I remember former IAF chief S Krishnswamy lamenting at his final press conference in October 2004 that red tape was holding up the formal release of the RFP. At the time, the MoD of course had its reasons — it was bang in the middle of reworking its defence procurement procedure and saw prudence in holding on to the RFP until it could slam in an integrity clause compulsion and, of course, the very necessary offsets clause. Foreign plaints that the MoD’s offset policy is singularly rigid and no in keeping with global best practices has been all but ignored by the government. The matter recently took the proportions of an ego-issue, when an official from one of the contending firms decided to engage Defence Secretary Shekhar Dutt at a recent CII event. A flustered Dutt told the gentleman to do his job and allow the government to do its own, and that India had not gone far enough from independence to begin taking the advice of foreign interests again. Yes, it’s still a very touchy subject.
Interestingly, some “on the ball” state governments have made representations to the government asking for a rethink on the direct offsets policy, explaining that indirect offsets would allow for investments and job creation in a variety of other sectors unrelated to defence. The MoD has “taken under consideration” these presentations but doesn’t seem in the mood to be advised otherwise. The companies that will receive an RFP see this as a real problem, with potentially larger entanglements in the future. Again, the MoD is not interested.