The Center on Monday informed the Parliament that foreign vendors have not fulfilled three offset agreement obligations worth over ₹89 crore.
The defense policy mandates international players to invest at least 30 percent of the total contract value in the Indian defense industry to discharge offset obligations. In the last five years, 15 offset agreements in the defense sector have been signed.
“Out of the 15 offset agreements, the cumulative percentage of claims fulfilled are 175.48 per cent. However, the specific liability in some of these offset agreements still pending is ₹89.08 crore,” Minister of State for Defense Ajay Bhatt said in a written reply to AAP MP Sanjay Singh’s query in Rajya Sabha.
The total contracted offset amount from 2017 to 2022 in 15 offset agreements with nine foreign vendors is $1.86 billion, the minister informed the Upper House. While four offset agreements took place in 2017, five in 2018, three in 2019, two in 2020 and one in 2021.
Some foreign defense and aerospace manufacturers, including Safran, Dassault Aviation, Thales (all the three from France), Lockheed Martin (the US), MBDA (European consortium), Rosoboronexport (Russia) and Israel Aerospace Industries have flagged issues related to offset agreements .
In May 2022, the minister had informed the Parliament that vendors had either defaulted or not-performed in 21 offset contracts during the last five years, amounting to $2.24 billion till December 31, 2021. The government had imposed penalties to the tune of $43.14 million on such vendors in 16 cases, Bhat said. According to the minister, the government had managed to get offset claims worth $2.64 billion in 47 contracts till December 31, 2021.