"In the 11th Plan, the value of offsets contracts is likely to be more than Rs 10,000 crore... In addition, (offsets worth) Rs 4,818 crore are at the contract negotiation stage and Rs 31,500 crore are at other stages," Minister of State for Defence M M Pallam Raju said today (Jan 19).
Under the Defence Procurement Procedure (DPP), foreign vendors have to reinvest at least 30 per cent of the deals worth over Rs 300 crore in the Indian defence, civil aerospace or internal security sector.
With India planning to spend over USD 100 billion for the modernisation of its armed forces, there will be investment of USD 30 billion in the three sectors. The Minister said offsets provide an opportunity for small and medium enterprises to emerge as suppliers for Indian defence companies and earn a significant revenue out of these propositions.
Raju said 12 offsets contracts worth Rs 9,943 crore have already been signed and more than 85 public and private sector companies have benefited from them. As India looks to procure an increased number of platforms such as unmanned aerial vehicles, Airborne Early Warning Systems, refuelling tankers, battle tanks and missile systems, it would need to develop a robust industrial base, he said.
Raju said a committee has been formed under a senior officer to study the existing offsets policy and it would recommend further changes in it on basis of the suggestions provided by the stakeholders including private sector defence companies.
To increase self-reliance in defence sector and to promote indigenous defence and related sectors, Government has come up with its first-ever Defence Production Policy.