Says Hollande’s comments were taken out of context, insists it had no role in selection of offset partner
Following former French president Francois Hollande's bombshell that the Indian government proposed Anil Ambani's Reliance Defence as the Offset partner for the 36 Rafale jet deal, the Ministry of Defence (MoD) on Saturday described it an "unnecessary controversy". A release issued by the MoD said Hollande's statement wasn't reported in its full context, and reiterated that New Delhi had had no role in the selection of the offset partner, which was a commercial decision of the manufacturer.
Giving details, an MoD spokesperson said the 'Offset Policy' was formally announced for the first time in 2005 and has been revised several times. "To leverage its huge arm imports in order to develop a strong indigenous industry, a flow-back arrangement is made in defence contracts, which is widely known as offsets and constitutes a certain percentage of the contract value," he said.
"The offset can be discharged by many means, such as direct purchase of eligible products/services, FDI in joint ventures and investment towards equipment and transfer of technology. As per defence offset guidelines, the foreign original equipment manufacturer (OEM) is free to select any Indian company as its offset partner," the spokesperson said.
The joint venture between Reliance Defence and Dassault Aviation was purely a commercial arrangement between two private companies, he said, adding that Dassault had also issued a statement that it had signed a partnership agreement with several companies and was negotiating with hundred-odd other companies. As per the guidelines, the vendor is to provide details of offset partners either at the time of seeking offset credit or one year prior to discharge of offset obligation, which in this case will be due from 2020.
Offset Partners
To leverage its huge arm imports in order to develop a strong indigenous industry, a flow-back arrangement is made in defence contracts, known as offsets, that constitutes a certain percentage of contract value
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