Textron Fails To Meet The Offset Guidelines, Reduces Operations In India

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After failing to meet the offset guidelines and seeing lack of opportunities in India, US manufacturer Textron has decided to reduce its operations in India. 

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US manufacturer Textron has decided to wind down its defence operations in India after getting hit by number of penalties for not meeting the strict guidelines and not seeing enough revenue stream in the country. It was recently penalized $300,000 by the defence ministry for not meeting the offset guidelines. 

The company is set to close its corporate office in the capital but will continue to work from its Bengaluru office, informed two officials to Economic Times. 

In 2011, company announced a $257 million deal to supply 512 sensor fuzed weapons and as per the policy, it was obligated to spend at least 30% of the amount in the Indian defence and aerospace sector. 

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The ministry has warned that the company could face a larger fine of $8 million in the future if failing to resolve the matter. It has also created uncertainty regarding the participation of Textron’s Bell Helicopters in an upcoming Rs 12,000 crore contest to make new naval utility helicopters in India.

Mukesh Aghi, president of the US-India Strategic Partnership Forum (USISPF), told ET, “Our recommendation to India is that make the offset issues a little simpler. As I understand, they are working on that. In the last four years, this administration has taken a lead on that and has encouraged US companies to Make in India. The issue is not much on the policy side, it is on the execution side.” 

Aghi said Textron’s decision wasn’t dictated by the policy. “For Textron, they are not able to generate revenue. It is a business decision, it is not a policy issue,” he added. 

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