Indian Defense Sector to Gain Business Worth $10 Billion says Minister for Defen

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Multi-billion dollar defence deals under negotiations at present are expected to give Indian firms business worth around USD $10 billion (Rs.45,000 crore) over the years through the offsets policy, Minister of State for Defence Production M.M. Pallam Raju is quoted to have said today.

[b]"Defence offset projects worth Rs.45,000-crore ($10-billion) are being negotiated, which will benefit India in terms of business and development of defence technology"
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"The offset provision is a great opportunity to develop long-term partnership in various areas, which can be utilized by the US industry to identify Indian partners and establish a long-term supply chain"
-- Minister of State for Defence Production M.M. Pallam Raju
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These include deals such as 12 Boeing P-8I (Poseidon maritime reconnaissance aircraft) worth over USD $3 billion, ultra-light howitzers worth USD $647 million, GE F414-INS6 engines for the HAL Tejas fighter jet worth USD $650 million, Harpoon anti-ship missiles estimated at USD $170 million and six Lockheed Martin C-130 J Super Hercules aircraft for the Indian special forces.

Under the renewed Defence Procurement Policy, it is mandatory for overseas firms securing Indian defence contracts to outsource 30 percent of the deal to state-run Indian enterprises and private firms as offset works.

"The procurement contracts indicate that the US defence industry players are increasingly looking towards East to establish manufacturing bases," said Martin W. Philips, KPMG global head of aerospace and defence.

Endorsing Philips' view, Richard Rekhy, KPMG advisory head, said a business of $10-billion was a big number for the Indian defence industry. "The benefit to the Indian industry will be in the form of upgrading domestic infrastructure, capacity addition and research development and activities," Philips noted.

Raju also told the industry representatives that the government was conscious of the benefits of the offset policy and would tweak it to incorporate best global practices.