India’s Defence Procurement Procedure: Challenges and Way Forward with Special Reference to Offsets

Anurag ChHibber

Although defence offsets, being in the nascent stages are yet evolving, India’s experience so far with offsets has not been very encouraging. The offset policy is neither geared towards delivering optimum results nor is the system of implementation established and robust. Defence offsets come at a cost and empirical studies have shown that the premium in this cost is transferred to the buyer and it still remains unclear as to who benefits from such transactions.
The present offset guidelines suffer from certain key weaknesses including ambiguity in explanation, greater leeway to foreign vendors, little incentive to defence manufacturing and lack of in-house capacity for monitoring/auditing offset programmes.
This Monograph endeavors to analyse the present offset policies and structures for managing and implementation of offsets and also study the concept of banking of offsets in detail, with a view to derive unparalleled pay- offs for the Indian industry. Since technology acquisition is a game changer in this field, the Monograph also mulls over the nuances and intricacies of this provision.

Anurag ChHibber
Anuraag Chhibber comes with a wide operational experience of having participated in counter insurgency operations in Punjab, Nagaland, Manipur and Kashmir. He has had a stint in Army Headquarters New Delhi in which he was handling the weapons and equipment procurements for Indian Army and was bestowed with Vishisht Sewa Medal (VSM) for his distinguished services by The President of India. He also has a unique distinction of concluding the first Offsets Contract of Indian Army. As a Senior Fellow at Centre for Land Warfare Studies, New Delhi, he was instrumental in training officers of Indian Army on procurement issues under instructions of Vice Chief of Army Staff.

Contents

Preface
1. Introduction
2 . Defence Industry: Evolution and the Avenues
3. Capital Defence Procurement Procedure: An Overview and Linkages with Offsets Programme
4 . Insight into the Historical Perspective and the Concept of Offsets
5 . Understanding the Global Offset Models and the Best Practices
6. The Journey of Indian Defence Offset Programme
7. Perceived Shortcomings Impeding the Success of Indian Defence Offsets Programme
8. Offsets Versus the Lure of ‘Make in India’
9. Recommendations for a Successful Offset Model
10. Conclusion