The benefits of the offset policy laid down in the Defence Procurement Policy, 2006 are beginning to trickle in. With the ministry of defence implementing the offset clause in a defence deal for the first time, two firms in the private sector have bagged orders worth Rs 250 crore from an Israeli defence electronics company.
The DPP lays down the procedure for implementing the offset clause applicable to all capital acquisitions where the value of the tender is above Rs 300 crore. The clause imposes requirements on foreign vendors to create commercial activity in the defence sector in the country equivalent to 30 per cent of the contract value.
India has inked a deal with Israeli defence firm ELTA Systems for the supply of over a dozen medium-powered radars for the IAF at a cost of nearly Rs 900 crore. As part of the offset clause, ELTA has decided to source radar components worth Rs 250 crore from L&T and Astra Microwave. KP Singh, secretary, defence production, said it was the foreign vendor’s prerogative to decide whether to partner with a private firm or a public sector undertaking.