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The Ministry of Defence said on Thursday a penalty of 20 per cent would be imposed on foreign military vendors failing to fulfil offsets obligation within the prescribed time frame as part of the Defence Procurement Procedure. The decision on Revised Offset Guidelines was taken last month during the meeting of the Defence Acquisition Council (DAC) and it will be applicable from August.
The overall cap on penalty will be 20 per cent of the total offset obligations during the period of the main procurement contract, said an MoD statement. There will be no cap on penalty for failure to implement offset obligations during the period beyond the main procurement contract,which can extend to a maximum period of two years, it added.
Under the policy,vendors bagging deals over Rs 300 crore have to re-invest at least 30 per cent of the worth of the contract back into Indian defence,civil aerospace and homeland security sector. With plans to spend over $100 billion in the next five years,India is expected to sign offset contracts worth over at least $30 billion.
Other decisions taken during the meeting on transfer of technology include technology acquisition,period of implementing the offset.
