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Government of India
Ministry of Defence
27-August-2012 15:13 IST
Revision in Offset Policy

Vendors can offer transfer of technology as part of their offset obligations as per Para 3.1 (c), (e) and (f) of Revised Defence Offset Guidelines, which have come into force from 1st August, 2012.

Para 3.1(c), (e) and (f) of Defence Offset Guidelines are reproduced below:-

(i)    3.1(c) 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. The investment in kind in terms of ToT must cover all documentation, training and consultancy             required for full ToT (civil infrastructure and equipment is excluded). The ToT          should be provided without license fee and there should be no restriction on domestic production, sale or export.

(ii)    3.1(e) 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 (as distinct from     Indian enterprises). This will include augmenting capacity for Research, Design and Development, Training and Education but exclude civil            infrastructure.

(iii) 3.1(f) Technology Acquisition by the Defence Research and Development Organization in areas of high technology listed in Annexure-VIII to Appendix-D.

A multiplier is permitted as per Para 5.11 of Defence Offset Guidelines which have come into force from 1st August, 2012.

Para 5.11 of Defence Offset Guidelines is reproduced below:-

In the discharge of offset obligations under Para 3.1(a), (b), (c) and (d), a multiplier of 1.50 will be permitted where Micro, Small and Medium Enterprises are lOPs. For the purpose of offsets, Micro, Small and Medium Enterprises are defined as follows:-

(a)  In the case of enterprises engaged in manufacture of goods:-

(i)        A micro enterprise is that where investment in plant and machinery does not exceed Rs. 2.5 million;

(ii)       A small enterprise is that where investment in plant and machinery is more than Rs. 2.5 million but does not exceed Rs. 50 million; and

(iii)      A medium enterprise is that where investment in plant and machinery is more than Rs.50 million but does not exceed Rs.100 million.

(b)  In the case of enterprises engaged in providing services:-

(i)        A micro enterprise is that where investment in equipment does not exceed Rs.1 million;

(ii)       A small enterprise is that where investment in equipment is more than Rs.1 million but does not exceed Rs.20 million; and

(iii)      A medium enterprise is that where investment in equipment is more   than Rs.20 million but does not exceed Rs.50 million.

Note: The above monetary limits shall be subject to change as may be notified by Department of Micro, Small and Medium Enterprises, Government of India from time to time.

The aforesaid stipulations are subject to various conditions and limitations prescribed in Revised Defence Offset Guidelines. Text of the revised Defence Offset Guidelines is available at http://mod.nic.in/dpm/revised-quidelines.pdf

This information was given by Minister of State for Defence Dr MM PallamRajuin a written reply to Shri Sugumar K. and Shri Sivasami C. in Lok Sabha today.

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