<p>The whopping purchase order would benefit the Indian defence industry in a big way because of the inflow of $30 billion (Rs I.5 lakh crore) as offset in the industry, officials informed the Parliamentary Standing Committee on Defence that submitted its report on Wednesday.<br /><br />Under Offsets policy—a provision in the military procurement policy—if the government wants to purchase any military equipment worth more than Rs 300 crore, the supplier will have to re-invest 30 per cent of the contract amount in Indian defence, homeland security and aviation industry for the growth of the domestic industries.<br /><br />Incidentally, while the 2005 policy envisages 30 per cent offset, the government hiked the its limits to 50 per cent in India’s biggest defence deal —$10.4 billion race to buy 126 medium multi-role combat aircraft.<br /><br />The offset policy is in existence since 2005 and has been refined over the years now.<br />The Defence Research and Development Organisation (DRDO) had benefited from the offset policy in the recent past. <br /><br />Offset amount<br /><br />As India plans to buy 10 heavy-lift C-17 Globemaster aircraft from the US aviation major Boeing for Indian Air Force at a cost of $ 4.1 billion, the offset amount comes down to about $1 billion, which roughly translates to Rs 4500 crore.<br /><br />Almost half of the offset amount—about $500 million—is being used to purchase equipment to set up a new high-altitude engine testing facility under the DRDO, which now goes abroad for such tests.<br /><br />In addition, equipment worth $ 300 million are being brought to establish a new wind tunnel facility for testing missiles and fighter aircraft of the future, a defence ministry official informed the House panel.<br /></p>
<p>The whopping purchase order would benefit the Indian defence industry in a big way because of the inflow of $30 billion (Rs I.5 lakh crore) as offset in the industry, officials informed the Parliamentary Standing Committee on Defence that submitted its report on Wednesday.<br /><br />Under Offsets policy—a provision in the military procurement policy—if the government wants to purchase any military equipment worth more than Rs 300 crore, the supplier will have to re-invest 30 per cent of the contract amount in Indian defence, homeland security and aviation industry for the growth of the domestic industries.<br /><br />Incidentally, while the 2005 policy envisages 30 per cent offset, the government hiked the its limits to 50 per cent in India’s biggest defence deal —$10.4 billion race to buy 126 medium multi-role combat aircraft.<br /><br />The offset policy is in existence since 2005 and has been refined over the years now.<br />The Defence Research and Development Organisation (DRDO) had benefited from the offset policy in the recent past. <br /><br />Offset amount<br /><br />As India plans to buy 10 heavy-lift C-17 Globemaster aircraft from the US aviation major Boeing for Indian Air Force at a cost of $ 4.1 billion, the offset amount comes down to about $1 billion, which roughly translates to Rs 4500 crore.<br /><br />Almost half of the offset amount—about $500 million—is being used to purchase equipment to set up a new high-altitude engine testing facility under the DRDO, which now goes abroad for such tests.<br /><br />In addition, equipment worth $ 300 million are being brought to establish a new wind tunnel facility for testing missiles and fighter aircraft of the future, a defence ministry official informed the House panel.<br /></p>