Offset in India

1. Structure:
On Indian side mainly two agencies are involved, one for civilian purchases and the other for defence deals.

On the civilian side it is the State Trading Corporation (STC) under the Ministry of Commerce (MoC)1

The MEA (Ministry of External Affairs) and the Planning Commission are critical players and important stakeholders and have tremendous influence. MEA because of invariably such sales are part of foreign relations and Planning Commission as the resource planning and management agency.

Likewise, on US side both Commerce and State are involved and Bureau of Industry and Security (BIS) in Commerce does an annual report2 to the Congress with emphasis on military sales.

2. Do you know how offset transactions work, like do we go to Boeing and ask them to manage their offsets, or we go to Govt of India ( MoD ) and ask them.

I will begin with civilian offsets, therefore, MoC/STC in India, rather than defence. Defence has somewhat legitimate utilization of offset and will be loathe to give it up. For example, Boing's "search is focused on finding structural and avionics partners to fulfill the P-8I's offset requirement, reportedly worth 30% of the deal's overall value"3.
3. Do we need to involve an Investment Bank in the middle ( this can be easily done )
4. Government of India allows Offsets to be used in different purposes, is there any kind of official guidance about that.
5. Who makes the call on these offset investments, Corporates or Govt of india
6. Is the US dept of commerce involved in any way, what is the US govt oversight in this
7. What do you know about Sri lankan government offsets
8. Can we propose to companies like Boeing, Raytheon to manage these offsets that they have
9. Do offsets expire or is there a time line for offset usage


2. Do you know how offset transactions work, like do we go to Boeing and ask them to manage their offsets, or we go to Govt of India ( MoD ) and ask them.

I will begin with civilian offsets, therefore, MoC/STC in India, rather than defence. Defence has somewhat legitimate utilization of offset and will be loathe to give it up. For example, Boing's "search is focused on finding structural and avionics partners to fulfill the P-8I's offset requirement, reportedly worth 30% of the deal's overall value"4.

I have dealt with offset transaction from my days as head of NASSCOM (1989-91) so I have reasonably familiarity with how trade offset works. More out of academic interest, I have continued to particpate in discussions on offset more on the Indian side and 'gripes' from US side.

To my thinking we need to take following quick steps and some of then in parallel:

  • Get a international trade business school student to do a quick and dirty paper on offset in Indo-US trade: Sizing, known policy and procedure, with examples. I can find an indian institution to host and provide research support.
  • At the same time start engaging with two Indian lobbying firms. One to develop the public opinion on societal use of offset (through editorial space) and the other to identify and connect to the right officials. I know whom to get.
  • Start talking to the US side, develop a constituency in both Commerce and State that will be supportive and see us as their proxy. This is a desirable objective from US policy perspective because it will further grow US trade and exports. Enough of basmati rice!
  • Develop a "watering hole" here in DC to gather both industry and government leaders from both countries. Woodrow Wilson is an inexpensive and good alternative.

3. Do we need to involve an Investment Bank in the middle ( this can be easily done)
Yes.

4. Government of India allows Offsets to be used in different purposes, is there any kind of official guidance about that.
Yes. The lobbying firm mentioned above could get that quickly because it will like pulling teeth from government and public sector officials!

5. Who makes the call on these offset investments, Corporates or Govt of India
GoI through MoC and STC but interested corporates do push to take advantage. A
6. Is the US dept of commerce involved in any way, what is the US govt oversight in this
7. What do you know about Sri lankan government offsets
8. Can we propose to companies like Boeing, Raytheon to manage these offsets that they have
9. Do offsets expire or is there a time line for offset usage

Offset Agreements Activity 1993-2000

Countertrade & Offset

Abu Dhabi International Offset Conference 2009 (ADIOC 2009)

UAE Offset Program Bureau (OPB) oversee the offset program in the UAE. It is mandated to set up joint ventures, as well as investing in commercial, industrial, financial, and educational projects and to create investment funds in the UAE and abroad.

Address
Saif Mohamed Al Hajeri
CEO
UAE Offset Program Bureau
PO Box 908
Abu Dhabi, UAE
Phone +971 2 616-0000
Fax +971 2 616-0001

Check these 2 organizations,

http://www.dioa.org/

http://www.globaloffset.org/ ( I can get to Neil, he is the exec dir of this org easily

Also need to ind out how how offset does Boeing have,
who plays role in offset Disburement
a) Govt of India
b) Trade groups in India
c) Companies like Boeing/raytheon etc

Also check out this firm http://www.blenheimcapitalpartners.com/

We need to formulate a strategy, I can get to the board of boeing, now boeing sold $ 4 billion of stuff this month, so does that mean they have an offset obligation of 4 1 billion, how does it work in India

oeing names John Williams as Director of India Offset Programs
NEW DELHI, May 2, 2008 – The Boeing Company (NYSE: BA) has named John Williams Director of Offset Programs in India. Williams will be based in Boeing’s New Delhi office.
Williams, 44, will serve as the in-country offset representative for Boeing’s business units and programs and will work closely with Boeing India President Ian Thomas to strengthen Boeing’s efforts to deepen its engagement with Indian industry through the development of mutually beneficial partnerships.
"John's deep international business experience and his intimate knowledge of Boeing will help us to capitalize on the emerging opportunities in India," Thomas said. "His appointment, and the expansion of our Boeing India offset programs team, underscores our commitment to India and the important role that India plays in our global growth and productivity plans."
In addition to his responsibilities as India Offset Programs Director, Williams will also be Boeing's Global Corporate Citizenship focal for India. In this capacity, he will lead Boeing’s efforts to increasingly engage in social investment and philanthropy programs while also developing new initiatives, which will benefit local communities across India.
Prior to serving as India Offset Programs Director, Williams played a key role in Boeing Integrated Defense Systems' Rotorcraft Programs International Contracts team. He was responsible for proposing and negotiating large production and development contracts with international customers in Singapore, Israel, Kuwait, and the United Kingdom.
Williams has a Bachelor's degree in Economics from Northwestern College, Iowa and speaks several languages.


Thank you, Amitava.

Defence
Civilian

These are the points that need to be figured out

1. Structure
2. Do you know how offset transactions work, like do we go to Boeing and ask them to manage their offsets, or we go to Govt of India ( MoD ) and ask them,
3. Do we need to involve an Investment Bank in the middle ( this can be easily done )
4. Government of India allows Offsets to be used in different purposes, is there any kind of official guidance about that.
5. Who makes the call on these offset investments, Corporates or Govt of india
6. Is the US dept of commerce involved in any way, what is the US govt oversight in this
7. What do you know about Sri lankan government offsets
8. Can we propose to companies like Boeing, Raytheon to manage these offsets that they have
9. Do offsets expire or is there a time line for offset usage

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