Understanding India’s offset policy
India, the world’s largest importer of arms, would like to be self-sufficient in defence production.
But to realise that ambition, the country needs greater investment and technology from abroad.
Karishma Maniar explains new government offsets policies aiming to attract foreign involvement.
The concept of offset, as understood in the defence sector, primarily aims to provide additional benefits to the buyer of a product from a foreign supplier. It can take various forms – from helping domestic industries with additional works contracts, to transferring complicated technology to the domestic industry. Since defence procurements involve a substantial amount of public money, it can be argued that the discharge of offset obligations helps ensure that at least some of this is ploughed back into the local economy. Historically most developing countries have always had some provisions of offset in the procurement process. In the Indian context, the issues surrounding offset are complicated – and there are different implications for players, depending on where they are in the value chain.
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