Armed with a new offset policy for all future big-ticket weapons acquisitions, the Defence Ministry expects private manufacturing to boom in this fledgling sector.

A guidance released by the ministry shows it expects a staggering $10 billion in offsets—return investments in the buyer country—in the 11th Plan period (2007-2012), much of which will come in the form of strategic joint ventures and FDI.

On Defence Minister Pranab Mukherjee’s orders, the next few months will see furious activity to subvert the snail pace of procedural reform and get down to giving the country a viable, modern and robust offset implementation policy.

In November, the Ministry will convene a high-level seminar with representation from the US Department of Commerce, strategic think tanks from France and the UK, and a list of recognised defence finance and economics scholars, including Professor Keith Hartley, to produce a detailed roadmap of best practices to prepare for global investments in the defence business.

FM P. Chidambaram wrote to the Defence Ministry this week to tell them that he would sit in on the seminar’s session on acquisitions and has asked for a briefing on current procedures.

Today, the Ministry made a start by taking part in a CII-backed workshop on offsets, with panelists from large US firms like Lockheed-Martin and Northrop-Grumman. But the country’s nascent offset policy has come in for much criticism for being too rigid, reaching out, but falling short.

Ministry’s keenness to get global best practices going is not surprising—despite tweaks to the system, private participation in defence is negligibly small.

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