Business Standard

<b>Letters:</b> A win-win offset deal

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Business Standard New Delhi

Ajai Shukla’s argument against India considering the possibility of acquiring one of the two under-construction aircraft carriers from the UK was not very convincing (“Making warships happen”, September 21). Although there is no disagreement on the basic premise of promoting and enhancing indigenous capabilities of defence design and production, it is a long-term strategy that will take time to bear fruit (we are yet to build our first aircraft carrier).

The UK’s budget crisis could be an opportunity for India to leapfrog the development and production cycle by not only acquiring a vessel, but also gaining access to high-end technology to support the development of indigenous capability in related areas by applying sufficient offsets and other contractual obligations on BAE Systems. For instance, BAE Systems could be asked to invest in one of the private sector shipyards for building future warships for the Indian navy and for export. From this perspective, this purchase could be leveraged in multiple ways for the benefit of all stakeholders: the Navy will get a warship it desperately needs in a much shorter period, the defence R&D capability of Indian players will become more state-of-the-art and the private sector will get much-needed FDI and an opportunity to break into the global defence market.

 

The deal can be structured as a government-to-government transaction, thus eliminating the usual procedural delays. The Indian government can also drive a hard bargain, given there are no other potential buyers for this warship. Whether the decision makers in the Indian defence establishment can achieve such a feat is all together a different matter — given their track record of the past decade, I am not optimistic.

Anshul Rai, on email

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First Published: Sep 23 2010 | 12:45 AM IST

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