Offsets would be mandatory even for single vendor contracts

India today said it will not go ahead with a single vendor for its defence products if the offsets clause was not agreed to and that it will look for a new source to acquire them in such a scenario.
    
It also said that it was seriously considering "stringent" penalties against vendors, who renege from meeting the offsets obligations, which mandated that the seller plough back 30 per cent to 50 per cent of defence deals that are worth over Rs 300 crore.

"In a single vendor situation, if he does not agree to offsets, then we will look for another vendor," Defence production secretary RK Singh told a FICCI-organised seminar on Defence Offsets here.
     
"We feel that the penalties are not stringent enough to dissuade vendors from reneging on offsets contracts," he said referring to the Defence Procurement Procedure that India had brought out making it mandatory for foreign vendors to sign an offsets clause in defence deals.
     
Singh said India had already made deals that would bring in over Rs 1,200 crore in offsets back into India "as enabler of capability" to domestic industries.

Another Rs 49,000 crore worth of offsets were in the offing under deals that would come through in the next few years, he added.

With regard to demands from industries to expand the scope of offsets to civilian areas too under defence contracts, the Secretary said the offsets obligations would remain in the defence sector only and would not be extended to civilian sectors.