Tejas engine offset offers come in

European aerospace company Eurojet and America’s General Electric submitted offset proposals for their bids for light combat aircraft Tejas engines to the ministry of defence on Friday, a day before the deadline expires December 12.The Indian government invites offset proposals from bidders of defence and civil aircraft deals.
An offset obligation is expected to be discharged through direct purchases or by executing export orders for defence products and components manufactured by or services provided by Indian defence industries. In many instances, it also involves technology transfer and training for military requirements.
As per the defence procurement policy 2006, 30-50% offset obligation is mandatory for the winner of the defence deal. There are two offset proposals — technical and commercial — submitted by each bidder, which are opened after completion of technical and commercial evaluations. For instance, technical offset proposal is opened after the technical evaluation and commercial offset offer after commercial evaluation.

Since the offset programme of the Indian government will require transfer of the key technology, the two aerospace companies need clearances from their respectively governments or regional economic organisations.

Apparently, Eurojet, which will be supplying its EJ200 for the new LCA Tejas, has got clearance from Nato Eurofighter and Tornado Management Agency (Netma) for the transfer of “key technology” under the offset programme.

“In their proposal, they (Eurojet) have accepted to transfer key technology. They have also mentioned in the same note they can discuss transfer of other technologies too,” the source said.

According to him, if the European engine maker offers 100% transfer of technology, the price of its bid would shoot up; “Then its bid would not be competitive.”Eurojet has said it would form a joint venture with Hindustan Aeronautics Ltd or some private company to fulfill its offset obligation.

GE, which will supply the F-414 engine, is also said to have acquired the approval of the US government for technology transfer for the LCA programme. The two companies that have bid for the $750 million order for 99 engines for Tejas.