The Centre told the Supreme Court Monday that as per the Defence Offset Guidelines, the Original Equipment Manufacturer (OEM) is free to select its Indian Offset Partners (IOPs) for implementing the offset obligation in the deal.
Justifying its stand on the Rafale deal, the Centre said that to promote indigenisation, a robust offset clause has been included in the Defence Procurement Procedure (DPP) since 2005.
It said the aim was to leverage "our capital acquisitions to develop the Indian defence industry, improve defence research and encourage the development of synergistic sectors such as civil aerospace and internal security".
It further said: "The offsets are to ensure that for every dollar that went to a foreign arms supplier, 30-50 per cent get back into India for an investment or procurement. As per DPP-2013, the offset clause would be applicable for all procurement proposals where indicative cost is Rs 300 crore or more involving outright purchase from foreign/Indian vendors and purchases from foreign vendors followed by licensed production."
The Centre said that offset discharge is to be undertaken through various offset avenues like direct purchase of eligible products/services, FDI in Joint Venture and transfer of technology/provision of equipment.
"As per the Defence Offset Guidelines, the vendor/ Original Equipment Manufacturer (OEM) is free to select its...IOPs for implementing the offset obligation," it said.
Congress President Rahul Gandhi has been accusing Prime Minister Narendra Modi of forcing the French company Dassault, which is the OEM in Rafale deal, to select a Reliance group firm of Anil Ambani as an offset partner to help it "pocket" Rs 30,000 crore.
The Centre further said that in so far as the discharging of the offset obligations by OEM and its Tier-I vendors through IOPs is concerned, there is no mention of any private Indian Business House(s) in IGA or Offset Contract.
"The Offset Contract does not envisage manufacture of 36 Rafale Aircraft in India by any public or private sector firm. As per the Offset Contract, the vendor / OEM is required to confirm the details of IOPs/ products either at the time of seeking offset credits or one year prior to discharge of offset obligation.
"The annual offset implementation schedule, as per offset contract, will commence from October 2019. The vendor /OEM is yet to submit a formal proposal in the prescribed manner indicating details of IOPs and products for offset discharge." it said.
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