Opinion | India's Defence Deals Have A Serious Problem Nobody Talks About

Updated: Jul 31, 2026 15:59 pm IST Published On Jul 31, 2026 15:55 pm IST Last Updated On Jul 31, 2026 15:59 pm IST

Published On Jul 31, 2026 15:55 pm IST

Last Updated On Jul 31, 2026 15:59 pm IST

For more than two decades, India's defence offset policy aimed to be a powerful instrument to strengthen indigenous defence manufacturing, attract cutting-edge technologies, and reduce dependence on foreign suppliers.

The concept was straightforward: if India spends billions of dollars on importing military hardware, a portion of that expenditure should return to the country through investments, technology transfers, local production, research partnerships, and industrial development. Basically, the policy was well-intentioned, having looked at developing countries striving to build a military technological base while purchasing military equipment from advanced countries.

However, it looks like that never worked in India.

Even I recall my discussion with then Defence Secretary Ajay Kumar, and he understood the problem, then told me: "Plan to get rid of offset policy; it does not do much good."

Not to say that the policy did not produce any gains. Large defence contracts did generate substantial business for Indian companies, expanded the private sector, and enabled many MSMEs to become suppliers to global aerospace and defence manufacturers.

Several Indian firms today manufacture components for international defence companies - an outcome that would have been difficult without offset obligations.

Yet, despite these achievements, the policy has fallen significantly short of its original strategic objectives. India continues to rely heavily on imports for advanced military technologies and critical components. The country's ambition of using offsets to build tech sovereignty remains only partially fulfilled.

The Public Accounts Committee (PAC), in its Fiftieth Report on the "Management of Defence Offsets," adopted on June 4 and presented to Parliament this month, provides perhaps the most comprehensive assessment of the programme's shortcomings. The report makes it clear that the problem extends far beyond delayed vendor obligations. It reveals deeper structural weaknesses in planning, project evaluation, technology selection, and contract management.

Large Pending Obligations

The most immediate concern is the pace of implementation. Among 26 ongoing offset contracts, the total offset obligation stands at nearly USD 9.92 billion. However, vendors have submitted claims worth only USD 5.47 billion, representing just 55.14 % of the........

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