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India signs defence offset contracts worth $4.27 bn

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IAF's C-130J Super Hercules.

NEW DELHI (PTI): India has signed defence offset contracts worth USD 4.27 billion in the last five-and-a-half years and Rs 1,17,319 crore has been spent on acquisition of military products from various indigenous sources, government has told the lower house of Parliament.

In a written reply to the House, Defence Minister A K Antony said, "17 offset contracts have been signed so far with a value of about USD 4.279 billion... Offset policy was introduced in 2005. It is a relatively new policy and is in the process of evolution. The first offset contract was signed in 2007."

Defence Ministry also tabled a report on the contracts which were signed by the country with an obligation of 30 per cent offset clause.

While the offset contracts worth around USD 3.435 billion were signed while procuring aircraft and systems for the Indian Air Force, Navy booked total offsets of worth USD 843 million while acquiring fleet tankers, maritime reconnaissance aircraft, radars and UAVs (Unmanned Aerial Vehicle).

Tabling a report on Capital Acquisition for the defence forces, the Minister said that in 2006-07 Rs 21,612.24 crore was spent for the purpose, followed by 17,993.08 crore in 2007-08.In 2008-09, Rs 20,347.74 was spent by the government.

Last year, the sum spent on acquisition of defence products was Rs 31,445.55 crore, he said.

Since 2007, IAF has spent money on acquisition of new systems and aircraft and upgradation of the existing ones.

Some of the major contracts include the deal to upgrade existing fleet of MiG-29 fighter aircraft, acquisition of C-130J and C-17 transport aircraft and upgrade of mirage-2000 planes.

Replying to a question on amount spent on capital acquisition from foreign sources, Antony said, Rs 15,443.01 crore was spent in 2010-11.

From 2008-09, the total amount spent on capital acquisition through foreign sources was Rs 39,039.87 crore.

"Procurement of defence equipment is done from various indigenous as well as foreign sources in accordance with the Annual Acquisition Plan (AAP) ... Defence equipment have been imported from various countries including Russia, USA, Israel, France, United Kingdom, Germany, Poland, Singapore etc. during the last three years," Antony said.

In reply to a question on transparency in defence deals, Minister of State for Defence M M Pallam Raju said, "Meetings are held at various levels to review the performance of DPSUs at which they are asked to maintain probity and transparency in their dealings."

Defence PSUs have also been instructed to enter into "Integrity Pact" with their vendors to avoid all forms of corruption by following a system that is fair, transparent and free from influence, Raju told the House.

In reply to a question on procurement proposals for the Indian Army, the Defence Minister said, "A total of 44 Army contracts have been concluded by the government in last three years and 13 proposals are at different stages of finalisation."

He was replying to a question on number of procurement proposals sent by the Army to the government in regard to procurement of military equipment during last three years.The Minister also informed the House on the process of procurement and its various stages.

"Proposals for procurement of equipment pass through various stages in accordance with the Defence Procurement Procedure (DPP) like Acceptance of Necessity (AoN), Technical Evaluation Committee (TEC), General Staff (GS) Evaluation and Contract Negotiation Committee (CNC) before they are approved by the competent financial authority," he said.

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