The Public Accounts Committee has reignited debate over India’s defence offset policy by flagging nearly ₹42,000 crore worth of obligations as pending, Bharat Shakti reported.

The committee, in a report tabled during the Monsoon Session, criticised deficiencies in contract management and called for a special audit to assess implementation.

According to the PAC, 26 ongoing offset contracts carry obligations worth $9.9 billion, of which $4.48 billion, or about 45 per cent, remained unfulfilled as of 31 December 2025. It recommended immediate clearance of all pending obligations and a comprehensive audit of the policy’s execution.

The committee also criticised the Ministry of Defence for lacking a mechanism to measure the actual impact of offsets on India’s indigenous defence industry. It said loopholes in the finalisation process reflected weaknesses in planning and contract management.

However, Amit Cowshish, former Financial Adviser (Acquisition) in the Ministry of Defence, argued that the headline figures require closer interpretation. He noted that offset contracts were signed progressively from 2008 onwards, each with its own implementation schedule, meaning obligations naturally extend into the future.

Cowshish highlighted that the more meaningful indicator is the value of obligations that had actually fallen due by December 2025. Based on the PAC’s own report, over 92 per cent of claims against due obligations had already been submitted. He said this does not indicate any major structural failure in execution.

He also cautioned against attributing responsibility solely to foreign original equipment manufacturers. Offset implementation follows plans approved in advance by the Defence Ministry, making delays a shared responsibility. Vendors may fail to place orders on time, but delays can also arise if Indian Offset Partners are unable to execute the work.

Cowshish pointed out that the offset policy itself became increasingly complicated over time. He said excessive control by the Ministry in approving proposals, weak oversight, and late initiation of audits contributed to implementation challenges.

He questioned whether the policy was ever capable of delivering the strategic outcomes often associated with it. Vendors were allowed multiple avenues to discharge obligations and naturally opted for simpler routes, such as purchasing eligible defence products from Indian firms. Expecting significant technology transfer through this framework, he argued, was unrealistic.

The PAC has maintained that offsets should reduce dependence on imports, facilitate advanced technology transfer, and strengthen India’s domestic defence industry. It also noted that the Ministry has not conducted any detailed assessment of whether these objectives have been achieved.

Cowshish believes expectations from the offset policy have often exceeded what the framework was designed to deliver. He said the PAC’s suggestions seem unworkable and that the policy’s limitations must be acknowledged.

The report is likely to renew scrutiny of how India structures and monitors offset contracts, particularly as the country continues to sign high-value foreign defence deals while pursuing its broader goal of defence self-reliance.

Agencies