By Manu Pubby ET Bureau|Updated: Aug 01, 2018, 06.09 AM IST
Offset rules mandate the foreign companies invest at least 30% of the contract value in the Indian defence and aerospace sector.
Amid differences over fulfilling offset obligations, the defence ministry has encashed a part of the bank guarantee given by US aerospace manufacturer Lockheed Martin for a special operations aircraft deal.
The penalty – a little less than $ 5,00,000 – was imposed for alleged violation of terms and conditions for the Rs 4,000-crore deal that was signed in 2013.
Sources said that the penalty was imposed after the defence ministry was not satisfied with the quantum of offset obligations – sourcing of parts and services from Indian companies – to the tune of $32 million annually but failed to meet these during execution.
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