SuvarnaTeja
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Another stupid assumption.
Local manufacturing was to limit the effect of any sanctions in the future and to build a local aircraft Industry and eco system. Not to reduce cost.
Local manufacturing is more expensive that purchasing it, especially since wages and costs in India are rising.
It is not necessary for the the local manufacturer to recover the entire capital cost from the manufacturing of the specified jets. They can become part of DA's supply chain and recover the cost over a longer period of time building other aircraft components, for commercial use.
But unlike last time, this time the details will be taken in writing and not left to the discretion of the supplier and left to be decided sometime in the vague future like what happened with Boeing.
The point being Modi has given 36 additional fighters to be bought in fly away condition with no commitment on ToT.
I gave HAL as one example, you claimed to choose HAL as preferred partner for DA.
In the original deal HAL was mandated to be the partner. I am happy that the original deal was cancelled. This was the only right step taken by Modi.
I never said Offset has to be tied to the product being procured. That is your strawman.
Offset is primarily a mechanism to ensure ToT within specified time. Its not to create jobs or Foreign excange. Those are secondary and incidental to the main reason which is to transfer the relevent know how.
Each offset has a weighted rank that is based on the criticality of the tech being transferred. So a easily available tech for a commercial aircraft might be given a weight of 0.7 its actual value, AESA tech could be given a weight of 2.1 its actual value.
I will let your false claim of being in supply chain procurement slide. Keep that for someone more gullible.
Again you are confused. The purpose of offsets is not to get ToT. Getting any ToT as part of offset obligations from the vendor is purely coincidental and should be considered as a bonus. The primary purpose is to bring in investments which offsets the money going out as part of the procurement (meaning saving precious Foreign Exchange) apart from building the Industry and generating jobs. MoD has very little say in case of Offsets other than ensuring that the offsets are in the eligible sectors or not. In most cases India may already have such technologies or the technology may fall into commodity (non critical) category. It is the ToT where MoD can clear specify and mandate what should be part of the deal.
Here is an official presss release:
Press Information Bureau
Government of India
Ministry of Defence
22-September-2018 16:39 IST
Clarification on Offset Policy
Unnecessary controversies are being sought to be created following media reports regarding a statement purportedly made by the former French President, Francois Hollande, concerning the selection of Reliance Defence as the Offset partner by Dassault, the manufacturers of Rafale aircraft.
The reported statement perhaps needs to be seen in its full context – where the French media has raised issues of conflict of interest involving persons close to the former President. His subsequent statements are also relevant in this regard.
The Government has stated earlier and again reiterates that it had no role in the selection of Reliance Defence as the Offset partner.
For a rounded appreciation of this matter, it may be worthwhile to briefly dwell upon why and how Offset Policy came into play. The Offset Policy was formally announced for the first time in 2005 and has been revised several times. To leverage its huge arm-imports in order to develop a strong indigenous industry, a flow-back arrangement is made in the defence contracts, which is widely known as offsets, and constitutes a certain percentage of the contract value. The key objectives of the Defence Offset Policy is to leverage the capital acquisitions to develop Indian defence industry by fostering development of internationally competitive enterprises; augmenting capacity for research and development in defence sector and to encourage development of synergistic sector like civil aerospace and internal security. The offset can be discharged by many means such as direct purchase of eligible products/services, FDI in joint ventures and investment towards equipment and transfer of technology. As per Defence Offset Guidelines, the foreign Original Equipment Manufacturer (OEM) is free to select any Indian company as its offset partner.
It has been reported that a JV between Reliance Defence and Dassault Aviation came into being in February, 2017. This is a purely commercial arrangement between two private companies. Incidentally, media reports of February, 2012 suggest that Dassault Aviation, within two weeks of being declared the lowest bidder for procurement of 126 aircraft by the previous Government, had entered into a pact for partnership with Reliance Industries in Defence sector.
Dassault Aviation has issued a Press Release stating that it has signed partnership agreement with several companies and is negotiating with hundred odd other companies. As per the guidelines, the vendor is to provide the details of the offset partners either at the time of seeking offset credit or one year prior to discharge of offset obligation, which in this case will be due from 2020.
In view of above, it is once again reiterated that the Government of India has no role in the selection of Indian Offset partner which is a commercial decision of the OEM..
SRR/Rajib
http://pib.nic.in/newsite/PrintRelease.aspx?relid=183625
It just gvies a maximum limit of 15%. A proposal can come with 0% too if that was the best way to keep the cost down.