Indian Offsets Deter Bell

India has been trying to buy a new light helicopter for its Air Force and Army for a few years. They had a competition last year that Eurocopter won, but Bell protested and that award was thrown out. They have started a new competition to meet that requirement. Bell and several other companies submitted bids. The Dallas-Fort Worth Star Telegram is reporting that Bell is now leaving the current competition. As part of this contract, and most in India, the government demands offsets. Normally this is when a foreign system is purchased and they buyer requires investment in either their goods or economy. India is demanding that up to fifty percent of the value of the helicopter company be offset with investment in India. This doesn't mean buying Indian parts, or complete systems, but actually establishing companies that do business in India. Bell has decided with that offset requirement the contract isn't viable and has withdrawn.
Offsets can be tricky. You want some compensation for your country's companies if you choose a system made in another, but at the same time you do not want to limit competition by making it hard for companies to compete. The reason you are allowing foreign systems to be proposed is that you do not have a domestic source for the requirement. India has been working on its offset requirements, but they are actually a law instead of a policy and that requires political efforts to reduce them.