Govt clears defence plan, revises offset policy

Defence Ministry approved a plan for development of capabilities and effected a major change in offset policy by including transfer-of-technology.

New Delhi: With Army Chief Gen VK Singh
highlighting shortage of equipment, the Defence Ministry on Monday
appeared to be fast-tracking decision-making as it approved a
plan for development of capabilities and effected a major
change in offset policy by including transfer-of-technology.

The Defence Acquisition Council (DAC), headed by Defence
Minister AK Antony, also cleared the 15-year Long Term
Integrated Perspective Planning (LTIPP) which would project
requirements of the armed forces to be met through
indigenisation and robust involvement of private sector.

The two-hour meeting of the DAC was attended by Army Chief
Gen V K Singh, IAF Chief NAK Browne and Naval Chief Nirmal
Verma. Prior to this, Antony had an hour-long separate meeting
with the Army Chief and other senior Army officials to review
the requirements of the force.

These meetings came days after Gen Singh flagged the issue
of shortages and deficiencies faced by the army like lack of
ammunition for tanks and obsolescence of air-defence systems.

The 12th Defence Plan, approved by the DAC, charts the
roadmap for development of capabilites of the three forces in
tune with their future operational requirements and the role
which the country will play within the region and outside.

The DAC also approved revised Defence Offset Guidelines
(DOG) where it recognised transfer of technology (ToT) for
discharge of offset obligations, meeting a key demand of
foreign companies.

"Revised policy recognises ToT as eligible for discharge
of offset obligations. Investment in `kind` in terms of ToT
must cover all documentation, training and consultancy
required for full ToT," officials said.

As per the changes, the Ministry has demanded that the ToT
should be provided without license fee and there should be no
restriction on domestic production, sale or export.

Under the offsets clause, foreign vendors are required to
invest at least 30 per cent of their contract value in India
in selected fields of civil aerospace, homeland security and

The objective of offsets is to develop indigenous defence
industry and manufacturing sector.

The Ministry had to do without an LTIPP for the last 15
years as its approval was delayed.

The LTIPP and Five Year Defence Plan, which will come into
effect from this year, have been formulated over two years
involving the Defence Ministry, HQ Integrated Defence Services
and three forces, Defence Ministry officials said.

"While LTIPP is a broad vision document, the 12th Defence
Plan deals with specific requirements and modernisation plans
of defence forces and also allocation of resources for
modernisation and day to day functioning," Ministry officials

It also plans to put up the unclassified version of LTIPP
on its website in the form of Technology Perspective
Capability Roadmap to enable DRDO, Defence Public Sector
Undertakings and private sector to plan their research and
development roadmap.

In earlier policy, offset obligations had to be discharged
during the period co-terminus with the main procurement

"The revised guidelines allow offset obligations to be
discharged within a timeframe that can extend beyond the
period of the main procurement contract by a maximum period of
two years," the officials said.

Under the new guidelines, the banked offset credit too
has been increased from two to seven years.