India to ease defence offsets norms to push industry growth

India is preparing to ease its defence offsets policy to facilitate greater foreign investments in the domestic military industry whenever the nation buys hardware worth over Rs.300 crore or $60 million.

A meeting of the Defence Acquisition Council chaired by Defence Minister A.K. Antony Thursday considered proposals to amend the offsets policy, which is part of the Defence Procurement Procedure (DPP).

The latest DPP was issued in 2011 and under it any defence acquisition worth $60 million or more would fetch the domestic defence, aerospace and homeland security industries 30 percent of the deal.

After the DAC meeting, a senior defence ministry official said: "This is part of the discussion process to make the defence offsets a little more flexible to enable military vendors plough back their offsets commitments in the Indian defence industry."

"The discussions today (Thursday) remained inconclusive and the matter will again be taken up for discussion in the next meeting," he added.

It is estimated that about $30 billion will accrue as offsets benefits to Indian defence, aerospace and homeland security industries over the next decade.
Among the amendments in the offsets policy being considered is allowing technology transfers from vendors as part of their offsets commitments.

The defence ministry may also include commercial shipbuilding among the sectors along with defence, aerospace and homeland security for fulfilment of the offsets obligations of defence vendors.

The new offsets policy may mandate the Defence Offsets Facilitation Agency (DOFA)  to administer the vendors' commitments, making it the key body for enabling the accruing of benefits to the domestic defence industry from offsets.
India had come up with its first offsets policy in its 2006 DPP.