Parliamentary panel pulls up defence ministry over Rs 42,500 crore offset dues

A parliamentary committee has raised serious concerns over India’s defence offset policy. India's foreign military equipment suppliers are yet to fulfil obligations worth Rs 42,500 crore (approximately $4.5 billion). The Public Accounts Committee (PAC), in a report tabled in Parliament, noted that nearly 45 per cent of offset commitments under 26 ongoing contracts remain pending, despite the policy being in place since 2005.The offset framework, designed to reduce the outflow of national resources, facilitate technology transfer and strengthen the domestic industrial base, mandates foreign suppliers to reinvest a portion of large defence deals into India’s industry and Research & Development apparatus. The PAC report reveals that of the $9.9 billion offset obligations under current contracts, only $5.46 billion worth have been discharged. In total, 56 offset contracts worth $13.2 billion have been signed since 2005, with completion scheduled by 2033.The committee was scathing in its assessment, stating that “loopholes and lacunae exist” in the finalisation process and that deficiencies at the settlement stage reflected “inadequacies in planning and contract management” within the ministry of defence. It recommended that all pending obligations as of December 31, 2025 be cleared immediately, and called for a special audit to ascertain the true status of implementation. The PAC also criticised the absence of any metric to measure the policy’s impact on the country’s defence sector, noting that no detailed study had been commissioned to evaluate the effectiveness of the policy.Beyond offsets, the committee also rapped the defence ministry over delays in artillery modernisation. It highlighted the two-decade gap between the Army’s urgent requirement for modern guns and the eventual induction of upgraded systems, leaving formations reliant on ageing Bofors 155mm artillery guns inducted in 1986. The infamous Bofors scandal led to the OEM’s ban in 1989, created a capability vacuum. Though the Ordnance Factory Board was tasked in 2013 to produce upgraded prototypes, bulk orders were delayed and the indigenous Dhanush gun was only inducted in 2022. The Regiment of Artillery has since then inducted different types of artillery guns such as the K9 Vajra self-propelled guns and the M777 light weight howitzers in the army. The army has also given orders for the domestically developed 307 Advanced Towed Artillery Guns (ATAGS). These procurements are made under the Field Artillery Rationalisation Programme formed in the aftermath of the Kargil conflict.The PAC’s observations extend to operational readiness of the Indian Air Force and the upgradation of medium-lift helicopters, underscoring systemic delays in procurement and modernisation.

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