India enhances scrutiny of defence offsets

According to the Indian MoD, foreign contractors have discharged offset obligations worth about USD4 billion. (Indian MoD)

A total of 21 defence offset contracts in India during the past five years have been classified by the Ministry of Defence (MoD) as non-compliant, Ajay Bhatt, Minister of State for Defence, said in a parliamentary reply on 4 April.

The newly disclosed figure reflects an increase in scrutiny of defence offsets in India and comes after the MoD was criticised by the country's Comptroller and Auditor General (CAG) for ‘weak' monitoring of offsets.

Bhatt said that in the five years up to 31 December 2021, a total of 21 offset contracts with foreign firms had “defaulted” or were “non-performing” on obligations. He did not clarify the scope to which these firms had been subject to penalties.

Bhatt said the value of the “non-performed” offsets obligations, across the total 21 contracts, was USD2.24 billion. Additionally, total offset claims worth USD2.64 billion had been submitted by foreign contractors on 47 offset contracts in the past five years.

A total of USD43.14 million worth of penalties across 16 offset contracts have been levied against foreign contractors since India introduced its offset policy in 2005, Bhatt said.

According to other MoD statistics, USD4 billion in offsets had been discharged by foreign contractors in India until 4 April 2022.

A total of USD441.8 million was classified by the MoD as “incomplete claims” or with “clarifications sought”. Another USD571 million in offset claims was being assessed by the MoD and its Defence Offset Management Wing as of early April 2022.