9
Offset Procurement
Offset Procurement in India -
Riding the Elephant
Offsets represent a major opportunity to build world-class Defence-Indusrial capacity
Haim Helfgot *
O
ne of the major changes in India’s DPP (Defence
Procurement Procedures) has been the
introduction in 2006 of requirements from foreign
Defence suppliers for “buy back” / offset procurement.
The offset procurement clauses are is applicable to all
procurement proposals wherein the indicative cost is in
excess of Rs 300 crores (about US$ 54.5 million, according
to the rate of exchange).
For India, offsets represent a major opportunities to
build a world-class Defence-industrial capacity. For
foreign suppliers, offset procurement represent a major
challenge, according to some. Fulfilling the offset
requirement was accepted by many foreign suppliers
with some reluctance, as some companies felt that “this
is an impossible mission”.
However, I would like to propose a different point of view
and some ideas on how to face this major challenge.
Most importantly, we have to see the offset procurement
clauses as a potential bridge between two business
cultures, and attempting to create common ground and
procedural and practical symbiosis.
A good place to start is with a positive approach and
an understanding that the mission is achievable. We do
however have to find the best way and approach. We have
to find the tools to build the desired bridge, a bridge that
will bring us close to our goal: manufacturing according
to our requirements.
As I have visited India very often in the past 13 years,
I have seen from first hand that India has taken a huge
step forward with their infrastructure. India is like a big
elephant moving forward constantly. We can see that this
elephant is unstoppable!
Let’s climb the ‘elephant’ and join the ride
Building a bridge between cultures requires also some
effort from the Indian side. Indian companies are already
moving in the direction of adopting stringent western
standards of production, which has been common to
procedures in most of the advanced economies.
Some typical mistakes that Israeli companies make:
“I was twice in India, I am already an expert”.
Lack of willingness to compromise.
A couple of mistakes that Indian companies are making:
“We can do everything”
“We should not bother our customer when we are facing
difficulties”
The challenge – how to build the bridge
Both sides of this bridge need to understand the benefits
of having a local partner.
What are the Indian partner’s main tasks?
• Be part of the Israeli team
• Be a bridge in to the Indian culture – Explain the
“hidden”meanings of language
• Identify for the Israeli partner local sources as per the
requirements
• Monitor activities in India and report back
• Accompany Israeli teams during their visits
• What are the Israeli partner’s main tasks?
• Be a bridge to Israeli business culture – Explain the
“hidden”meanings of language
• Identify business opportunities related to the Indian
partner’s capabilities
• Accompany Indian visits to Israel and prepare them for
the meetings
• Be a local POC (Point of Contact) for their Indian partner
• Monitor local activities
Why should we have a partner? It costs us
money!
Answer: Wrong, it saves both time and money
Doing this right from the beginning saves both time and
money!
*The Author is VP in ETIP
hich provides Offset solutions “tailored”
according to customer needs and executes projects in India.
