In order to address delay in acquiring vital combat systems, the Indian government may be willing to forgo its offset clause to speed up the delivery of the S-400 Russian air defence systems.
Read: Russia readies 'draft agreement' for supply of S-400 missiles to India
India is in urgent need of effective air defence systems and will begin its final negotiation in March for five S-400 air defence systems. The deal is expected to cost Rs 39,000 crore.
Any defence deal India concludes with a foreign vendor under 'Buy (Global)' or 'Buy and Make' category, where the cost is above Rs 300 crore (now Rs 2,000 crore) needs to have an offset clause, which will require the vendor to invest at least 30 percent of contract value in Indian defence and aerospace sectors. Normally during the negotiations in a weapons buy, this clause is also taken into consideration.
The present government has added its "Make in India" initiative with the offset clause when entering into deals with foreign companies.
Revealing to the Economic Times, a top Russian official told them that the offset clause would result in delayed delivery timelines. And since this was a "strategic project" between the two, he hasn't heard of such a package for this project.
"As far as I have heard, there is no offset package for the programme. It is a strategic project and is very important for the two countries," said Viktor N Kladov, director of international co-operation at Rostec, a state-owned company that controls S-400 system's sales.
"It should not be played around with some offset packages," he added.
Kladov also noted that Russia is still ready to comply with an offset clause for this particular project, but it would delay the project by "one-two years."
The report also said that initially, two might be ordered and based on the performance, the order might be increased.
Kladov also said that it takes one year for the contract and two more years for system to be delivered. So, if the contract is signed within this year, then the deliveries could start by 2019-2020.
China, however is the first international customer for S-400 and is expected to get them in 2017.
The S-400 has the unique ability to take out a range of threats from UAVs, airborne early warning aircraft, stealth fighter, cruise missiles to precision-guided munitions.
The system uses four missiles of differing ranges to fill its performance envelop. One S-400 system has eight battalions, with 72 launchers and a maximum of 348 missiles, RIA Novosti reported.
