21 defence offset contracts saw default in last 5 years: Govt


The total number of offset contracts in which vendors have defaulted and non-performed offset obligations, during the last five years, stands at 21 with a non-performed amount of $2.24 billion till last year, the Parliament was informed on Monday.

Action is taken against the defaulting and non-performing vendors by imposing penalty, after following the laid down procedure, Minister of State for Defence Ajay Bhatt told the Rajya Sabha in a a written reply to a query posed by CPI-M member John Brittas.

Action has been taken in 16 contracts with levying of penalty amounting to $43.14 million till December 31, 2021, he added.

During the last five years, offset claims worth $2.64 billion have been submitted in 47 offset contracts till December 31, 2021.

Offsets are an obligation by an foreign companies to boost India’s domestic defence industry if India is buying defence equipment from it. Since defence contracts are costly, the government wants part of that money either to benefit the Indian industry, or to allow the country to gain in terms of technology.

The key objective of the Defence Offset Policy is to leverage capital acquisitions to develop Indian defence industry by fostering development of internationally competitive enterprises, augmenting capacity for research, design, and development related to defence products and services and encouraging development of synergistic sectors like civil aerospace, and internal security.



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