T&M Acquisitions in India can be motivated by Offset Policies!

Since 2006 the central cabinet had given a kind of green light to various user ministries to pursue the so called "Offset Policy" in major procurements the user departments are making.The current proposal stands at the !00 M$ or 200 M$ thresholds for these offsets to get triggered.This actually leads to offsetting of 30% of procurements through local companies,or locally created companies by MNCs for offsetting the total contract outgo.In bigger cases the threshold can be as much as 50% contract value.

To coordinate in a systematic manner across different user ministries/sectors a National Offset Authority is chaired at Cabinet Secretary Level.Today mainly the Defence Ministry are seizing the opportunity because of large scale/Big ticket projects procurement.Total offset pie available to cater to Defense itself is estimated to be worth around Rs 20000Cr!

This is where opportunity,a creative one can come for T&M companies.As the local procurement will consist of 3rdparty hardware,3rd party software,services and program management,independent Engineering Services and lot of jigs,fixtures,tools and testers,the whole gamut can be managed by T&M Services banner easily.This will require astute sales and business planning,local companies creation and motivating small,niche hitech companies to come to India and get plugged in with this huge,sustainable and game changing one for T&M industry!

Designing a business model for different high technology sectors will be very involved process.Depending upon resources of information,taxonomy,databases,bills of materials and global/local pricing on products and services these models will have to be tweaked.Many of the processes of procurement are getting eDriven and therefore they can be very cost efficient and suitable for Governance Platform too.T&M industry more particularly T&M services will benefit.M&A of various main technology companies and therefore attendant T&M companies will benefit by this opportunity.We need to see how it plays out and how we respond in an enterprising manner!