India signs another defence deal with Israel - minus offset clause

April 6th, 2009 - 8:21 pm ICT by IANS  

New Delhi, April 6 (IANS) Close on the heels of a $2 billion missile deal with the Israeli Aerospace Industry (IAI), India has signed yet another deal with an Israeli defence company to build a munition factory in Bihar forgoing the mandatory offset clause, a senior official said.
The Rs.12 billion/$240 million deal with the Israel Military Industries Ltd. was signed with the Indian Ordnance Factory Board (OFB) on March 25.

“No offset clause is there… It is the major concession granted in this deal,” a senior defence ministry official told IANS requesting anonymity.

The Indian defence procurement policy mandates an offset clause under which 30 percent of all defence deals of over Rs.3 billion have to be reinvested in the country.

The munition factory will be built at Nalanda in Bihar along the lines of IMI’s ordnance factory in the Tel Aviv suburb of Ramat Hasharon.

The global tenders for the deal were floated in 2007 and following approval of the cabinet committee on security, the deal was inked.

The deal with the IAI, signed in February this year, for joint development of medium range surface-to-air missiles ran into controversy because of a pending Central Bureau of Investigation’s probe into the Barak missile deal where there were allegations of kickbacks.

It also had a clause of six percent “business charge”, which was politically criticised as illegal commission. Commissions on defence deals were banned by the government after the kickback controversy over the Bofors gun deal in the 1980s.

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