The Rafale imbroglio, says a story in this paper, has prevented finalisation of a new policy on utilising offsets — mandated spending in the buyer’s economy by the beneficiaries of large procurement orders above a threshold, typically in defence equipment and large civilian aircraft.

This is unfortunate. But offsets are but one method of fuelling defence production in the country. The biggest obstacle would seem to be lack of coherence, deliberate or otherwise, and determination in the defence establishment to procure from within the country.

America’s Defence Advanced Research Projects Agency has done much to both drive research and development and create a vibrant startup culture, delivering not only things that meet defence needs but also a hi-tech civilian industry. Lack of consensus on how to marshal offset commitments into viable defence production need not come in the way of India’s defence establishment identifying and cataloguing with clarity its requirements. These requirements could be met with existing gear or via innovative new kit. If India’s startups are given a chance to submit proposals on solving specified defence needs, the ones that are deemed realistic can be given projects and funding. Similar opportunity can be given to established industry as well, who can raise their own funds but need the assurance that once they meet the specifications laid down by the procurer at competitive costs, their kit would be purchased.

Anecdotal evidence suggests that the Navy is better organised when it comes to local procurement. The Army and the Air Force, too, must give Indian industry a fair chance, instead of making a beeline for Israel or European capitals.

For serious technology transfer, we need government-to-government deals and/or majority ownership by foreign partners in Indian joint ventures. Allowing offset commitments to flow into an alternate investment fund is a sound idea, its managers could then channel funds to the right companies, incentivised by remuneration linked to performance. Time to act, not mark time.