India points to an increase in defence offset deals

The Indian Ministry of Defence (MoD) has signed 21 defence offset contracts with foreign contractors over the past three years, Indian Minister of State for Defence Shripad Naik told parliament on 20 November. He said the value of these offset deals is USD5.67 billion.

Citing a study conducted by the Institute for Defence Studies and Analysis in New Delhi, Naik added that from 2005 (when India introduced its defence offset policy) until March this year the MoD had signed a total of 52 offset contracts valued at USD11.79 billion.

Naik did not elaborate on the figures but indicated that the increase in defence offset contracts signed by the MoD and foreign contractors over the past three years was the result of various reforms introduced by the department.

India has increased the number of defence offset contracts it has signed in recent years. These deals include offsets related to BAE Systems' supply of M777 lightweight howitzers (pictured) to the Indian Army. (BAE Systems)

These included reforms to stimulate private-sector expansion in India, local defence manufacturing, and foreign direct investment (FDI) in defence. Naik added that, “so far FDI amounting to INR18.12 billion (USD252.5 million) has been reported by companies in the [Indian] defence and aerospace sector since April 2014”.

The MoD has also introduced several updates to its defence offset policy in recent years. For instance, in 2016 the MoD lifted the threshold for offset from INR3 billion to INR20 billion to more efficiently manage offset work and related technology inflows into India.

An updated defence offset policy is expected to be introduced by the Indian MoD in 2020.