The Rs. 40,300-crore deal between India and Russia for
five S-400 air defence missile systems does not have any offset clause.
India has decided to drop it so as to advance deliveries, though it was
Russia that initially did not want offsets.
As per the schedule, Russia will start deliveries
after 24 months, which is 2020-end. Contract negotiations started after an
inter-governmental agreement was concluded in October 2016.
Under the defence procurement procedure, deals worth
Rs. 2,000 crore or more have a 30% offset clause. This is meant to bring
technologies to the country and build domestic defence manufacturing
capabilities. As a result, manufacturers add the cost of fulfilling the
offset obligations to the deal.
In an indication of the tough bargain India has to
take up for a sanctions waiver under the Countering America’s Adversaries
through Sanctions Act (CAATSA), a spokesperson of the U.S. State Department
said on Saturday that there were “strict criteria” for a waiver, and urged
all its allies and partners to “forgo transactions” with Russia.
“The waiver authority is not country-specific. There
are strict criteria for considering a waiver. The waiver is narrow, intended
to wean countries off Russian equipment and allow for things such as spare
parts for the previously purchased equipment,” the spokesperson said,
without any reference to India.
The spokesperson said a focus area for the
implementation of the CAATSA would be “new or qualitative upgrades in
capability,” including the S-400. The recent sanctions on a Chinese
government entity for an S-400 delivery underscored the seriousness of the
Donald Trump administration’s resolve.