NASSCOM welcomes the Ministry of Defence’s directive on reinstating Defence offsets in services. It has been over 2 years since the office orders holding services offset in abeyance were announced. Industry best practices in project management, execution and valuation were considered and NASSCOM members had shared global best practices to help address concerns related to valuation and delivery of services.
As per the announcement made in consultation with the Defence Acquisition Council, the offset discharge in engineering design and testing as well as software development is subject to a cap of 20%. Further it will now require CMMI certification for contracts above certain threshold specified as 5% of offset obligation, and will be subject to random audits.
Offset discharge through Maintenance, repair and overhaul and Up gradation/life extension has been fully reinstated.
This directive will help companies plan for meeting offset obligations and also encourage investments in building strategic capabilities and capacities being held up till now. This will help in the long run create a roadmap for a strong ecosystem of defence in the country, which will encompass product design and development, Manufacturing, technology transfer, R&D with deep domain expertise.