Amit's Blog

Defence Offsets in India: Impact, Growth, Top Beneficiaries, and Outlook to 2030   India’s defence offset policy, introduced in 2005, mandates foreign suppliers to reinvest 30% of contract value into the Indian economy, aiming to boost indigenous manufacturing, technology transfer, and global supply chain integration. This note analyzes the policy’s impact on Indian companies, offset business growth, and top beneficiaries, with snapshots for 2010, 2018, and 2025, and projections to 2030. Offsets have scaled the defence industry to USD 37.3 billion (2016-17) and private sector output to INR 197.2 billion (2022), with exports surging 46% CAGR (FY17-24). However, limited technology transfer (90% direct purchases) and low FDI (3.5%) hinder self-reliance. Top beneficiaries like HAL, BEL, and Tata dominate, but SMEs gain indirectly. By 2030, offsets may reach USD 15 billion, with exports targeting INR 50,000 crore, though indigenous policies coul...

Critical Analysis of India’s Defence Offset Policy: A Comparative Perspective India’s defence offset policy, introduced in 2005 and formalized in 2006 under the Defence Procurement Procedure (DPP), mandates foreign vendors to reinvest at least 30% of contracts valued over ₹300 crore into India’s defence sector. Aimed at fostering self-reliance, technological advancement, and economic growth, the policy sought to reduce India’s 70% reliance on imported defence equipment (circa 2008). Nearly two decades later, its effectiveness remains debated. This analysis critically evaluates the policy’s outcomes, compares it with offset policies in Israel, Australia, Brazil, and South Korea, and offers reform recommendations, drawing on expert insights and data. Objectives of India’s Defence Offset Policy The Ministry of Defence (MoD) articulated the policy’s goals in a 2012 press release: “to leverage capital acquisitions to develop Indian defence industry by (i) fostering development of inte...