Lockheed Martin is in talks with the Indian MoD over offsets linked to the company’s sale of C-130J Hercules transport aircraft to the Indian Air Force

by Jon Grevatt

Key Points

  • Lockheed Martin says it is co-operating with the Indian MoD to complete offset obligations within the performance period
  • The negotiations, which come amid reports of failed offset targets, highlight continuing offset challenges in India

Lockheed Martin told Jane’s on 1 August that it is co-operating with the Indian Ministry of Defence (MoD) to discharge defence offset obligations linked to its sales of C-130J-30 Hercules transport aircraft to the Indian Air Force (IAF).

The comments follow media reports in India that the MoD has cashed in part of a bank guarantee from Lockheed Martin in relation to a fine linked to an alleged breach of offset obligations tied to the C-130J program.

As per Indian defence offset rules if Lockheed Martin and the MoD do not reach an agreement on the offset proposal the US company could face stiffer penalties.

A Lockheed Martin spokesperson confirmed that the offset package under discussion was linked to the US government’s sale of a second batch of six C-130Js announced in 2013, which was costed at USD1.1 billion. The IAF acquired an initial batch of six aircraft in 2007 for USD962 million, although Lockheed Martin’s offset obligations linked to this programme have already been met. Sales of both batches of C-130Js were conducted under the US Foreign Military Sales route.

“Lockheed Martin has been diligently discharging its offset obligations in India since 2009,” said the spokesperson. “This has delivered extensive economic benefits through investment, skills training, transfer of technology and exports. Our successful joint ventures in India have been a key part of helping India achieve its goal of developing an aerospace and defence supplier ecosystem and participating in the global supply chain.”

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