Defence Canteens ban import of finished goods

The Government controlled Canteen Stores Department that operates canteens of defence forces are to ban the imported items. This is applicable to all the Fast Moving Consumer Goods and Liquor, consumer durables and footwear.

Highlights

Out of 5,500 items sold by the Canteen Store Department, more than 420 are imported. This data was provided by the Manohar Parrikar Institute for Defence Studies and Analyses. Of this, China accounts to the bulk of imported items such as electric kettles, toilet brushes, sandwich toasters, ladies’ handbags and laptops.

Impacts

This move will help India become Atma Nirbhar. The Canteen Stores Department is the largest retail chains in the country with more than 12 million customers. Therefore, the companies that sell premium products such as high-end smart phones, imported liquor are to be hardly hit.

Recent reforms in Defence Sector

  • The Defence Ministry has been bringing in several reforms in the defence sector. This includes the recent dilution of offset policy in defence policy.
  • The Government of India has recently diluted the offset policy in defence procurement based on the report submitted by the Comptroller and Auditor General.
  • According to the dilution the offset clause will not be applicable to bilateral deals.

What is offset?

It is an obligation by a foreign entity to boost the domestic defence industries of India by buying defence equipment from the entity’s country.

What is the issue?

Under the defence offset policy, all the contracts that are of worth more than 300 crore rupees are mandated to spend at least 30 percentage in India. This can be done by procuring components for transfer of Technology for setting up process and development facilities.

The Comptroller and auditor General report said that under the 59,000 crore raffle deal the manufacturer assault aviation is yet to fulfill its offset obligations. The offset component of the deal was 50%.

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