The PIL seeks that all offset contracts with private organisations after 2005 be disclosed by the government, and must be quashed.
New Delhi: Amidst the controversy over the Rafale fighter jets deal, a public interest litigation (PIL) in the Supreme Court seeks the repeal of the government’s offset policy on the basis that the “scam” is against public interest.
The matter, which is listed for February 1, calls for the repeal claiming the offset deal has driven up the cost of various defence deals signed without actually bringing a tangible gain to the domestic industry.
Saurabh Jain, a 35-year-old lawyer who has filed the PIL, contends that the government’s policy, which allows foreign defence suppliers to enter into offset contracts with private Indian companies, is being misused to favour preferred Indian companies and is leading to corruption and wastage of national resources.
“Foreign suppliers are misusing and mis-playing the liberty in Indian Government policy in order to influence the decisions of the Government of India by providing offset contracts to strong favoured Indian companies…
“All offset contracts entered into with various private organisations after the year 2005 ought to be disclosed by the Government of India and must be quashed,” the petition reads.
Offset policy was first introduced as a part of the Defence Procurement Procedure (DPP), 2005, under which a foreign company has to invest back a portion of the deal into India.
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The petition is “seeking raising issue of matter of public importance inter alia challenging the arbitrary, unfair and irrational Offset policy of the Government of India which was first provided for in the Defence Procurement Procedure 2005 and its subsequent revisions made in 2007, 2009, 2011, 2013 and 2016 issued by the Ministry of Defence (“MoD”) that is causing loss to public exchequer and public interest as well.”
Jain has argued that there is reliable evidence in public domain to suggest that contracts worth more than Rs. 2,40,000 crore have been signed under Foreign Military Sales (FMS), Inter Governmental Agreement (IGA) and Government-to-Government (GTG) process since 2008. The total number of contracts signed during the same period, on which offsets were applicable, are estimated at Rs. 4,00,000 crore.
Even assuming that 15% extra cost must have been payable on account of offsets under each of the above contracts, an additional payment to the tune of Rs. 36,000 crore by the MoD from State Exchequer to foreign vendors has been made in this period for the acquisition under GTG/FMS, the plea reads.
Jain has named 37 companies, including Reliance Defence and Dassault Aviation, as respondents.
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Not sure the petition is well conceived. All offset contracts – barring some aspects that may require to be kept confidential on grounds of national security – should be in the public domain, on the website of MoD. Certainly a situation should not arise where the authorities claim they are unaware of the fact that ADAG is an offset partner of Dassault. The effort, over a period of time, should be to strengthen the domestic manufacturing capabilities of credible firms, receiving mentorship and support from the world’s leading arms manufacturers. It will be a very long time before an Indian firm can independently design and manufacture a state of the art weapon system like the S 400, but there should be progressively higher local content. Felt disappointed to read, in the tributes pouring in for George Fernandes, that India has not had a really striking Raksha Mantri after him.