MoD Inks Defence Offset Contracts Valued at US$5.67 Billion

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New Delhi: The Ministry of Defence (MoD) has signed defence offset contracts with a cumulative value of US$ 5.67 billion in the last three years, Lok Sabha was told on November 20.

In a written reply, Minister of State for Defence Shripad Naik said a study on impact of offsets on Defence Industrial Base was conducted by Department of Defence Production through Institute for Defence Studies and Analyses (IDSA). According to the study conducted, till March 2019, MoD has signed 52 offset contracts valued at US$11.79 billion to be discharged through Indian Offset Partners.

In May 2001 the defence industry sector, which was hitherto reserved for the public sector, was opened up to 100 per cent for Indian private sector participation with Foreign Direct Investment (FDI) up to 26 per cent both subject to licensing. Further, Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry allowed FDI under automatic route up to 49 per cent and above 49 per cent through government route wherever it is likely to result in access to modern technology or for other reasons to be recorded.

Since the opening of private sector participation in defence production in 2001, 452 Industrial Licenses (ILs) have been issued till October 2019 for manufacture of a wide range of defence items, out of which a total of 109 licenses have been issued in the last three financial years.

He said so far FDI amounting to Rs 1,812 crores has been reported by the companies in the defence and aerospace sector since April 2014.

Separate procedure for ‘Make-II’ category has been notified under Defence Procurement Procedure (DPP) to encourage indigenous development and manufacture of defence equipment. Till date, 44 proposals for development by industry have been given ‘In-principle’ approval under Make-II.