India’s defence acquisition system has come under fresh parliamentary scrutiny after the Public Accounts Committee (PAC) raised serious concerns over the Ministry of Defence’s handling of defence offset obligations and the pace of military modernisation. In its latest report tabled in Parliament, the committee noted that offset commitments worth approximately ₹42,500 crore remain pending under several major defence contracts, prompting questions over the effectiveness of the country’s offset policy.
The committee observed that despite defence offsets being introduced to strengthen India’s indigenous defence industrial base through technology transfers, local manufacturing and investments, a significant portion of these obligations has yet to be fulfilled. It said the continued backlog reflects shortcomings in monitoring, enforcement and contract management, limiting the policy’s intended benefits for India’s defence ecosystem.
According to the report, nearly 45 per cent of offset commitments linked to 26 active defence contracts remain outstanding. The PAC stated that such delays have prevented the domestic defence industry from fully benefiting from high-value foreign procurement programmes and have slowed the growth of indigenous capabilities.
The parliamentary panel urged the Ministry of Defence to establish a more robust mechanism for tracking offset implementation and ensuring that foreign vendors comply with their contractual commitments. It also recommended stricter accountability measures, including the timely imposition of penalties wherever contractual obligations are not met.
Apart from the offset issue, the committee also expressed concern over persistent delays in the procurement and induction of critical military equipment. It noted that lengthy acquisition timelines continue to affect the armed forces’ modernisation plans, delaying the replacement of ageing platforms and slowing capability enhancement across the services.
The report stressed that an efficient procurement process is essential for maintaining operational readiness, particularly at a time when India’s security environment is becoming increasingly complex. It called for greater coordination among stakeholders, faster decision-making and reforms aimed at reducing procedural delays without compromising transparency or accountability.
The PAC further emphasised that successful implementation of defence offsets should complement the government’s broader objective of building a self-reliant defence manufacturing ecosystem under the Atmanirbhar Bharat initiative. Effective execution of offset contracts, the committee said, would not only promote technology absorption but also strengthen Indian defence companies by integrating them into global supply chains.
The committee’s observations come at a time when India is pursuing several high-value defence acquisition programmes while simultaneously seeking to expand domestic manufacturing capabilities. Its recommendations are expected to influence future procurement practices and reinforce the government’s focus on improving efficiency, transparency and accountability within the defence acquisition framework.