$15 bn. defence offsets likely in 10 years, says Parrikar

Defence procurements have started flowing in along with their offsets. The offset benefits for the country look set to reach $12 billion to $15 billion over the next 10 years, Defence Minister Manohar Parrikar said here on Thursday.

Offsets are the plough-backs to domestic industry from defence imports of very high value.

Mr. Parrikar said that in the last two years, 100 per cent offset obligations were achieved compared to around 60 per cent during the earlier five years.

“The quantum of offsets will increase in the coming years because deals are in the offing.” He cited the impending purchase of 36 Rafale medium multi-role fighter aircraft that the government is currently negotiating with French vendor Dassault Aviation. The acquisition will result in offsets that will be 50 per cent of the value of the deal.

“There are a lot of things that can be done with offsets if you apply them well,” Mr. Parrikar said, addressing the two-day seventh annual Strategic Electronics Summit organised by the Electronics Industries Association of India (ELCINA).

‘Become lead integrators’

The Minister stressed that defence public sector units such as Hindustan Aeronautics Ltd., Bharat Electronics Ltd. and Bharat Dynamics Ltd., which manufacture critical products for the armed forces, should be lead integrators and make way for industry as supplier of components and systems.

The contribution of small and medium industries to defence PSUs increased 4 per cent last year and stood at 9 per cent of the total procurement. The target is 15 per cent, he said.

Huge surge

Ajay Kumar, Additional Secretary, Department of Electronics and Information Technology, said defence policies had triggered a huge surge in electronics that would go into projects for the armed forces.

After a long gap, “Last week, we received the 200th proposal for investment in electronics,” he said.

ELCINA president Vikram Desai estimated the value of electronics in defence manufacturing at Rs. 30,000 crore and said large opportunities were emerging.

Jayant D. Patil, L&T Heavy Engineering’s senior vice-president and head of Defence and Aerospace, estimated that defence manufacturing projects worth around Rs. 12 lakh crore would happen in India in the next decade and electronics would form nearly half of those opportunities.