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Publish Date : 19-Oct-2015

The government is continuing with its incremental changes in policy to facilitate business in the defence sector, and will soon restore 'services' as qualified offsets in military procurement contracts.

But, IT firms may have little to cheer as software development and quality assurance may be dropped from the list.

According to sources, the defence ministry is expected to approve several amendments in the procurement policy soon. The biggest among them is an easing of offset guidelines which call for winning foreign suppliers to invest at least 30% of the contract value into the Indian defence and aerospace industry.

After the defense ministry had put a stop to services being treated as eligible offsets, effectively cutting out thousands of crores of business for the industry, the services sector received a major blow in May 2013. The suspension followed probes into the VVIP chopper deal that pointed to the services route being used for channeling funds.

But, with a robust demand from the industry, the government will soon restore five out of the seven categories of services that are qualified to be counted for offsets. These include maintenance, repair and overhaul (MRO), engineering, design and testing, upgradation, training and research and development.

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