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The country's financial watchdog Comptroller and Auditor General (CAG) in an audit report on Management of Defence Offsets tabled in the Parliament flagged that foreign vendors made
various offset commitments to qualify for the main supply contract but later were not earnest about fulfilling these commitments. In 2005, India adopted the Offset Policy for defence capital
purchases. This meant that for all capital purchases above Rs 300 crore made through imports, the foreign vendor was required to invest at least 30 per cent of the value of the purchase in
India, reported _IANS_. This investment was to be made in the Indian defence and aerospace sector. Various avenues were available to the vendor to discharge these offset obligations. This
included Foreign Direct Investment, offering of free Transfer of Technology to Indian firms, purchase of eligible products manufactured by Indian firms (exports). For the discharge of these
offsets, the foreign vendor had to select an Indian firm as a partner (Indian Offsets Partner or IOPs). The objective of the Offset policy was to develop the Indian defence industry so as to
achieve self-reliance and reduce dependence on imports. From 2005 till March 2018, 46 offset contracts had been signed with foreign vendors, valued at Rs 66,427 crore.