing to do, instead, Knowledge Transfer is more long term and effective.
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”. Thereafter there has been excessive control by the MoD over the offset policy, which has led to its inefficiency. There should be an offset contract that enables the vendor the freedom to achieve the objectives. He concluded by saying,
(1) The text of the policy and guidelines should be clear
(2) Training to people who are supposed to manage the offset contract should be looked into
(3) There should be less focus on penalising the vendors rather incentivise them with better policy benefits, and
(4) Excessive control by the MoD has to be checked The virtual session, moderated by Subimal Bhattacharjee, Independent Consultant on Defence & Cyber Security, saw enthusiastic participation, with over forty participants joining to hear experts deliberate on these issues. This was an issue-specific webinar under this project, which have been conceptualised as capacity-building sessions for media professionals, so that they can have a better informed view of defense and strategic matters. With its headquarters in Jaipur, India, CUTS International has regional centres in Accra, Lusaka and Nairobi covering West, Southern and East Africa. Besides them, it has centres in Hanoi, Geneva and Washington DC. In India, it has a regional centre in Kolkata, a rural development centre in Chittorgarh and a liaison office in New Delhi.
For more information, please contact:
Purushendra Singh, +91-80058-53806, prh@cuts.org Vijay Singh, +91-80766-19084, vs1@cuts.org
Mehta was speaking at a webinar was organised by CUTS International under the Defense News Conclave Project, being implemented with the support of the US Consulate Kolkata. This project aims at creating awareness about the importance of India-US defence relations, particularly in the context of contemporary developments in the Indo-Pacific region and defence modernisation.
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.
He was speaking at a webinar, titled “India’s Defence Offset Policy: Challenges & Opportunities” which saw former offset committee members among the distinguished panelists. 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 we should catch up and apart from indigenous research, a lot of investment in indigenous processes is required. He further mentioned 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 that, “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”.
Suggesting the carrot approach, she mentioned that the private players should be welcomed to innovate and produce dual-use technologies. While there are challenges, Upadhyaya mentioned that “There is cost advantage in India, with respect to great abundance of STEM labour, something that the US is suffering with. India should use this as an offset obligation and reap the benefits”.
Towards the end of her remarks, Upadhyaya stated that doing away with the offsets may not be the best strategy, rather giving more flexibility, working towards a fast procurement timeline and surrounding systems can be reinforced.
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. With the three clarion calls: Atma Nirbhar Bharat, Make-in-India and Start-up India, in his view, India is focusing on developing capability. He concluded his intervention by stating that “The defence offset needs to be taken into a lifestyle approach”, which would leverage life cycle sustainment. 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). He added that Transfer of Technology (ToT) is the worst thing to do, instead, Knowledge Transfer is more long term and effective.
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”. Thereafter there has been excessive control by the MoD over the offset policy, which has led to its inefficiency. There should be an offset contract that enables the vendor the freedom to achieve the objectives. He concluded by saying,
(1) The text of the policy and guidelines should be clear
(2) Training to people who are supposed to manage the offset contract should be looked into
(3) There should be less focus on penalising the vendors rather incentivise them with better policy benefits, and
(4) Excessive control by the MoD has to be checked The virtual session, moderated by Subimal Bhattacharjee, Independent Consultant on Defence & Cyber Security, saw enthusiastic participation, with over forty participants joining to hear experts deliberate on these issues. This was an issue-specific webinar under this project, which have been conceptualised as capacity-building sessions for media professionals, so that they can have a better informed view of defense and strategic matters. With its headquarters in Jaipur, India, CUTS International has regional centres in Accra, Lusaka and Nairobi covering West, Southern and East Africa. Besides them, it has centres in Hanoi, Geneva and Washington DC. In India, it has a regional centre in Kolkata, a rural development centre in Chittorgarh and a liaison office in New Delhi.
For more information, please contact:
Purushendra Singh, +91-80058-53806, prh@cuts.org Vijay Singh, +91-80766-19084, vs1@cuts.org