New Delhi. 22 January 2022. Insighteon Consulting, a consulting firm in Aerospace and Defence, continuing with a reputation of creativity and innovativeness, has scheduled yet another Wargame on “What Ails The Closure Of Offset Obligations in India“.
In DAP 2020, the avenues for discharging offsets have been greatly reduced. It is now confined only to contracts involving outright purchase of materiel from foreign vendors through competitive bidding. All contracts based on ab initio negotiations with a single vendor are also now exempt under the new procedure from discharging off sets. GoI has further abolished services and offset banking besides excluding civil aviation and homeland security products for generation of offsets in future contracts.
These changes are prospective. Presently, there exists a large amount of offset obligations of 20 odd OEMs, pending for upto a decade, which need to be resolved and closed. Overall, India has inked 55 defence offset contracts with a total value of around $13 billion but only around $ 4 billion worth of claims have been made till date.
Time and again, warnings have been issued by MoD, that if companies do not fulfil their offset obligations, their existing performance bank guarantees could be forfeited or deductions made from scheduled payments to them. Fines have already been imposed on a number of companies while others are on a watch-list. In August last year, it was reported that the MoD had threatened to ban foreign vendor and put another 11 vendors on a watch-list on account of slow implementation of the offset contracts
To resolve this imbroglio, certain questions that need to be answered include:-
- What are the reasons behind the failure to fulfil offset obligations leading to penalties
- What are the options available to hasten the process of achieving defence offset obligations closure?
- Can there be a win-win solution for both the OEMs and the Govt?
The wargame will be conducted on 23 and 24 February 2022 with the aim of ascertaining likely consequences of the stalemate situations in execution of offset obligations and recommend actions for achieving closure. The participants will include retired senior leaders from the Public Sector and Private Industry, Defence Officers, Bureaucrats, members of various think tanks. The participants will be given Wargame appointments to represent all stakeholders.
Business wargaming is an engaging, exciting and energetic experience. Unlike other exercises, wargaming is designed to provide helpful insights for actionable stra tegic decision-making. With the findings of a war game, decision makers can better evaluate their alternative strategies.
