Foreign companies have called for an overhaul of India’s defence offset policy, which requires contractors to invest a share of the value of the deal in India, especially a rule that prevents them from deciding their weapons-making partners in the country.

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The reform call comes amidst growing concerns in defence circles over weapons procurement policy delays affecting several orders.

European aerospace company Airbus has called for allowing original equipment manufacturers choose offset partners themselves rather than the government play matchmaker.

“Offset policies in India are restrictive and force us to work with people who aren’t the best to work with,” said Airbus India managing director Pierre De Bausset told CNBC-TV18. “We want to see broadening of where offsets can go, and us getting to choose the partners we work with.”At a defence conference in Chennai earlier this week, Prime Minister Narendra Modi reiterated the government’s commitment to expedite defence deals.

Alan Garwood, business development director, BAE Systems, a global defence, aerospace and security company, said the offset rules in India are problematic and are quite strict in how they are being enforced.

“Quite simply, Indian offset rules state that if I’m selling to you, I’m allowed to sell only what I’ve made myself. They don’t allow us to sell all of what we’ve helped make, and a change would let us offer more diverse products.”

But Indian companies remain sanguine about their prospects.

Automobile company Ashok Leyland, which has diversified into defence, said its defence orders are conservatively valued at Rs 5,000 crore in the next five years.

“The last year alone has seen our orders double to Rs 800 crore,” said Vinod Dasari, managing director, Ashok Leyland.

“We have managed to win 19 of the 23 tenders we participated in. If all orders fructify, we could be looking at making products worth nearly Rs 50,000 crore.”

L&T Defence, a unit of the engineering and construction company, said its defence orders are worth at least Rs 50,000 crore for the next five years.

First Published:Apr 16, 2018 5:22 PM IST