Parliamentary Committee Raises Alarm Over ₹42,000 Crore Unmet Defence Offset Obligations While Former Official Challenges Severity of the Issue
Summary
India's Public Accounts Committee (PAC) has brought renewed attention to the country's defence offset policy by identifying approximately ₹42,000 crore in unfulfilled obligations across 26 active offset contracts, recommending a special audit and immediate clearance of pending dues. The committee criticized the Ministry of Defence for poor contract management, loopholes in the finalization process, and the absence of any mechanism to measure the actual impact of these offsets on India's indigenous defence industry. However, former Ministry of Defence Financial Adviser Amit Cowshish contested the severity of these findings, pointing out that over 92 per cent of claims against obligations that had actually fallen due by December 2025 had already been submitted, suggesting no fundamental systemic failure. Cowshish further argued that responsibility for delays cannot rest solely with foreign Original Equipment Manufacturers, as the Indian government itself approves offset implementation plans, and Indian Offset Partners also contribute to delays when they fail to execute assigned work. He also questioned the very design of the offset policy, arguing that it was structurally incapable of delivering ambitious outcomes like advanced technology transfer, and that the PAC's recommendations may be largely unworkable given the framework's inherent limitations.
Key Takeaways
- 1. **Scale of Unfulfilled Obligations:** Of $9.9 billion in total offset obligations across 26 contracts, approximately $4.48 billion (45%) remained unfulfilled as of December 2025, raising serious concerns about policy effectiveness and contract enforcement.
- 2. **Audit and Accountability Gap:** The PAC's finding that the Ministry of Defence lacks any mechanism to measure the real-world impact of offsets on domestic defence industry growth points to a significant oversight and accountability deficit in defence procurement governance.
- 3. **Shared Responsibility for Delays:** Expert analysis highlights that offset implementation delays involve multiple stakeholders — foreign OEMs, the Ministry of Defence, and Indian Offset Partners — making it counterproductive to assign blame exclusively to foreign vendors.
- 4. **Structural Limitations of Offset Policy:** The offset framework, increasingly complicated over time by excessive ministerial control and weak oversight, was arguably never designed to deliver transformative outcomes such as meaningful technology transfer, revealing a fundamental mismatch between policy expectations and design.
- 5. **Strategic Self-Reliance Goals at Risk:** The PAC's core objective — using offsets to reduce import dependence and strengthen indigenous defence manufacturing — remains largely unverified and potentially unachieved, undermining India's broader Atmanirbhar Bharat defence ambitions.