Monday, August 23, 2010

International industry unites, calls on India to reform offset policies

Defence industry associations across North America and Europe will send a jointly signed letter to the Indian Ministry of Defence (MoD) early next month outlining proposals to overcome what they view as excessive bureaucracy that is stifling defence trade.

The letter will focus on defence companies' frustrations with existing offset policies and make a number of recommendations that industry bodies hope the MoD will include in a revision of the offset policy planned for next year.

Cosignatories of the letter include the Aerospace Industries Association in the United States; the Washington, DC-based US-India Business Council; the UK's ADS (AeroSpace Defense Security); the German Aerospace Industries Association (BDLI); France's Groupement des Industries Françaises Aéronautiques et Spatiales; and the Aerospace Industries Association of Canada.

Confirming the development on 19 August, Brinley Salzmann, the director of overseas and exports at ADS, said the letter is a result of international defence industries' desire for a "workable offset policy in India that makes commercial sense for the overseas obligors and also generates value and benefits for Indian industry."

Salzmann said a particular focus of the letter is a request to the MoD that it establish a dedicated body that has authority to make key decisions on how vendors fulfil offset obligations.

Salzmann added that such an agency would address the high level of bureaucracy that has been identified by international defence industries as one of the biggest challenges in doing business in India.

He did not reveal full details of the letter's content, but said: "It will be along the lines of the need for a simplification of the system to try to generate an entity that has the authority to make decisions."

1 comment:

  1. while the approach of the international industry is to simplify the matter the joint approach tends to send a signal of arm-twisting the indian government. The need for a defence offset agency as a budgeted office of the MoD is known and is being examined. however the moot question to the international industry is why are they intrested in increasin investment to 49%. If the aim is to sell products offset is only a part of the obligation so 26 or 49 or 89 does not matter. if the aim is to establish defence production in india then they may approach the ministry of industry the ministry of defence has no role.
    the proposal to approach the government collectively is to simply sell as well as to meet their offset obligations in a manner where they retain control. this defeats the indian aim to build its defence industry. the response of the proposal can be anticipated