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Indian defense offset's policy to bring in $10 billion

by 2011
Dated 27/7/2006
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India's newly introduced defence offsets policy

is likely to bring in $10 billion during the 11th five-year
plan period (2007-11), Defence Secretary Shekhar Dutt said
Thursday.

India will look for direct offsets in all capital acquisitions of

the defence ministry to strengthen the capabilities of its
indigenous industry, he said while speaking at a workshop
on Implementation of Offsets in Defence organised by the
Confederation of Indian Industry (CII) here.

The government recently announced the new policy for

capital acquisitions in which the minimum requirement is
of 30 percent offsets in all acquisitions where the purchase
cost exceeds Rs.3 billion. Nearly 80 percent of all offsets
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are in the area of aerospace.

The secretary said much depended on the ability of the Indian defence industry to absorb the offset and the export
potential generated.

India has a large industrial base and offsets will further enhance its technical and manufacturing potential. They will
also help to increase investments in domestic research and development, he maintained.

Offsets provisions will apply to capital acquisitions categorised as outright purchases from a foreign or Indian vendor or
purchases followed by licensed production. However, the Defence Acquisition Council can prescribe offset percentages
higher than 30 percent, if required.

Pointing out that it will be as much as 40 percent cheaper to manufacture in India under offsets, Dutt said: 'We would
like to pursue offsets that will be beneficial to both Indian industry and foreign collaborators.'

The concept and benefits of offsets can also be applied to leverage large purchases by leading Indian companies
individually or through consortiums, he said.

'This would strengthen their collective bargaining abilities,' he added.

Offsets will also help foreign collaborators take advantage of India's software industry. There are large software
technology hubs in practically all cities of India whereas earlier most software development was centred around
Bangalore, Dutt pointed out.

http://www.india-defence.com/reports/2262 5/28/2010
Indian defense offset's policy to bring in $10 billion by 2011 | India Defence Page 2 of 2

In addition, India has a large reservoir of technically trained manpower developed over the past few decades.

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