Defence Minister Manohar Parrikar foresee the offset in Defence procurements is set to reach $12 to 15 billion over the next ten years. Addressing the seventh annual Strategic Electronics Summit organised by Electronics Industries Association of India (ElCINA) in Bengaluru on Thursday the Defence Minister said, with purchases coming through, their offsets to domestic industry have normalised. “In the last two years, 100 per cent offset obligations were achieved compared to around 60 per cent during the earlier five years” , he added.
“The quantum of offsets will increase in the coming years because deals are in the offing. The purchase of 36 Rafale medium multi-role fighter aircraft that is currently going through cost negotiations will result in offsets that will be 50 per cent of the value of the deal”.
The Minister stressed that Defence public sector units such as Hindustan Aeronautics ltd., Bharat Electronics ltd. and Bharat Dynamics ltd., which manufacture critical products for the Forces, should be lead integrators and make way for industry as supplier of components and systems.
He said after the new Defence Procurement Policy 2016, lot of changes were taking place giving impetus to the role of industry. “ The government was carefully and practically viewing the policy of banning and penalising certain vendors. The logic was to ensure that projects do not get stalled for many years”, he said.
He said efforts made by his ministry over the last two years had already bear fruit for the small and medium scale industries whose supplies to the defence sector had touched Rs.52000 crore last year up from Rs,42,000 crore in 2014. Their share in defence purchases had gone up to 9 per cent last fiscal from 4 per cent the previous year. ‘’We aim to touch 15 per cent this year’’ he added.
He said he had sought the Defence PSUs to be major integrators of platforms and procure systems and components from the private sector.