New offset rules won’t apply to multi-role fighter contract: MoD

(The Indian Express) : The Defence Ministry has decided that new rules that relax defence offset obligations to include the civil aviation and internal security sectors will not apply to the upcoming $10 billion contract for medium multi-role combat aircraft.
After considering a report of an expert committee constituted to look into the merits of applying the new offset rules to the multi-billion dollar contract that requires the winner to pump back 50 per cent of the contract value into the Indian market, the Defence Ministry has decided that older rules restricting the investment to the defence sector will remain in force.
The committee was set up after representations by the defence industry that argued the Indian market is not mature enough to absorb offsets to the tune of $5 billion that are expected to come in when the winner of the deal is announced.
In fact, all six contenders were asked to hold their offset proposals as the decision was being taken. 
In the new Defence Procurement Policy announced earlier this year, the ministry opened the offsets field from the defence sector to include civil aviation and internal security.
As per government estimates, the value of offset contracts is expected to exceed Rs 10,000 crore in the 11th plan.
It is learnt that the defence minster was in favour of strengthening the domestic defence sector and dismissed suggestions that the winning contender also be allowed to invest in the aviation and internal security sectors.
The decision comes as the Defence Ministry is in the final stages of selecting contenders who will go into the next stage of commercial negotiations.