The recently released Defence Acquisition Procedure 2020 (effective from October 1) has substantially revised the offset guidelines in an endeavour to attract foreign direct investment, facilitate technology transfer and promote export of major defence items.
A significant change in the offset guidelines is related to the provisions on multipliers. Simply stated, multipliers permit a foreign vendor to claim offset credit that is disproportionate to the actual offset investment. The maximum value of multipliers under the revised guidelines is reserved at 4, thereby allowing a foreign vendor to claim a credit up to four times the value of its actual offset investment.
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Written by Shivpriya Nanda & Namrata Nambiar, published in Financial Express.