The Indian subsidiary of the UK-based BAE Systems, a leading defence equipment manufacturer has approached the government seeking changes in policies related to defence offsets and procurement, foreign trade, and taxation for ease of operations.
With a presence of over 60 years, UK-headquartered BAE Systems is developing India as a key international market with a strategic vision to become a major and integral part of the domestic Indian defence and security industry.
The proposals submitted by the company to the DIPP, Union ministry of commerce and industry, will be discussed at a meeting on January 12 in New Delhi, just a few days ahead of the visit of US President Barack Obama. The government is keen to get the support of the world’s leading defence companies, especially as it is looking to boost domestic manufacturing of defence equipment.
The overseas defence company has recommended that in order to provide impetus to the ‘Make in India’ campaign, transactions relating to supply of a product assembled, integrated and tested and delivered to Indian OEM in country by the Indian Offset Partner (IOP) on behalf of the foreign OEM should be treated as ‘deemed exports’ for the purposes of offsets. Seeking amendment of the Foreign Trade Policy 2009-14, it has suggested that where the ministry of defence is the end user for goods and services supplied by an Indian manufacturer including DPSUs/OFB/DRDO, on behalf of the foreign OEM who has obtained a contract from the government under global tender process/inter governmental agreements such as foreign military sales under US procurement laws should qualify as ‘deemed exports.’
On the offsets policy in Defence, should be made more broad based to cover other sectors where the need for investment flows is equally acute, but where the ability of India to absorb investment if far greater and the offset commitments can provide the required push to enable investment flows. Also, that the OEM and their vendors be allowed flexibility in meeting the offset requirements both in terns of extent and content to work share in the programme. This would help build genuine capacity in the country through consolidated offsets rather than piecemeal offsets obligations by crafting sustainable business models for the global supply chain.
Ahead of the January 12 meeting, the company was advised to meet joint secretary IPP and to explain the proposals relating to offsets.