Why in News:
- The total offset commitment by foreign defence companies to be fulfilled in India for various defence deals during the last 15 years, was $6.83 billion till August 01, 2022 of which they fulfilled offset claims worth 82.13% or about $5.61 billion, the Defence Ministry informed Parliament.
- Defence offset policy was promulgated under Defence Procurement Procedure (DPP) 2005 with the objective that it would bring in high-end technology into the country and build the domestic defence industry.
- Under the offset clause, a foreign company which wins a defence deal is supposed to invest back a part of the contract value in the country thus developing skills and bringing in technology while also generating employment.
- As per DPP 2006, offset value has been fixed at 30% of defence deals above ₹300 crore which was revised to ₹2000 crore in DPP 2016 for full import deals.
- In Defence Acquisition Procedure 2020, the Government has removed the requirement of offset clause in InterGovernmental Agreements like the Rafale deal.
- The offset guidelines have also been revised in DPP 2020 wherein preference will now be given to manufacture of complete defence products over components and various multipliers have been added to give incentivisation in discharge of offsets.