Sunday, April 17, 2016

Can defence offset requirements be effectively bypassed by routing imported components via companies domiciled in India?

Indian government frequently requires a certain percentage of procurement value to be procured from local suppliers - an offset - in order to encourage transfer of technology as well as to stimulate local manufacturing. Sounds good.

But can these requirements be fooled by simply importing components into newly-created dummy companies in India, and then supplying these imported components, making it look like these have been supplied by Indian companies? Alternatively, these foreign-made components can be imported into already-established Indian manufacturing companies, and these Indian companies can then supply these components as-it-is after keeping a small margin, again making it look like these have been manufactured and supplied by an Indian company.

1 comment:

  1. I think to manufacture components locally would be cheaper than to import them in almost all the cases. If this is true, then the companies that go for local manufacturing would beat those that go for importing them. Though, this doesn't answers the question that can that loophole be by-passed or not, but still if would ultimately affect the importing companies leading to their closure.