Defence Industry

Defense Offset Pledge Is Valued At $6.83 Billion Over The Next 15 Years: Govt

Story Highlights
  • "15 businesses collectively failed to meet the first deadline for carrying out their promise to offset defence spending.
  • According to the governing defence offset criteria, the defaulting vendors have been penalised as necessary for unfulfilled offset duties.

The government reported in Lok Sabha on Friday that the estimated total cost of the defence offset commitment that required to be implemented over the last 15 years was USD 6.83 billion.

In response to a query, Minister of State for Defense Ajay Bhatt stated that as of August 1st, offset claims totaling 82.13 percent of the overall offset commitment had been submitted.

The USD 6.83 billion total offset commitment amount is likewise valid through August 1.

According to India’s offset policy, foreign defence companies that receive contracts for Rs 2000 crore or more are required to spend at least 30% of that amount in India by way of component purchases, technology transfers, or the establishment of R&D projects.

However, if the offsets were not included in the original contract and the procurements were made through the “quick track procedure” or a “option clause,” they are not applicable.

Furthermore, contracts do not permit offsets.

under agreements between governments.

When asked if the government was aware that many foreign corporations over the past 15 years have not completed their defence offset responsibilities by the deadline originally set for completion, Bhatt responded “yes.”

When questioned about the overall amount of the commitment for offsets for defence that had to be carried out during the time, he stated that it was USD 6.83 billion up to August 1.

“15 businesses collectively failed to meet the first deadline for carrying out their promise to offset defence spending. Additional information, which is of a strategic and sensitive nature and cannot be revealed, “added Bhatt.

According to the governing defence offset criteria, the defaulting vendors have been penalised as necessary for unfulfilled offset duties.

Additionally, he pointed out that “re-phasing” of offset liabilities has been permitted, allowing suppliers to discharge the outstanding offset commitments in legitimate circumstances.

A parliamentary standing committee requested in March that the defence ministry use greater caution and transparency in ensuring that offset criteria in defence contracts are met.

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