India’s Public Accounts Committee has sharply criticised the defence ministry for failing to enforce offset obligations worth ₹42,500 crore, with nearly half of commitments under ongoing contracts still pending, Times of India reported.

The panel has demanded immediate clearance of dues by December 2025 and a special audit, while also highlighting systemic delays in artillery and helicopter modernisation that continue to affect operational readiness.

The parliamentary committee has raised alarm over the state of India’s defence offset policy. Foreign military equipment suppliers are yet to discharge obligations amounting to ₹42,500 crore, or approximately $4.5 billion. These offsets were intended to strengthen India’s defence industrial base by mandating reinvestment into local industry and research.

The offset framework was introduced in 2005 to reduce the outflow of national resources, facilitate technology transfer, and build domestic capacity. Under this system, foreign suppliers winning large defence contracts must reinvest a portion of the deal value in India.

The PAC report revealed that of the $9.9 billion offset obligations under 26 ongoing contracts, only $5.46 billion has been discharged. This leaves nearly 45 per cent of commitments unfulfilled. Since 2005, a total of 56 offset contracts worth $13.2 billion have been signed, with scheduled completion by 2033.

The committee was scathing in its assessment, stating that loopholes and lacunae exist in the finalisation process. It argued that deficiencies at the settlement stage reflected inadequacies in planning and contract management within the defence ministry.

The PAC recommended that all pending obligations as of December 31, 2025 be cleared immediately. It also called for a special audit to ascertain the true status of implementation, noting that the ministry has failed to commission any detailed study to measure the policy’s impact on the defence sector.

The committee criticised the absence of metrics to evaluate whether offsets have genuinely strengthened India’s defence industry. Without such analysis, it argued, the policy risks becoming a procedural exercise rather than a strategic tool.

Beyond offsets, the PAC also pulled up the ministry over delays in artillery modernisation. It highlighted the two-decade gap between the Army’s urgent requirement for modern guns and the eventual induction of upgraded systems.

The Army has long relied on ageing Bofors 155mm artillery guns inducted in 1986. The infamous Bofors scandal led to the OEM’s ban in 1989, creating a capability vacuum. Though the Ordnance Factory Board was tasked in 2013 to produce upgraded prototypes, bulk orders were delayed. The indigenous Dhanush gun was only inducted in 2022.

The Regiment of Artillery has since inducted systems such as the K9 Vajra self-propelled guns and the M777 lightweight howitzers. The Army has also ordered 307 Advanced Towed Artillery Guns (ATAGS), developed domestically.

These procurements fall under the Field Artillery Rationalisation Program, formulated after the Kargil conflict to modernise artillery capabilities.

The PAC’s observations extend to the operational readiness of the Indian Air Force. It noted delays in the upgradation of medium-lift helicopters and systemic procurement bottlenecks that undermine modernisation.

The committee stressed that such delays in critical equipment acquisition compromise national security. It urged structural reforms in decision-making, stronger supply chain management, and timely acquisition of technology to prevent the armed forces from being deprived of credible systems.

The report underscores the need for a strategic overhaul of India’s defence procurement and offset management. Without decisive corrective measures, India risks continued dependence on ageing platforms and unfulfilled industrial potential.

Agencies